<PAGE>
TRACK 'N TRAIL
4961-A Windplay Drive
El Dorado Hills, CA 95762-9632
(916) 933-4525
April 24, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Track 'n Trail, which will be held on Thursday, May 28, 1998, at 10:00 a.m.,
at 4961-A Windplay Drive, El Dorado Hills, California.
The formal notice of the Annual Meeting and the Proxy Statement have
been made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return,
at an early date, the enclosed proxy in the prepaid envelope addressed to
American Securities Transfer and Trust, Inc., our agent, to ensure that your
shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE
AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Company's 1997 Annual Report to Stockholders is also
enclosed.
The Board of Directors and management look forward to seeing you
at the meeting.
Sincerely,
/s/ David L. Suechting, Jr. /s/ Gregory M. Kilgore
David L. Suechting, Jr. Gregory M. Kilgore
CHAIRMAN OF THE BOARD PRESIDENT AND
CHIEF OPERATING
OFFICER
<PAGE>
TRACK 'N TRAIL
-----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1998
-----------------------
To the Stockholders of Track 'n Trail:
The Annual Meeting of Stockholders of Track 'n Trail, a Delaware
corporation (the "Company"), will be held on Thursday, May 28, 1998, at 10:00
a.m. Pacific Daylight Time, at 4961-A Windplay Drive, El Dorado Hills,
California, for the following purposes:
1. To elect five directors;
2. To ratify appointment of Coopers & Lybrand L.L.P. as the
Company's independent auditors; and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournment of the Annual Meeting.
Stockholders of record as of the close of business on April 10, 1998 are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. A complete list of stockholders entitled to vote will be available at
the Secretary's office, 4961-A Windplay Drive, El Dorado Hills, California, for
ten days before the meeting.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. EVEN
IF YOU PLAN TO ATTEND THE MEETING, WE HOPE THAT YOU WILL PROMPTLY MARK, SIGN,
DATE AND RETURN THE ENCLOSED PROXY. THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND
OR VOTE AT THE MEETING.
By Order of the Board of Directors
/s/ Daniel J. Nahmens
------------------------------------
SECRETARY
El Dorado Hills, California
April 24, 1998
<PAGE>
TRACK 'N TRAIL
-----------------------
PROXY STATEMENT
-----------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Track 'n Trail, a Delaware corporation (the
"Company"), of proxies in the accompanying form to be used at the Annual Meeting
of Stockholders to be held at 4961-A Windplay Drive, El Dorado Hills,
California, on Thursday, May 28, 1998 and any adjournment thereof (the "Annual
Meeting"). The shares represented by the proxies received in response to this
solicitation and not revoked will be voted at the Annual Meeting. A proxy may
be revoked at any time before it is exercised by filing with the Secretary of
the Company a written revocation or a duly executed proxy bearing a later date
or by voting in person at the Annual Meeting. On the matters coming before the
Annual Meeting for which a choice has been specified by a stockholder by means
of the ballot on the proxy, the shares will be voted accordingly. If no choice
is specified, the shares will be voted FOR the election of the nominees for
directors listed in this Proxy Statement and FOR approval of Proposal 2
described in the Notice of Annual Meeting and in this Proxy Statement and as to
any other matter that may be properly brought before the Annual Meeting, in
accordance with the judgement of the proxy holders.
Stockholders of record at the close of business on April 10, 1998 are
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on such date, the Company had 6,842,644 shares of Common Stock
outstanding and entitled to vote. The presence in person or by proxy of the
holders of a majority of the Company's outstanding shares constitutes a quorum
for the transaction of business at the Annual Meeting. Each holder of Common
Stock is entitled to one vote for each share held as of the record date.
Directors are elected by a plurality vote. The other matters submitted
for stockholder approval at this Annual Meeting will be decided by the
affirmative vote of a majority of shares present in person or represented by
proxy and entitled to vote on each such matter. Abstentions with respect to any
matter are treated as shares present or represented and entitled to vote on that
matter and thus have the same effect as negative votes. If a broker who is the
record holder of certain shares indicates on a proxy that he or she does not
have discretionary authority to vote on a particular matter as to such shares,
or if shares are not voted in other circumstances in which proxy authority is
defective or has been withheld with respect to any matter, these non-voted
shares will be counted for quorum purposes but are not deemed to be present or
represented for purposes of determining whether stockholder approval of a
particular matter has been obtained.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers and other employees of the Company by
personal interview, telephone or facsimile. No additional compensation will be
paid to such persons for such solicitation. The Company will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to beneficial owners of the Company's Common Stock.
