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 ss.240.14a-11(c) or ss.240.14a-12
FIRST TEAM SPORTS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
FIRST TEAM SPORTS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
July 12, 2000
TO THE SHAREHOLDERS OF FIRST TEAM SPORTS, INC.:
The 2000 Annual Meeting of Shareholders of First Team Sports, Inc. will
be held at the Anoka-Hennepin Technical College, 1355 West Highway 10, Anoka,
Minnesota, at 11:00 a.m. (Minneapolis-time) on Wednesday, July 12, 2000, for the
following purposes:
1. To set the number of members of the Board of Directors at six
(6).
2. To elect members of the Board of Directors.
3. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending
February 28, 2001.
4. To take action on any other business that may properly come
before the meeting or any adjournment thereof.
Accompanying this Notice of Annual Meeting is a Proxy Statement, form
of Proxy and the Company's 2000 Annual Report.
Only shareholders of record as shown on the books of the Company at the
close of business on May 19, 2000 will be entitled to vote at the Annual Meeting
or any adjournment thereof. Each shareholder is entitled to one vote per share
on all matters to be voted on at the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to attend the Annual Meeting, please sign, date and mail the enclosed
form of Proxy in the return envelope provided as soon as possible. Your
cooperation in promptly signing and returning your Proxy will help avoid further
solicitation expense to the Company.
BY ORDER OF THE BOARD OF DIRECTORS
June 9, 2000 John J. Egart
Anoka, Minnesota President and Chief Executive Officer
<PAGE>
FIRST TEAM SPORTS, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
to be held
July 12, 2000
The accompanying Proxy is solicited by the Board of Directors of First
Team Sports, Inc. (the "Company") for use at the Annual Meeting of Shareholders
of the Company to be held on Wednesday, July 12, 2000, at the location and for
the purposes set forth in the Notice of Annual Meeting, and at any adjournments
thereof.
The cost of soliciting proxies, including the preparation, assembly and
mailing of the proxies and soliciting material, as well as the cost of
forwarding such material to the beneficial owners of the Company's Common Stock,
will be borne by the Company. Directors, officers and regular employees of the
Company may, without compensation other than their regular remuneration, solicit
proxies personally or by telephone.
Any shareholder giving a Proxy may revoke it any time prior to its use
at the Annual Meeting by giving written notice of such revocation to the
Secretary or other officer of the Company or by filing a later-dated written
Proxy with an officer of the Company. Personal attendance at the Annual Meeting
is not, by itself, sufficient to revoke a Proxy unless written notice of the
revocation or a later-dated Proxy is delivered to an officer of the Company
before the revoked or superseded Proxy is used at the Annual Meeting. Proxies
will be voted as specified by the shareholders.
The presence at the Annual Meeting in person or by proxy of the holders
of a majority of the outstanding shares of the Company's Common Stock entitled
to vote shall constitute a quorum for the transaction of business. If a broker
returns a "non-vote" proxy, indicating a lack of voting instructions by the
beneficial holder and a lack of discretionary authority on the part of the
broker to vote on a particular matter, then the shares covered by such non-vote
shall be deemed present at the meeting for purposes of determining a quorum but
shall not be deemed to be represented at the Annual Meeting for purposes of
calculating the vote with respect to such matter. If a shareholder abstains from
voting as to any matter, then the shares held by such shareholder shall be
deemed present at the Annual Meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such matter, but shall not
be deemed to have been voted in favor of such matter. An abstention as to any
proposal will, therefore, have the same effect as a vote against the proposal.
Proxies which are signed but which lack any such specification will be voted in
favor of the proposals set forth in the Notice of Meeting and in favor of the
number and slate of directors proposed by the Board of Directors and listed
herein.
The mailing address of the principal executive office of the Company is
1201 Lund Boulevard, Anoka, Minnesota 55303. The Company expects that this Proxy
Statement, the related Proxy and Notice of Meeting will first be mailed to
shareholders on approximately June 9, 2000.
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business
on May 19, 2000 as the record date for determining shareholders entitled to vote
at the Annual Meeting (the "Record Date"). Persons who were not shareholders on
the Record Date will not be allowed to vote at the Annual Meeting. At the close
of business on the Record Date, 5,861,640 shares of the Company's Common Stock,
par value $.01 per share, were issued and outstanding. The Common Stock is the
only outstanding class of capital stock of the Company. Each share of Common
Stock is entitled to one vote on each matter to be voted upon at the Annual
Meeting. Holders of Common Stock are not entitled to cumulative voting rights.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT SHAREHOLDINGS
The following table provides information as of the Record Date
concerning the beneficial ownership of the Company's Common Stock by (i) each
director and nominee for director of the Company, (ii) the named executive
officers in the Summary Compensation Table, (iii) persons known to the Company
to be the beneficial owners of more than 5% of the Company's outstanding Common
Stock as of the Record Date and (iv) all directors and executive officers as a
group.
