<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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
Aftermarket Technology Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(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
(set forth the amount on which the filing fee is calculated and state
how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
---------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
900 OAKMONT LANE, SUITE 100
WESTMONT, ILLINOIS 60559
Dear Stockholders:
Your are cordially invited to attend the Annual Meeting of
Stockholders of Aftermarket Technology Corp. on Tuesday, June 3, 1997 at
10:00 a.m., Chicago time, at the Hyatt Regency Hotel, 1909 Spring Road,
Oakbrook, Illinois. Your Board of Directors and management look forward to
greeting those stockholders who attend the meeting.
At this meeting, you will be asked to elect directors of the Company,
to approve an amendment to the Company's charter to reduce the authorized number
of shares of capital stock, and to approve and authorize the Company to enter
into indemnification agreements with its directors and certain of its officers.
Your Board of Directors recommends a vote FOR these proposals. The reasons for
the Board's recommendation, as well as other important information, are
contained in the accompanying Proxy Statement. You are urged to read the Proxy
Statement carefully.
It is important that your shares be represented and voted at the
meeting, whether or not you plan to attend. Please sign, date and mail the
enclosed proxy card at your earliest convenience.
Your interest and participation in the affairs of the Company are
greatly appreciated.
William A. Smith Stephen J. Perkins
CHAIRMAN OF THE BOARD PRESIDENT, CHIEF EXECUTIVE OFFICER
AND DIRECTOR
April 25, 1997
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
900 OAKMONT LANE, SUITE 100
WESTMONT, ILLINOIS 60559
--------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------------------------
To the Stockholders of
Aftermarket Technology Corp.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Aftermarket Technology Corp., a Delaware corporation (the "Company"), will be
held at the Hyatt Regency Hotel, 1909 Spring Road, Oakbrook, Illinois, on
Tuesday, June 3, 1997, at 10:00 a.m., Chicago time, for the purposes of
considering and acting upon the following:
1. election of nine directors to hold office until the 1998 Annual
Meeting of Stockholders and thereafter until their successors are
elected and qualified;
2. approval of an amendment to the Company's Amended and Restated
Certificate of Incorporation to reduce the authorized number of shares
of capital stock from 35,000,000 to 26,000,000;
3. approval and authorization of the Company to enter into
indemnification agreements with directors and certain officers; and
4. transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 18, 1997 will
be entitled to notice of and to vote at the meeting and any adjournments
thereof.
By Order of the Board of Directors,
Joseph Salamunovich
Secretary
Dated: April 25, 1997
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
900 OAKMONT LANE, SUITE 100
WESTMONT, ILLINOIS 60559
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Aftermarket Technology
Corp., a Delaware corporation (the "Company"), for use at the Annual Meeting
of Stockholders of the Company (the "Meeting") to be held at the Hyatt
Regency Hotel, 1909 Spring Road, Oakbrook, Illinois on June 3, 1997 at 10:00
a.m., Chicago time, and all adjournments thereof. This Proxy Statement and
the accompanying form of proxy are first being mailed to stockholders on or
about April ___, 1997.
The cost of preparing, assembling and mailing the Notice of Annual
Meeting of Stockholders, Proxy Statement and form of proxy and the solicitation
of proxies will be paid by the Company. Proxies may be solicited by directors,
officers and other regular employees of the Company, none of whom will receive
any additional compensation for such solicitation. Proxies may be solicited in
person or by telephone. The Company will pay brokers or other persons holding
stock in their names or the names of their nominees for the expenses of
forwarding soliciting material to their principals.
VOTING
The close of business on April 18, 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting. On that date, there were outstanding 16,993,794 shares of the
Company's Common Stock, $.01 par value ("Common Stock"). A majority of the
shares entitled to vote, present in person or represented by proxy, will
constitute a quorum at the Meeting. Each share of Common Stock is entitled to
one vote on any matter that may be presented for consideration and action by the
stockholders at the Meeting. In all matters other than the election of
directors, the affirmative vote of a majority of the issued and outstanding
shares of Common Stock will be the act of stockholders. Directors will be
elected by a plurality of the votes of the shares of Common Stock present in
person or represented by proxy and entitled to vote on the election of
directors. Abstentions will be treated as the equivalent of a negative vote for
the purpose of determining whether a proposal has been adopted and will have no
effect for the purpose of determining whether a director has been elected. If a
broker indicates on the proxy that such broker does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
be treated as present for purposes of determining the existence of a quorum but
will not be considered as present and entitled to vote with respect to that
matter.
Proxies will be voted in accordance with the instructions thereon.
In the absence of such instructions, proxies will be voted for the Company's
nominees for election as directors and in favor of the other proposals
specifically identified in the Notice of Meeting accompanying this Proxy
Statement. As of the date hereof, the Board of Directors is not aware of any
matters to be presented for action at the Meeting other than those
specifically identified in the Notice of Meeting. However, should any other
matters come before the meeting, proxies will be voted in the discretion of
the persons named as proxies thereon as to any other business that may
properly come before the Meeting or any adjournment thereof.
<PAGE>
Any stockholder has the power to revoke his or her proxy at any time
before it is voted at the Meeting by submitting written notice of revocation to
the Secretary of the Company, or by filing a duly executed proxy bearing a later
date. A proxy will not be voted if the stockholder who executed it is present
at the Meeting and elects to vote the shares represented thereby in person.
