<PAGE>
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 Rule 14a-11(c) or Rule 14a-12
CRAGAR INDUSTRIES, INC.
-----------------------
(Name of Registrant as Specified in Its Charter)
---------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
<PAGE>
[ ] 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>
CRAGAR INDUSTRIES, INC.
4636 North 43rd Avenue
Phoenix, Arizona 85031
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1999
To our Shareholders:
The 1999 Annual Meeting of Shareholders (the "Annual Meeting") of
Cragar Industries, Inc. (the "Company") will be held at 10 a.m., Mountain
Standard Time, on Friday, May 21, 1999, at 4636 North 43rd Avenue, Phoenix,
Arizona, for the following purposes:
1. To elect five directors to the Board of Directors to serve until
the next Annual Meeting of Shareholders or until their successors
have been elected and qualified; and
2. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Each outstanding share of the Company's Common Stock entitles the
holder of record at the close of business on April 23, 1999 to vote at the
Annual Meeting or any adjournment thereof. Shares can be voted at the Annual
Meeting only if the holder is present or represented by proxy. So far as
management is aware, the matters described in this Proxy Statement will be the
only ones to be acted upon at the meeting. If any other matters properly come
before the meeting or any adjournment thereof, the proxy committee named in the
enclosed proxy will vote on those matters in accordance with its judgment. A
copy of the Company's 1998 Annual Report to Shareholders, which includes
certified financial statements, is enclosed. Management cordially invites you to
attend the Annual Meeting.
By Order of the Board of Directors
/s/ Michael L. Hartzmark
Phoenix, Arizona Michael L. Hartzmark
April 30, 1999 President and Chief Executive Officer
IMPORTANT
SHAREHOLDERS ARE EARNESTLY REQUESTED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY.
A POSTAGE-PAID ENVELOPE IS PROVIDED FOR MAILING IN THE UNITED STATES.
<PAGE>
CRAGAR INDUSTRIES, INC.
4636 North 43rd Avenue
Phoenix, Arizona 85031
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Cragar
Industries, Inc. (the "Company") in connection with the solicitation of proxies
to be used in voting at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held on May 21, 1999. The enclosed proxy is solicited by the
Board of Directors of the Company. The proxy materials were mailed on or about
April 30, 1999 to shareholders of record at the close of business on April 23,
1999.
A person giving the enclosed proxy has the power to revoke it at any
time before it is exercised by either: (i) attending the Annual Meeting and
voting in person; (ii) duly executing and delivering a proxy bearing a later
date; or (iii) sending written notice of revocation to the Secretary of the
Company at 4636 North 43rd Avenue, Phoenix, Arizona 85031.
The Company will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of the outstanding Common Stock of
the Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone or telegraph.
VOTING SECURITIES OUTSTANDING
Only holders of record of Common Stock at the close of business on
April 23, 1999 will be entitled to vote at the Annual Meeting. At that date,
there were 2,453,990 shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote on all matters on which shareholders may vote.
There is no cumulative voting on any matters.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspectors of election appointed for the meeting and will
determine whether or not a quorum is present. The inspectors of election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of five members.
Directors hold office until the next annual meeting of the stockholders of the
Company or until their successors have been elected and qualified. The present
terms of Michael L. Hartzmark, Sidney Dworkin, Mark Schwartz, Donald E.
McIntyre, and Michael R. Miller, all of who are incumbent directors, will expire
at the Annual Meeting. Messrs. Hartzmark, Dworkin, Schwartz, McIntrye, and
Miller have been nominated for re-election as directors of the Company and,
unless otherwise instructed, the proxy holders will vote the proxies received by
them for their re-election. The nominees receiving the highest number of votes
cast at the Annual Meeting will be elected.
If any nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline to
serve as a director.
1
<PAGE>
INFORMATION CONCERNING DIRECTORS AND OFFICERS
Information concerning the names, ages, terms, positions with the
Company and business experience of the Company's current directors and executive
officers is set forth below.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael L. Hartzmark, Ph.D. 43 President, Treasurer, Chief Executive Officer, and
Director
Sidney Dworkin(1)(2) 77 Director
Mark Schwartz(1)(2) 49 Director
Donald E. McIntyre(1)(2) 74 Director
Michael R. Miller 40 Secretary, Chief Operating Officer, and Director
Richard P. Franke 42 Chief Financial Officer
- -------------------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
</TABLE>
MICHAEL L. HARTZMARK joined the Company as a full-time employee in May
1993 and has served as its President and Chief Executive Officer since June 4,
1993, and as a director since January 1, 1993. Prior to joining the Company, Dr.