Name, Position(s) Number of Shares Percent of
(and Address of 5% Holders) Beneficially Owned(1)(2) Class(2)
--------------------------- ------------------------ ----------
John J. Egart 594,852(3)(4) 9.7%
President, Chief Executive
Officer and Director
1201 Lund Boulevard
Anoka, MN 55303
David G. Soderquist 459,175(4)(5) 7.6%
Vice Chairman and Director
1201 Lund Boulevard
Anoka, MN 55303
Joe Mendelsohn 164,250(6) 2.7%
Chairman and Director
Timothy G. Rath 54,000(7) *
Director
Stanley E. Hubbard 53,750(8) *
Director
William J. McMahon 10,500(9) *
Director
Kent A. Brunner 103,223(10) 1.7%
Vice President and Chief Financial
Officer
Leonard R. Vinson, Jr. 79,333(11) 1.3%
Senior Vice President of Sales
Marketing
Dimensional Fund Advisors, Inc. 375,450(12) 6.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
All Executive Officers and 1,503,583(13) 22.3%
Directors as a Group
(8 persons)
<PAGE>
*less than 1%
(1) Unless otherwise indicated, each person named or included in the group has
sole power to vote and sole power to direct the disposition of all shares listed
as beneficially owned by him or her.
(2) Under the rules of the SEC, shares not actually outstanding are deemed to be
beneficially owned by an individual if such individual has the right to acquire
the shares within 60 days. Pursuant to such SEC rules, shares deemed
beneficially owned by virtue of an individual's right to acquire them are also
treated as outstanding when calculating the percent of the class owned by such
individual and when determining the percent owned by any group in which the
individual is included.
(3) Includes: 1,521 shares of Common Stock held by Mr. Egart's wife; 17,349
shares of Common Stock held by either Mr. Egart or his wife as custodian for
their children; and 284,167 shares of Common Stock which may be acquired by Mr.
Egart upon exercise of stock options.
(4) Includes 15,500 shares of Common Stock held by a partnership, of which Mr.
Egart and Mr. Soderquist are partners and with respect to which each, as a
partner, shares voting and investment power over the shares.
(5) Includes 191,250 shares of Common Stock which may be acquired by Mr.
Soderquist upon exercise of stock options.
(6) Includes 164,250 shares of Common Stock which may be acquired by Mr.
Mendelsohn upon exercise of stock options.
(7) Includes 24,000 shares of Common Stock which may be acquired by Mr. Rath
upon exercise of stock options.
(8) Includes 25,500 shares of Common Stock which may be acquired by Mr. Hubbard
upon exercise of stock options.
(9) Represents 10,500 shares of Common Stock which may be acquired by Mr.
McMahon upon exercise of stock options.
(10) Includes 98,751 shares of Common Stock which may be acquired by Mr. Brunner
upon exercise of stock options.
(11) Includes 78,333 shares of Common Stock which may be acquired by Mr. Vinson
upon exercise of stock options.
(12) The shares are held by four investment companies and certain other
investment vehicles, including commingled group trusts and separate accounts
("Funds"), for which Dimensional Fund Advisors Inc. ("Dimensional") acts as
investment advisor and investment manager. As such advisor and manager,
Dimensional has sole voting and dispositive power over the shares but disclaims
beneficial ownership of such shares. The Company has relied on information
provided by Dimensional in its February 2000 Schedule 13G amendment filed with
the Securities & Exchange Commission.
<PAGE>
(13) Includes 876,751 shares of Common Stock which may be acquired upon the
exercise of stock options; 15,500 shares of Common Stock held by a partnership;
and 19,320 shares of Common Stock held by or for family members of executive
officers.
ELECTION OF DIRECTORS
(Proposals #1 and #2)
The Bylaws of the Company provide that the number of directors shall be
the number set by the shareholders, which shall be not less than one. The Board
of Directors unanimously recommends that the number of directors be set at six,
which is the current number of directors, and that six directors be elected.
Unless otherwise instructed, the Proxies will be so voted.
