SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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
PLAY-BY-PLAY TOYS & NOVELTIES, 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)(4) 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:
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>
PLAY-BY-PLAY TOYS & NOVELTIES, INC.
4400 TEJASCO
SAN ANTONIO, TEXAS 78218-0267
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 29, 2001
To the Shareholders of
Play-By-Play Toys & Novelties, Inc.
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders of
Play-By-Play Toys & Novelties, Inc. (the "Company") will be held at the San
Antonio Holiday Inn Select, 77 N.E. Loop 410, San Antonio, Texas 78216 on the
29th day of January, 2001, at 1:00 p.m. (local time) for the following purposes:
1. "FOR" the election of Directors of the nominees named on the accompanying
Proxy; and
2. "FOR" the ratification of the selection of Ernest & Young LLP, as
Certified Public Accountants, for the Company for the fiscal year ending
July 31, 2001; and
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Only common shareholders of record at the close of business on December 15,
2000 are entitled to notice of and to vote at the annual meeting.
All shareholders are cordially invited to attend the meeting in person.
However, if you are unable to attend in person and wish to have your shares
voted, PLEASE FILL IN, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. Your proxy may be revoked by
appropriate notice to the Secretary of Play-By-Play Toys & Novelties, Inc. at
any time prior to the voting thereof.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES L. DOW II
SENIOR VICE PRESIDENT
AND SECRETARY
San Antonio, Texas
December 15, 2000
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PLAY-BY-PLAY TOYS & NOVELTIES, INC.
4400 TEJASCO
SAN ANTONIO, TEXAS 78218-0267
(210) 829-4666
DECEMBER 15, 2000
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 29, 2001
This Proxy Statement and the accompanying Proxy and Notice of Annual
Meeting of Shareholders are furnished to holders of common shares, without par
value (the "Common Shares"), of Play-By-Play Toys & Novelties, Inc. (the
"Company") in connection with the solicitation by its Board of Directors (the
"Board") of proxies to be used at the 2000 Annual Meeting of Shareholders of the
Company (the "Annual Meeting") to be held on Monday, January 29, 2001, at 1:00
p.m. at the San Antonio Holiday Inn Select, 77 N.E. Loop 410, San Antonio, Texas
78216, and at any postponements or adjournments thereof. Only those shareholders
of record at the close of business on December 15, 2000 will be entitled to
receive notice of, and to vote at, the Annual Meeting. Copies of this Proxy
Statement and the accompanying Proxy and Notice of Annual Meeting of
Shareholders are first being mailed to shareholders on or about December 20,
2000.
All Common Shares represented by each properly executed Proxy received by
the Board pursuant to this solicitation will be voted in accordance with the
shareholder's directions specified on the Proxy. If no directions have been
specified on a Proxy, the Common Shares represented by that Proxy will be voted
as follows:
"FOR" the election of Directors of the nominees named on the accompanying
Proxy; and
"FOR" the ratification of the selection of Ernest & Young LLP as independent
Certified Public Accountants for the Company for fiscal year 2001.
Management knows of no other matters that may properly be brought, or
which are likely to be brought, before the Annual Meeting. However, if any other
matters are properly brought before the Annual Meeting, the persons named as
proxies in the accompanying Proxy or their substitutes will vote in accordance
with their best judgment on such matters.
Without affecting any vote previously taken, a shareholder signing and
returning a Proxy has the power to revoke it at any time prior to its exercise
by giving notice to the Company in writing mailed to James L. Dow II, Secretary
of the Company, at the Company's executive offices at 4400 Tejasco, San Antonio,
Texas 78218-0267, by executing a subsequent Proxy, or by attending the Annual
Meeting and declaring to the Company such shareholder's intent to vote in
person. Attendance at the Annual Meeting will not, in and of itself, constitute
revocation of a Proxy.
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The presence, in person or by proxy, of the holders of a majority of the
Common Shares issued and outstanding on December 15, 2000, is necessary to
constitute a quorum at the Annual Meeting. As of December 15, 2000, the Company
had 7,395,000 Common Shares issued and outstanding.
Under Texas law and the Company's Amended and Restated Bylaws, each
shareholder is entitled to one vote for each Common Share held. Common Shares
represented in person or by proxy but not voted with respect to a proposal are
counted as present. In votes other than for the election of directors, the
effect of abstention or a non-vote is the same as a "no" vote. In the election
of directors, Common Shares as to which the authority to vote is withheld and
the Common Shares represented in person or by proxy but not voted with respect
to the election of directors are not counted toward the election of directors or
toward the election of the individual nominees specified on the proxy.
All costs of solicitation of the proxies will be borne by the Company.
Solicitation will be made by mail. Proxies may be further solicited at no
additional compensation by officers, directors or employees of the Company by
telephone, written communication or in person. Upon request, the Company will
reimburse banks, brokerage firms, and other custodians, nominees and fiduciaries
for expenses reasonably incurred by them in sending proxy materials to the
beneficial owners of Common Shares of the Company. No solicitation will be made
by specially engaged employees or other paid solicitors.
MANAGEMENT
The names of the directors and executive officers of the Company, their
respective ages, positions and director terms are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION TERM
---- --- -------- --------
<S> <C> <C> <C>
Arturo G. Torres 64 Chief Executive Officer and Chairman of the Board 2000
Richard R. Neitz 51 President, Chief Operating Officer and Director 2001
James L. Dow II 46 Senior Vice President, General Counsel and Secretary -
Joe M. Guerra 38 Chief Financial Officer, Assistant Secretary and Treasurer -
Mark L. Haug 44 Senior Vice President of Merchandise & Hardgoods, Product -
Development and Creative Services
Manuel Fernandez-Barroso 66 President of Caribe Marketing & Sales Co., Inc. 2002
Ottis W. Byers 56 Director 2001
Guarione M. Diaz 60 Director 2000
Howard G. Peretz 61 Director 2002
Heriberto "Berto" Guerra, Jr. 50 Director 2000
Steve K.C. Liao 54 Director 2001
</TABLE>
ARTURO G. TORRES has been Chief Executive Officer and Chairman of the
Board of the Company since April 1993. Mr. Torres is a nominee to the Board of
Directors for the 2000 Annual Shareholders' Meeting. Prior thereto, Mr. Torres
was the Founder, Chairman of the Board, Chief Executive Officer and President of
Pizza Management, Inc. ("PMI") from its inception in 1972 to its eventual sale
in 1992. PMI was the largest (approximately 240 restaurants) private Pizza Hut,
Inc. franchisee in the world with operations in the United States, the
Commonwealth of Puerto Rico, Spain and the United States Virgin Islands.