Hartzmark was an economic consultant (as President of EconOhio Corporation) and
a financial consultant (as President of MDA Financial, Inc.). EconOhio wrote
business plans for and provided advice to a variety of companies. MDA provided
financial consulting services to small and medium-size companies, as well as
assistance to oil and gas and real estate limited partnerships. From 1987 to
1989, Dr. Hartzmark was Senior Economist at Lexecon, Inc., a Chicago-based
economics and law consulting firm. Dr. Hartzmark was the John M. Olin Visiting
Scholar at the University of Chicago and an Assistant Professor at the
University of Michigan. He has also worked for the Treasury Department and the
Commodity Futures Trading Commission. Dr. Hartzmark earned his M.A. and Ph.D.
degrees in economics at the University of Chicago. He holds a B.A. in economics
from the University of Michigan.
SIDNEY DWORKIN has served as a director of the Company since December
1994. Mr. Dworkin served as President and Chairman of the Board of Revco
Drugstore Company, Inc. until October 1987. Mr. Dworkin currently serves as a
member of the Board of Directors of Comtrex Systems, Inc., Northern
International Technologies, Inc., and CCA Industries, Inc. He is also owner and
Chairman of the Board of Advanced Modular Systems, Inc., a privately-held
manufacturer of modular buildings. His experiences range across a multitude of
industries including, among others, pharmaceuticals, computer hardware and
software, modular housing, and consumer products.
MARK SCHWARTZ has served as a director of the Company since January
1993. Mr. Schwartz is President of G&S Metal Products, Inc., one of the largest
privately held manufacturers and distributors of consumer household products in
the United States. The Company is headquartered in Cleveland, Ohio, with major
manufacturing and distribution facilities in both Ohio and Connecticut. G & S
Metal products sells its products to most major retailers including, among
others, mass merchandisers and supermarkets. Mr. Schwartz's responsibilities
also include other G & S divisions with business interests primarily in
industrial metal fabrication. Additionally Mr. Schwartz has extensive
international business experience.
2
<PAGE>
DONALD E. MCINTYRE has served as a director of the Company since June
1996. Mr. McIntyre is currently active nationally in merger and acquisition work
in association with Chapman Associates. Until its sale in February 1997, he was
also interim CEO at Capital Electric Group, Inc.. From 1964 to 1981, he was
Chairman of the Board, President, and CEO of Custom Products Corporation, a
multi-plant manufacturing and distribution company. Mr. McIntyre currently
serves as a member of the Board of Directors of Capital Electric Group, the
Joray Corporation, and Watkins Shepard Inc. Mr. McIntyre holds a B.S. from Iowa
State University and attended post-graduate courses at Michigan State University
and Drake.
MICHAEL R. MILLER joined the Company as a full-time employee in
November 1996 after serving as a consultant to the Company for three months. He
has over 17 years of experience with manufacturing companies working either as a
senior executive or consultant. From 1992 to 1996, Mr. Miller was employed at
Form Rite, a supplier of fluid handling systems to Ford, GM, Chrysler, Mercedes,
Nissan, and TRW. He assisted with the sale of Form Rite to Siebe plc., a large
British firm. Prior to the sale, he had worldwide responsibility for sales and
engineering efforts. Mr. Miller was Vice President of Operations for Mr. Gasket
Company, Inc. and had operating responsibility for CRAGAR from 1988 to 1992. He
joined Mr. Gasket from the consulting practice of Deloitte & Touche after
completing a restructuring project at CRAGAR Industries. Mr. Miller has a B.S.
in Business Administration from the University at Albany and a Master of
Business Administration from Rochester Institute of Technology.