In the absence of other instruction, the Proxies will be voted for each
of the following individuals. If elected, such individuals shall serve until the
next annual meeting of shareholders and until their successors shall be duly
elected and shall qualify. All of the nominees are currently members of the
Board of Directors. If, prior to the Annual Meeting, it should become known that
any one of the following individuals will be unable to serve as a director after
the Annual Meeting by reason of death, incapacity or other unexpected
occurrence, the Proxies will be voted for such substitute nominee as is selected
by the Board of Directors. Alternatively, the Proxies may, at the Board's
discretion, be voted for such fewer number of nominees as results from such
death, incapacity or other unexpected occurrence. The Board of Directors has no
reason to believe that any of the following nominees will be unable to serve.
Under applicable Minnesota law, setting the number of directors at six
and the election of each nominee requires the affirmative vote of the holders of
the greater of (i) a majority of the voting power of the shares represented in
person or by proxy at the Annual Meeting with authority to vote on such matter,
or (ii) a majority of the voting power of the minimum number of shares that
would constitute a quorum for the transaction of business at the Annual Meeting.
<PAGE>
<TABLE>
<CAPTION>
Name and Age Director
of Nominee Principal Occupations for the Past Five Years Since
---------------- --------------------------------------------- -----
<S> <C> <C>
John J. Egart - President and Chief Executive Officer of the 1986
50 Company since January 1994; Executive Vice President
of the Company from the Company's inception in May
1986 until January 1994.
David G. Soderquist - Vice Chairman of the Company since January 1994; 1986
51 President and Chief Executive Officer of the Company
from the Company's inception in May 1986 until
January 1994.
Joe Mendelsohn - Chairman of the Board of the Company since January 1991
69 1991; consultant to various toy and related product
businesses since January 1987, including to the
Company 1988 to 1999.
Timothy G. Rath - Consultant since February 1996; various positions, 1991
54 most recently Chief Executive Officer, with Kelly
Russell Studios, Inc., a firm engaged in production
and marketing of sports memorabilia, from November
1994 to February 1996; consultant to Anthony
Industries, Inc., a diversified manufacturer of
recreational and industrial products, from June 1992
to October 1993.
Stanley E. Hubbard - Vice President of Hubbard Broadcasting, Inc. 1992
39 since July 1984 and President and Chief Executive
Officer of Hubbard Media Group, LLC since August
1999; President and Chief Executive Officer of United
States Satellite Broadcasting Company, Inc. from
March 1993 and January 1996, respectively, through
May 1999.
William J. McMahon - Consultant since March 2000; various positions, most 1996
53 recently President and Chief Executive Officer of
Cedar Technologies, Inc., a manufacturer and marketer
of robotic compact disc duplication equipment from
October 1998 to March 2000; President and Chief
Executive Officer of Lund International Holdings,
Inc., a manufacturer of vehicle accessories, from
September 1994 to October 1998; Chief Operating
Officer of Anagram International, Inc., a
manufacturer of Mylar balloons and packaging
products, from 1991 to September 1994.
</TABLE>
<PAGE>
Board and Committee Meetings
During the fiscal year ended February 29, 2000, the Board of Directors
held five meetings. Each director attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors and the total number of
meetings of all committees of the Board on which he served. The Board of
Directors has an Audit Committee, Compensation Committee and Stock Option
Committee. The Board does not have a nominating committee.
The Audit Committee recommends to the Board of Directors the selection
of independent accountants and reviews the activities and reports of the
independent accountants as well as the internal accounting controls of the
Company. The Audit Committee is comprised of Mr. Mendelsohn, Mr. Rath and Mr.
McMahon. During fiscal 2000, the Audit Committee held two meetings.
The Compensation Committee recommends the compensation for executive
officers of the Company. The Compensation Committee is comprised of Mr. Rath,
Mr. Hubbard and Mr. McMahon. During fiscal 2000, the Compensation Committee met
once.
The Stock Option Committee administers the Company's 1987 Stock Option
Plan, 1990 Nonqualified Stock Option Plan, 1993 Employee Stock Purchase Plan and
the 1994 Stock Option and Incentive Compensation Plan. The Stock Option
Committee is comprised of Mr. Rath and Mr. Hubbard. During fiscal 2000, the
Stock Option Committee met once.
Compensation of Directors
Directors' Fees. The Company pays each director who is not an employee
of the Company an attendance fee of $500 per Board of Directors and committee
meeting attended; provided, however, that no director may receive more than $500
per day. Beginning in August 1999, Joe Mendelsohn received $500 per month as
fees for serving as Chairman. In addition, Mr. Mendelsohn received $7,500 for
providing consulting services to the Company from March through July 1999.