This Proxy Statement and the accompanying form of proxy are being mailed
to stockholders on or about April 24, 1998.
IMPORTANT
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT, WHETHER YOU
INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, YOUR SHARES CAN BE VOTED.
PROXIES WILL ALSO BE ACCEPTED BY TRANSMISSION OF A TELEGRAM, CABLEGRAM OR
TELECOPY PROVIDED SUCH TRANSMISSION CONTAINS SUFFICIENT INFORMATION FROM WHICH
IT CAN BE DETERMINED THAT THE TRANSMISSION WAS AUTHORIZED BY THE STOCKHOLDER.
THE TRANSFER AGENT'S TELECOPY NUMBER IS (303)234-5340. THIS WILL NOT LIMIT YOUR
RIGHTS TO ATTEND OR VOTE AT THE ANNUAL MEETING.
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
NOMINEES
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") provides that effective upon the first annual
meeting of stockholders following registration of the Company's Common Stock
under Section 12 of the Securities Exchange Act of 1934, as amended, the Board
of Directors shall be divided into three classes designated Class I, Class II
and Class III, with the term of office of directors of one class expiring at
each annual meeting of stockholders. The directors of the class whose term
expires at the time of each meeting shall be elected to hold office until the
third succeeding annual meeting of stockholders after their election. Pursuant
to the Company's Certificate of Incorporation, the term of office of Class I
directors expires at the 1999 Annual Meeting of Stockholders, the term of office
of Class II directors expires at the 2000 Annual Meeting of Stockholders and the
term of office of Class III directors expires at the 2001 Annual Meeting of
Stockholders, and in all cases until their respective successors shall have been
elected and qualified or until such directors' earlier resignation, removal from
office, death or incapacity.
Unless authority to vote for directors is withheld, it is intended that
the shares represented by the enclosed proxy will be voted for the election of
Helen C. Bulwik and Steven D. Tough as Class I directors, Gregory M. Kilgore and
Barbara J. Suechting as Class II directors, and David L. Suechting, Jr. as the
Class III director. All nominees are currently members of the Board of
Directors of the Company. Each of the nominees has been nominated by the
Company's Board of Directors. In the event any of such nominees becomes unable
or unwilling to accept nomination or election, the shares represented by the
enclosed proxy will be voted for the election of the balance of those named and
such other nominees as the Board of Directors may select. The Board of
Directors has no reason to believe that any such nominee will be unable or
unwilling to serve. There are no family relationships among any of the
directors or executive officers of the Company, except that David L. Suechting,
Jr., the Chairman of the Board, is the son of Barbara J. Suechting, who is a
director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION FOR DIRECTOR OF
DAVID L. SUECHTING, JR., BARBARA J. SUECHTING, HELEN C. BULWIK, STEVEN D. TOUGH
AND GREGORY M. KILGORE.
Set forth below is information regarding the nominees and the Company's
executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------- --- ------------------------------------------
<S> <C> <C>
David L. Suechting, Jr. . 38 Chairman of the Board
Barbara J. Suechting. . . 56 Director
Gregory M. Kilgore. . . . 48 President, Chief Operating Officer and
Director
Helen C. Bulwik . . . . . 49 Director
Steven D. Tough . . . . . 47 Director
John E. Wilkinson . . . . 48 Executive Vice President-Marketing
Daniel J. Nahmens . . . . 39 Vice President-Finance, Chief Financial
Officer, Treasurer and Secretary
David T. Morgan . . . . . 55 Vice President-Real Estate
William Forsberg. . . . . 53 Vice President-Stores
</TABLE>
DAVID L. SUECHTING, JR. has served as Chairman of the Board since the
Company's organization in March 1997. Mr. Suechting co-founded Track 'n Trail,
a California corporation ("Track 'n Trail-California"), and has served as its
Chairman of the Board since 1993. Mr. Suechting has also served as the Chairman
of the Board of Overland Management Corporation ("Overland") since its
acquisition in October 1996. From January 1993 to April 1996, Mr. Suechting
served as President of Track 'n Trail-California. Prior to that time, he served
Track 'n Trail-California in various capacities, including Vice President-Stores
from July 1991 to April 1996, Vice President-Operations from October 1989 to
July 1991, Vice President-Merchandise from February 1982 to October 1989 and as
Store Manager/District Manager from 1980 to February 1982.
-2-
<PAGE>
BARBARA J. SUECHTING has served as a director of the Company since its
organization in March 1997. Ms. Suechting co-founded Track 'n Trail-California
and served as Secretary and a director from 1980 to October 1997. She also
served as Secretary and a director of Overland from its acquisition in October
1996 to October 1997.