RICHARD P. FRANKE became the Company's Chief Financial Officer on
January 1, 1999 after serving as a consultant to the Company for the previous
three months. From 1994 to 1998, Mr. Franke was employed as Chief Operating
Officer/Chief Financial Officer for Infinity2, Inc., an international network
marketing company, Chief Operating Officer/Chief Financial Officer for Capital
Electric Group, Inc., an electrical wholesale distributor, and as a consultant
and Chief Financial Officer for Inter Pipe, Inc., a specialty truck
manufacturer. Prior to 1994, Mr. Franke was the Chief Financial Officer at B&K
Steel Fabrications, Inc., a regional steel fabricator located in the
southwestern United States. Mr. Franke holds a B.S. in Accounting from Arizona
State University and is licensed as a Certified Public Accountant in Arizona.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended December 31, 1998, the Board of Directors of the
Company met or acted by written consent on four occasions. Each of the Company's
directors attended all of the meetings of the Board of Directors.
COMPENSATION COMMITTEE. The Compensation Committee of the Board of
Directors, which met four times during 1998, reviews all aspects of compensation
of officers of the Company and determines or makes recommendations on such
matters to the full Board of Directors. The Compensation Committee consists of
Messrs. Dworkin, Schwartz, and McIntyre.
AUDIT COMMITTEE. The Audit Committee, which met four times during 1998,
represents the Board of Directors in evaluating the quality of the Company's
financial reporting process and internal financial controls through
consultations with the independent auditors, internal management and the Board
of Directors. The Audit Committee consists of Messrs. Dworkin, Schwartz, and
McIntyre.
EXECUTIVE COMMITTEE. The Executive Committee, which met several times
during 1998, has all the powers and authority of the Board of Directors in the
management of the business and affairs of the Company, except those powers that,
by law, cannot be delegated by the Board of Directors. The Executive Committee
consists of Messrs. Hartzmark, Miller, and McIntrye.
OTHER COMMITTEES. The Company does not maintain a standing nominating
committee or other committees performing similar functions. Nominations of
persons to be directors are considered by the full Board of Directors.
3
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth for each of the three fiscal years ended
December 31, 1998, the total compensation awarded to, earned by, or paid to (i)
the Company's Chief Executive Officer, and (ii) each of the Company's other
executive officers whose annual salary and bonus exceeded $100,000 during fiscal
1998 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
NAME AND SECURITIES UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
------------------ ---- ------ ----- -------
<S> <C> <C> <C> <C>
Michael L. Hartzmark 1998 $122,300 --- 40,000(1)
President & Chief 1997 $125,000 --- 20,000(2)
Executive Officer 1996 $110,000 --- 20,000(2)
25,000(1)
Michael R. Miller 1998 $111,530 --- 17,000(2)
Secretary & Chief 1997 $ 99,999 $20,000 8,000(2)
Operating Officer 1996 $ 99,999 ---
</TABLE>
- ------------------------
(1) These figures represent options originally granted in prior years that
were repriced in 1998 (See footnote (2) below). In accordance with
Securities and Exchange Commission rules, these options are reported
as options granted during fiscal year 1998 as a result of the
repricing of these options on November 12, 1998. See "Report of the
Board of Directors on Option Repricing" for additional information
regarding the repricing.
(2) Each option was originally exercisable at $5.125 to purchase one share
of Common Stock, which was the fair market value on the date of the
grant. These options were repriced in November 1998 at $4.125 per
share, which was the fair market price of the Common Stock on the date
of repricing. See (1) above.
4
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
No stock options were granted to the Named Executive Officers during
1998 and the Company does not maintain an option or other stock-based plan that
provides for the grant of stock appreciation rights.
The following table sets forth information with respect to stock
options granted prior to 1998 that were repriced during the fiscal year ended
December 31, 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO EMPLOYEES PRICE
NAME OPTIONS GRANTED IN FISCAL YEAR (PER SHARE) (1) EXPIRATION DATE
- ---- --------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Michael L. Hartzmark........ 20,000 23.0% $4.125 May 16, 2007
20,000 23.0% $4.125 Nov 9, 2006
Michael Miller.............. 17,000 19.5% $4.125 May 16, 2007
8,000 9.2% $4.125 Nov 9, 2006
</TABLE>
(1) These figures represent options originally granted in prior years that
were repriced in 1998. In accordance with Securities and Exchange
Commission rules, these options are reported as options granted during
fiscal year 1998 as a result of the repricing of these options on
November 12, 1998. See "Report of the Board of Directors on Option
Repricing" for additional information regarding the repricing.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
The following table sets forth information concerning the value of each
Named Executive Officer's unexercised options at December 31, 1998. None of the
Named Executive Officers exercised any stock options in 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED DECEMBER 31, 1998 (#) DECEMBER 31, 1998 ($)
ON VALUE --------------------- ---------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Hartzmark - - 20,000 20,000 - -
Michael Miller - - 10,999 14,001 - -
</TABLE>
- ---------------------------------------
(1) Options are considered "in the money" if the fair market value of the
underlying securities exceeds the exercise price of the options. At
December 31, 1998, none of the options held by the Named Executive
Officers were in the money.