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RICHARD R. NEITZ has been President and Chief Operating Officer of the
Company since November 2000 and was appointed as Director of the Company in
October 1999 by the Company's Board of Directors. From October 1999 to November
2000, he was President of the Company's Retail Division. From 1992 to September
1999, Mr. Neitz was President, Chief Operating Officer and Director of DSI Toys
Inc., formerly Diversified Specialists, Inc. Prior to that, Mr. Neitz was Senior
Vice President, Marketing and Product Development of Diversified Specialists.
Mr. Neitz is a member of the Board of Directors of the Toy Manufacturers of
America ("TMA") and serves as the Chairman of its Membership Committee.
JAMES L. DOW II has been Senior Vice President, General Counsel and
Secretary of the Company since August 2000. Prior thereto, from August 1998
through July 2000 Mr. Dow served as Senior Vice President of Administration,
Legal Affairs and Assistant Secretary of Carreker Corporation. From July 1995
through July 1998, Mr. Dow served as Director, Executive Vice President of
Operations, Legal Affairs and Chief Financial Officer of Intergo Communications,
Inc. From March 1991 though June 1995, Mr. Dow served as Vice President, General
Counsel and Secretary of Elcor Corporation. And from November 1984 to February
1991, Mr. Dow served as Deputy General Counsel and Assistant Secretary of
Electronic Data Systems, Inc. Mr. Dow received a Bachelor of Science Degree in
Political Science and Economics from the University of Arizona, Tucson, Arizona
in 1977 and a Juris Doctorate Degree of Law from Pepperdine University, Malibu,
California, in 1980.
JOE M. GUERRA has been Chief Financial Officer of the Company since
February 1999 and was appointed as Secretary and Treasurer of the Company in
October 1999. In September of 2000, Mr. Guerra was appointed Assistant Secretary
after resigning his position as Secretary. From February 1998 to February 1999,
Mr. Guerra served as the Company's Controller. From August 1996 to January 1998,
Mr. Guerra was the Chief Financial Officer of a San Antonio based company that
operated restaurants. From November 1994 to July 1996, Mr. Guerra served as the
Chief Financial Officer of the Company. Mr. Guerra, whom is a Certified Public
Accountant, received a Bachelor of Business Administration degree in accounting
from St. Mary's University, San Antonio, Texas, in 1984.
MARK L. HAUG has been Senior Vice President of Merchandise & Hardgoods,
Product Development and Creative Services for the Company since February 1999
and from June 1996 to February 1999 served as Vice President of Merchandise
Hardlines and Product Development. From March 1990 through December 1994, Mr.
Haug served as Import and Product Development Manager for Acme Premium Co. Acme
merged with Ace Novelty Co. in December 1994 where Mr. Haug maintained the
position of Merchandise and Product Development Manager. He held this position
until the Company acquired Ace Novelty in June 1996. Mr. Haug served as Vice
President of Merchandising for Toy King, a retail toy chain based in Orlando,
Florida from October 1987 to March 1990. Prior to that Mr. Haug served as
Department Manager, Assistant Store Operations Manager, Assistant Buyer,
Hardlines Import Coordinator, and Boys' Toys/Sporting Goods Buyer for Venture
Stores from 1974 to October 1987.
MANUEL FERNANDEZ-BARROSO has been President of Caribe Marketing & Sales
Co., Inc. ("Caribe"), the Company's Latin American subsidiary, since March 1999.
Mr. Barroso was appointed as Director of the Company by the Company's Board of
Directors in March 1999. Prior thereto, Mr. Barroso was the Founder and
President of Caribe from its inception to its acquisition by the Company in
March 1999. Caribe is headquartered in San Juan, Puerto Rico and prior to its
acquisition, was the Company's distributor in Puerto Rico for the preceding two
years, and was a distributor for other manufacturers throughout Puerto Rico and
Central American for more than 15 years. Mr. Barroso resigned from the Company's
Board of Directors in December 2000 due to personal reasons; however, he will
remain in his position as President of Caribe Marketing & Sales Co., Inc.
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OTTIS W. BYERS has been a Director of the Company since September 1995.
Since May 1998, Mr. Byers has been the owner of Circle CB Transport, Inc. of
Crockett, Texas. Since 1990, Mr. Byers has owned 4-B Ranch in Crockett, Texas.
From 1978 through 1994, Mr. Byers owned Byers Enterprises, which operated three
Mexican food restaurants in Texas. Mr. Byers received a Bachelor of Science
degree in history from Sam Houston State University, Huntsville, Texas.
GUARIONE M. DIAZ was elected to the Company's Board of Directors in
January 2000. Mr. Diaz is a nominee to the Board of Directors for the 2000
Annual Shareholders' Meeting. Mr. Diaz is currently President and Executive
Director of the Cuban American National Council, Inc., a private nonprofit
organization. Mr. Diaz has served on the Board of Directors of the National
Council of La Raza and the National Hispanic Leadership Agenda. More recently,
Mr. Diaz served on the Florida Commission on Education Reform and
Accountability, the National Hispana Leadership Institute and the U.S. Census
Advisory Committee on Race and Ethnic Populations. In 1994, Mr. Diaz was
appointed as United States Ombudsman/Civilian Liaison at the U.S. Naval base in
Guantanamo, Cuba. Mr. Diaz holds a Masters Degree from Columbia University and a
B.A. from St. Francis College in New York City.
