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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
FUNCO, 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Items 22(a)(2) of Schedule A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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:
- - --------------------------------------------------------------------------------
[FUNCOLAND LOGO]
FUNCO, INC.
10120 West 76th Street
Minneapolis, MN 55344
June 28, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of Shareholders
of Funco, Inc. The meeting will be held at 10:00 a.m. Central Daylight Time
on Friday, August 2, 1996, at the Minneapolis Ramada Plaza Hotel, 12201
Ridgedale Drive, Minnetonka, Minnesota 55305. I encourage you to attend.
Whether or not you plan to attend the meeting, I urge you to vote your proxy.
On behalf of our Board of Directors and employees, thank you for your
continued support and interest in Funco, Inc.
Sincerely,
/s/ David R. Pomije
David R. Pomije
Chairman and Chief Executive Officer
- - --------------------------------------------------------------------------------
[FUNCOLAND LOGO]
FUNCO, INC.
10120 West 76th Street
Minneapolis, Minnesota 55344
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
Please take notice that the 1996 Annual Meeting of Shareholders of Funco, Inc.,
a Minnesota corporation (the "Company"), will be held at the Ramada Plaza Hotel,
12201 Ridgedale Drive, Minnetonka, Minnesota 55305, on Friday, August 2, 1996,
at 10:00 a.m. Central Daylight Time, to consider and vote upon the following
matters, as described in the accompanying Proxy Statement:
1. Election of directors of the Company.
2. Approval of the amendment to the Company's 1993 Stock Option Plan to
increase the number of shares reserved for issuance under such plan.
3. Approval of appointment of Ernst & Young LLP as independent auditors
of the Company.
4. Such other business as may properly come before the Annual Meeting or
any adjournment or adjournments thereof.
The Board of Directors of the Company has fixed the close of business on June
18, 1996, as the record date for determination of shareholders entitled to
notice of and to vote at the Annual Meeting.
Shareholders who do not expect to be personally present at the Annual Meeting
are urged to vote, sign, date and return the accompanying proxy in the enclosed,
postage paid return envelope as soon as possible. The Board of Directors of the
Company sincerely hopes, however, that all shareholders who can attend the
Annual Meeting will do so.
By Order of the Board of Directors
/s/ Robert M. Hiben
Robert M. Hiben
Secretary
June 28, 1996
- - --------------------------------------------------------------------------------
FUNCO, INC.
10120 West 76th Street
Minneapolis, Minnesota 55344
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 2, 1996
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Funco, Inc.
(the "Company") in connection with the 1996 Annual Meeting of Shareholders of
the Company, which will be held on August 2, 1996, and any adjournments thereof.
A person giving the enclosed proxy has the power to revoke it at any time before
the convening of the Annual Meeting. Revocations of proxy will be honored if
received at the offices of the Company, addressed to the attention of Robert M.
Hiben, on or before August 1, 1996. In addition, on the day of the meeting,
prior to the convening thereof, revocations may be delivered to the tellers who
will be seated at the door of the meeting hall. Unless so revoked, all properly
executed proxies will be voted as specified. In the event no choice is specified
on the proxy, the shares represented by such proxy will be voted FOR the
nominees for directors set forth herein, FOR the amendment to the 1993 Stock
Option Plan, and FOR the appointment of Ernst & Young LLP, as the Company's
independent auditors. If any other matters properly come before the Annual
Meeting, or if any of the persons named to serve as directors should decline or
be unable to serve, the persons named in the proxy will vote the same in
accordance with their discretion.
Expenses in connection with the solicitation of proxies will be paid by the
Company. Proxies are being solicited primarily by mail, but officers, directors
and other employees of the Company may also solicit proxies by telephone,
telegraph or personal calls. No extra compensation will be paid by the Company
for such solicitation. The Company may reimburse brokers, banks and other
nominees holding shares for others for the cost of forwarding proxy materials
to, and obtaining proxies from, their principals. This Proxy Statement is first
being mailed to shareholders on or about June 28, 1996.
