<PAGE> 1
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 [ ]
[ ] 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 Section 240.14a-11(c) or Section
240.14a-12
SPORT-HALEY, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than 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)(4) and
0-11.
1) Title of each class securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
[HALEY LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 10, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Sport-Haley, Inc. will be held at the Renaissance Hotel, 3801 Quebec Street,
Denver, Colorado on Tuesday, February 10, 1998, at 2:00 p.m., Mountain Standard
Time, and thereafter as it may from time to time be adjourned, for the
following purposes:
1. To elect five directors to hold office for the term set forth
in the accompanying Proxy Statement and until their successors
shall have been duly elected and qualified;
2. To consider and act upon an amendment to increase the number
of shares of Common Stock authorized for issuance under the
Company's 1993 Stock Option Plan by an additional 150,000
shares.
3. To ratify the appointment of Levine Hughes & Mithuen, Inc. as
independent auditors; and
4. To consider and transact such other business as may properly
come before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 19,
1997, as the record date for the determination of shareholders entitled to
notice of and to vote at this meeting or any adjournment thereof.
By Order of the Board of Directors,
December 19, 1997 /s/ Steve S. Auger
-------------------------------------
Steve S. Auger, Corporate Secretary
IMPORTANT
PLEASE MARK, DATE, SIGN, NOTE ANY CHANGE OF ADDRESS AND RETURN THE ENCLOSED
PROXY CARD IMMEDIATELY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, WE WILL
BE GLAD TO RETURN YOUR PROXY SO THAT YOU MAY VOTE IN PERSON.
<PAGE> 3
SPORT-HALEY, INC.
4600 E. 48TH AVENUE
DENVER, COLORADO 80216
PROXY STATEMENT
RELATING TO THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD FEBRUARY 10, 1998
GENERAL
The enclosed proxy is solicited by the Board of Directors of
Sport-Haley, Inc. (hereinafter referred to as the "Company") for use at the
Annual Meeting of Shareholders to be held at the Renaissance Hotel, 3801 Quebec
Street, Denver, Colorado on Tuesday, February 10, 1998, at 2:00 p.m., Mountain
Standard Time, for the purposes set forth in the foregoing Notice of Annual
Meeting of Shareholders. This Proxy Statement and the form of proxy will be
mailed to shareholders on or about December 22, 1997.
The record date with respect to this solicitation is December 19,
1997. All holders of record of Common Stock of Sport-Haley, Inc. as of the
close of business on that date are entitled to vote at the meeting. As of the
record date, the Company had 4,542,962 shares of Common Stock outstanding,
excluding treasury shares. Each share of Common Stock is entitled to one vote.
A majority of the votes entitled to be cast constitutes a quorum. If a quorum
exists, action on any matter other than the election of directors will be
approved if the votes cast in person or by proxy at the meeting favoring the
action exceed the votes cast opposing the action. In the election of
directors, that number of candidates equaling the number of directors to be
elected having the highest number of votes cast in favor of their election will
be elected. Abstentions and broker non-votes are not counted in the
calculation of the vote.
A proxy may be revoked by the shareholder at any time prior to its
being voted. If a proxy is properly signed and is not revoked by the
shareholder, the shares it represents will be voted at the meeting in
accordance with the instructions of the shareholder, unless it is received in
such form as to render it invalid. If the proxy is signed and returned without
specifying choices, the shares will be voted in accordance with the
recommendations of the Board of Directors.
As a matter of policy, proxies, ballots and voting tabulations that
identify individual shareholders are held confidential by the Company. Such
documents are available for examination only by the inspectors of election,
none of whom is an employee of the Company, and certain employees associated
with tabulation of the vote. The identity of the vote of any shareholder is
not disclosed except as may be necessary to meet legal requirements.
The cost of this solicitation will be borne by the Company. Employees
and directors of the Company may solicit proxies but will not receive any
additional compensation for such solicitation. Proxies may be solicited
personally or by mail, facsimile, telephone or telegraph.
<PAGE> 4
I. ELECTION OF DIRECTORS
Information concerning the five nominees for election as directors is
shown below. All nominees are now members of the Board of Directors. The
Board of Directors knows of no reason why any nominee would be unable to serve
as a director. If any nominee should for any reason become unable to serve,
the shares represented by all valid proxies will be voted for the election of
such other person as the Board of Directors may designate or the Board of
Directors may reduce the number of directors to eliminate the vacancy.