GREGORY M. KILGORE has served as President and Chief Operating Officer
of the Company since its organization in March 1997. Mr. Kilgore has also
served as President and Chief Operating Officer of Track 'n Trail-California
since April 1996. He also has served as a director of Overland since its
acquisition in October 1996. Prior to being appointed President, Mr. Kilgore
served as Executive Vice President and Chief Operating Officer from September
1991 to April 1996. From May 1987 to September 1991, Mr. Kilgore functioned as
interim President and Chief Operating Officer of several turnaround and emerging
retail operations. From 1981 to 1987, Mr. Kilgore was Vice President-Operations
of Berman's Leather Experts. Mr. Kilgore has served as a director of the
Company since March 1997, and as a director of Track 'n Trail-California since
July 1996. He has also served as a director of Shari's Bear'ys, an emerging
specialty retailer since February 1998.
HELEN C. BULWIK has served as a director of the Company since October
1997. Ms. Bulwik is a director in the global retail practice for Anderson
Consulting which is the largest consulting firm in the world. From 1988 to
January 1998 Ms. Bulwik was President of Seagate International, Inc., a
management services and financial advisory services firm. She was Executive
Vice President of Palo Alto Consulting Center, a division of the Tom Peters
Group (a consulting firm), from 1987 to 1988. From 1982 to 1987, Ms. Bulwik was
co-owner and founder of Sanca International, Inc., a private label apparel
manufacturer. She served as General Manager of Bullock's Northern California
from 1978 to 1982 and as Store Merchandiser and Buyer for Macy's California from
1972 to 1978.
STEVEN D. TOUGH has served as a director of the Company since October
1997. Mr. Tough has served as Senior Vice President of Operations of Foundation
Health Corporation, a provider of managed health care services based in
Sacramento, California, since 1993. Mr. Tough has also been President and Chief
Operating Officer of Foundation Health Federal Services, a subsidiary of
Foundation Health Corporation, since 1990. He also served as President and
Chief Operating Officer of Foundation Health (a California Health Plan) from
1988 to 1992.
JOHN E. WILKINSON has served as Executive Vice President-Marketing of
the Company since its organization in March 1997. Mr. Wilkinson has also served
as Executive Vice President-Marketing of Track 'n Trail-California since June
1996. From September 1991 to May 1996, he held the position of Vice
President-Marketing. From 1982 to September 1991, Mr. Wilkinson was associated
with Weinstock's Department Store, a division of Carter Hawley Hale, where he
held the positions of Senior Vice President and General Merchandise Manager from
1989 to 1991, Vice President and General Merchandise Manager from 1987 to 1989
and divisional Vice President from 1982 to 1987.
DANIEL J. NAHMENS has served as Chief Financial Officer, Vice
President-Finance and Treasurer of the Company since its organization in March
1997, and as Secretary since October 1997. Mr. Nahmens has served as Secretary
and a director of Track 'n Trail-California and Overland since October 1997. He
has also served as Chief Financial Officer and Vice President-Finance of Track
'n Trail-California since November 1993, and as Treasurer since June 1996. From
August 1988 to November 1993, Mr. Nahmens served as Controller of Track 'n
Trail-California. From February 1988 to June 1988, he held the position of
Chief Financial Officer of Greenwood Development Co., a local chain of fast-food
stores. From October 1981 to February 1988, Mr. Nahmens was associated with Cal
Gas Corporation, a nationwide liquid gas retailer, where he last held the
position of Financial Accounting Manager. From 1980 to 1981, Mr. Nahmens was
employed by Peat Marwick, Mitchell & Co. (presently known as KPMG Peat Marwick
LLP) as a Certified Public Accountant.
DAVID T. MORGAN has served as Vice President-Real Estate of the Company
since its organization in March 1997. Mr. Morgan has also served as Vice
President-Real Estate of Track 'n Trail-California since June 1996, and from
August 1992 to June 1996, he served as Director of Real Estate and Development.
From May 1990 to August 1992, Mr. Morgan was a Real Estate Representative of
Payless Shoe Source, a national retail shoe store chain, and from April 1986 to
May 1990, he was Vice President-Real Estate of Round Table Franchise
Corporation.