HOWARD G. PERETZ was appointed by the Board of Directors of the Company as
Director of the Company in June of 2000 filling the vacant seat previously held
by Mr. Tomas Duran who resigned in February of 2000. Mr. Peretz also serves as a
consultant to the Company since October 1999. From January 1981 through
September 2000, Mr. Peretz provided independent consulting services for client
companies engaged in the toy marketplace in the primary areas of strategic
planning, marketing, advertising, and product development.
HERIBERTO "BERTO" GUERRA, JR. has been a Director of the Company since its
inception in May 1992. Mr. Guerra is the Executive Vice President, External
Affairs for Southwestern Bell Telephone, and has been employed by that company
or an affiliate since 1978. Mr. Guerra is a nominee to the Board of Directors
for the 2000 Annual Shareholders' Meeting. Mr. Guerra served on President Bush's
Hispanic Alliance on Free Trade from 1989 through 1992 and has served on the
College of Education Foundation Advisory Council of The University of Texas from
1988 to the present. Mr. Guerra is the Chairman of San Antonio Hispanic Chamber
of Commerce. In April 1995, Mr. Guerra was elected to the Board of Trustees of
The University of Texas-Pan American Foundation. Mr. Guerra received a Bachelor
of Science degree in interdisciplinary management from Southwest Texas State
University in 1984.
STEVE K.C. LIAO has been a Director of the Company since October 1995.
Since 1989, Mr. Liao has been a real estate investor and property manager of
multi-family properties in Houston, Texas.
There are no family relationships among any of the executive officers or
directors of the Company.
NUMBER, TERM AND COMPENSATION OF DIRECTORS
The Company's Articles of Incorporation divide the Board into three
classes of as equal size as possible, with the terms of each class expiring in
consecutive years so that only one class is elected in any given year.
Successors to directors whose terms have expired are required to be elected by
shareholder vote. Vacancies in unexpired terms and any additional positions
created by Board action are filled by action of the existing Board. The terms of
Messrs. Torres, Diaz, and Guerra will expire at the 2000 meeting of
shareholders, and the terms of Messrs. Byers, Neitz and Liao will expire at the
2001 annual meeting of shareholders. The term of Mr. Peretz will expire at the
2002 annual meeting of shareholders of the Company. The executive officers of
the Company are elected annually by the Board following the annual
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<PAGE>
meeting of shareholders and serve at the discretion of the Board until their
successors are elected and qualified.
The Company had entered into a Convertible Loan Agreement ("Convertible
Loan Agreement") dated July 3, 1997, pursuant to which the Company issued $15
million of convertible subordinated notes. On October 22, 1999, the Company and
the holders of the convertible subordinated notes entered into a First Amendment
to the Convertible Loan Agreement ("First Amendment"). The First Amendment
permits two representatives designated by the holders of the convertible
debentures ("Lender Representatives") to attend as observers all meetings of its
board of directors and comment on matters discussed at such meetings.
Additionally, if the Company fails to pay in full all outstanding principal and
accrued interest on the convertible debentures on December 31, 2000, the Company
shall cause those persons designated by the holders of a majority of the
outstanding principal amount of the debentures ("Lender Directors") to be
appointed as members of the Board of Directors, until the debentures are paid in
full, one or more directors, up to a number that is the greater of (i) three and
(ii) a proportion of the full Board of Directors as equal as possible to the
percentage of the holders' ownership of Common Stock on an as-converted basis.
Outside members of the Board are compensated $1,000 per meeting for
attending Board meetings, $500 per meeting for attending Board committee
meetings and receive reimbursement for out-of-pocket expenses incurred for
attendance at meetings. During fiscal 2000, total outside directors' fees of
$21,000 were paid in cash. Management directors receive no fees for their
services.
5
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Messrs. Torres, Diaz and Guerra are the Board's nominees for election as
directors; to serve as Category I directors until the 2003 Annual Meeting of
shareholders or until their successors are elected and qualified. Information
concerning the nominees is set forth before. Messrs. Torres and Guerra were
previously elected to the Board by the Company's shareholders. Mr. Diaz was
previously appointed to the Board by the Board of Directors of the Company.
The Board currently consists of 7 members. The Board has determined to
nominate three persons for election. The proxies cannot be voted for a greater
number of persons than the number of nominees named.
If, for any reason, any of the nominees shall become unavailable for
election, the individuals named in the enclosed Proxy may exercise their
discretion to vote for any substitutes proposed by the Board, unless the Board
should decide to reduce the number of directors to be elected at the Annual
Meeting. The affirmative vote of a majority of the votes cast is required for
the election of each nominee for director.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED
HEREIN.
MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
BOARD MEETINGS
The Board held four meetings during the fiscal year ended July 31, 2000.
All directors attended at least 75% of the meetings of the Board and Board
committees of which they are members.
BOARD COMMITTEES
The Company's Board has two standing committees: the Audit Committee and
the Compensation Committee. On September 6, 2000, Mr. Liao was elected Chairman
of the Audit Committee by the Board of Directors. The functions of the Audit
Committee, of which Messrs. Byers, Diaz, Guerra, and Liao are members, are to
make recommendations to the Board regarding the engagement of the Company's
independent accountants and to review with management and the independent
accountants the Company's internal controls, financial statements, basic
accounting and financial policies and practices, audit scope and competency of
accounting personnel. The Audit Committee held three meetings during fiscal
2000. Likewise, on September 6, 2000, Mr. Guerra was reelected Chairman of the
Compensation Committee. The functions of the Compensation Committee, of which
Messrs. Byers, Diaz, Guerra, and Liao are members, are to review and recommend
to the Board the compensation, stock options and employment benefits of all
officers of the Company, to administer the Play-By-Play Toys & Novelties, Inc.