Stock Option Grants. Pursuant to either the Company's 1987 Stock Option
Plan or the Company's 1994 Stock Option and Incentive Compensation Plan, each
member of the Board of Directors who is neither an employee of, nor a paid
advisor or consultant to, the Company (a "Non-Employee Director") receives, upon
initial election to the Board, a nonqualified option to purchase 7,500 shares of
the Company's Common Stock at an option price per share equal to 100% of the
fair market value of the Company's Common Stock on the date of such election.
Such option is immediately exercisable to the extent of 1,500 shares and to the
extent of an additional 1,500 shares on each of the first, second, third and
fourth anniversaries of the date of grant. Each Non-Employee Director who is
re-elected as a director of the Company or whose term of office continues after
a meeting of shareholders at which directors are elected receives a nonqualified
option to purchase 3,000 shares of Common Stock at an option price per share
equal to 100% of the fair market value of the Common Stock on the date of such
re-election or shareholder meeting, which option is immediately exercisable in
full. However, a Non-Employee Director who receives a 7,500-share option upon
initial election to the Board may not receive the 3,000-share option for a
period of at least ten (10) months. All options granted pursuant to these
provisions expire on the earlier of (i) three months after the optionee ceases
to be a director (except by disability or death) or (ii) ten (10) years after
the date of grant. In the event of disability or death of a Non-Employee
<PAGE>
Director, any option granted to such Non-Employee Director may be exercised at
any time within twelve (12) months of the disability or death of such
Non-Employee Director or prior to the date on which the option, by its terms,
expires, whichever is earlier. Joe Mendelsohn, Chairman, did not receive an
option under the above formula plan for outside directors in connection with the
June 1999 shareholders' meeting because of a consulting arrangement with the
Company through July 1999, but will receive the automatic grant of an option to
purchase 3,000 shares if re-elected at the Annual Meeting. During fiscal 2000,
Mr. Mendelsohn received a discretionary grant of options to purchase 7,500
shares of the Company's Common Stock at $1.563 per share and 15,000 shares at
$2.25 per share. The options become exercisable in three annual increments
beginning on the date of grant and has other terms similar to those described
above.
Report of Compensation Committee and Stock Option Committee
The Compensation Committee's executive compensation policies are
designed to enhance the financial performance of the Company, and thus
shareholder value, by significantly aligning the financial interests of the
Company's key executives with those of the Company's shareholders. Compensation
of the Company's executive officers is comprised of four parts: base salary,
annual incentive bonuses, fringe benefits and long-term incentive opportunity in
the form of stock options. The Compensation Committee believes, but has not
conducted any formal survey, that the base salaries of the Company's executive
officers are generally less than executive officers of comparable publicly-held
companies. These relatively low base salaries are combined with the opportunity
to earn substantial cash bonuses if certain Company financial performance goals
are met. Long-term incentives are based on stock performance through stock
options. Although the Company's 1994 Stock Option and Incentive Compensation
Plan ("1994 Plan") also gives the Compensation Committee the flexibility to
grant other types of incentives, including restricted stock, stock appreciation
rights, performance shares and/or cash, only stock options have been granted
under the 1994 Plan. The Compensation Committee believes that stock ownership by
the Company's executive officers is beneficial in aligning management's and
shareholders' interests in the enhancement of shareholder value. Overall, the
intent is to have more significant emphasis on variable compensation components
and less on fixed cost components. The Compensation Committee believes this
philosophy and structure are in the best interests of the Company's
shareholders.
Bonuses. The Compensation Committee recommended, and the Board of
Directors unanimously approved, a fiscal 2000 bonus plan for the Company's
officers which provided for the creation of a bonus pool ranging from $150,000
to $650,000 based on the Company attaining pre-tax earnings ranging from
$455,000 to $1,370,500. Although no bonuses were earned pursuant to the bonus
plan for fiscal 2000, the Compensation Committee approved the following
discretionary bonuses for fiscal 2000, John Egart - $70,000, Kent Brunner -
$45,000 and Sonny Vinson - $45,000.
For fiscal 2001, the Compensation Committee recommended, and the Board
of Directors unanimously approved, a bonus plan for the Company's officers which
provides for the creation of a bonus pool ranging from $150,000 to $600,000
based on the Company attaining pre-tax earnings ranging from $350,000 to
<PAGE>
$1,390,000. Each officer is eligible, based on the achievement of individual
performance objectives, to receive up to the following percentage of the
applicable bonus pool: John Egart - 40%, Kent Brunner - 27.5%, Sonny Vinson -
27.5% and Dave Soderquist - 5%.