5
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has employment agreements in place with respect to Michael
Miller, Richard Franke, and Anthony Barrett. Terms of the employment agreements
relate to non-competition, acceptable behavior and requirements of
confidentiality. Mr. Barrett resigned from the Company effective February 28,
1999. As severance and for payment of back salary, Mr. Barrett was granted 1,000
shares of restricted stock.
DIRECTOR COMPENSATION
The Company pays all non-employee directors $1,500 for attendance at
the Company's quarterly and annual meetings of directors and $500 per Executive
Committee meeting attended. In addition, directors may be reimbursed for certain
expenses in connection with attendance at board and committee meetings.
Directors who are not employees of the Company receive nonqualified
stock options pursuant to a formula grant provision of the 1996 Non-Employee
Directors' Stock Option Plan (the "Directors' Plan"). Pursuant to the
Directors' Plan, Sidney Dworkin, Don McIntyre, and Mark Schwartz were each
granted options in May 1998 to purchase 2,000 shares for a period of five
years at an exercise price of $5.25 per share. Pursuant to the repricing of
options, approved in November 1998 by the Board of Directors, the options
previously granted to the Board members was repriced. The repriced options
have exercise prices of $4.125 per share, equal to the fair market value on
the date of repricing. (See "Report of the Board of Directors on Option
Repricing")
CHANGE OF CONTROL PROVISIONS
Each outstanding option granted under the Directors' Plan becomes
immediately fully exercisable if (i) there occurs any transaction that has the
result that stockholders of the Company immediately before such transaction
cease to own at least 51% of the voting stock of the Company, (ii) the
stockholders of the Company approve a plan of merger, consolidation,
reorganization, liquidation or dissolution in which the Company does not
survive, or (iii) the stockholders of the Company approve a plan for the sale,
lease, exchange, transfer, assignment or other disposition of all or
substantially all the property and assets of the Company.
REPORT OF THE BOARD OF DIRECTORS ON OPTION REPRICING
THE FOLLOWING REPORT DOES NOT CONSTITUTE SOLICITING MATERIAL AND SHOULD NOT BE
DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER COMPANY FILING UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE
EXTENT THE COMPANY SPECIFICALLY INCORPORATE THIS REPORT.
In November 1998, the Board of Directors approved a repricing of all
outstanding options held by officers and directors of the Company. In
connection with the repricing, the Board of Directors determined that the
imbalance between the original exercise price of the options held by the
officers and directors and the lower market price of the Common Stock that
prevailed in November 1998 was not an appropriate incentive to achieve the
Company's long-term goals. The repriced options have exercise prices of
$4.125 per share, equal to the fair market value on the date of repricing.
Except for the new exercise price, the terms of the options remain the same.
Sidney Dworkin
Donald McIntyre
Mark Schwartz
Michael L. Hartzmark
Michael Miller
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1999, the number and
percentage of outstanding shares of Common Stock beneficially owned by (i) each
person known by the Company to beneficially own more than 5% of such stock, (ii)
each of the Company's directors, (iii) each of the Named Executive Officers, and
(iv) all directors and officers of the Company as a group. Except as otherwise
indicated, the Company believes that each of the beneficial owners of the Common
Stock listed below, based on information furnished by such owners, has sole
investment and voting power with respect to such shares, subject to community
property laws where applicable.