1994 Incentive Plan (the "Incentive Plan"), to fix the terms of other employee
benefit arrangements and to make awards under such arrangements. The
Compensation Committee held four meetings during fiscal 2000. During fiscal
2000, none of the individuals serving on the Compensation Committee was an
officer or employee of the Company. The Board does not have a Nominating
Committee.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires each director and officer of the Company, and each
person who owns more than 10% of a registered class of the Company's equity
securities, to file by specific dates with the United States Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and 10% shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. The
Company is required to report in this Proxy Statement any failure of its
directors and officers and beneficial owners of more than 10% of the Company's
Common Stock to file by the relevant due date any of these reports during the
Company's fiscal year.
To the Company's knowledge, during fiscal 2000 all Section 16(a) filing
requirements applicable to the Company's officers, directors and 10%
shareholders were complied with, except for one late filing each as to Arturo G.
Torres concerning three transactions, Guarione M. Diaz concerning one
transaction, Manuel F. Barroso concerning one transaction, Richard R. Neitz
concerning one transaction, Saul Gamoran (former Executive Vice President,
Secretary and General Counsel) concerning one transaction, Howard G. Peretz
concerning one transaction and James Weisfield (former Senior Vice President and
General Counsel) concerning one transaction.
EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE EXCHANGE ACT THAT MIGHT INCORPORATE FUTURE FILINGS BY REFERENCE, INCLUDING
THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT OF THE
COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS, AND SHALL NOT BE DEEMED SOLICITING MATERIAL OR
FILED UNDER THE SECURITIES ACT OR THE EXCHANGE ACT.
REPORT OF THE COMPENSATION COMMITTEE
THE COMPENSATION COMMITTEE
The Compensation Committee's stated purpose is to review and recommend to
the Board the compensation, stock options and employment benefits of all
officers of the Company, administer the Incentive Plan, fix the terms of other
employee benefit arrangements and make awards under such arrangements. The
Compensation Committee is composed of directors who have never served as
officers of the Company. The following is a summary of policies of the
Compensation Committee that affect the compensation paid to executive officers,
as reflected in the tables and text set forth elsewhere in this Proxy Statement.
GENERAL COMPENSATION POLICY. The Compensation Committee's overall policies
with respect to executive officers is to offer competitive compensation
opportunities for such persons based upon their personal performance, the
financial performance of the Company and their contribution to that performance.
Each executive officer's compensation package is comprised of three elements:
(i) base salary that reflects individual performance and is designed primarily
to be competitive with salary levels in the industry, (ii) stock-based incentive
awards designed to strengthen the mutuality of interests between the executive
officers and the Company's shareholders, and (iii) for executive officers and
certain personnel that
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perform sales and marketing functions, annual cash bonuses related to the
performance of the Company for such individual's respective functional area.
FACTORS. Several important factors considered in establishing the
components of each executive officer's compensation package for the 2000 fiscal
year are summarized below. Additional factors were taken into account to a
lesser degree. The Compensation Committee may, in its sole discretion, apply
entirely different factors, such as different measures of financial performance
for future fiscal years. However, it is presently contemplated that all
compensation decisions will be designed to further the overall compensation
policy described above.
BASE SALARY. The base salary for each executive officer is set on the
basis of personal performance, the salary levels in effect for comparable
positions in similarly situated companies within the toy industry or similarly
sized public companies and internal comparability considerations. However, the
Compensation Committee did not conduct a formal survey of executive officer
salaries at such companies. The Compensation Committee believes that the
Company's most direct competitors for executive talent are not limited to the
companies that the Company would use in a comparison for shareholder returns.
Therefore, the compensation comparison group is not the same as the industry
group index used in the "Performance Graph" section below.
STOCK-BASED INCENTIVE COMPENSATION. The Company adopted the Incentive Plan
in August 1994. The Incentive Plan authorizes the Company to award incentive
stock options and non-qualified stock options to purchase Common Stock and
restricted stock to officers and other employees of the Company. The purpose of
the Incentive Plan is to attract, retain and motivate officers and employees. On
June 27, 1996, the Company registered with the SEC 700,000 shares authorized
under the Incentive Plan. On December 11, 1997, the shareholders approved an
increase in the number of shares authorized to award incentive options and
non-qualified stock options by 600,000 shares to 1,300,000 shares. On March 17,
1998, the Company registered with the SEC the additional 600,000 shares. Stock
options may be exercised at a purchase price as recommended by the Compensation
Committee and determined by the Board of Directors, provided that the exercise
price per share under the Incentive Plan shall be an amount not less than 100%
of the fair market value on the date the option is granted or 110% of fair
market value for beneficial owners of 10% or more of the Company's outstanding
shares. Thus, the optionee receives a return only if the market price of the
shares appreciates over the option term. The grants are designed to align the
interests of the optionees with those of the shareholders and provide each
individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business, even though
certain executive officers of the Company are already significant shareholders
of the Company (see "Principal Shareholders"). Moreover, the long-term vesting
schedules encourage a long-term commitment to the Company by its executive
officers and other optionees. The size of the option grant to each optionee is
set at a level that the Compensation Committee deems appropriate in order to
create a meaningful opportunity for stock ownership based upon the individual's
current position with the Company, but also takes into account the individual's
potential for future responsibility and promotion over the option vesting
period, and the individual's performance in recent periods. The Compensation
Committee periodically reviews the number of shares owned by, or subject to
options held by, each executive officer, and additional awards are considered
based upon past performance of the executive officer.
ANNUAL CASH BONUSES. The Company does not have a formal cash bonus program
for executive officers, although cash bonuses have been paid from time to time
in the past to selected executive officers in recognition of superior individual
performance. Cash bonuses of $4,250 and $3,500 were paid to Mark L. Haug and
Manuel Fernandez-Barroso, respectively, during fiscal 2000.
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CHIEF EXECUTIVE OFFICER
In fiscal 2000, Arturo G. Torres, Chairman and Chief Executive Officer of
the Company, received total cash payments of $425,000 in salary. Mr. Torres does
not have an employment agreement with the Company.