<TABLE>
<CAPTION>
NAME AGE CAPACITIES IN WHICH SERVED
------------------ --- ------------------------------------
<S> <C> <C>
Robert G. Tomlinson(1) 56 Chairman of the Board and Chief Executive Officer
Robert W. Haley 52 President and Director
Mark J. Stevenson(1)(2) 59 Director
Ronald J. Norick(2) 56 Director
James H. Everest(1)(2) 49 Director
</TABLE>
- ---------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Robert G. Tomlinson has served as Chairman of the Board and Chief
Executive Officer of the Company since October 1992. Mr. Tomlinson was a
partner in Tomlinson Enterprises, a real estate investment partnership, from
1972 through 1993. From 1989 until he joined the Company, Mr. Tomlinson was
also engaged in management of his personal investment portfolio.
Robert W. Haley has served as President and a director of the Company
since May 30, 1996. From January 1992 until his appointment to such positions,
he served as Vice President - Sales and Marketing of the Company. From 1983 to
1992, Mr. Haley held executive sales and management positions with various
apparel manufacturers, including Izod-LaCoste, Head Sportswear and Di Fini,
Ltd. Mr. Haley is a Class A PGA professional golfer with 25 years experience
in the golf industry.
Mark J. Stevenson has been a director of the Company since November
1993. Since June 1, 1994, Mr. Stevenson has served as chairman of the board,
president and chief executive officer of Electronic Manufacturing Systems,
Longmont, Colorado, a contract manufacturer serving the computer, data storage,
telecommunications and medical equipment industries. From 1992 to 1994, Mr.
Stevenson served as chairman of the board of Micro Insurance Software, Inc.,
Boulder, Colorado, a manufacturer of computer software oriented to the
insurance industry. From 1990 to 1992, he served as executive vice president
and a director of Solbourne Computer, Boulder, Colorado, a wholly-owned
subsidiary of Matsushita. Mr. Stevenson was responsible for worldwide sales,
marketing, customer support and product management in this position.
Ronald J. Norick has been a director of the Company since November
1993. Since 1987, Mr. Norick has served as the elected Mayor of the City of
Oklahoma City, Oklahoma. His current term of office expires in April 1998.
From 1960 to 1992, Mr. Norick served in various capacities, including as
president from 1981 to 1992, of Norick Brothers, Inc., a closely-held printing
company which was acquired by Reynolds & Reynolds in June 1992. Mr. Norick
serves on a number of public boards and commissions, including the Mayor's
Commission on Public Education, the National League of Cities and
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<PAGE> 5
the United States Conference of Mayors. Mr. Norick also serves as manager of
Norick Investments Company LLC, a family-owned limited liability company which
is engaged in investments.
James H. Everest has been a director of the Company since November
1993. Mr. Everest has served as president of the Jean I. Everest Foundation,
Oklahoma City, Oklahoma, since 1991. The Jean I. Everest Foundation was
organized to conduct charitable activities by Mr. Everest's father. Mr.
Everest has been the managing partner of Everest Brothers, a general
partnership active in oil and gas exploration and development, since 1984. Mr.
Everest has also been engaged in managing his personal investments since 1984.
Mr. Everest is a member of the Oklahoma Bar Association and the American Bar
Association and serves in a number of capacities for various civic and
community organizations.
COMMITTEES OF THE BOARD
The Board of Directors has delegated certain of its authority to a
Compensation Committee and an Audit Committee. The Compensation Committee is
composed of Messrs. Stevenson, Norick and Everest. The Audit Committee is
composed of Messrs. Tomlinson, Stevenson and Everest. No member of either
committee is a former or current officer or employee of the Company with the
exception of Mr. Tomlinson.
The Compensation Committee held two meetings in fiscal 1997. The
primary function of the Compensation Committee is to review and make
recommendations to the Board with respect to the compensation, including
bonuses, of the Company's officers and to administer the Company's Stock Option
Plan.
The Audit Committee did not hold any meetings in fiscal 1997. The
function of the Audit Committee is to review and approve the scope of audit
procedures employed by the Company's independent auditors, to review and
approve the audit reports rendered by both the Company's independent auditors
and to approve the audit fee charged by the independent auditors. The Audit
Committee reports to the Board of Directors with respect to such matters and
recommends the selection of independent auditors.