WILLIAM FORSBERG has served as Vice President-Stores of the Company
since its organization in March 1997, and as Vice President-Stores of Track 'n
Trail-California since June 1996. Prior to joining Track 'n Trail-California,
Mr. Forsberg was President and Chief Operating Officer of New Century Co. Inc.,
an owner and operator of a chain
-3-
<PAGE>
of video stores and a chain of tailoring and alteration stores, from April 1994
to June 1996. From October 1983 to April 1994, Mr. Forsberg was employed by
Wilsons Suede and Leather, where he last held the position of Director of In
Store Operations. From 1974 to 1983, he was Regional Manager of Fanny Farmer
Candy Shops.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held two meetings during the fiscal year ended
December 27, 1997. All directors attended at least 75% of the aggregate number
of meetings of the Board of Directors and of the committees on which such
directors serve except for Helen C. Bulwik and Steven D. Tough whose
appointments were not effective until October 16, 1997.
The Board of Directors has appointed a Compensation Committee and an
Audit Committee. The Compensation Committee and Audit Committee are comprised
entirely of independent directors.
The members of the Compensation Committee during 1997 were Helen C.
Bulwik and Steven D. Tough whose appointments were effective October 16, 1997.
The Compensation Committee held no meetings during 1997. The functions of the
Compensation Committee include reviewing and approving executive compensation
policies and practices, reviewing salaries and bonuses for certain officers of
the Company, administering the Company's Amended and Restated 1996 Stock Option
Plan (the "1996 Stock Option Plan") and other benefit plans, and considering
such other matters as may from time to time be referred to the committee by the
Board of Directors.
The members of the Audit Committee during 1997 were Helen C. Bulwik and
Steven D. Tough whose appointments were effective October 16, 1997. The Audit
Committee held no meetings during 1997. The functions of the Audit Committee
include recommending to the Board of Directors the retention of independent
auditors, reviewing the scope of the annual audit undertaken by the Company's
independent auditors and the progress and results of their work, and reviewing
the Company's financial statements, internal accounting and auditing procedures
and corporate program to ensure compliance with applicable laws.
DIRECTORS' COMPENSATION
Directors of the Company who are not also employees of the Company or
one of its subsidiaries receive $1,000 for each Board meeting attended and $750
for each committee meeting attended. No other director receives cash
compensation for services as a director. All directors, however, are
reimbursed for their expenses incurred in attending meetings. In addition,
directors who are not common law employees or officers of the Company receive
options to purchase 5,000 shares of the Company's Common Stock upon their
initial appointment as a director of the Company, and receive options to
purchase 1,250 shares of Common Stock upon each annual stockholders' meeting
following the meeting at which such director was initially appointed (unless any
director was appointed prior to such a meeting, in which case such director's
annual grant occurs at the second annual meeting following the initial
appointment) at an exercise price equal to the fair market value of the Common
Stock on the date of grant. The shares subject to the options vest and become
exercisable at the rate of 25% on each anniversary of the grant date. In 1997,
Helen C. Bulwik and Steven D. Tough were each granted options to purchase 5,000
shares of the Company's Common Stock at an exercise price of $9.75 per share.
Certain of the Company's directors have received distributions from the Company
in their capacity as stockholders. See "Certain Transactions."
-4-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 10, 1998,
as to shares of the Company's Common Stock beneficially owned by: (i) each of
the Company's executive officers named in the Summary Compensation Table,
(ii) each of the Company's directors, (iii) all directors and executive officers
of the Company as a group, and (iv) each person who is known by the Company to
own beneficially more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS(1) OWNED OWNED(2)
- -------------------------------------- ------------ ------------
<S> <C> <C>
Barbara Suechting . . . . . . . . . . 1,811,470 26.5%
David L. Suechting, Jr.(3). . . . . . 1,390,403 20.3
Deborah Suechting . . . . . . . . . . 905,735 13.2
Gregory M. Kilgore(4) . . . . . . . . 350,618 5.1
John E. Wilkinson(4). . . . . . . . . 201,468 2.9
Daniel J. Nahmens(4). . . . . . . . . 101,935 1.5
David T. Morgan(4). . . . . . . . . . 50,117 *
William Forsberg(4) . . . . . . . . . 50,117 *
All directors and executive officers
as a group (9 persons)(5) . . . . . . 3,956,128 57.8%
</TABLE>
- -----------------------------
* Less than 1%.
(1) The address for each listed stockholder is c/o Track 'n Trail, 4961-A
Windplay Drive, El Dorado Hills, CA 95762. To the Company's knowledge, the
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the footnotes to this table.
(2) The percentage of beneficial ownership is calculated based on 6,842,644
shares of Common Stock outstanding on April 10, 1998. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect
to securities. Shares subject to options presently exercisable or
exercisable within 60 days of April 10, 1998 are deemed to be beneficially
owned by the holder but are not treated as outstanding for the purpose of
computing the beneficial ownership of any other person.