ELECTION OF DIRECTORS
The directors of the Company are elected annually. The term of
office of all present directors expires on the date of the Meeting, at which
nine directors are to be elected to serve for the ensuing year and until their
successors are elected and qualified. The nominees for election as directors
(all of whom are presently directors) are:
William A. Smith Stephen J. Perkins
Robert Anderson Richard R. Crowell
Mark C. Hardy Dr. Michael J. Hartnett
William E. Myers, Jr. Gerald L. Parsky
Richard K. Roeder
For information regarding each nominee, see "Management--Directors and
Executive Officers."
Should any nominees become unavailable to serve as a director or
should any vacancy occur before the election (which events are not anticipated),
the proxies may be voted for a substitute nominee selected by the Board of
Directors or the authorized number of directors may be reduced. If for any
reason the authorized number of directors is reduced, the proxies will be voted,
in the absence of instructions to the contrary, for the election of the
remaining nominees named in this Proxy Statement. To the best of the Company's
knowledge, all nominees are and will be available to serve.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
William A. Smith 51 Chairman of the Board of Directors
Stephen J. Perkins 49 President, Chief Executive Officer and Director
John C. Kent 45 Chief Financial Officer
Joseph Salamunovich 37 Vice President, General Counsel and Secretary
Wesley N. Dearbaugh 45 President and General Manager, Independent Aftermarket
James R. Wehr 43 President, Aaron's
Michael L. LePore 43 President, CRS
Robert Anderson 76 Director
Richard R. Crowell 42 Director
Mark C. Hardy 33 Director
Dr. Michael J. Hartnett 51 Director
William E. Myers, Jr. 37 Director
Gerald L. Parsky 55 Director
Richard K. Roeder 48 Director
</TABLE>
WILLIAM A. SMITH has been the Chairman of the Board of Directors since
July 1994. Mr. Smith was the President and Chief Executive Officer of the
Company from July 1994 until October 1996. From March 1993 to July 1994, Mr.
Smith served as a consultant to Aurora Capital Partners, L.P. ("ACP") in
connection with the Company's formation and the acquisition of its first four
subsidiaries in 1994. From March 1992 to March 1993,
2
<PAGE>
Mr. Smith was President of the Rucker Fluid Power Division of Lucas Industries,
plc. From October 1988 to March 1992, Mr. Smith was Vice President of Parts
Operations for Navistar International Transportation Corporation, a truck engine
manufacturer, where Mr. Smith managed its aftermarket parts business, including
four new aftermarket business lines. From July 1985 to October 1988, Mr. Smith
served as President of Labinal, Inc., a French automotive and aerospace
equipment manufacturer, where he was in charge of its North American operations.
From 1979 to 1985, Mr. Smith was Vice President of Marketing of the Cummins
Diesel Recon business, Cummins Engine Company's aftermarket remanufacturing
division. From 1972 to 1979, Mr. Smith held several director level positions at
Cummins Engine Company covering distribution, technical service, service
training, market planning, parts marketing, service publications and warranty
administration.
STEPHEN J. PERKINS became the President and Chief Executive Officer
of the Company in October 1996. From February 1992 to October 1996, Mr.
Perkins was President and Chief Executive Officer of Senior Flexonics, an
international division of Senior Engineering, plc. Senior Flexonics included
20 operations in 13 countries that manufactured and distributed engineered
flexible tubular products for the automotive, aerospace and industrial
markets. From September 1983 to February 1992, Mr. Perkins was President and
Chief Executive Officer of Flexonics, Inc., the privately held predecessor of
Senior Flexonics. From March 1979 to September 1983, Mr. Perkins was the
Director of Manufacturing and then Vice President and General Manager of the
Flexonics Division of what is now Allied Signal. From July 1971 to March
1979, Mr. Perkins held several management positions in manufacturing at
multiple facilities for the Steel Tubing Group of Copperweld Corporation.
Mr. Perkins began his career with U.S. Steel as an Industrial Engineer.
JOHN C. KENT became Chief Financial Officer of the Company in July
1994. From March 1990 to July 1994, Mr. Kent was Vice President, Finance and
Chief Financial Officer of Aerotest, Inc., an aircraft maintenance and
modification company. In March 1995, Aerotest filed a voluntary petition for
relief under Chapter 11 of the United States Bankruptcy Code. The Aerotest
bankruptcy proceedings are still pending. From 1987 to March 1990, Mr. Kent was
an Assistant Treasurer at Security Pacific Auto Finance. From 1978 to 1987 Mr.
Kent served in several capacities at Western Airlines, Inc., including Director
of Cash and Risk Management.
JOSEPH SALAMUNOVICH joined the Company as Vice President, General
Counsel and Secretary in March 1997. From January 1995 to March 1997, Mr.
Salamunovich was a partner in the law firm of Gibson, Dunn & Crutcher LLP, where
he specialized in corporate and securities law matters. From 1986 to 1995, Mr.
Salamunovich was an associate of the same firm.
WESLEY N. DEARBAUGH joined the Company as President and General
Manager of Independent Aftermarket in June 1996. From 1993 to June 1996, Mr.
Dearbaugh was a Partner and Vice President of Marketing for Cummins, S.W., a
multi-branch distributor of heavy duty parts and service. From 1992 to 1993, he
was Vice President of Marketing for SEI, a large pension consulting firm. From
1983 to 1992, Mr. Dearbaugh held senior management and partner positions in
value investment funds and limited partnerships. From 1979 to 1983, Mr.