Stock Options and Other Incentives. The Company's stock option program
is the Company's long-term incentive plan for officers and key managers. The
objectives of the program are to align executive and shareholder long-term
interests by creating a strong and direct link between executive pay and
shareholder return, and to enable executives to develop and maintain a
significant, long-term ownership position in the Company's Common Stock.
The Company's 1987 Stock Option Plan and 1994 Plan authorize the Stock
Option Committee of the Board of Directors to award stock options to officers
and other employees. The 1994 Plan also permits the Compensation Committee to
award other forms of long-term incentives, including stock appreciation rights,
stock and restricted stock, performance shares and/or cash. To date, however,
only stock options have been granted under the 1994 Plan. Stock options are
generally granted each year, at an option price equal to the fair market value
of the Company's Common Stock on the date of grant, and vest over a period of
three years. The amount of stock options awarded is generally a function of the
recipient's salary and position in the Company. Awards are intended to be
generally competitive with other companies of comparable size and complexity,
although the Stock Option Committee has not conducted any thorough comparative
analysis.
Benefits. The Company provides the same health and disability insurance
benefits to its executive officers as are available to Company employees
generally, except that executive officers receive additional life and long-term
disability insurance beyond that available to Company employees generally. The
Company also provides automobiles to Mr. Egart and Mr. Soderquist. The amount of
perquisites, as determined in accordance with the rules of the SEC relating to
executive compensation, did not exceed 10% of salary for fiscal 2000.
Chief Executive Officer Compensation. The Compensation Committee
believes, but has not conducted any formal survey, that Mr. Egart's fiscal 2000
base salary of $135,000 (which was the result of a voluntary salary reduction in
early 1999 from $175,000) was substantially less than the base salaries of chief
executive officers of comparable publicly-held companies. For fiscal 2001, Mr.
Egart will receive a salary of $175,000. For fiscal 2000, Mr. Egart received a
discretionary bonus of $70,000. The stock options to purchase 65,000 shares of
Company Common Stock granted to Mr. Egart during fiscal 2000 are consistent with
the design of the overall compensation program and are shown in the compensation
tables under "Management Compensation" following this report.
Members of the Compensation Committee
and Stock Option Committee:
Timothy G. Rath
Stanley E. Hubbard
William J. McMahon
<PAGE>
MANAGEMENT COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid or accrued during each of the Company's last three fiscal
years to the Company's Chief Executive Officer and each of the other executive
officers whose total annual salary and bonus paid or accrued during fiscal year
2000 exceeded $100,000 (the "named executive officers").
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
----------------------------------- ------------------------------------
Restricted LTIP All Other
Name and Principal Fiscal Stock Options/SARs Payouts Compensation
Position Year Salary ($) Bonus ($) Other ($) Awards ($) (#)(1) ($) ($)(2)
---------------------- ------ ---------- --------- --------- ---------- ------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John J. Egart, 2000 $140,592 $70,000 -- -- 65,000 -- $17,378
President and Chief 1999 $135,000 -- -- -- 60,000 -- $13,563
Executive Officer 1998 $175,000 -- -- -- 270,000(3) -- $18,215
Kent A. Brunner 2000 $102,564 $45,000 -- -- 62,000 -- $12,677
Vice President and 1999 $ 80,000 $10,000 -- -- 30,000 -- $ 9,024
Chief Financial 1998 $ 70,905 -- -- -- 43,501(3) -- $ 8,075
Officer
Leonard R. Vinson, Jr. 2000 $123,565 $45,000 -- -- 50,000 -- --
Senior Vice President 1999 $ 1,000(4) -- -- -- 120,000 -- --
of Sales & Marketing
</TABLE>
(1) Options to acquire shares of Common Stock.
(2) Represents contributions to the Company's Profit Sharing Plan.
(3) Includes previously granted options, which were repriced in fiscal 1998
(225,000 shares - John Egart; 23,501 shares - Kent Brunner).
(4) Mr. Vinson began his employment with the Company on February 17, 1999.