(3) Represents 1,390,403 shares held by the Suechting Family Trust for which
Mr. Suechting and his wife, Jackie Suechting, serve as co-trustees and hold
joint voting and investment power.
(4) Represents shares subject to stock options exercisable on April 10, 1998 or
within 60 days thereafter.
(5) Includes 751,554 shares subject to stock options exercisable on April 10,
1998 or within 60 days thereafter.
-5-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth compensation for services rendered in all
capacities to the Company for the fiscal years ended December 27, 1997 and
December 28, 1996 of (i) the Company's chief executive officer and (ii) the
Company's four other most highly compensated executive officers whose total
annual salary and bonus for fiscal year 1997 and 1996 exceeded $100,000 (the
"Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
----------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gregory M. Kilgore.. . . . . . . . . . . . . . . . 1997 $161,293 $ 52,524 $350,618 $7,539
President and Chief Operating Officer 1996 153,951 158,000 350,618 5,977
John E. Wilkinson. . . . . . . . . . . . . . . . . 1997 124,861 52,186 200,468 7,372
Executive Vice President-Marketing 1996 117,869 102,000 200,468 5,340
Daniel J. Nahmens. . . . . . . . . . . . . . . . . 1997 96,850 43,009 100,234 7,410
Vice President-Finance and Chief Financial
Officer 1996 92,350 131,000 100,234 4,947
William Forsberg . . . . . . . . . . . . . . . . . 1997 102,908 16,374 50,117 5,890
Vice President-Stores
David T. Morgan. . . . . . . . . . . . . . . . . . 1997 84,897 20,490 50,117 5,707
Vice President-Real Estate 1996 70,066 54,000 50,117 4,161
</TABLE>
- ---------------------------
(1) Represents Company-paid health and life insurance premiums and Company
contributions to the Company's 401(k) plan. In fiscal 1997, the Company
paid $2,934 in health and life insurance premiums for each of the Named
Officers. Company contributions to the Company's 401(k) plan in fiscal
1997 for Mssrs. Kilgore, Wilkinson, Nahmens, Forsberg, and Morgan
totaled $4,605, $4,438, $4,476, $2,956, and $2,773, respectively. In
fiscal 1996, the Company paid $2,638 in health and life insurance
premiums for each of Mssrs. Kilgore, Wilkinson, Nahmens, and Morgan.
Company contributions to the Company's 401(k) plan in fiscal 1996 for
Mssrs. Kilgore, Wilkinson, Nahmens, and Morgan totaled $3,339, $2,702,
$2,309, and $1,523, respectively.
STOCK OPTIONS
No options were granted to the Named Officers in fiscal 1997. The
following table sets forth certain information as of December 27, 1997 and for
the fiscal year then ended with respect to stock options exercised, and the
value of options held, by the Named Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR(1)
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
AT DECEMBER 27, 1997(#) AT DECEMBER 27, 1997($)(2)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <S> <C>
Gregory M. Kilgore. . . 350,618 0 $2,576,813 0
John E. Wilkinson . . . 200,468 0 1,302,040 0
Daniel J. Nahmens . . . 100,234 0 451,053 0
David T. Morgan . . . . 50,117 0 225,527 0
William Forsberg. . . . 50,117 0 225,527 0
</TABLE>
- ---------------------------
(1) No options were exercised in fiscal 1997.
(2) Calculated on the basis of the fair market value of the underlying
securities at December 27, 1997 ($8.50 per share) minus the exercise
price.
-6-
<PAGE>
EMPLOYEE STOCK PURCHASE PLAN
The Company maintains a qualified Employee Stock Purchase Plan (the
"Purchase Plan") to encourage employees to own shares of the Company's Common
Stock, which is generally available to all eligible employees. The Purchase
Plan allows participants to buy shares of the Company's Common Stock at a 15%
discount to market price with up to 15% of their salaries. Employees are
eligible to participate in the Purchase Plan if they have been employed by the
Company or a participating subsidiary for a least one year prior to the
commencement of a participation period. However, any highly compensated
employee (as defined in Section 414 of the Code) who owns 3% or more of the
outstanding stock in the Company may not participate in the Purchase Plan.
Daniel J. Nahmens, a Named Officer, has participated in the Purchase Plan since
its inception.