LIMITATIONS ON DEDUCTIBILITY
The Compensation Committee has reviewed the Company's informal
compensation policies in light of amendments to the Internal Revenue Code
enacted during 1993 that generally limit deductions for compensation paid to
certain executive officers to $1,000,000 per annum (certain performance based
compensation is not subject to that limit). At present levels of compensation,
these amendments do not limit the deductions to which the Company is entitled
and the Compensation Committee has therefore concluded that no changes in the
Company's compensation policies as a result of these amendments are appropriate.
SUMMARY
The Compensation Committee believes that the compensation programs of the
Company and the administration of those programs well serve the interests of the
Company's shareholders. These programs allow the Company to attract, retain and
motivate exceptional management talent and to compensate executives in a manner
that reflects their contribution to both the short and long-term performance of
the Company. The Company intends to continue to emphasize programs that it
believes positively affect shareholder value.
Play-By-Play TOYS & NOVELTIES, INC. COMPENSATION COMMITTEE
2000 MEMBERS
Ottis W. Byers, Guarione M. Diaz, Berto Guerra, Jr.,
and Steve K. C. Liao
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PERFORMANCE GRAPH
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OR THE EXCHANGE ACT THAT MIGHT
INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART,
THIS SECTION ENTITLED "PERFORMANCE GRAPH" SHALL NOT BE INCORPORATED BY REFERENCE
INTO ANY FILINGS OR INTO ANY FUTURE FILINGS, AND SHALL NOT BE DEEMED SOLICITING
MATERIAL OR FILED UNDER THE SECURITIES ACT OR THE EXCHANGE ACT. THIS GRAPH IS
PRESENTED IN ACCORDANCE WITH UNITED STATES SECURITY AND EXCHANGE COMMISSION
REQUIREMENTS. YOU ARE CAUTIONED AGAINST DRAWING ANY CONCLUSIONS FROM THIS
INFORMATION, AS PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE
PERFORMANCE. THIS GRAPH IN NO WAY REFLECTS A FORECAST OF FUTURE FINANCIAL
PERFORMANCE OF THE COMPANY.
The following graph compares the cumulative total shareholder return on
the Company's Common Stock from July 19, 1995 (the date the Company became a
public company) until July 31, 2000, with the cumulative total return of the
Standard and Poor's Index and the Peer Group Index (as defined below). The graph
assumes the investment of $100 in the Company's Common Stock and in each of the
indexes on July 19, 1995 and reinvestment of all dividends. The initial public
offering price of the Company's Common Stock on July 19, 1995 was $12.25 per
share.
COMPARISON OF CUMULATIVE TOTAL RETURN*
FOR THE PERIOD ENDED JULY 31, 2000
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
CUMULATIVE TOTAL RETURN* JULY 31, 2000
------------------------ -------------
Play-By-Play Toys & Novelties, Inc........................... 11.21
S&P 500...................................................... 277.12
Peer Group**................................................. 5.32
* Annual Return assumes reinvestment of dividends. There were no dividends paid
by the Company during the period presented. Cumulative Total Return assumes
an initial investment of $100 on July 19, 1995.
** Peer Group index is composed of toy companies with similar market
capitalization. These companies are DSI Toys Inc., Empire of Carolina Inc.,
Grand Toys Intl, Inc., Just Toys, Inc., and Toymax International, Inc.
10
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to annual
and long-term compensation paid or awarded to the Company's current chief
executive officer and of the other four most highly-paid executive officers of
the Company whose annual compensation exceeded $100,000 (together, the "Named
Executive Officers") for or with respect to the fiscal years ended December 31,
2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------------------- ------------------------------------------
# SHARES
OTHER RESTRICTED UNDERLYING
NAME AND FISCAL ANNUAL STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) AWARDS (2)(3) COMPENSATION
--------------------------------- ----- --------- -------- ----------------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Arturo G. Torres, 2000 $425,000 - - - - -
Chairman of the Board 1999 $425,000 - - - - -
and Chief Executive Officer 1998 $368,154 $200,000 - - 200,000 -
Raymond G. Braun, 2000 $225,000 - - - - -
(former) President and 1999 $225,000 - - - - -
Chief Operating Officer (4) 1998 $200,577 - - - 70,000 -
Mark L. Haug, 2000 $200,000 4,250 - - - -
Senior Vice President of 1999 $180,000 15,000 - - - -
Merchandise & Hardgoods, 1998 $168,000 20,000 - - - -
Product Development and
Creative Services
Richard R. Neitz, 2000 $182,692 - - - 100,000 -
President and 1999 $ - - - - - -
Chief Operating Officer (5) 1998 $ - - - - - -
Manuel Fernandez-Barroso, 2000 $160,000 3,500 $36,252 - 10,000 -
President of Caribe 1999 $ 53,333 - $12,084 - - -
Marketing & Sales Co., Inc. (6) 1998 $ - - - - - -
</TABLE>
(1) Certain of the Company's executive officers receive personal benefits in
addition to salary; however, the Company has concluded that the aggregate
amounts of such personal benefits did not exceed the lesser of $50,000 or
10% of annual salary reported for any named executive officer, except for
Mr. Barroso who received $10,800 and $3,600 in automobile allowance in
fiscal 2000 and 1999, respectively, and $25,452 and $8,484 in premiums
paid by the Company in 2000 and 1999, respectively, for an individual life
insurance policy.
(2) The outstanding options were granted pursuant to the Company's Incentive
Plan except for Mr. Neitz whom was granted 100,000 non-qualified stock
options pursuant to his employment agreement.
(3) Options granted on August 29, 1997 were granted outside the Incentive Plan
at an exercise price of $19.00 and options granted on December 11, 1997
were granted pursuant to the Company's Incentive Plan at an exercise price
of $18.9375. These options were terminated via Board Resolution and signed
termination agreements on January 26, 2000.