VOTING RIGHTS
Only shareholders of record at the close of business on June 18, 1996, are
entitled to notice of and to vote at the meeting or any adjournment thereof. As
of that date, there were issued and outstanding 5,892,212 shares of Common Stock
of the Company, the only class of securities of the Company entitled to vote at
the Annual Meeting. Each shareholder of record is entitled to one vote for each
share registered in the shareholder's name as of the record date. The Articles
of Incorporation of the Company do not grant the shareholders the right to vote
cumulatively for the election of directors. The presence in person or by proxy
of holders of a majority of the shares of Common Stock entitled to vote at the
Annual Meeting will constitute a quorum for the transaction of business.
Abstentions and broker non-votes are counted for the purpose of determining
whether a quorum is present at the Annual Meeting. For the purpose of
determining whether a proposal (but not on the election of directors) has
received a majority vote, abstentions will be included in the vote totals with
the result that an abstention will have the same effect as a negative vote. In
instances where brokers are prohibited from exercising discretionary authority
for beneficial owners who have not returned a proxy (the broker non-votes),
those shares will not be included in the vote totals and, therefore, will have
no effect on the vote.
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of June 18, 1996, with
respect to the stock ownership of all persons known by the Company to be
beneficial owners of more than five percent of its outstanding shares of Common
Stock, each director, each nominee for director, each of the named executive
officers and all officers and directors of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
------------------------------------ ------------------ ------------------
<S> <C> <C>
David R. Pomije 2,589,092(1) 43.9%
10120 West 76th Street
Minneapolis, MN 55344
Stanley A. Bodine 159,096(2) 2.7%
Richard T. Guidera 8,500(3) Less than 1%
George E. Mileusnic 11,500(4) Less than 1%
Patrick J. Ferrell 7,500(5) Less than 1%
All officers and directors as a group (7
persons) 2,843,362(6) 48.3%
</TABLE>
(1) Includes 15,642 shares issuable upon exercise of currently exercisable
options and options exercisable within 60 days of the record date.
(2) Includes 36,194 shares issuable upon exercise of currently exercisable
options and options exercisable within 60 days of the record date.
(3) Includes 4,500 shares issuable upon exercise of currently exercisable
options and options exercisable within 60 days of the record date.
(4) Includes 8,000 shares issuable upon exercise of currently exercisable
options and options exercisable within 60 days of the record date.
(5) Includes 6,500 shares issuable upon exercise of currently exercisable
options and options exercisable within 60 days of the record date.
(6) Includes 113,435 shares issuable upon exercise of currently exercisable
options and options exercisable within 60 days of the record date.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Management has nominated the individuals listed below for election as directors,
each to serve until the next Annual Meeting of Shareholders and until his
successor is elected and qualified or until his earlier resignation or removal.
Unless instructed not to vote for the election of directors or not to vote for
any specified nominee, the proxies will vote to elect the listed nominees. If
any of the nominees are not candidates for election at the Annual Meeting, which
is not currently anticipated, the proxies may vote for such other persons as
they, in their discretion, may determine.
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
---- --- --------------
<S> <C> <C>
David R. Pomije 40 1988
Stanley A. Bodine 46 1992
Richard T. Guidera 67 1992
George E. Mileusnic 41 1993
Patrick J. Ferrell 39 1995
</TABLE>
DAVID R. POMIJE is the founder of the Company and has been chairman of the board
and chief executive officer of the Company since its inception in March 1988. He
also served the Company as its president and chief financial officer until April
1995. Mr. Pomije's prior experience includes nine years within the consumer
electronics industry. Prior to founding the Company, he was president of
Protectronics, Inc., a home computer mail order business, for three years.
Protectronics, Inc. filed for liquidation under Chapter 7 of the federal
Bankruptcy Code on March 25, 1988. From 1987 to 1988, Mr. Pomije was a director
of Cady Communications, Inc., a reseller of business telephone systems.
STANLEY A. BODINE was named president and chief operating officer of the Company
in April 1995. He had served as executive vice president since March 1992 and
has been a director of the Company since May 1992. From October 1991 to March
1992, he worked for Funco as a management consultant. Mr. Bodine held various
management positions with The Pillsbury Company from 1978 to 1991, most recently
as senior vice president of The Haagen-Dazs Company, with responsibility for
business development in the United States, Europe and the Pacific Rim. He also
served as general manager of Haagen-Dazs International and director of planning
and development for Pillsbury's domestic and international divisions.
RICHARD T. GUIDERA was elected to the Board of Directors in September 1992.