<TABLE>
<CAPTION>
NUMBER
SHARES BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED(2) TOTAL(3)
- --------------------------------------- -------- --------
<S> <C> <C>
Michael L. Hartzmark, Ph. D.(5) (11) 120,466 4.84%
Michael R. Miller(11) 19,333 .78%
Mark Schwartz(6) (11) 252,831 9.77%
Sidney Dworkin(7) (11) 613,707 22.33%
Donald McIntyre(11) 7,300 .30%
Harry Schwartz(8) 253,264 9.82%
Dolores Hartzmark(9) 147,098 5.66%
Lee Hartzmark(10) 258,500 9.53%
All executive officers and directors
as a group (six persons) (12) 1,013,637 34.45%
</TABLE>
- ------------------------
(1) Unless otherwise noted, the address of each of the listed stockholders is
c/o Cragar Industries, Inc. 4636 N. 43rd Avenue, Phoenix, Arizona 85031.
(3) A person is deemed to be the beneficial owner of securities that can be
acquired within 60 days from the date set forth above through the
exercise of any option or warrant.
(4) In calculating percentage ownership, all shares of Common Stock that the
named stockholder has the right to acquire within 60 days upon exercise
of any option or warrant are deemed to be outstanding for the purpose of
computing the percentage of Common Stock owned by such stockholder, but
are not deemed outstanding for the purpose of computing the percentage of
Common Stock owned by any other stockholder. Shares and percentages
beneficially owned are based upon 2,453,990 shares outstanding on March
31, 1999.
(5) Includes 33,333 shares purchasable upon exercise of options, and 31,960
shares owned by MDA Financial, Inc. of which Dr. Hartzmark is a
beneficial owner.
(6) Includes 10,100 shares purchasable upon exercise of options, 39,287
shares purchasable upon the exercise of various warrants, and 84,696
purchasable upon conversion of Series A Preferred Stock at $3.21 per
share.
(7) Includes 9,400 shares purchasable upon exercise of options, 10,533 shares
owned by CN Partners of which Mr. Dworkin is a one-fifth beneficial
owner, 116,324 shares purchasable upon the exercise of various warrants,
and 169,393 shares purchasable upon conversion of Series A Preferred
Stock at $3.21 per share.
(8) Includes 10,533 shares owned by CN Partners of which Mr. Schwartz is a
one-fifth beneficial owner, 39,287 shares purchasable upon exercise of
various warrants, and 84,696 shares purchasable upon conversion of Series
A Preferred Stock at $3.21 per share.
(9) Includes 36,750 shares purchasable upon exercise of various warrants.
(10) Includes 10,533 shares owned by CN Partners of which Mr. Hartzmark is a
one-fifth beneficial owner, 78,574 shares purchasable upon the exercise
of various warrants, and 169,393 shares purchasable upon conversion of
Series A Preferred Stock at $3.21 per share.
(11) Includes Director and Employee options that have vested or will vest as
of May 31, 1999.
(12) Includes Messrs. Dworkin, M. Schwartz, M. Hartzmark, McIntyre, Miller,
and Franke.
7
<PAGE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS
From January to March 1998, the Company raised $2.25 million from a
private placement of 22,500 shares of Series A Convertible Preferred Stock ("the
Series A Preferred Stock") and related Warrants. The private placement was made
to a group of accredited investors and included the conversion of $900,000 of
existing debt held by Messrs. Lee Hartzmark, Mark Schwartz, Harry Schwartz, and
Sidney Dworkin into equity. Mr. Lee Hartzmark beneficially owned approximately
9.5% of the Company's Common Stock as of March 31, 1998 and is Michael
Hartzmark's father. Mark Schwartz and Sidney Dworkin are Directors of the
Company. Harry Schwartz beneficially owns approximately 9.8% of the Company's
Common Stock and is Mark Schwartz's father.
Holders of Series A Preferred Stock are entitled to receive cumulative
dividends equal to 7% per annum on the Stated Value of the Series A Preferred
Stock ($100 per share).
In connection with the issuance of the Series A Preferred Stock, the
Company also granted Warrants to the holders of the Series A Preferred Stock to
acquire up to 333,333 shares of the Company's Common Stock at an exercise price
of $8.10 per share or 15 warrants per $100 investment. The Warrants may be
exercised at any time on or before January 23, 2001, three years after the date
of issuance of the Series A Preferred Stock. Officers, directors and family
members who purchased or converted debt for Series A Preferred Stock are listed
below.
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C>
Sidney Dworkin........................................ 5,438
Lee Hartzmark......................................... 5,438
Mark Schwartz......................................... 2,719
Harry Schwartz........................................ 2,719
</TABLE>
During August 1998, the Company agreed to grant warrants to Messrs.