PENSION AND LONG-TERM INCENTIVE PLANS
The Company has no pension or long-term incentive plans.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (collectively, the
"Employment Agreements") with Gregory Kilgore, President and Chief Operating
Officer; John Wilkinson, Executive Vice President-Marketing; Daniel Nahmens,
Vice President-Finance and Chief Financial Officer; and David Morgan, Vice
President-Real Estate. Each of the Employment Agreements provides for an
initial two-year term which expired on January 3, 1996, with automatic one-year
renewals upon the expiration of the initial term and on each anniversary
thereafter. Each of the Employment Agreements may be terminated by the Company
or the employee without cause (as defined in the Employment Agreements) upon 30
days' notice, or for cause without any notice. Under the Employment Agreements,
Messrs. Kilgore, Wilkinson, Nahmens and Morgan are entitled to minimum annual
compensation of $130,000, $105,000, $75,000 and $60,000, respectively. Each of
the Employment Agreements provides that if the Company breaches any portion of
such Employment Agreement or terminates it without cause, the Company must pay
to the employee an amount equal to one year of his salary, calculated at the
highest salary rate paid to such employee by the Company in the two-year period
prior to the termination.
The Employment Agreements with each of Gregory Kilgore, John Wilkinson,
Daniel Nahmens and David Morgan also provide that the Company will indemnify
such individuals for any losses, costs, damages or expenses incurred as a direct
consequence of the discharge of their duties or by reason of their status as
agents of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors was appointed by
the Board of Directors effective October 16, 1997 and consists of two directors,
neither of whom is an officer or employee of the Company. All matters
concerning executive compensation in fiscal 1997 were addressed prior to
formation and organization of the Company by the full Board of Directors of
Track 'n Trail-California, including Gregory M. Kilgore, who was an executive
officer in fiscal 1997.
REPORT ON EXECUTIVE COMPENSATION
The Company's compensation programs and policies applicable to its
executive officers are administered by the Compensation Committee of the Board
of Directors which was appointed effective October 16, 1997. The Compensation
Committee is made up entirely of non-employee directors. The members of the
Compensation Committee are Helen C. Bulwik and Steven D. Tough. The 1997
compensation of the Company's executive officers was determined prior to the
Company's initial public offering in October 1997 and prior to formation of the
Compensation Committee. For this reason, the Compensation Committee did not
undertake a general assessment of executive compensation levels in 1997.
-7-
<PAGE>
COMPENSATION PHILOSOPHY AND POLICIES
The Company's compensation programs and policies are designed to enhance
stockholder value by aligning the financial interests of the executive officers
of the Company with those of its stockholders. It is the Company's policy
generally to qualify compensation paid to executive officers for deductibility
under section 162(m) of the Internal Revenue Code. Section 162(m) generally
prohibits the Company from deducting the compensation of executive officers that
exceeds $1,000,000 unless that compensation is based on the satisfaction of
objective performance goals. Income arising under the Company's 1996 Stock
Option Plan currently does not qualify as performance-based compensation. The
Company intends to retain the flexibility necessary to provide total cash
compensation in line with competitive practice, the Company's compensation
philosophy and the Company's best interests, including compensation that may not
be deductible.
COMPONENTS OF EXECUTIVE OFFICER COMPENSATION
There are four primary components of executive compensation: Base
Salary, Bonus, Stock Options and Employee Stock Purchase Plan.
BASE SALARY
The annual base salaries of executive officers other than the Chief
Operating Officer were generally recommended by the Company's Chief Operating
Officer and reviewed by the Board of Directors, taking into consideration the
competitive level of salaries in the industry, the overall performance of the
Company, the performance of the department under the executive officer's
management control and the individual executive officer's contribution and
performance.
The base salary for the Chief Operating Officer was determined by:
(a) examining the Company's performance against its preset goals, (b) examining
the Company's performance within its speciality retailers industry,
(c) evaluating the overall performance of the Chief Operating Officer, and
(d) comparing the base salary of the Chief Operating Officer to that of other
chief executive officers in the speciality retail industry. Based upon the data
and performance, the Chief Operating Officer's base salary was raised from
$153,951 to $161,293 for fiscal year 1997.
BONUSES
The Company's 1997 Executive Bonus Plan was a cash-based incentive bonus
program. The 1997 Executive Bonus Plan provided for payment of a cash bonus to
each named executive officer that is directly related to earnings and certain
expense controls areas of the Company. The bonus was determined under a
predetermined objective formula. The bonus is the product of (i) the executive
officer's individual multiplier set by the Board of Directors before the bonus
year began and (ii) a multiplier determined from a matrix that charts the
earnings and certain expense control items of the Company's annual operating
plan established by the Board of Directors before the bonus year began. For
1997, the Company achieved the Executive Bonus Plan's earnings goal and some of
the expense control goals. The Chief Operating Officer was awarded a bonus of
$52,524 under the Executive Bonus Plan.