Option Grants During 2000 Fiscal Year
The following table provides information related to stock options
granted to the named executive officer during fiscal 2000. The Company did not
grant any stock appreciation rights during fiscal 2000.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------------------
% of Total Potential Realizable Value at
Options Assumed Annual Rates of Stock
Options Granted to Exercise or Price Appreciation for Option
Granted Employees in Base Price Expiration Term(1)
Name (#) Fiscal Year ($/Sh)(2) Date 0% 5% ($) 10% ($)
---------------------- -------- -------------- ----------- ------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Egart 15,000(3) 4.1% $1.563 12/19/06 -- $9,544 $22,243
50,000(4) 13.5% $2.25 02/01/07 -- $45,799 $106,731
Kent A. Brunner 12,000(3) 3.2% $1.563 12/19/06 -- $7,636 $17,784
50,000(4) 13.5% $2.25 02/01/07 -- $45,799 $106,731
Leonard R. Vinson, Jr. 10,000(3) 2.7% $1.563 12/19/06 -- $6,363 $14,828
40,000(4) 10.8% $2.25 02/01/07 -- $36,639 $85,385
</TABLE>
<PAGE>
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior to
the expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the options. These
numbers do not take into account provisions of certain options providing for
termination of the option following termination of employment,
nontransferability or vesting over periods of up to three years. If the options
are adjusted as set forth in (3) and (4) below, the potential realizable value
will be somewhat less.
(2) The option exercise price may be paid in shares of Common Stock owned by the
executive officer, in cash, or in any other form of valid consideration or a
combination of any of the foregoing, as determined by the Stock Option Committee
in its discretion.
(3) Option becomes exercisable with respect to one-half of the shares covered
thereby on the date of grant and on the first anniversary date of the original
grant; however, in the event of a change of control of the Company, any
unexercisable portion of the options will become immediately exercisable. See
"Change of Control Arrangements." The exercise price was equal to the fair
market value of the Common Stock on the date of grant.
(4) Option becomes exercisable with respect to one-third of the shares covered
thereby on each of the first three anniversary dates of the original grant;
however, in the event of a change of control of the Company, any unexercisable
portion of the options will become immediately exercisable. See "Change of
Control Arrangements." The exercise price was equal to the fair market value of
the Common Stock on the date of grant.
Option Exercises During Fiscal 2000 and Fiscal Year-End Option Values
The following table provides information related to options and
warrants exercised by the named executive officer during fiscal 2000 and the
number and value of options held at fiscal year-end. The Company does not have
any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
Shares
Acquired on Value Number of Unexercised Value of Unexercised In-the-
Name Exercise Realized Options at FY-End (#) Money Options at FY-End ($)(2)
(#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---------------------- ------------ --------------- --------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
John J. Egart -- -- 314,167 80,833 $44,319 $42,236
Kent A. Brunner -- -- 97,085 65,665 $32,789 $33,705
Leonard R. Vinson, Jr. -- -- 78,333 91,667 $56,738 $60,072
</TABLE>
(1) Value is calculated based on the amount, if any, by which the closing price
for the Common Stock as quoted on the Nasdaq National Market on the date of
exercise exceeds the option exercise price, multiplied by the number of shares
to which the exercise relates.
(2) The closing price for the Company's Common Stock as quoted on the Nasdaq
National Market on February 29, 2000 was $2.50. Value is calculated on the basis
of $2.50 minus the option exercise price and multiplying the result (if greater
than zero) by the number of shares of Common Stock underlying the option.
<PAGE>
Employment Agreements and Severance Arrangements
The Company has an Employment Agreement with John Egart, President and
Chief Executive Officer, dated January 23, 1996, which Agreement was amended as
of January 1, 1998. The Agreement has a three-year term, with automatic two-year
renewals unless a nonrenewal notice is given by the officer or the Company. The
Agreement provided for an initial annual base salary of $175,000, which base
salary was reduced to $135,000 in early 1999, but increased to $175,000 as of
March 1, 2000.
The Company has an Employment Agreement with Kent Brunner, Vice
President and Chief Financial Officer, dated August 18, 1997, which Agreement
was amended as of December 1, 1998. The Agreement has a two-year term, with
automatic two-year renewals unless a nonrenewal notice is given by the officer
or the Company. The Agreement provided for an initial annual base salary of
$71,000, which base salary was increased to $115,000 as of March 1, 2000.
The Company has an Employment Agreement with Leonard ("Sonny") Vinson,
Senior Vice President of Sales and Marketing dated January 1, 2000. The
Agreement has a two-year term, with automatic two-year renewals unless a
nonrenewal notice is given by the officer or the Company. The Agreement provided
for an initial annual base salary of $120,000, which salary was increased to
$130,000 as of March 1, 2000.