(4) Mr. Braun resigned from the Board of Directors and his responsibilities
and positions with the Company on November 28, 2000.
(5) Mr. Neitz joined the Company on October 4, 1999.
(6) Mr. Barroso joined the Company on March 30, 1999 when the Company acquired
Caribe Marketing & Sales Co., Inc. Mr. Barroso resigned from the Company's
Board of Directors in December 2000 due to personal reasons; however, Mr.
Barroso will remain in his position as President of Caribe Marketing &
Sales Co., Inc.
11
<PAGE>
EMPLOYMENT ARRANGEMENTS
Other than employment agreements with Mr. Braun and Mr. Neitz, the Company
does not have employment agreements with any of its United States employees. In
November 1996, the Company entered into an employment agreement with Mr. Braun,
which agreement expired on January 2, 2000. Mr. Braun resigned from his position
as President and Chief Operating Officer in November 2000.
STOCK OPTION GRANT TABLE
The following table sets forth certain information concerning options
granted to the named executive officers during the Company's fiscal year ended
July 31, 2000:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) FISCAL 2000 (1) ($/SHARE) DATE ($/SH) (2)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard R. Neitz 100,000 37.66% $3.875 10/4/04 $1.67
Manuel Fernandez-Barroso 10,000 3.77% $3.375 1/26/05 $3.19
</TABLE>
(1) Based upon 265,500 options to purchase shares of Common Stock granted in
fiscal 2000
(2) The per share value is based on the Black-Scholes Option pricing model.
The calculation included the following assumptions: estimated volatility
of 166.5% based on historical stock prices of comparable companies);
risk-free interest rate ranging from 4.64% to 6.67% (based on returns
available through U.S. Treasury bonds); no dividend yield; and an expected
life of options ranging from 5 to 12 years. Option values are dependent on
general market conditions and the performance of the Common Stock. There
can be no assurance that the values in this table will be realized.
12
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, with respect to the executive officers
named in the Summary Compensation Table, information with respect to the
aggregate amount of options exercised during fiscal 2000, any value realized
thereon, the number of unexercised options at the end of fiscal year 2000
(exercisable and unexercisable) and the value with respect thereto.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END (#) AT FISCAL YEAR END ($) (1)
ACQUIRED VALUE ------------------------------ ----------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXCERCISABLE EXERCISABLE UNEXCERCISABLE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Arturo G. Torres - - 70,000 - - -
Raymond G. Braun - - 140,000 60,000 - -
Mark L. Haug - - 21,000 10,000
Richard R. Neitz - - - 100,000 - -
Manuel Fernandez-Barroso - - 2,000 8,000 - -
</TABLE>
(1) Total value of options based on fair market value of $1.50 per share as of
July 31, 2000, the sale price of the Common Stock as reported by the
Nasdaq National Market system on that date.
1994 INCENTIVE PLAN
SCOPE. During fiscal 1995, the Board of Directors and shareholders of the
Company approved the Incentive Plan. The Incentive Plan authorizes the Company
to award incentive stock options and non-qualified stock options to purchase
Common Stock and restricted stock to officers and other employees of the
Company. On June 27, 1996, the Company registered with the Securities and
Exchange Commission 700,000 shares authorized under the Incentive Plan. On
August 29, 1997, the Board of Directors amended the Incentive Plan to increase
the number of shares authorized to award incentive options and non-qualified
stock options by 600,000 shares to 1,300,000. This amendment was approved at the
December 1997 shareholders' meeting. On March 17, 1998, the Company registered
with the Securities and Exchange Commission the additional 600,000 shares. The
purpose of the Incentive Plan is to attract, retain and motivate officers and
employees. If an award made under the Incentive Plan expires, is canceled or
otherwise is terminated, those shares will be available for future awards under
the Incentive Plan. The Incentive Plan will terminate on August 24, 2004.
ADMINISTRATION. The Incentive Plan is administered by the Company's
Compensation Committee (the "Committee"). Subject to the provisions of the
Incentive Plan, the Committee will have authority to select those officers and
other employees of the Company to receive awards, to determine the time or times
of receipt, to determine the types of awards and the number of shares covered by
the awards, and to establish the terms, conditions and provisions of such
awards.
STOCK OPTIONS. Both incentive stock options and non-qualified stock
options (collectively referred to as "Stock Options") may be granted pursuant to
the Incentive Plan. All Stock Options granted under the Incentive Plan will have
an exercise price per share to be determined by the Committee, provided that the
exercise price per share under each Stock Option shall not be less than the fair
market value of a share of Common Stock at the time the Stock Option is granted
(110% of such fair market value in the case of incentive stock options granted
to a shareholder who owns 10% or more of the Company's Common Stock).
13
<PAGE>
The maximum term for all Stock Options granted under the Incentive Plan is ten
years (five years in the case of an incentive stock option granted to a
shareholder who owns 10% or more of the Company's Common Stock). Stock Options
are exercisable at such time and in such installments as the Committee may
provide at the time the Stock Option is granted. During fiscal 2000, the
Committee granted incentive stock options to purchase 140,500 shares of Common
Stock under the Incentive Plan to certain officers and employees of the Company.
At July 31, 2000, 412,800 incentive stock options were outstanding. The options
generally have a four-year vesting period and are exercisable at prices per
share ranging from $1.6875 to $19.00. One-fifth of such options will become
exercisable six months after the date of grant and on each of the first four
anniversaries of the date of grant. In the event of a change in control of the
Company, as defined in the Incentive Plan, awards under the Incentive Plan
become exercisable within 60 days of the change in control. Options to purchase
229,000 shares of Common Stock were exercisable as of July 31, 2000.
RESTRICTED STOCK. Restricted stock awards are grants of Common Stock made
to officers and employees subject to conditions established by the Committee.