BOARD AND COMMITTEE ATTENDANCE
In fiscal 1997, the Board of Directors held two meetings. All
directors attended all board and committee meetings held during fiscal 1997.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
Officers are appointed by and serve at the discretion of the Board of
Directors and all of the Company's officers devote full-time to the Company's
business and affairs.
Steve S. Auger, age 52, has served as Controller of the Company since
July 1993. In January 1996, he was appointed Secretary and Treasurer. From
September 1989 to January 1993, Mr. Auger served as the controller of Fiber
Optic Technologies, Inc., Englewood, Colorado, where he was responsible for
financial and cost accounting, budgeting and cash management.
Catherine B. Blair, age 46, has served as Vice President -
Merchandising/Design since May 1996. Ms. Blair has been part of the Company's
design team since 1992, and was appointed Director of Design in 1995. From
1990 to 1991, she was a designer for Di Fini, Ltd., a golfwear company and
prior to such time, worked as a freelance designer for companies such as
Macy's, Bloomingdale's, Ann Taylor and The Gap.
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<PAGE> 6
Kevin M. Tomlinson, age 38, has served as Vice President of Operations
since November 1997. From 1992 until joining the Company, he held several
executive positions with Nu-kote International, an imaging supplies
manufacturer, including vice presidential positions in marketing, global
procurement and retail and Director of National Accounts. From 1982 to 1992,
Mr. Tomlinson held executive positions in marketing, merchandising, procurement
and operations with various office products distributors. Kevin Tomlinson is
the son of Robert G. Tomlinson, the Company's Chairman and Chief Executive
Officer.
Grant M. Beeman, age 38, has served as Vice President of Manufacturing
since November 1997. From September 1992 until joining the Company, Mr. Beeman
was employed by Carlyle Golf, Inc., a men's golf apparel manufacturer, where he
served as Vice President of Design and Manufacturing. During 1991 and 1992, he
was engaged in management of his personal investment portfolio. From 1986 to
1991, Mr. Beeman was a designer and salesman for Deline Box Company. In 1982,
Mr. Beeman founded On and Off the Field, an active sportswear design firm,
which designs and manufactures clothing for polo clubs and domestic department
stores.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the annual
and long-term compensation for services in all capacities to the Company for
the three fiscal years ended June 30, 1997 of Robert G. Tomlinson, the Chief
Executive Officer, and Robert W. Haley, President, the only executive officers
of the Company whose total annual salary and bonus exceeded $100,000 during the
year ended June 30, 1997 (the "Named Officers").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
AWARDS
ANNUAL COMPENSATION --------------
FISCAL ----------------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(#) COMPENSATION(1)
- --------------------------- ------ ---------- --------- -------------------- ----------------
<S> <C> <C> <C> <C> <C>
Robert G. Tomlinson, 1997 $ 192,726 $ 45,000 30,000 $ 796
Chairman of the Board and 1996 117,308 49,419 -0- 796
Chief Executive Officer 1995 52,728 24,485 50,000 -0-
Robert W. Haley, 1997 $ 154,164 $ 36,000 30,000 $ 664
President 1996 112,115 98,026 18,750 664
1995 98,328 62,008 17,375 -0-
</TABLE>
- -------------------
(1) Comprised of Company contributions to the Named Officer's 401(k) plan and
term life insurance premiums.
Option Grants Table. The following table sets forth information on
grants of stock options pursuant to the Company's 1993 Stock Option Plan, as
amended, during fiscal 1997 to the Named Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES PERCENT OF TOTAL EXERCISE OR
UNDERLYING OPTIONS/ OPTIONS/SARS GRANTED TO BASE PRICE EXPIRATION
NAME SARS GRANTED EMPLOYEES IN FISCAL YEAR(1) ($/SHARE)(2) DATE
- ------------------ ---------------------- --------------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Robert G. Tomlinson 30,000 31.6% $ 14.25 2/13/2007
Robert W. Haley 30,000 31.6% $ 14.25 2/13/2007
</TABLE>
- ---------------
(1) Excludes options granted to the Company's independent sales
representatives. The percentage of total options granted if such sales
representatives were included would be 19.2%.
(2) The exercise price is equal to the market price of the underlying security
on the date of grant. One-third of such options vest annually on February
14, commencing February 14, 1998.