Since 1984, Mr. Guidera has been president of The Guidera Group, Inc., a firm
providing shopping center consulting and business brokerage services to
retailers. Prior thereto he had served as executive vice president of operations
and leasing and a partner of The Center Companies, which was formed in 1980 as a
successor to Dayton-Hudson Properties.
GEORGE E. MILEUSNIC was elected to the Board of Directors in December 1993.
Since August 1994, Mr. Mileusnic has been the executive vice president and chief
financial officer of The Coleman Company, Inc., a leading manufacturer and
marketer of brand name consumer products for the camping and related outdoor
recreational markets in the United States and Canada. He joined The Coleman
Company in September 1989 as the senior vice president and chief financial
officer. From 1987 to 1989, he was senior vice president and controller of
Burger King Corporation, a subsidiary of The Pillsbury Company.
PATRICK J. FERRELL was elected to the Board of Directors in May 1995. Since
1991, Mr. Ferrell has served as chief executive officer of Infotainment
World, Inc., a subsidiary of IDG Communications which publishes GamePro,
S.W.A.T. Pro and Electronic Entertainment magazines, as well as related tip
books and strategy guides. Mr. Ferrell is the founder of Infotainment World,
Inc. and has been president since 1989. Mr. Ferrell, a CPA, has held a
variety of financial management positions at Visa, U.S.A., Failure Analysis
Associates, Foster Farms and Peat, Marwick, Mitchell & Co.
DIRECTORS' COMPENSATION. Directors who are not otherwise employees of the
Company are paid an annual retainer of $2,400, plus $200 for each committee
meeting attended which was not held on the same date as a regular board meeting.
During fiscal 1996, an aggregate of $7,200 was paid or accrued to outside
directors for their services. Nonemployee directors are eligible for stock
option awards under the Company's 1992 Stock Option Plan for Nonemployee
Directors.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors met three times during the past fiscal year. All
directors attended each of the meetings held during the period in which each
was a director, except Mr. Guidera who attended two of the three meetings.
The Board of Directors has Executive, Compensation and Audit Committees, each
comprised of two members. The Board of Directors does not have a Nominating
Committee.
EXECUTIVE COMMITTEE. The Executive Committee is authorized to take action
between meetings of the Board, subject to Board ratification. The Executive
Committee did not meet during fiscal 1996. The current members of the Executive
Committee are Messrs. Pomije and Bodine.
AUDIT COMMITTEE. The Audit Committee has the principal function of reviewing the
adequacy of the Company's internal controls, conferring with the independent
auditors concerning the scope of their examination of the books and records of
the Company, recommending to the Board of Directors the appointment of
independent auditors and considering other appropriate matters regarding the
financial affairs of the Company. The Audit Committee met two times during
fiscal 1996. The current members of the Audit Committee are Messrs. Mileusnic
and Ferrell.
COMPENSATION COMMITTEE. The principal function of the Compensation Committee is
to make recommendations to the Board of Directors concerning the compensation of
executive officers and other management personnel. The Compensation Committee
met four times during fiscal 1996. The current members of the Compensation
Committee are Messrs. Guidera and Mileusnic.
REPORT OF THE COMPENSATION COMMITTEE
COMMITTEE OBJECTIVES. With respect to executive compensation, the objectives of
the Committee are to establish and maintain programs and practices that will
align executive compensation with the Company's performance and profitability,
and motivate and retain executive officers.
In meeting these objectives, the Compensation Committee has determined that
executive compensation plans are to include competitive base salaries,
performance based cash bonuses and appropriate long-term stock based incentive
awards.
ELEMENTS OF THE COMPANY'S EXECUTIVE COMPENSATION PLANS
BASE SALARY. The Board of Directors establishes the base salary level for each
executive officer, including the chief executive officer, based upon
recommendation of the Compensation Committee. In developing specific salary
recommendations, the Compensation Committee considers the scope of
responsibility of each executive officer, the individual's experience and the
competitive marketplace for the position.
PERFORMANCE BASED CASH BONUS. The Board of Directors establishes an annual cash
bonus plan based upon recommendation of the Compensation Committee, which
correlates incentive payments to factors including overall Company financial
performance, specific individual objectives and the individual executive
officer's base salary. The Company did not award performance based cash bonuses
to any of its named executive officers during fiscal 1996.