The terms of a restricted stock award, including the restrictions placed on such
shares and the time or times at which such restrictions will lapse, shall be
determined by the Committee at the time the award is made. Unless the Committee
determines otherwise, holders of restricted stock shall have the right to vote
the shares of restricted stock and to receive all dividends thereon. The
Committee may determine at the time of an award of restricted stock that
dividends paid on such shares may be paid to the grantee or deferred. Deferred
dividends (together with any interest accrued thereon) will be paid upon the
lapsing of the restrictions on the shares of restricted stock or forfeited upon
the forfeiture of the shares of restricted stock. The agreements evidencing
awards of restricted stock shall set forth the terms and conditions of such
awards and the effect of a grantee's termination of employment. No restricted
stock shares have been issued pursuant to the Incentive Plan as of July 31,
2000.
TERMINATION AND AMENDMENT. The Incentive Plan may be terminated or amended
by the Board, provided that, in the absence of shareholder approval, no
amendment of the Incentive Plan may materially increase the total number of
shares of Common Stock with respect to which awards may be made under the
Incentive Plan, change the exercise price of a Stock Option, materially modify
the requirements as to eligibility for participation in the Incentive Plan or
materially increase the benefits accruing to participants under the Incentive
Plan. No amendment of the Incentive Plan may adversely alter or impair any Stock
Option or share of restricted stock awarded under the Incentive Plan prior to
such amendment without the consent of the holder thereof.
NON-PLAN OPTIONS
In connection with the employment of Raymond Braun in January 1997,
non-qualified stock options to purchase 200,000 shares of Common Stock were
granted at a purchase price of $8.00 per share. These options vest on or after
the first day of each calendar month, commencing February 1, 1997, through and
including January 1, 2002. In connection with these option grants, the Company
recognized $140,000 of compensation expense and has a balance of $198,333 of
unearned compensation in fiscal 2000.
REGISTRATION OF SHARES
On June 27, 1996, the Company registered 700,000 shares of Common Stock
that are issuable pursuant to the Incentive Plan or as non-qualified stock
options with the United States Securities and Exchange Commission. On March 17,
1998, the Company registered 600,000 additional shares that are issuable
pursuant to the Incentive Plan or as non-qualified stock options with the United
States Securities and Exchange Commission.
14
<PAGE>
RESTRICTION ON ISSUANCE OF STOCK OPTIONS BY CONVERTIBLE DEBENTURE AGREEMENT
The First Amendment to the Convertible Loan Agreement entered into on October
22, 1999, limits the Company's ability to issue stock options to employees to
the amount of options held by employees, in the aggregate, as of the date of the
amendment.
PRINCIPAL SHAREHOLDERS
The following table presents certain information as of July 31, 2000
regarding the beneficial ownership of the Company's Common Stock by (i) each
person the Company knows to be the beneficial owner of 5% or more of the
outstanding shares of Common Stock, (ii) each named executive officer, (iii)
each director of the company and (iv) all executive officers and directors of
the Company as a group. Except as indicated in the footnotes to this table and
pursuant to applicable community property laws, the Company believes that each
shareholder named in this table has sole investment and voting power with
respect to the shares set forth opposite such shareholder's name.
NUMBER
SHARES
BENEFICIALLY
NAME OWNED PERCENTAGE
-------------------------------------------------------------------------
Arturo G. Torres 1,852,990(1)(2)(3) 24.82%
Raymond G. Braun 141,930 (2) 1.88%
Manuel Fernandez-Barroso 82,000 1.11%
Berto Guerra, Jr. 40,665 (2)(3) *
Steve K. C. Liao 22,500 (2) *
Mark L. Haug 21,000 *
Ottis W. Byers 20,000 (2) *
Joe M. Guerra 8,570 (2) *
Guarione M. Diaz 5,000 *
Richard R. Neitz 5,000 *
James L. Dow 0 *
Howard G. Peretz 0 *
--------------
All directors and executive
officers as a group (twelve persons) 2,199,655 26.23%
==============
* Less than 1%
(1) Includes 49,200 shares held in trust for the benefit of Mr. Torres' three
(16,400 shares each), for which Mr. Torres is the trustee and has sole
voting and investment power.
(2) At the Board meeting on 1/26/00, the Board voted to terminate options
granted to directors and officers on 8/29/97, 12/11/97 and 2/6/98. The
total number of voluntarily terminated options was 260,000 from 8/29/97,
70,000 from 12/11/97 and 45,000 from 2/6/98.
(3) Options granted on 4/13/95 expired on 4/13/00.
The business address of all officers and directors of the Company is 4400
Tejasco, San Antonio, Texas 78218-0267.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Torres leases seven land and building packages to third parties with
whom the Company has revenue sharing agreements concerning the placement of
amusement machines, which may benefit Mr. Torres due to percentage rent
provisions in these real property leases. The Company paid such third parties
approximately $501,880 during fiscal 2000, pursuant to the terms of such revenue
sharing agreements. The Company believes the amounts paid to such third parties
were fair and reasonable and were on terms at least as favorable as would be
available from non-affiliated parties.
The Company has a 51% ownership in its Los Angeles, California facility.
In October 1999, Mr. Torres purchased the remaining 49% interest in this
facility from a third party, and has leased it to the Company since that date.
In connection with this lease, the Company paid rents totaling $157,500 to Mr.
Torres during fiscal year 2000.
On March 20, 2000, the Company obtained a loan in the principal amount of
$2.5 million from Mr. Torres. The loan provided for interest at 8% per annum and
was secured by a first lien on the Company's 1999 Federal income tax refund of
approximately $2.8 million. The tax refund was received and the loan from Mr.
Torres plus a nominal amount of accrued interest was repaid shortly thereafter.
Mr. Peretz is affiliated with a company from which the Company has secured
two product licensing agreements, and also acts as a consultant to the Company
in sales, licensing and product development matters. The product licensing
agreements call for the payment of minimum guaranteed royalties, as well as
royalties based on sales of the licensed items over the licensing periods. The
Company made advance payments on the license agreements totaling $10,000 in
fiscal 2000. The Company paid consulting fees to Mr. Peretz totaling $87,125
during fiscal year 2000.