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<PAGE> 7
Fiscal Year-End Options/Option Values Table.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDER- VALUE OF UNEXERCISED IN-
LYING UNEXERCISED OPTIONS/ THE MONEY OPTIONS/SARS
SHARES SARS AT FISCAL YEAR-END AT FISCAL YEAR-END($)(2)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- ----------- ----------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Tomlinson 50,000 $ 443,750 -0- 30,000 -0- $ 75,000
Robert W. Haley 41,616 $ 500,189 -0- 30,000 -0- $ 75,000
</TABLE>
- ---------------
(1) The dollar values are calculated based upon the difference between the
exercise price of the options and the closing bid price for the Common
Stock on the date of exercise.
(2) The dollar values are calculated based upon the difference between the
exercise price of the options and the closing bid price for the Common
Stock of $16.75 on June 30, 1997.
No employee of the Company receives any additional compensation for
his services as a director. Non-management directors receive no salary for
their services as such, but receive a fee of $250 per meeting attended. The
Board of Directors has also authorized payment of reasonable travel or other
out-of-pocket expenses incurred by non-management directors in attending
meetings of the Board of Directors. During fiscal 1997, each director who was
not an employee of the Company received options to purchase 25,000 shares of
Common Stock at an exercise price of $12.125 per share. One-third of such
options vest on each February 14, commencing February 14, 1998.
Employment Agreements. Effective January 1, 1997, the Company entered
into a new employment agreement with Mr. Tomlinson. The agreement requires
that he devote his full business time to the Company as Chief Executive Officer
and/or Chairman of the Board at an annual salary of $200,000, an automobile
allowance and such bonuses and salary increases as are awarded by the Board of
Directors. The employment agreement extends for a three-year term. Mr.
Tomlinson has the option to convert the employment agreement to a consulting
agreement in the event of a change in control of the Company or upon his
resignation. Subject to the right of the Company to terminate the consulting
agreement for cause, Mr. Tomlinson is entitled to serve as a consultant to the
Company for the duration of the agreement and to continue to receive
compensation in the amount of 60% of his annual salary. If Mr. Tomlinson
terminates the agreement with "cause" (as defined in the agreement), or the
Company terminates the agreement for other than "cause" (as defined in the
agreement), or if there is a change in control of the Company or if Mr.
Tomlinson dies, Mr. Tomlinson or his estate, as applicable, is entitled to
receive severance compensation for three years from the date of termination in
an amount equal to his annual salary and bonus payments during the preceding 12
months. During the time he is receiving such severance compensation, he is
entitled to participate in all employee benefit plans at the Company's expense.
The change of control provisions and death benefits entitle Mr. Tomlinson or
his estate, as applicable, to receive such amount in a lump sum. If Mr.
Tomlinson becomes totally disabled during the term of the agreement, his full
salary will be continued for one year from the date of disability. If
termination is for any reason other than by the Company with cause, all options
previously granted shall become fully vested on the date of termination. The
agreement contains a non-competition provision for one year following
termination.
Effective January 1, 1997, the Company entered into an employment
agreement with Mr. Haley. The agreement requires that he devote his full
business time to the Company as President or Senior Executive Officer at an
annual salary of $160,000 and such bonuses and salary increases as are awarded
by the Board of Directors. The employment agreement extends through December
31, 1998. If the Company terminates the agreement for other than "cause" (as
defined in the agreement), Mr. Haley is entitled to receive severance
compensation for one year from the date of termination in an amount equal to
his annual salary and bonus payment during the preceding 12 months. If Mr.
Haley terminates the
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<PAGE> 8
agreement with or without cause, Mr. Haley is entitled to receive severance
compensation for one year in an amount equal to 60% of his annual salary and
bonus payment during the preceding 12 months. During the time he is receiving
any such severance compensation, he is eligible to participate in all employee
benefit plans at the Company's expense. If there is a non-negotiated change in
control of the Company or if Mr. Haley dies, Mr. Haley or his estate, as
applicable, is entitled to lump sum severance compensation equal to three times
his annual salary and bonus payment during the preceding 12 months. If Mr.
Haley becomes disabled during the term of the agreement, his full salary will
be continued for one year from the date of disability. If termination is for
any reason other than by the Company with cause, all options previously granted
shall become fully vested on the date of termination. The agreement contains a
non-competition provision for one year following termination.