Dearbaugh held positions at Cummins Diesel Recon, Cummins Engine Company's
Aftermarket Remanufacturing Division, including General Manager of Fuel Systems,
Director-Product Management, and Manager of Sales & Marketing. From 1974 to
1979, Mr. Dearbaugh held several positions in industrial engineering and
technical sales at Atlas Crankshaft, a manufacturing division of Cummins Engine
Company.
JAMES R. WEHR has been President of the Company's Aaron's Automotive
Products, Inc. subsidiary ("Aaron's") since August 1990 and has responsibility
for developing and maintaining the relationships between Aaron's and Chrysler,
other original equipment manufacturers and Western Auto. In 1983 Mr. Wehr
founded Intercont, Inc., a cleaning and testing equipment division of Aaron's.
Mr. Wehr has been involved in the automotive aftermarket since 1969.
MICHAEL L. LEPORE has been President of the Company's Component
Remanufacturing Specialists, Inc. subsidiary ("CRS") since 1984. From 1976 to
1984 Mr. LePore was manager of U.S. Operations for Borg-Warner Parts and Service
Division, a subsidiary of Borg Warner LTD U.K.
3
<PAGE>
ROBERT ANDERSON became a director of the Company in March 1997. Mr.
Anderson has been associated with Rockwell International Corporation since 1968,
where he has been Chairman Emeritus since 1990 and served previously as Chairman
of the Executive Committee from 1988 to 1990 and as Chairman of the Board and
Chief Executive Officer from 1979 to 1988. Mr. Anderson is a director of
Gulfstream Aerospace Corporation, Optical Data Systems Company and Timken
Company.
RICHARD R. CROWELL became a director of the Company in July 1994.
Mr. Crowell is a founding partner and Managing Director of ACP. Prior to
forming ACP in 1991, Mr. Crowell was a Managing Director of Rosecliff, Inc., the
management company for Acadia Partners L.P. since its inception in 1987. Mr.
Crowell is also a director of Astor Corporation.
MARK C. HARDY became a director of the Company in July 1994. Mr.
Hardy is a Vice President of ACP and joined ACP in June 1993. Prior to joining
ACP, Mr. Hardy was an Associate at Bain & Company, a consulting firm. Mr. Hardy
is also a director of Astor Corporation.
DR. MICHAEL J. HARTNETT became a director of the Company in July
1994. Since March 1992 Dr. Hartnett has been Chairman, President and Chief
Executive Officer of Roller Bearing Company of America, Inc., a manufacturer of
ball and roller bearings that is controlled by an affiliate of ACP. Prior to
joining Roller Bearing in 1990 as General Manager of its Industrial Tectonics
subsidiary, Dr. Hartnett spent 18 years with The Torrington Company, a bearing
manufacturer.
WILLIAM E. MYERS, JR. became a director of the Company in July 1994.
Mr. Myers has been, for more than the past five years, the Chairman of the Board
and Chief Executive Officer of W.E. Myers and Company, a private merchant bank.
GERALD L. PARSKY became a director of the Company in March 1997. Mr.
Parsky is the Chairman and a founding partner of ACP. Prior to forming ACP in
1991, Mr. Parsky was a senior partner and a member of the Executive and
Management Committees with the law firm of Gibson, Dunn & Crutcher LLP. Prior
to that, he served as an official with the United States Treasury Department and
the Federal Energy Office, and as Assistant Secretary of the Treasury for
International Affairs. Mr. Parsky is also a director of Astor Corporation.
RICHARD K. ROEDER became a director of the Company in July 1994. Mr.
Roeder is a founding partner and Managing Director of ACP. Prior to forming ACP
in 1991, Mr. Roeder was a partner in the law firm of Paul, Hastings, Janofsky &
Walker, where he served as Chairman of the firm's Corporate Law Department and a
member of its National Management Committee. Mr. Roeder is also a director of
Astor Corporation.
COMMITTEES OF THE BOARD OF DIRECTORS AND BOARD MEETINGS
The Company maintains an Audit Committee and a Compensation
Committee. It does not have a nominating committee.
The Audit Committee is charged with establishing the scope of the
Company's audit procedures, negotiating with and retaining the Company's
independent auditors, reviewing and presenting to the Board of Directors for
approval the audit reports rendered to the Audit Committee and initiating any
other such audit procedures that it may deem necessary or advisable with respect
to the financial control of the Company's operations. The Audit Committee,
which was comprised of Messrs. Roeder, Hardy and former director Kurt Larsen
during 1996, did not meet during the year (although it met in February 1997).
In March 1997, Messrs. Anderson and Hartnett succeeded Messrs. Hardy and Larsen
on the Audit Committee.
The Compensation Committee establishes the general compensation
policies of the Company, establishes the specific compensation programs utilized
by the Company with respect to the executive officers of the Company and makes
recommendations to the Board of Directors regarding the granting of stock
options to eligible employees. The Compensation Committee, which is comprised
of Messrs. Crowell, Roeder and Smith, did not meet during 1996 (although it met
in February 1997).
4
<PAGE>
In 1996, the Board of Directors held two meetings. Each director
attended at least 75% of the meetings of the Board of Directors and the
committees of the Board on which he served in 1996.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than 10% of any equity
security of the Company to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and to furnish copies of these
reports to the Company. Based solely on a review of the copies of the forms
that the Company received, the Company believes that Forms 4 were not timely
filed on January 10, 1997 by reporting persons to report (i) the purchase of
shares in the Company's initial public offering and/or (ii) the redemption of
preferred stock following the merger of the Company's former holding company
into the Company, which purchases and redemptions occurred on December 20, 1996.