STOCK OPTIONS
Under the Company's compensation policy, ownership of the Company's
Common Stock is a key element of executive compensation. The grant of stock
options is intended to retain and motivate key executives and to provide a
direct link with the interests of the stockholders of the Company. In general,
stock option grants are determined based on: (i) prior award levels, (ii) total
awards received to date by individual executives, (iii) the total stock award to
be made and the executive's percentage participation in that award, (iv) the
executive's direct ownership of the Company's shares, (v) the number of options
vested and nonvested, and (vi) the options outstanding as a percentage of total
shares outstanding. The Board of Directors did not award the Chief Operating
Officer any options to purchase shares of Common Stock in 1997.
EMPLOYEE STOCK PURCHASE PLAN
The Company maintains a qualified Employee Stock Purchase Plan (the
"Purchase Plan") to encourage employees to own shares of the Company's Common
Stock, which is generally available to all eligible employees. The
-8-
<PAGE>
Purchase Plan allows participants to buy shares of the Company's Common Stock
at a 15% discount to market price with up to 15% of their salaries. However,
the number of shares that may be purchased by each participant is limited by
applicable tax laws.
The foregoing report has been furnished by the Compensation Committee of
the Board of Directors and shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Act of 1934,
except to the extent the Company specifically incorporates this report by
reference and shall not otherwise be deemed filed under such Acts.
Respectfully submitted,
Helen C. Bulwik
Steven D. Tough
CERTAIN TRANSACTIONS
In October 1997, the Company effected a reorganization (the
"Reorganization") of Track 'n Trail-California in which the Track 'n
Trail-California stockholders (the "Pre-Offering Stockholders") exchanged 100%
of their Track 'n Trail-California common stock for 4,107,608 shares of the
Company's Common Stock, inclusive of the 40,816 shares of the Company's Common
Stock issued upon formation. The exchange of Track 'n Trail-California stock
for Company Common Stock was accomplished in October 1997, in an exchange of one
share of Track 'n Trail-California common stock for approximately 100 shares of
the Company's Common Stock.
As a result of Track 'n Trail-California's status as an S Corporation,
Track 'n Trail-California has historically paid distributions to its
stockholders to enable them to pay their income tax liabilities and, from time
to time, to distribute previously undistributed S corporation earnings.
Distributions of $2.4 million were made in 1997 through the Reorganization.
Prior to the Reorganization, Track 'n Trail-California declared a $6.4 million
distribution to the Pre-Offering Stockholders, which constituted substantially
all of the accumulated undistributed S corporation earnings through October 6,
1997 (the date preceding the date of termination of Track 'n Trail-California's
S corporation status). The distribution was paid out of a portion of the
Company's proceeds from its initial public offering (the "Offering") in October
1997.
In October 1996, the Pre-Offering Stockholders acquired 21.0% of the
outstanding common stock of Overland in return for $663,000 of subordinated
promissory notes (the "Subordinated Notes"), which were guaranteed by Track 'n
Trail-California. Effective January 1, 1997, the Pre-Offering Stockholders
assigned their Overland stock to Track 'n Trail-California, in consideration of
the assumption by Track 'n Trail-California of their Subordinated Notes
exclusive of accrued interest.
The Pre-Offering Stockholders had also guaranteed Track 'n
Trail-California's obligations under the then existing bank loan agreement and
other secured debt, substantially all of which was repaid from the proceeds of
the Offering. The Pre-Offering Stockholders also guaranteed several equipment
leases currently providing for aggregate annual rental payments of $114,000,
which remain outstanding.
The Company believes that the foregoing transactions were in its best
interests.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company has adopted provisions in its Certificate of Incorporation
that limit the liability of its directors for monetary damages for breach of
their fiduciary duty as directors, except for liability that cannot be
eliminated under the Delaware General Corporation Law ("Delaware Law"). The
Delaware Law provides that directors of a company will not be personally liable
for monetary damages for breach of their fiduciary duty as directors, except for
liability (i) for any breach of their duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payment of dividend or unlawful stock repurchase or redemption, as provided in
Section 174 of the Delaware Law, or (iv) for any transaction
-9-
<PAGE>
from which the director derived an improper personal benefit. Any amendment or
repeal of these provisions requires the approval of the holders of shares
representing at least 66 2/3% of the shares of the Company entitled to vote in
the election of directors, voting as one class.