401(k) PLAN
In January 1996, the Company adopted a defined contribution savings
plan (the "401(k) Plan") to provide retirement income to employees of the
Company. The 401(k) Plan is intended to be qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended. The 401(k) Plan covers all
employees who are at least 18 years of age and have been employed at least
three months. It is funded by voluntary pre-tax contributions from employees
up to a maximum amount equal to 15% of annual compensation and through matching
contributions by the Company up to 5% of the employee's annual compensation.
Upon leaving the Company, each participant is 100% vested with respect to the
participant's contributions and is vested based on years of service with
respect to the Company's matching contributions. Contributions are invested as
directed by the participant in investment funds available under the 401(k)
Plan. Full retirement benefits are payable to each participant in a single
cash payment or an actuarial equivalent form of annuity on the first day of the
month following the participant's retirement.
COMMON STOCK OWNERSHIP
The table on the following page sets forth certain information
regarding beneficial ownership of Common Stock as of November 30, 1997 by (i)
each person known by the Company to own beneficially more than 5% of the
outstanding Common Stock, (ii) each director or nominee, and (iii) all
executive officers and directors as a group. The information on the
institutional investors' statements filed with the Commission under Section
13(d) or 13(g) of the Exchange Act. Each person has sole voting and sole
investment or dispositive power with respect to the shares shown except as
noted.
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<PAGE> 9
<TABLE>
<CAPTION>
SHAREHOLDINGS ON
NOVEMBER 30, 1997
-------------------------------
NUMBER OF PERCENT OF
NAME AND ADDRESS (1) SHARES (2) CLASS(3)
- ------------------------------- ---------- ------------
<S> <C> <C>
Robert G. Tomlinson(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,000 *
Robert W. Haley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,616 *
Mark J. Stevenson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,800 *
Ronald J. Norick(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,500 1.32%
James H. Everest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 *
Woodland Partners, LLC(6) . . . . . . . . . . . . . . . . . . . . . . . . . . 871,400 18.66%
60 South Sixth Street, Suite 3750
Minneapolis, Minnesota 55402
First Bank System, Inc(6). . . . . . . . . . . . . . . . . . . . . . . . . . 403,600 8.64%
601 Second Avenue South
Minneapolis, Minnesota 55402
Robertson, Stephens & Company Investment Management, L.P.(6) . . . . . . . . 386,600 8.28%
555 California Street, Suite 2600
San Francisco, California 94104
Delaware Management Holdings, Inc.(6) . . . . . . . . . . . . . . . . . . . . 236,900 5.07%
2005 Market Street
Philadelphia, Pennsylvania 19103
All directors and officers as a group
(Nine persons)(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164,083 3.51%
</TABLE>
- -------------------
* Less than 1%
(1) Except as noted above, the address for all persons listed is 4600 E. 48th
Avenue, Denver, Colorado 80216.
(2) Ownership includes both outstanding Common Stock and shares issuable upon
exercise of options that are currently exercisable or will become
exercisable within 60 days after the date hereof.
(3) All percentages are calculated based on the number of outstanding shares in
addition to shares which a person or group has the right to acquire within
60 days of November 30, 1997.
(4) Includes 30,000 shares subject to currently exercisable options.
(5) Includes 8,333 shares subject to currently exercisable options.
(6) Based solely on the respective Schedule 13D or 13G provided to the Company
by such entity.
(7) Includes 65,000 shares of Common Stock subject to currently exercisable
options. Excludes shares of Common Stock as to which officers and
directors disclaim beneficial ownership.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE DIRECTOR NOMINEES IDENTIFIED ABOVE.
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<PAGE> 10
II. PROPOSAL TO APPROVE AMENDMENT
TO THE RESTATED 1993 STOCK OPTION PLAN
The Company's 1993 Stock Option Plan (the "Option Plan") was adopted
in 1993 and has been amended and restated since that date. The Board of
Directors believes that the Option Plan has proven to be of substantial value
in stimulating the efforts of employees and increasing their ownership stake in
the Company. In light of the Company's continued growth, the number of shares
remaining for issuance under the Option Plan is insufficient to provide
adequately for participation by eligible employees, directors and consultants
to whom the Compensation Committee would consider granting options. The Board
of Directors has adopted an amendment to the Option Plan to increase the number
of shares available for issuance under the Option Plan by an additional 150,000
shares of Common Stock, which brings the total amount issuable under the Option
Plan to 1,350,000. As of November 30, 1997, a total of 297,075 non-qualified
and Incentive Stock Options were outstanding, with exercise prices ranging from
$2.50 to $14.25 per share. In addition, as of that date, a total of 789,281
options had been exercised under the Option Plan, which leaves 113,644 shares
currently available for grant under the Option Plan.