Dworkin, L. Hartzmark, and M. Schwartz as consideration for providing debt
financing to the Company in the aggregate principal amount of $900,000 during
December 1997 and January 1998. For each $100,000 loaned to the Company, the
Company agreed to grant warrants to purchase 1,500 shares of Common Stock at an
exercise price of $3.00 per share. The principal amounts of these loans were
subsequently converted into 9,000 shares of Series A Preferred Stock.
In addition, during 1998, the Company agreed to grant warrants to Mr.
Sidney Dworkin, Mrs. Doris Dworkin and Mrs. Dolores Hartzmark, each of whom
pledged assets to secure the Company's obligations under the Loan and Credit
Agreement with NationsCredit Commercial Funding. The Company agreed to grant
warrants to purchase 7,000 shares of Common Stock for each $100,000 in value of
assets pledged on an annual basis, which warrants will be exercisable at an
exercise price equal to the price of the Company's Common Stock on the date of
grant.
The Company believes that all transactions it has entered into with
affiliates are at arm's length and on terms equivalent or similar to terms under
which the Company would conduct business with unaffiliated third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors and officers, and persons who own more
that 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes of ownership with the Securities and Exchange
Commission. During the fiscal year ended December 31, 1998, Form 3 was not
timely filed (although such Form 3 was subsequently filed) for Michael Miller;
and Form 4 was not timely filed (although such Form 4 was subsequently filed)
for any of the following persons: Anthony Barrett; Sidney Dworkin; Michael
Hartzmark; Donald McIntrye; and Mark Schwartz.
8
<PAGE>
RELATIONSHIP WITH
INDEPENDENT ACCOUNTANTS
The principal independent public accounting firm utilized by the
Company during the fiscal year ended December 31, 1998 was KPMG LLP, independent
certified public accountants (the "Auditors"). The Company is currently
evaluating its accounting and auditing needs. No decision has been made whether
to retain KPMG LLP or to engage a different independent public accounting firm
to provide the Company with accounting, auditing, and tax services for 1999. A
representative of the Auditors will attend the Annual Meeting for the purpose of
responding to appropriate questions and will be afforded an opportunity to make
a statement if the Auditors so desire.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's 2000 Annual Meeting must be
received by the Company no later than January 5, 2000 in order that they may be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting. Proposals should be addressed to the Secretary of the Company at
4636 North 43rd Avenue, Phoenix, Arizona 85031.
OTHER MATTERS
The Board of Directors does not intend to present at the Annual Meeting
any matters other than those described herein and does not presently know of any
matters that will be presented by other parties.
Cragar Industries, Inc.
/s/ Michael L. Hartzmark
Michael L. Hartzmark
President and Chief Executive Officer
April 30, 1999
9
<PAGE>
CRAGAR INDUSTRIES, INC.
1999 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICIITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael L. Hartzmark and Michael R.
Miller, or any of them acting in the absence of the other with full powers of
substitution, the true and lawful attorneys and proxies for the undersigned
and to vote, as designated on the reverse, all shares of Common Stock of
CRAGAR INDUSTRIES, INC. (the "Company") that the undersigned is entitled to
vote at the Annual Meeting of Shareholders (the "Meeting") to be held on
Friday, May 21, 1999, at 10:00 a.m., Mountain Standard Time, at 4636 North
43rd Avenue, Phoenix, Arizona, and at any and all adjournments thereof, and
to vote all shares of Common Stock which the undersigned would be entitled
to vote, if then and there personally present, on the matters set forth on
the reverse.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) -----------
SEE REVERSE
SIDE
-----------
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
CRAGAR INDUSTRIES, INC.
MAY 21, 1999
- PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED -
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE
FOR WITHHELD
1. Election of NOMINEES: Michael L. Hartzmark
directors / / / / Michael R. Miller
Sidney Dworklin
FOR, except vote withheld from the following Mark Schwartz
nominees: Donald E. McIntyre
- --------------------------------------------
The Board of Directors recommends a vote FOR
the nominees.
Change of Address/
comments on reverse side / /
I plan to I do not plan
attend / / to attend / /
the meeting the meeting
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
SIGNATURE(S) Dated:
------------------------ ------------------------- ---------
SIGNATURE IF HELD JOINTLY
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executer, administrator, or guardian, please
give full title as such.