Each of the above-described employment agreements provides that if the
Company gives the officer a nonrenewal notice, the officer is entitled to a cash
payment equal to such officer's highest annual base salary in effect during the
prior three years or, if such nonrenewal notice is given within one year after a
change of control, two times the sum of such officer's highest annual base
salary in effect during the prior three years plus the amount of incentive bonus
which, absent termination, could have been earned by such officer during the
year in which such officer's employment ceased. If the agreement is terminated
by the Company without cause or if the officer resigns for good reason, the
officer is entitled to a cash payment equal to the greater of (a) the sum of (i)
the highest monthly base salary in effect during the prior three years times the
number of months remaining (without regard to renewals) in the term, plus (ii)
the product of the amount of incentive bonus earned during the prior fiscal year
multiplied by the number of months remaining (without regard to renewals) in the
term, divided by 12, or (b) the sum of the highest annual base salary in effect
during the prior three years plus the amount of incentive bonus earned by the
officer during the prior fiscal year; provided, however, if such termination or
resignation occurs within one year after a change of control, such amount will
be at least two times the sum of the highest annual base salary in effect during
the prior three years plus the amount of incentive bonus which, absent
termination, could have been earned by such officer during the year in which
such officer's employment ceased. The above-described change of control payments
are subject to reduction if total compensation received by the officer upon a
change of control would constitute an excess parachute payment under I.R.C. ss.
280G.
Change of Control Arrangements
In addition to the change of control arrangements provided for in the
foregoing employment agreements, the Company's stock option plans provide the
following:
1987 Stock Option Plan. In May 1989, the Board of Directors adopted
resolutions amending the Company's 1987 Stock Option Plan (the "1987 Plan") and
providing that all options outstanding thereunder, including options held by the
Company's executive officers, and all nonqualified stock options granted outside
of the 1987 Plan to consultants to the Company, which are not then otherwise
exercisable in full shall become fully exercisable upon the occurrence of any of
the following events: (i) any person or group becomes the beneficial owner of
25% or more of the Company's Common Stock; (ii) at any time during any
consecutive two-year period, the directors of the Company at the beginning of
the period (and any new director whose election to the Board was approved by the
<PAGE>
vote of at least two-thirds of the directors still in office) cease to
constitute a majority of the directors then in office; (iii) the consummation of
a merger or consolidation (whether or not the Company is the surviving
corporation), other than a merger or consolidation in which the holders of the
Company's stock immediately prior thereto hold immediately thereafter securities
representing more than 70% of the combined voting power of the voting securities
of the merged or consolidated entity; or (iv) the consummation of a sale of all
or substantially all of the Company's assets or a plan of complete liquidation
of the Company.
1994 Stock Option and Incentive Compensation Plan. Following a "change
of control," the 1994 Stock Option and Incentive Compensation Plan (the "1994
Plan") provides that all restrictions on restricted stock awarded under the 1994
Plan will immediately lapse, all performance share objectives for outstanding
performance share or cash Incentives shall be deemed to have been met and all
outstanding options and stock appreciation rights shall immediately become
exercisable. However, all change of control compensation to a participant must
be less than the amount which would be considered a "parachute payment" under
I.R.C. ss. 280G. Section 280G provides that, if payments which are contingent
upon a change of control equal or exceed three times such participant's "base
amount" (average annual compensation over the five taxable years preceding the
taxable year in which the change of control occurs), then such payments
constitute a "parachute payment" and the excess of such "parachute payment" over
such participant's "base amount" will not be deductible by the Company and will
be subject to an excise tax payable by the participant. To the extent that
change of control compensation would equal or exceed three times a participant's
"base amount," the participant must designate which payments should be reduced
or eliminated so as to avoid receipt of a "parachute payment."
For purposes of these provisions, a "change of control" refers to any
of the following events: (i) the acquisition of at least 25% beneficial
ownership of any of the Company's equity securities by any person or group of
persons other than the Company's current shareholders; (ii) the approval of a
merger, consolidation or sale of substantially all of the Company's assets by
the shareholder, other than a merger or consolidation in which the Company's
shareholders immediately prior to such merger or consolidation hold immediately
thereafter more than 70% of the voting securities of the merged or consolidated
entity, or (iii) certain changes in the composition of the Company's Board of
Directors.
<PAGE>
Stock Performance Chart
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock during the
five fiscal years ended February 29, 2000 with the cumulative total return on
the S&P 500 Composite Stock Index and the S&P Leisure Time Composite Index, an
index of leisure product manufacturers. The comparison assumes $100 was invested
on February 28, 1995 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
02/28/95 02/29/96 02/28/97 02/28/98 02/28/99 02/29/00
<S> <C> <C> <C> <C> <C> <C>
First Team $100.00 $75.17 $32.21 $14.09 $11.07 $13.42
Sports, Inc.