SUMMARY OF OPTION PLAN
The Option Plan provides for the granting of incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), nonqualified stock options and
stock appreciation rights ("SARs"), up to a maximum number of 1,200,000 shares.
Nonqualified stock options may be granted to employees, directors and advisors
of the Company, while Incentive Stock Options may be granted only to employees.
No options may be granted under the Option Plan subsequent to February 28,
2003.
The Option Plan is administered by the Compensation Committee of the
Board of Directors, which determines the terms and conditions of the options
and SARs granted under the Option Plan, including the exercise price, number of
shares subject to the option and the exercisability thereof.
The exercise price of all Incentive Stock Options granted under the
Option Plan must be at least equal to the fair market value of the Common Stock
of the Company on the date of grant. In the case of an optionee who owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company, the exercise price of Incentive Stock Options
shall be not less than 110% of the fair market value of the Common Stock on the
date of grant. The exercise price of all nonqualified stock options granted
under the Option Plan shall be determined by the Compensation Committee, but
shall not be less than 85% of the fair market value of the Common Stock. The
term of all nonqualified stock options granted under the Option Plan may not
exceed ten years and the term of all incentive stock options may not exceed
five years. The Option Plan may be amended or terminated by the Board of
Directors, but no such action may impair the rights of a participant under a
previously granted option.
The Option Plan provides the Board of Directors or the Compensation
Committee the discretion to determine when options granted thereunder shall
become exercisable and the vesting period of such options. Upon termination of
a participant's employment or consulting relationship with the Company, all
unvested options terminate and are no longer exercisable. Vested options shall
remain exercisable for a specified period of time following the termination
date. The length of such extended exercise period generally ranges from 30
days to one year, depending on the nature and circumstances of the termination.
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<PAGE> 11
The Board of Directors has approved the amendment and shareholder
approval is not required to amend the Option Plan. However, if shareholders do
not approve the amendment to the Option Plan, Incentive Stock Options granted
pursuant to the amendment may be disqualified from favorable tax treatment.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT TO THE OPTION PLAN WHICH
INCREASES THE NUMBER OF SHARES AVAILABLE PURSUANT TO THE PLAN BY AN ADDITIONAL
150,000 SHARES.
III. SELECTION OF AUDITORS
The firm of Levine Hughes & Mithuen, Inc. has examined the financial
statements of the Company for the period from July 1, 1993 to June 30, 1997.
Subject to shareholder approval, Levine Hughes & Mithuen, Inc. has been re-
appointed by the Board of Directors to serve as the Company's independent
auditors for the 1997-1998 fiscal year. Representatives of Levine Hughes &
Mithuen, Inc. are expected to be present at the Annual Meeting with the
opportunity to make a statement if it is their desire to do so, and will be
available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF LEVINE
HUGHES & MITHUEN, INC. AS INDEPENDENT AUDITORS FOR THE COMPANY.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's
directors, its executive officers, and any persons holding more than ten
percent of the Company's Common Stock are required to report their initial
ownership of the Company's Common Stock and any subsequent changes in that
ownership to the Securities and Exchange Commission, The Nasdaq Stock Market,
Inc., the Pacific Stock Exchange and the Company. Specific due dates for these
reports have been established and the Company is required to disclose in this
proxy statement any failure to file, or late filing, of such reports with
respect to the period ended June 30, 1997. Based solely on the Company's
review of Forms 3, 4 and 5 and amendments thereto furnished to the Company and
all written representations with respect to filing of such Forms, the Company
is aware that a Form 5 to report the grant of 7,500 options was filed by Mr.