STOCK BASED INCENTIVE AWARDS. The Compensation Committee and the Board of
Directors believe that stock based incentive awards encourage and reward
effective management actions that bring about long term corporate financial
success, primarily as measured by increases in shareholder value. Accordingly,
the Board of Directors, upon recommendation of the Compensation Committee, has
made periodic grants of stock options to executives.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. The following criteria were
applied by the Compensation Committee to determine compensation for the Chief
Executive Officer, Mr. Pomije, for the last fiscal year.
a) The Committee established Mr. Pomije's annual base salary for
fiscal 1996 to be $180,000, based upon the criteria described above
regarding base salary.
b) The Committee established Mr. Pomije's annual incentive bonus
opportunity at a level at which achievement of bonus, together with base
salary, would have been marketplace competitive. The Company did not achieve
the requisite financial results, therefore, no incentive bonus was awarded
to Mr. Pomije in fiscal 1996.
c) The Committee recommended to the Board of Directors that in fiscal
1996, pursuant to the 1993 Stock Option Plan, Mr. Pomije should be granted
options to acquire 18,500 shares of Common Stock at an exercise price of
$4.90 per share.
The Compensation Committee:
Richard T. Guidera
George E. Mileusnic
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth certain information
regarding compensation paid during each of the Company's last three fiscal years
to the Company's chief executive officer and the one other executive officer
whose total annual compensation in fiscal 1996 (based on salary and bonus)
exceeded $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
FISCAL ------------------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS/OPTIONS
- - --------------------------- ---- ------ ----- --------------
<S> <C> <C> <C> <C>
David R. Pomije 1996 $180,000 - 18,500 shares
Chief executive officer 1995 180,000 - 14,214 shares
1994 180,000 - -
Stanley A. Bodine 1996 153,750 - 33,500 shares
President 1995 153,750 - 13,355 shares
1994 150,000 - 12,500 shares
</TABLE>
OPTIONS GRANTED DURING FISCAL 1996. The following table provides information
relating to options granted to the Named Executive Officers during fiscal 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANT VALUE AT ASSUMED
--------------------------------------------------------- ANNUAL RATE OF STOCK
PERCENT OF TOTAL PRICE APPRECIATION
OPTIONS GRANTED FOR OPTION TERM
TO ---------------------
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PRICE(2) DATE 5% 10%
---- ---------- ----------- -------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
David R. Pomije 18,500 6.1% $4.90 6/14/2000 $25,045 $ 55,343
Stanley A. Bodine 18,500 6.1 4.45 6/14/2005 51,774 131,205
15,000 5.0 3.40 12/14/2005 32,074 81,281
------ ---- ------ ------
33,500 11.1% $83,848 $212,486
====== ==== ======= ========
</TABLE>
(1) The number indicated is the number of shares of Common Stock that can be
acquired upon exercise of the option. The Company has not granted any SARs. All
options granted in fiscal 1996 are nontransferable, vest over a period of three
years, become exercisable in three equal annual installments commencing either
June 15, 1996 or December 15, 1996, and provide for forfeiture of unvested
options upon termination of employment.
(2) The exercise price is equal to the fair market value of the Common Stock on
the date of grant; however, the exercise price for Mr. Pomije was increased by
10% as required by the federal tax code, as Mr. Pomije owns greater than 10% of
the outstanding Common Stock.
AGGREGATE OPTION EXERCISES DURING FISCAL 1996 AND FISCAL YEAR END OPTION VALUES.
The following table provides information related to options exercised by the
Named Executive Officers during fiscal 1996 and the number and value of options
held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR END(1)
ACQUIRED ON VALUE ------------------------ ------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
David R. Pomije - - 4,738 27,976 - -
Stanley A. Bodine 6,600 $16,797 28,409 66,096 $25,121 $30,146
</TABLE>
(1) Value is determined by the difference between the closing price of the
Company's Common Stock on March 31, 1996, which was $4.375, and the option
exercise price multiplied by the number of shares subject to the option.
STOCK PERFORMANCE CHART
PERFORMANCE GRAPH. The following table compares the cumulative total stockholder
return on Common Stock for the period commencing on August 12, 1992, the date of
the Company's initial public offering, through March 31, 1996, with the
cumulative total return on the NASDAQ United States Stock Market Index and the
NASDAQ Retail Index over the same period. This comparison assumes $100 was
invested on August 12, 1992, in the Company's Common Stock and in each of the
foregoing indices, and assumes reinvestment of all dividends.