These transactions were subsequently reported on Forms 5 that were timely filed
on February 14, 1997, thereby correcting the oversight. The reporting persons
who purchased shares in the initial public offering are William A. Smith,
Stephen J. Perkins, John C. Kent, Wesley N. Dearbaugh, Michael L. LePore and
Gerald L. Parsky. The reporting persons who's preferred stock was redeemed
following the merger are William A. Smith, James R. Wehr, Richard R. Crowell,
Mark C. Hardy, Kurt B. Larsen (a former director), Gerald L. Parsky and Richard
K. Roeder.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the three most recently completed
fiscal years, the cash compensation for services in all capacities to the
Company of those persons who were, as of December 31, 1996, the Company's Chief
Executive Officer, and the four other most highly compensated executive officers
of the Company and its subsidiaries whose total annual salary and bonus exceeded
$100,000 during the last fiscal year (collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
-------------------- ----------------
NUMBER OF SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS ($) OPTIONS (#)(1) ($)
- --------------------------- ------- ----------- ----------- ---------------------- --------------
<S> <C> <C> <C> <C> <C>
William A. Smith(2) 1996 $319,196 $315,803 -- --
Chairman of the 1995 300,000 -- -- --
Board of Directors 1994 150,000 -- 842,106 $250,000(3)
Stephen J. Perkins(4) 1996 70,385 125,000 498,000 --
President and 1995 -- -- -- --
Chief Executive Officer 1994 -- -- -- --
James R. Wehr 1996 282,297 300,000 -- --
President, Aaron's 1995 258,000 -- -- --
1994 109,000 -- 140,352 --
Michael L. LePore 1996 226,520 181,745 -- --
President, CRS 1995 160,838(5) 179,038(6) 70,176 --
1994 120,451 131,119 -- --
John C. Kent 1996 127,918 100,000 35,088 --
Chief Financial Officer 1995 124,615 12,000 -- --
1994 56,154 -- 70,176 --
Kenneth A. Bear 1996 107,467 80,000 -- -
Executive Vice President and 1995 103,200 60,000 -- --
General Manager, Aaron's 1994 44,140 32,960 70,176 --
</TABLE>
- -----------------
(1) Includes only options to purchase securities of the Company, which
options were issued pursuant to the Company's Stock Incentive Plan.
Pursuant to the Stock Incentive Plan, the Compensation Committee makes
recommendations to the Board of Directors regarding the terms and
conditions of each option granted.
(2) Mr. Smith served as the Company's Chief Executive Officer until
October 1996.
(3) In July 1994 the Company paid Mr. Smith $250,000 for consultation
services rendered in connection with the Company's formation and the
acquisition of its first four subsidiaries.
(4) Mr. Perkins was appointed as the Company's President and Chief
Executive Officer in October 1996. See "Executive
Compensation-Employment Agreements."
(5) Includes five months' salary of $56,777 prior to the acquisition of CRS
by the Company in April 1995.
(6) Includes $86,759 of bonus earned prior to the acquisition of CRS by
the Company in April 1995.
6
<PAGE>
OPTION GRANTS TABLE
Shown below is information concerning grants of options issued by the
Company to the Named Executive Officers during 1996:
<TABLE>
<CAPTION>
INDIVIDUAL POTENTIAL REALIZABLE
GRANTS VALUE AT ASSUMED
--------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- --------------------- --------------------- ------------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
William A. Smith -- -- -- -- -- --
Stephen J. Perkins 498,000(2) 66.8% $4.67 10/7/06 $1,462,608 $3,706,404
James R. Wehr -- -- -- -- -- --
John C. Kent 35,088(3) 4.7 4.67 10/1/06 103,052 261,145
Michael L. LePore -- -- -- -- -- --
Kenneth A. Bear -- -- -- -- -- --
- ---------------
</TABLE>
(1) The potential gains shown are net of the option exercise price and do
not include the effect of any taxes associated with exercise. The
amounts shown are for the assumed rates of appreciation only, do not
constitute projections of future stock price performance, and may not
necessarily be realized. Actual gains, if any, on stock option
exercises depend on the future performance of the Common Stock,
continued employment of the optionee through the term of the options,
and other factors.
(2) These options were granted under the Company's Stock Incentive Plan.
One third of the options vest and become exercisable on each of the
first three anniversaries of the date of grant.
(3) These options were granted under the Company's Stock Incentive Plan.
One third of the options vest and become exercisable on the first,
third and fifth anniversaries of the date of the grant.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
Shown below is information relating to the value of unexercised
options for each of the Named Executive Officers as of December 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
------------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
William A. Smith 842,106 -- $13,120,012 --
Stephen J. Perkins -- 498,000 -- $6,264,840
James R. Wehr 93,568 46,784 1,457,789 728,895
John C. Kent 23,392 81,872 364,447 1,170,302
Michael L. LePore 23,392 46,784 364,447 728,895
Kenneth A. Bear 23,392 46,784 364,447 728,895
</TABLE>
- ---------------
(1) Calculated using closing price on December 31, 1996 of $17.25 per
share.