Steve Auger, the Treasurer of the Company, one week late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy pursuant to which material
transactions between the Company and its executive officers, directors and
principal shareholders (i.e. shareholders owning beneficially 5% or more of the
outstanding voting securities of the Company) shall be submitted to the Board
of Directors for approval by a disinterested majority of the directors voting
with respect to the transaction. For this purpose, a transaction is deemed
material if such transaction, alone or together with a series of similar
transactions during the same fiscal year, involves an amount which exceeds
$60,000.
ANNUAL REPORT
The Annual Report to Shareholders for the fiscal year ended June 30,
1997 is being sent to all shareholders with this Proxy Statement. The Annual
Report to Shareholders does not form any part of the material for the
solicitation of any Proxy.
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED JUNE
30, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT
EXHIBITS, IS AVAILABLE WITHOUT CHARGE TO ANY SHAREHOLDER OF THE COMPANY UPON
WRITTEN REQUEST TO THE SECRETARY, SPORT-HALEY, INC., 4600 E. 48TH AVENUE,
DENVER, COLORADO 80216.
SHAREHOLDER PROPOSALS
Shareholders who intend to submit proposals for inclusion in the Proxy
Statement relating to the year ending June 30, 1998 must do so by sending the
proposal and supporting statements, if any, to the Company no later than
September 4, 1998. Such proposals should be sent to the attention of the
Corporate Secretary, Sport-Haley, Inc., 4600 East 48th Avenue, Denver, Colorado
80216.
OTHER MATTERS
Except for the matters described herein, management does not intend to
present any matter for action at the Annual Meeting and knows of no matter to
be presented at such meeting that is a proper subject for action by the
shareholders. However, if any other matters should properly come before the
Annual Meeting, it is intended that votes will be cast pursuant to the
authority granted by the enclosed Proxy in accordance with the best judgment of
the person or person acting under the Proxy.
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SPORT-HALEY, INC.
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 10, 1998
KNOW ALL MEN BY THESE PRESENTS: that the undersigned shareholder of
Sport-Haley, Inc. (the "Company") hereby constitutes and appoints Robert G.
Tomlinson, as attorney and proxy, with the power to appoint his substitute, and
hereby authorizes him to represent and vote, as designated below, all of the
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Shareholders of the Company to be held February 10,
1998, and at any and all adjournments thereof with respect to the matters set
forth below and described in the Notice of Annual Meeting of Shareholders and
Proxy Statement dated December 19, 1997, receipt of which is acknowledged.
1. TO CONSIDER AND ACT UPON A PROPOSAL TO ELECT MESSRS. ROBERT G.
TOMLINSON, ROBERT W. HALEY, MARK J. STEVENSON, RONALD J. NORICK AND
JAMES H. EVEREST AS DIRECTORS TO HOLD OFFICE FOR ONE-YEAR TERMS OR UNTIL
THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
[ ] FOR ELECTION OF ALL NOMINEES (Except as shown below)
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
Instructions: To withhold authority to vote for any individual
nominee, strike through the nominee's name below
ROBERT G. TOMLINSON
ROBERT W. HALEY
MARK J. STEVENSON
RONALD J. NORICK
JAMES H. EVEREST
2. TO CONSIDER AND ACT UPON AN AMENDMENT TO INCREASE THE NUMBER OF SHARES
OF COMMON STOCK AUTHORIZED FOR ISSUANCE UNDER THE COMPANY'S 1993 STOCK
OPTION PLAN BY AN ADDITIONAL 150,000 SHARES.
[ ] FOR PROPOSAL
[ ] AGAINST PROPOSAL
[ ] ABSTAIN
3. TO RATIFY THE APPOINTMENT OF LEVINE HUGHES & MITHUEN, INC. AS AUDITORS
OF THE COMPANY.
[ ] FOR RATIFICATION
[ ] AGAINST RATIFICATION
[ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY AND ALL
ADJOURNMENTS THEREOF.
[ ] AUTHORIZED TO VOTE
[ ] ABSTAIN
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder(s). IF NO INDICATION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES LISTED AND FOR PROPOSALS 2 AND 3 AND THE PROXY
HOLDERS WILL VOTE ON ANY PROPOSAL UNDER 4 IN THEIR DISCRETION AND IN THEIR BEST
JUDGMENT.
Please mark, date, and sign exactly as your name appears on your stock
certificate. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If this Proxy is not dated, the Proxy
will be deemed to bear the date the form was mailed to the shareholder.
Dated:
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Signature
Dated:
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Signature if held jointly