The Company's By-Laws also provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by the Delaware Law. The
Company entered into separate indemnification agreements with its directors and
certain of its officers that requires the Company, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors or officers and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified. The Company believes that the limitation of liability provision in
its Certificate of Incorporation and the indemnification agreements will
facilitate the Company's ability to continue to attract and retain qualified
individuals to serve as directors and officers of the Company.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of
the Company's Common Stock with The Nasdaq Stock Market (US) and Nasdaq Retail
Trade Stocks. The comparison assumes the investment of $100 on October 9, 1997
(the date the Company's Common Stock became registered under Section 12 of the
Securities Exchange Act of 1934) based on the initial public offering price of
such stock on that date and that dividends were reinvested when paid. The
comparisons in the graph are required by the Securities and Exchange Commission
and are not intended to forecast or be indicative of possible future performance
of the Company's Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG TRACK 'N TRAIL, THE NASDAQ STOCK
MARKET (US) AND NASDAQ RETAIL TRADE STOCKS
[GRAPH]
<TABLE>
<CAPTION>
10/09/97 10/31/97 11/28/97 12/26/97
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nasdaq Stock Market (US) $100 $91 $92 $87
Nasdaq Retail Trade Stocks 100 94 96 92
Track 'n Trail 100 95 100 81
</TABLE>
-10-
<PAGE>
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors
has appointed the firm of Coopers & Lybrand L.L.P. as the Company's independent
auditors for the fiscal year ending December 26, 1998, subject to ratification
by the stockholders. Coopers & Lybrand L.L.P. has audited the Company's
financial statements since January 1996. Representatives of Coopers & Lybrand
L.L.P. are expected to be present at the Company's Annual Meeting. They will
have an opportunity to make a statement, if they desire to do so, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF COOPERS & LYBRAND
L.L.P. AS THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Proposals of stockholders of the Company that are intended to be
presented by such stockholders at the Company's 1999 Annual Meeting must be
received by the Secretary of the Company no later than December 25, 1998 in
order that they may be included in the Company's proxy statement and form of
proxy relating to that meeting.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file reports of ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Forms 3, 4 and 5 they file. Based solely on the Company's review
of the copies of such forms it has received and written representations from
certain reporting persons that they were not required to file Forms 5 for
specified fiscal years, the Company believes that all of its officers, directors
and greater than ten percent beneficial owners complied with all filing
requirements applicable to them with respect to transactions during fiscal year
1997.
-11-
<PAGE>
OTHER MATTERS
The Company knows of no other business that will be presented at the
Annual Meeting. If any other business is properly brought before the Annual
Meeting, it is intended that proxies in the enclosed form will be voted in
accordance with the judgment of the persons voting the proxies.
Whether or not you intend to be present at the Annual Meeting, we urge
you to return your signed proxy promptly.
By Order of the Board of Directors.
/s/ Daniel J. Nahmens
Daniel J. Nahmens
SECRETARY
El Dorado Hills, California
April 24, 1998
-12-
<PAGE>
TRACK 'N TRAIL
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING ON MAY 28, 1998
The undersigned stockholder of Track 'n Trail, a Delaware corporation (the
"Company"), acknowledges receipt of Notice of the Annual Meeting of Stockholders
and Proxy Statement each dated April 24, 1998 and the undersigned revokes all
prior proxies and appoints GREGORY M. KILGORE and DANIEL J. NAHMENS, or each of
them, proxies for the undersigned to vote all shares of Common Stock of the
Company which the undersigned would be entitled to vote at the Annual Meeting of
Stockholders to be held at 4961-A Windplay Drive, El Dorado Hills, California at
10:00 a.m. on May 28, 1998 and any postponement or adjournment thereof, and
instructs said proxies to vote as follows:
1. ELECTION OF DIRECTORS:
/ / FOR each of the nominees listed below (except as marked to the
contrary below)
/ / WITHHOLD AUTHORITY to vote for the nominees listed below
Nominees: Helen C. Bulwik (Class I), Steven D. Tough (Class I),
Barbara J. Suechting (Class II), Gregory M. Kilgore
(Class II), and David L. Suechting, Jr. (Class III)
Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space
provided below.
---------------------------------------------------------------------------
2. TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S
INDEPENDENT AUDITORS:
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO
SPECIFICATIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE FIVE
NOMINEES FOR DIRECTOR AND FOR PROPOSAL 2.
PLEASE INDICATE BELOW WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING:
/ / I PLAN TO ATTEND / / I DO NOT PLAN TO ATTEND
TRACK 'N TRAIL
BOARD OF DIRECTORS PROXY
Annual Meeting of Stockholders May 28, 1998
Dated this day of , 1998
---- ----------
--------------------------------------------
(Signature of Stockholder)
--------------------------------------------
(Signature of Stockholder)
Please sign exactly as your name or names
appear hereon. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such.
If shares are held jointly, each holder must
sign.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO MARK,
SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