EMPLOYMENT AGREEMENTS
William A. Smith has an employment agreement with the Company
pursuant to which he serves as Chairman of the Board of Directors of the Company
at an annual salary of $316,000 (subject to cost-of-living
7
<PAGE>
adjustments). The employment agreement with Mr. Smith contains a noncompete
provision for a period of five years from the cessation of his employment with
the Company and a nondisclosure provision which is effective for the term of the
employment agreement and indefinitely thereafter. Mr. Smith is also entitled to
participate in any bonus, incentive or other benefit plans provided by the
Company to its employees.
Stephen J. Perkins entered into an employment agreement with the
Company effective as of October 7, 1996, pursuant to which he will serve as
President and Chief Executive Officer of the Company at an annual salary of
$300,000 for a period of three years. The employment agreement with Mr. Perkins
contains a noncompete provision for a period of 18 months from the cessation of
his employment with the Company and a nondisclosure provision which is effective
for the term of the employment agreement and indefinitely thereafter. Mr.
Perkins is also entitled to participate in any bonus, incentive or other benefit
plans provided by the Company to its employees.
John C. Kent entered into an employment agreement with the Company
effective as of October 1, 1996, pursuant to which he will serve as Chief
Financial Officer of the Company at an annual salary of $150,000 for a period of
three years. The employment agreement with Mr. Kent contains a noncompete
provision for a period of 18 months from the cessation of his employment with
the Company and a nondisclosure provision which is effective for the term of the
employment agreement and indefinitely thereafter. Mr. Kent is also entitled to
participate in any bonus, incentive or other benefit plans provided by the
Company to its employees.
Joseph Salamunovich entered into an employment agreement with the
Company effective as of March 17, 1997, pursuant to which he will serve as Vice
President and General Counsel of the Company at an annual salary of $165,000 for
a period of three years. The employment agreement with Mr. Salamunovich
contains a noncompete provision for a period of 18 months from the cessation of
his employment with the Company and a nondisclosure provision which is effective
for the term of the employment agreement and indefinitely thereafter. Mr.
Salamunovich is also entitled to participate in any bonus, incentive or other
benefit plans provided by the Company to its employees.
James R. Wehr entered into an employment agreement with Aaron's
effective as of August 2, 1994, pursuant to which he will serve as President of
Aaron's at an annual salary of $260,000 (subject to cost-of-living adjustments,
which make the current annual salary approximately $283,000) for a period of
three years. The employment agreement and related agreements with Mr. Wehr
contain a noncompete provision for a period ending August 1, 1999 and a
nondisclosure provision which is effective for the term of his employment with
Aaron's and indefinitely thereafter. Mr. Wehr is also entitled to participate
in any bonus, incentive or other benefit plans provided by Aaron's to its
employees.
Michael L. LePore entered into an employment agreement with CRS
effective as of June 1, 1995, pursuant to which he will serve as President of
CRS at an annual salary of approximately $225,000 (subject to cost-of-living
adjustments) for a period of five years. The employment agreement and
related agreements with Mr. LePore contain a noncompete provision for a
period ending June 1, 2002 and a nondisclosure provision which is effective
for the term of his employment with CRS and indefinitely thereafter. Mr.
LePore is also entitled to participate in any bonus, incentive or other
benefit plans provided by CRS to its employees.
Kenneth A. Bear entered into an employment agreement with Aaron's
effective July 28, 1994, pursuant to which he will serve as Executive Vice
President and General Manager of Aaron's at an annual salary of $104,000 for a
period of three years. The employment agreement with Mr. Bear contains a
nondisclosure provision which is effective for the term of his employment with
Aaron's and indefinitely thereafter. Mr. Bear is also entitled to participate
in any bonus, incentive or other benefit plans provided by Aaron's to its
employees.
8
<PAGE>
1996 STOCK INCENTIVE PLAN
Upon the merger of the Company's sole stockholder, Aftermarket
Technology Holdings Corp. ("Holdings"), with and into the Company in December
1996 (the "Reorganization"), the Company assumed the Amended and Restated 1994
Stock Incentive Plan of Holdings and renamed it the 1996 Stock Incentive Plan
(the "Stock Incentive Plan"). Pursuant to the Stock Incentive Plan, officers,
directors, employees and consultants of the Company and its subsidiaries are
eligible to receive options to purchase Common Stock and other awards in order
to provide incentives to employees and directors. The Stock Incentive Plan is
administered by the Compensation Committee, which has broad authority in
administering and interpreting the Stock Incentive Plan. Awards are not
restricted to any specified form or structure and may include, without
limitation, sales or bonuses of stock, restricted stock, stock options, reload
stock options, stock purchase warrants, other rights to acquire stock,
securities convertible into or redeemable for stock, stock appreciation rights,
phantom stock, dividend equivalents, performance units or performance shares
(collectively, "Awards"). Options granted to employees under the Stock
Incentive Plan may be options intended to qualify as incentive stock options
under Section 422 of the Internal Revenue Code of 1986 or options not intended
to so qualify. An Award granted under the Stock Incentive Plan to an employee
or independent contractor may include a provision terminating the Award upon
termination of employment under certain circumstances or accelerating the
receipt of benefits upon the occurrence of specified events, including, at the
discretion of the Compensation Committee, any change of control of the Company.