S&P 500 $100.00 $134.70 $169.94 $229.43 $274.71 $306.93
Composite Stock
Index
S&P Leisure Time $100.00 $135.83 $150.40 $222.33 $162.76 $83.36
Index
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely on its review of the copies of forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during fiscal year 1999,
all officers, directors and greater than ten-percent beneficial owners complied
with applicable filing requirements pursuant to Section 16(a) of the Securities
Exchange Act of 1934 except that each of the officers and directors reported
option grants on a Form 5 that was not timely filed.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors unanimously recommends that the shareholders
ratify the appointment of Ernst & Young LLP as independent auditors for the
Company for the fiscal year ending February 28, 2001. Unless otherwise
instructed, the Proxies will be so voted.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will be given an opportunity to make a statement regarding
financial and accounting matters of the Company if they so desire, and will be
available to respond to appropriate questions from the Company's shareholders.
The ratification of the appointment of Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending February 28, 2001 requires
the affirmative vote of the holders of the greater of (i) a majority of the
voting power of the shares represented in person or by proxy at the Annual
Meeting with authority to vote on such matter, or (ii) a majority of the voting
power of the minimum number of shares that would constitute a quorum for the
transaction of business at the Annual Meeting.
OTHER BUSINESS
Management knows of no other matters to be presented at the 2000 Annual
Meeting. If any other matter properly comes before the Annual Meeting, the
appointees named in the Proxies will vote the Proxies in accordance with their
best judgment.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 2001 Annual Meeting must be received by the
Company by February 9, 2001, to be included in the Company's proxy statement and
related proxy for the 2001 Annual Meeting. Shareholder proposals intended to be
presented at the next Annual Meeting but not included in the proxy materials
will be considered timely if received by the Company on or before April 25,
2001.
FORM 10-K
THE COMPANY WILL PROVIDE AT NO CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, TO ANY
BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE 2000 ANNUAL MEETING. PLEASE
ADDRESS YOUR REQUEST TO THE ATTENTION OF KENT A. BRUNNER, VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER, FIRST TEAM SPORTS, INC., 1201 LUND BOULEVARD, ANOKA,
MINNESOTA 55303. YOUR REQUEST MUST CONTAIN A REPRESENTATION THAT AS OF MAY 19,
2000, YOU WERE A BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL
MEETING OF SHAREHOLDERS.
BY ORDER OF THE BOARD OF DIRECTORS
John J. Egart
President and Chief Executive Officer
Dated: June 9, 2000
Anoka, Minnesota
<PAGE>
First Team Sports, Inc.
ANNUAL MEETING OF SHAREHOLDERS
Wednesday, July 12, 2000
11:00 a.m.
1201 Lund Boulevard
Anoka, MN 55303
First Team Sports, Inc.
1201 Lund Boulevard, Anoka, Minnesota 55303 proxy
--------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for use at the Annual Meeting
on July 12, 2000.
The shares of stock you hold in your account will be voted as you specify below.
If no choice is specified, the proxy will be voted "FOR" Items 1, 2 and 3.
By signing the proxy, you revoke all prior proxies and appoint John J. Egart and
David G. Soderquist, and each of them, with full power of substitution, to vote
your shares on the matters shown on the reverse side and any other matters which
may come before the Annual Meeting and all adjournments.
See reverse for voting instructions
<PAGE>
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to First Team Sports, Inc., c/o Shareowner
Servicessm, P.O. Box 64873, St. Paul, MN 55164-0873
Please detach here
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
<TABLE>
<S><C>
1. Set the number of directors at six (6). [ ] For [ ] Against [ ] Abstain
2. Elect directors: 01 John J. Egart 04 Stanley E. Hubbard [ ] Vote FOR [ ] Vote WITHHELD
02 David G. Soderquist 05 Timothy G. Rath all nominees from all nominees
03 Joe Mendelsohn 06 William J. McMahon (except as withheld below)
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.) -------------------------------------------
3. Ratify the appointment of Ernst & Young LLP as independent For Against
Abstain auditors for the Company for the year ending February 28, 2001.
4. In their discretion, the proxies are authorized to vote upon such business
as may properly come before the meeting.
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS GIVEN, THIS PROXY WILL BE VOTED FOR EACH PROPOSAL.
Address change? Mark box [ ] Dated: _____________________, 2000
Indicate changes below:
--------------------------------------------
--------------------------------------------
Signature(s) in Box Please sign exactly as
your name(s) appear on Proxy. If held in
joint tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority. Corporations
should provide full name of corporation and
title of authorized officer signing the
proxy.