From April 1999 through August 2000, the Company leased its San Juan,
Puerto Rico facility from Mr. Barroso. In connection with this lease, the
Company paid rents totaling $60,000 to Mr. Barroso during fiscal year 2000. The
Company moved to a new facility in Puerto Rico in August 2000.
In the future, all transactions between the Company and its affiliated
entities, executive officers, directors or significant shareholders will be on
terms, which will continue to be no less favorable to the Company than the
Company could obtain from non-affiliated parties.
16
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
At a special meeting held on July 24, 2000, the Audit Committee of the
Board of Directors of the Company approved the dismissal of
PricewaterhouseCoopers LLP as the Company's principal accountant to audit the
Company's financial statements and approved the engagement of Ernst & Young LLP
as the Company's principal accountant to audit the Company's financial
statements for the fiscal year ending July 31, 2000.
The reports of PricewaterhouseCoopers LLP on the Company's financial
statements for the past two fiscal years did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles.
In connection with the audits of the Company's financial statements
for each of the two fiscal years ended July 31, 1999 and 1998, and through July
24, 2000, there were no disagreements with PricewaterhouseCoopers LLP on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope and procedures which, if not resolved to the satisfaction of
PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to make
reference to the matter in their reports on the financial statements for such
years.
Ernest & Young LLP has served as the Company's independent accountants
since its appointment on July 24, 2000. The Board, on the unanimous
recommendation of the Audit Committee, has selected Ernest & Young LLP as the
Company's independent accountants for the fiscal year ending July 31, 2001,
subject to ratification by the shareholders at the Annual Meeting.
Representatives of Ernest & Young LLP are expected to be present at the meeting
to respond to questions and will have an opportunity to make a statement if they
desire to do so.
All services provided to the Company by Ernest & Young LLP were approved
by the Audit Committee.
Audit services of Ernest & Young LLP for fiscal 2000 included the
examination of the consolidated financial statements and services related to
filings with the SEC.
The affirmative vote of a majority of the votes cast on this proposal will
constitute ratification of the appointment of Ernest & Young LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF ERNEST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL YEAR 2001.
17
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no other
business that will be presented by management for consideration at the Annual
Meeting. If any other business properly comes before the Annual Meeting, the
proxy holders intend to vote the proxies as recommended by the Board.
The Company had entered into a Convertible Loan Agreement ("Convertible
Loan Agreement") dated July 3, 1997, pursuant to which the Company issued $15
million of convertible subordinated notes. In March 1999, the Company defaulted
under certain financial covenants of the Convertible Loan Agreement, and in July
1999 the Company defaulted in the payment of interest due on the convertible
subordinated notes.
On October 22, 1999, the Company and the holders of the convertible
subordinated notes entered into a First Amendment to the Convertible Loan
Agreement (the "First Amendment") which, among other things waived existing
defaults under the Convertible Loan Agreement, increased the interest rate from
8.5% to 10.5% per annum, changed the convertible debentures' final maturity date
from June 30, 2004 to December 31, 2000, and adjusted the conversion price from
$16 per share of common stock to the lesser of (i) $16 per share and (ii) the
greater of $6 per share or the average closing price of the Company's common
stock for the 30 days following October 22, 1999. At a conversion price of $6
per share (the lowest possible conversion price), the Company could issue up to
2,500,000 shares of its common stock upon the full conversion of the
subordinated debt, or 1,562,500 additional shares over the number of shares
issuable upon full conversion at $16 per share.
Since the 2,500,000 shares of common stock issuable upon conversion of the
convertible debentures constitute more than 20% of the 7,395,000 outstanding
shares of the Company's common stock, Rule 4460(i) of The Nasdaq Stock Market
normally would require shareholder approval of this re-set of the conversion
price. However, based on an exception to this rule, the Company has received
permission from The Nasdaq Stock Market to omit shareholder approval of the
conversion price re-set, and the Company's Audit Committee has approved the
Company's reliance on the shareholder approval exception.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2001 annual meeting
of the shareholders must be received by the Company in writing no later than
August 2, 2001. Proposals must be mailed to Play-By-Play Toys & Novelties, Inc.,
4400 Tejasco, San Antonio, Texas 78218-0267, Attention: Secretary, James L. Dow
II.
18
<PAGE>
ANNUAL REPORT (FORM 10-K)
The Company undertakes, on written request and without charge, to provide
each person from whom the accompanying Proxy is solicited with a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended July 31, 2000, as
filed with the SEC, including the financial statements and schedules. Requests
should be addressed to Play-By-Play Toys & Novelties, Inc., 4400 Tejasco, San
Antonio, Texas 78218-0267, Attention: Secretary, James L. Dow II.
By Order of the Board of Directors
James L. Dow II
Senior Vice President
And Secretary
December 18, 2000
19
<PAGE>
PLAY-BY-PLAY TOYS & NOVELTIES, INC
4400 Tejasco
San Antonio, Texas 78218-0267
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Arturo G. Torres and James L. Dow II, or
any one or more of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of common stock of Play By Play Toys &
Novelties, Inc. (the "Company") held of record by the undersigned on December
15, 2000 at the Annual Meeting of Shareholders to be held on January 29, 2001,
or any adjournments thereof.
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
<S> <C>
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [ ] To vote for all nominees listed below [ ]
</TABLE>
(INSTRUCTIONS TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
Arturo G. Torres, Guarione M. Diaz, and Heriberto "Berto" Guerra, Jr.
2. Proposal to ratify the appointment of Ernst & Young LLP, certified public
accountants, as the independent auditors for the Company for the fiscal year
ending July 31, 2001.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments thereof.
(BACK OF PROXY CARD)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears below. 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 full corporate name by President or authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated __________________________
________________________________
Signature
________________________________
Signature if held jointly
PLEASEMARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