As of April 18, 1997, there were outstanding options to purchase an
aggregate of 2,282,306 shares of Common Stock to officers and employees of
the Company and its subsidiaries and certain independent contractors. Of
these options, the exercise price for options to purchase an aggregate of
1,513,778 shares, 733,440 shares and 35,088 shares is $1.67, $4.67 and $14.75
per share, respectively. Each option is subject to certain vesting
provisions. All options expire on the tenth anniversary of the date of
grant. As of the same date, the number of shares available for issuance
pursuant to options yet to be granted under the Stock Incentive Plan is
104,694. For certain information regarding options granted to officers of
the Company, see "Security Ownership of Certain Beneficial Owners and
Management."
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The executive compensation program is administered by the
Compensation Committee of the Board of Directors, which consists of Messrs.
Crowell, Roeder and Smith. Messrs. Crowell and Roeder are not employees of the
Company and Mr. Smith does not participate in any matters considered by the
Committee relating to his compensation.
COMPENSATION PHILOSOPHY
The executive compensation program is designed to attract, retain and
motivate executive personnel whose sustained performance will increase
stockholder value through successful achievement of both short-term and
long-term Company objectives, and includes a mix of base salary and bonus and
the possibility of incentive stock options. Each executive's compensation is
linked to the achievement of both specific individual goals and the Company's
annual operating plan.
Federal law generally disallows the corporate tax deduction for
certain compensation paid in excess of $1 million annually to each of the
chief executive officer and the four other most highly paid executive
officers of publicly held companies. There is an exception to this rule for
"performance based compensation." To qualify as "performance-based
compensation," payments must be made from a plan that is administered by a
committee of outside directors. In addition, the material terms of the plan
must be disclosed to and approved by stockholders, and the committee must
certify that the performance goals have been achieved before payments can be
awarded. The Compensation Committee intends to design the Company's
compensation programs to conform with federal law so that total compensation
paid to any employee will not exceed $1 million in any one year, except for
compensation in excess of $1 million that qualifies as "performance-based" or
is otherwise exempt. However, the Company may pay compensation that is not
deductible in limited circumstances when prudent management of the Company so
requires.
9
<PAGE>
BASE SALARY
The base salary of each of the Company's executive officers is set
forth in his employment agreement, which in most cases was negotiated between
the Company and the officer at the time he joined the Company. See "Executive
Compensation--Employment Agreements." With respect to those officers of the
Company who do not have employment agreements, the Compensation Committee
solicits recommendations from the Chief Executive Officer, which it considers,
modifies (if appropriate) and approves. The salary level for each person
reflects, among other things, the Compensation Committee's assessment of (i) the
salary necessary to attract and retain a person with the skills and knowledge
required by the position, (ii) the accountability of the person and his impact
on the results of the Company, and (iii) the prevailing salary level for the
similar position at comparable companies.
PERFORMANCE BONUS
With respect to annual performance bonuses for each of the Company's
officers other than the Chief Executive Officer, the Compensation Committee
solicits recommendations from the Chief Executive Officer, which it considers,
modifies (if appropriate) and approves. Bonuses are awarded based on the extent
to which the Company or the relevant subsidiary achieves its operating plan for
the year, as well as the Compensation Committee's assessment of each person's
individual performance. The employment agreement for each executive officer
sets out the maximum bonus that can be awarded to the executive, which is stated
as a percentage of base salary. The annual operating plans for the Company and
for each of its subsidiaries for a given year are recommended to the Board of
Directors for its approval by the Chief Executive Officer at the beginning of
the year.
In evaluating the performance of the executive officers of the Company
in 1996 for purposes of establishing the amount of bonuses for the year, the
Compensation Committee considered, in addition to its normal parameters,
management's success in completing the initial public offering and the two
acquisitions made during the year.
INCENTIVE STOCK OPTIONS
Generally in the past, officers have been granted stock options by the
Board of Directors at the time they joined the Company. It is expected that
options will be granted annually in the future to selected officers in
conjunction with the year-end bonus payments in order to further align the
interests of those officers with the economic interests of the Company's
stockholders. Such options would be granted by the Board of Directors based on
the recommendations of the Compensation Committee. Stock options typically vest
over a five-year period and are granted with an exercise price equal to the
stock price as of the date of grant.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Perkins's base salary, as well as his bonus for 1996, are set
forth in the employment agreement that he entered into at the time that he
joined the Company. The terms of the employment agreement are the product of
arm's length negotiation and are consistent with the terms of the employment
agreement with the Company's former Chief Executive Officer, as well as in line
with the terms of the employment agreements with the other executive officers.
For 1997 and subsequent years, Mr. Perkins's annual bonus, which may not exceed
75% of his base salary at the time, will be established based on performance
criteria to be established by the Compensation Committee. This permits the
total compensation to be paid to the Chief Executive Officer to be heavily
influenced by the Company's performance.
10
<PAGE>
SUMMARY
The Compensation Committee believes that the current compensation
arrangements provide the Chief Executive Officer and the other executive
officers with incentive to perform at superior levels and in a manner that is
directly aligned with the economic interests of the Company's stockholders.
Compensation Committee of the Board of Directors
Richard R. Crowell
Richard K. Roeder
William A. Smith
The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The members of the Compensation Committee are Messrs. Crowell, Roeder
and Smith. Messrs. Roeder and Crowell are (i) two of the three stockholders and
directors of Aurora Advisors, Inc., the general partner of ACP, which is the
general partner of Aurora Equity Partners, a significant stockholder of the
Company, and (ii) two of the three stockholders and directors of Aurora Overseas
Advisors, Ltd., the general partner of Aurora Overseas Capital Partners L.P.,
the general partner of Aurora Overseas Equity Partners I, L.P., also a
significant stockholder of the Company. See "Security Ownership of Certain
Beneficial Owners and Management." In addition, Messrs. Roeder and Crowell are
two of the three managing directors of ACP, which provides management services
to the Company pursuant to a management services agreement. See "Certain
Transactions." Mr. Smith does not participate in any matters considered by the
Committee relating to his compensation.