8/12/92 4/04/93 4/03/94 4/02/95 3/31/96
------- ------- ------- ------- -------
FUNCO, INC. 100 245 266 89 80
NASDAQ STOCK MARKET-US 100 117 131 145 201
NASDAQ RETAIL TRADE 100 104 111 109 136
PROPOSAL NO. 2
AMENDMENT TO THE 1993 STOCK OPTION PLAN
BACKGROUND
The Company reserved 750,000 shares of Common Stock for issuance under the 1992
Employee Incentive Stock Option Plan (the "1992 Plan"). The Company granted
401,250 options to purchase shares of Common Stock under the 1992 Plan, of which
147,550 have been exercised. As of fiscal year end 214,500 such options were
outstanding, of which 85,960 were exercisable. Effective May 1993, following
shareholder approval in August 1993, the 1992 Plan was terminated with respect
to future grants and the 1993 Stock Option Plan was adopted.
The 1993 Stock Option Plan initially reserved 348,750 shares, equal to the
ungranted portion of the terminated 1992 Plan. Options available under the 1993
Stock Option Plan increase annually on May 1st by an amount equal to 1% of the
number of shares of the Company's outstanding Common Stock at fiscal year end.
Pursuant to the terms of the Company's 1993 Stock Option Plan, an aggregate of
523,182 shares of Common Stock has been reserved which includes 58,779 shares
reserved on May 1, 1996. As of fiscal year end 433,009 such options were
outstanding, of which 81,277 were exercisable. Additionally, as of fiscal year
end 2,033 options granted under the 1993 Stock Option Plan have been exercised.
AMENDMENT TO 1993 STOCK OPTION PLAN
The Board of Directors, upon recommendation of the Compensation Committee, has
adopted, subject to shareholder approval, an amendment to the 1993 Stock Option
Plan (the "Plan") which would increase by 300,000 the number of shares of Common
Stock currently available for issuance to officers and employees of the Company
upon grants of options under the Plan (from the 523,182 described above to
823,182). The additional shares may be issued upon the exercise of options that
qualify as "Incentive Stock Options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, or upon the exercise of options that do not so
qualify. Options granted under the Plan are exercisable over periods of up to
ten years from the date of grant. The Plan would retain the provision described
above which allows the Company to reserve an additional 1% of the total number
of shares of Common Stock outstanding at fiscal year end.
The text of the amendment is set forth below. If approved by the shareholders,
the amendment will become effective as of the date of such approval, August 2,
1996. A copy of the full text of the Plan is available from the Company upon
request.
The Funco, Inc. 1993 Stock Option Plan dated May 28, 1993, as amended ("Plan"),
is hereby amended, subject to shareholder approval, effective August 2, 1996, by
the revision of paragraph 1 of Section 3 of the Plan in its entirety to read as
follows:
"SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be, effective August 2, 1996, increased by
300,000 shares to 823,182 shares of Stock, which number shall be increased
annually, on May 1st, by an amount equal to 1% of the number of shares of
Stock outstanding as of the end of the most recently ended fiscal year. Such
shares may consist, in whole or in part, of authorized and unissued shares
or treasury shares. The number of shares of Stock available for Incentive
Stock Options shall be limited to 648,750."
Except as stated above, the Plan remains in full force and effect.
The affirmative vote of a majority of the shares of Common Stock represented in
person or proxy and entitled to vote at the Annual Meeting is required to
approve the amendment.
The Board of Directors recommends a vote FOR the approval of the amendment to
the 1993 Stock Option Plan.
PROPOSAL NO. 3
APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP, independent auditors, have been the auditors of the accounts
of the Company for the past six fiscal years. They have been appointed by the
Board of Directors of the Company for the purpose of auditing the Company's
accounts for the 1997 fiscal year and shareholder approval of such appointment
is requested.
Representatives of the firm of Ernst & Young LLP will be in attendance at the
Annual Meeting of Shareholders and will have the opportunity to make a statement
if they desire to do so. In addition, they will be available to respond to
appropriate questions.
The affirmative vote of a majority of the shares of Common Stock represented in
person or proxy and entitled to vote at the Annual Meeting is required to
approve the appointment of Ernst & Young LLP.