11
<PAGE>
PERFORMANCE GRAPH
The following graph shows the Company's total return to stockholders
compared to the Nasdaq Market Index and a Peer Group Index over the period from
December 17, 1996 (the initial day of trading of the Company's Common Stock on
the Nasdaq National Market) to December 31, 1996 (the final day of the most
recently completed fiscal year).
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
AFTERMARKET TECHNOLOGY CORP., NASDAQ MARKET INDEX AND PEER GROUP INDEX
[PERFORMANCE GRAPH APPEARS HERE]
DECEMBER 17, 1996 - DECEMBER 31, 1996
12/17/96 12/31/96
-------- --------
Aftermarket Technology Corp. $100.00 $100.73
Peer Group Index 100.00 101.00
Nasdaq Index 100.00 100.00
The Peer Group Index is comprised of seven publicly-traded companies
engaged in businesses in the automotive aftermarket that are comparable to that
of the Company and, in management's opinion, most closely represent the
Company's peer group. Copies of this index can be obtained by mail from the
Company.
Each line on the stock performance graph assumes that $100 was invested
in the Company's Common Stock and the respective indices on December 17, 1996
(the initial day of trading of the Company's Common Stock). The graph then
presents the value of these investments, assuming reinvestment of dividends,
through December 31, 1996.
The cumulative total return shown on the stock performance graph
indicates historical results only and is not necessarily indicative of future
results.
The stock performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of each class of
issued and outstanding voting securities of the Company, as of March 31, 1997,
by each director of the Company, each of the Named Executive Officers, the
directors and executive officers of the Company as a group and each person who
at such time beneficially owned more than 5% of the outstanding shares of any
class of voting securities of the Company.
<TABLE>
<CAPTION>
NUMBER OF VOTING
SHARES(1) PERCENTAGE
-------------- ----------------
<S> <C> <C>
Aurora Equity Partners L.P. (other beneficial owners: Richard R.
Crowell, Gerald L. Parsky and Richard K. Roeder)(2)(3)(4) 11,772,339 69.3
Aurora Overseas Equity Partners I, L.P. (other beneficial owners:
Richard R. Crowell, Gerald L. Parsky and Richard K. Roeder)(2)(4)(5) 5,519,889 32.5
General Electric Pension Trust(6) 2,018,652 11.9
3003 Summer Street
Stamford, CT 06905
William A. Smith(7)(8) 895,984 5.0
Stephen J. Perkins(8)(9) 1,000 *
John C. Kent(8)(10) 24,392 *
James R. Wehr(11)(12) 971,068 5.7
Michael L. LePore(13) 24,992 *
400 Corporate Drive
Mahwah, NJ 07430
Kenneth A. Bear(12)(13) 23,692 *
Robert Anderson(14) 18,918 *
10877 Wilshire Boulevard, Suite 1405
Los Angeles, CA 90024-4341
Richard R. Crowell(2)(3)(5)(15)(16) 12,960,489 76.3
Mark C. Hardy(15)(16) 8,460 *
Dr. Michael J. Hartnett(17) 70,176 *
60 Round Hill Road
Fairfield, CT 06430
William E. Myers, Jr.(17) 280,704 1.6
2 North Lake Avenue, Suite 650
Pasadena, CA 91101
Gerald L. Parsky(2)(3)(5)(15)(16)(18) 12,960,489 76.3
Richard K. Roeder(2)(3)(5)(15)(16) 12,960,489 76.3
All directors and officers as a group (15 persons)(19) 15,259,787 83.2
</TABLE>
- ---------------
* Less than 1%.
(1) The shares of Common Stock underlying options, warrants, rights or
convertible securities that are exercisable as of February 28, 1997 or
that will become exercisable within 60 days thereafter are deemed to
be outstanding for the purpose of calculating the beneficial ownership
of the holder of such options, warrants, rights or convertible
securities, but are not deemed to be outstanding for the purpose of
computing the beneficial ownership of any other person.
13
<PAGE>
(2) Includes 2,313,087 shares of Common Stock that are subject to an
irrevocable proxy granted to Aurora Equity Partners L.P. ("AEP") and
Aurora Overseas Equity Partners I, L.P. ("AOEP") by certain holders of
Common Stock, including Messrs. Crowell, Hardy, Parsky and Roeder,
certain other limited partners of AEP and certain affiliates of a
limited partner of AOEP. The proxy terminates upon the transfer of
such shares. Also includes the 2,018,652 shares of the Company's
Common Stock held by the General Electric Pension Trust. See Footnote
(6) below.
(3) AEP is a Delaware limited partnership the general partner of which is
ACP, a Delaware limited partnership whose general partner is Aurora
Advisors, Inc. ("AAI"). Messrs. Crowell, Parsky and Roeder are the
sole stockholders and directors of AAI, are limited partners of ACP
and may be deemed to beneficially share ownership of the Company's
Common Stock beneficially owned by AEP and may be deemed to be the
organizers of the Company under regulations promulgated under the
Securities Act of 1933.