All proxies not voted against the appointment of Ernst & Young LLP, not
abstaining from voting and not marked as broker non-votes shall be voted FOR the
appointment of Ernst & Young LLP. In the event that the appointment of Ernst &
Young LLP should not be approved by shareholders, the Board of Directors will
make another appointment to be effective at the earliest feasible time, either
this fiscal year or the next.
The Board of Directors recommends a vote FOR the appointment of Ernst & Young
LLP.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
All shareholder proposals intended to be presented at the 1997 Annual Meeting of
Shareholders must be received by the Company at its offices on or before
February 27, 1997.
GENERAL
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934. Section
16(a) of the Securities Exchange Act of 1934 requires the Company's directors
and executive officers, and persons who own more than ten percent of the
Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file. To the Company's knowledge, based
solely on review of the copies of such reports furnished to the Company during
fiscal 1996, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with.
OTHER MATTERS. The Board of Directors is not aware that any matter, other than
those described in the Notice, will be presented for action at the Annual
Meeting. If, however, other matters do properly come before the Annual Meeting,
it is the intention of the persons named in the proxy to vote the proxied shares
in accordance with their best judgment on such matters.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the fiscal year ended
March 31, 1996, accompanies this Notice of Annual Meeting of Shareholders and
Proxy Statement.
By Order of the Board of Directors
/s/ Robert M. Hiben
Robert M. Hiben
Secretary
June 28, 1996
- - --------------------------------------------------------------------------------
PROXY
FUNCO, INC.
ANNUAL MEETING OF SHAREHOLDERS -- AUGUST 2, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David R. Pomije and Stanley A. Bodine, or
either of them, proxies or proxy, with full power of substitution, to vote all
shares of Common Stock of Funco, Inc. (the "Company") which the undersigned is
entitled to vote at the 1996 Annual Meeting of Shareholders to be held at the
Ramada Plaza Hotel, 12201 Ridgedale Drive, Minnetonka, Minnesota 55305, August
2, 1996, at 10:00 a.m. Central Daylight Time, and at any adjournment thereof, as
directed below with respect to the proposals set forth below, all as more fully
described in the Proxy Statement, and upon any other matter that may properly
come before the meeting or any adjournment thereof.
1. ELECTION OF DIRECTORS:
|_| FOR all nominees listed below
(except as marked to the contrary below)
|_| WITHHOLD AUTHORITY to vote for all
nominees listed below
DAVID R. POMIJE STANLEY A. BODINE RICHARD T. GUIDERA
GEORGE E. MILEUSNIC PATRICK J. FERRELL
(INSTRUCTION: To withhold authority for any individual nominee, write that
nominee's name in the space provided below.)
- - --------------------------------------------------------------------------------
2. APPROVAL OF AMENDMENT TO THE 1993 STOCK OPTION PLAN
|_| FOR |_| AGAINST |_| ABSTAIN
3. APPROVAL OF APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
|_| FOR |_| AGAINST |_| ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
(continued and to be signed and dated on the other side)
(continued from other side)
The power to vote granted by this Proxy may be exercised by David R. Pomije
and Stanley A. Bodine, jointly or singly, or their substitute(s), who are
present and acting at said Annual Meeting or any adjournment of said Annual
Meeting. The undersigned hereby revokes any and all prior proxies given by the
undersigned to vote at this Annual Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SHAREHOLDERS' INSTRUCTIONS. IF
THE SHAREHOLDER(S) WHO EXECUTE THIS PROXY DO NOT WITHHOLD THEIR VOTES FOR THE
ELECTION OF DIRECTORS AND DO NOT VOTE AGAINST OR ABSTAIN FROM VOTING ON PROPOSAL
NO. 2 OR NO. 3, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE PROPOSED
DIRECTORS AND FOR PROPOSALS NO. 2 AND NO. 3.
It is urgent that each
shareholder complete, date, sign
and mail this Proxy as soon as
possible. Your vote is important!
Dated _____________________, 1996
_________________________________
Signature of Shareholder(s)
_________________________________
Signature of Shareholder(s)
When signing as attorney,
executor, administrator, trustee
or guardian, please give your
title as such. If signer is a
corporation, please sign full
corporation name by authorized
officer.
PLEASE DO NOT FORGET TO DATE THIS PROXY.