(4) The address for this beneficial holder is West Wind Building, P.O. Box
1111, Georgetown, Grand Cayman, Cayman Islands, B.W.I.
(5) AOEP is a Cayman Islands limited partnership the general partner of
which is Aurora Overseas Capital Partners, L.P. ("AOCP"), a Cayman
Islands limited partnership whose general partner is Aurora Overseas
Advisors, Ltd. ("AOAL"). Messrs. Crowell, Parsky and Roeder are the
sole stockholders and directors of AOAL, are limited partners of AOCP
and may be deemed to beneficially own the shares of the Company's
Common Stock beneficially owned by AOEP.
(6) With limited exceptions, the General Electric Pension Trust has agreed
to vote these shares in the same manner as AEP and AOEP vote their
respective shares of the Company's Common Stock. This provision
terminates upon the transfer of such shares.
(7) Includes 842,106 shares of Common Stock subject to exercisable options
granted under the Stock Incentive Plan.
(8) The address for this beneficial holder is 900 Oakmont Lane, Suite 100,
Westmont, Illinois 60559
(9) Excludes 498,000 shares of Common Stock subject to options granted
under the Stock Incentive Plan that are not exercisable within 60 days
of February 28, 1997.
(10) Consists of 23,392 shares of Common Stock subject to options granted
under the Stock Incentive Plan that are exercisable as of February 28,
1997 or that will become exercisable within 60 days thereafter.
Excludes 81,872 shares of Common Stock subject to options granted
under the Stock Incentive Plan that are not exercisable within 60 days
of February 28, 1997.
(11) Includes 93,568 shares of Common Stock subject to options granted
under the Stock Incentive Plan that are exercisable as of February 28,
1997 or that will become exercisable within 60 days thereafter.
Excludes 46,784 shares of Common Stock subject to options granted
under the Stock Incentive Plan that are not exercisable within 60 days
of February 28, 1997.
(12) The address for this beneficial holder is 2699 North Westgate,
Springfield, MO 65803.
(13) Consists of 23,392 shares of Common Stock subject to options granted
under the Stock Incentive Plan that are exercisable as of February 28,
1997 or that will become exercisable within 60 days thereafter.
Excludes 46,784 shares of Common Stock subject to options granted
under the Stock Incentive Plan that are not exercisable within 60 days
of February 28, 1997.
(14) Includes 4,290 shares held by Mr. Anderson's wife (including 2,790
shares held by her as trustee for her relatives), as to which Mr.
Anderson disclaims beneficial ownership.
14
<PAGE>
(15) The address for this beneficial holder is 1800 Century Park East,
Suite 1000, Los Angeles, CA 90067.
(16) The holder of these shares has granted an irrevocable proxy covering
these shares to AEP and AOEP.
(17) Consists of shares of Common Stock subject to exercisable warrants.
(18) Includes 2,000 shares held by Mr. Parsky's wife, as to which Mr.
Parsky disclaims beneficial ownership.
(19) Includes 1,356,730 shares of Common Stock subject to warrants and
employee stock options that are exercisable as of February 28, 1997 or
that will become exercisable within 60 days thereafter.
CERTAIN TRANSACTIONS
The Company believes the transactions described below, which were
entered into by the Company and its subsidiaries, were beneficial to the
respective companies, and were on terms at least as favorable to the respective
companies as could have been obtained from unaffiliated third parties pursuant
to arms-length negotiations.
RELATIONSHIP WITH ACP
The Company was formed in 1994 at the direction of ACP. The Company
paid ACP fees of approximately $1.1 million for investment banking services
provided in connection with the acquisitions of three new subsidiaries in 1995
and two additional subsidiaries in 1996. The Company has also agreed to pay to
ACP a base annual management fee of approximately $530,000 for advisory and
consulting services pursuant to a written management services agreement (the
"Management Services Agreement"). ACP is also entitled to reimbursements from
the Company for all of its reasonable out-of-pocket costs and expenses incurred
in connection with the performance of its obligations under the Management
Services Agreement. The base annual management fee is subject to increase, at
the discretion of the disinterested members of the Board of Directors, by up to
an aggregate of $250,000 in the event the Company consummates one or more
significant corporate transactions. The base annual management fee was not
increased as a result of the 1995 and 1996 acquisitions. The base annual
management fee is also subject to increase for specified cost of living
increases. If the Company's EBITDA (as defined in the Management Services
Agreement) in any year exceeds management's budgeted EBITDA by 15% or more for
that year, ACP will be entitled to receive an additional management fee equal to
50% of its base annual management fee for such year. Because the Company's
EBITDA did not exceed management's budgeted EBITDA by 15% in 1995 and 1996, ACP
did not receive this additional management fee in 1995 or 1996. In the event
the Company consummates any significant corporate transaction, ACP will be
entitled to receive a closing fee from the Company equal to 2% of the first $75
million of the acquisition consideration (including debt assumed and current
assets retained) and 1% of acquisition consideration (including debt assumed and
current assets retained) in excess of $75 million. Notwithstanding the
foregoing, no payment will be made to ACP pursuant to the Management Services
Agreement at any time that certain events of default shall have occurred and be
then continuing under either of the indentures governing the Company's senior
subordinated notes or the Company's revolving credit agreement. The Management
Services Agreement also provides that the Company shall provide ACP and its
directors, employees, partners and affiliates with customary indemnification
against all actions not involving gross negligence or willful misconduct. The
base annual management fee payable to ACP will be reduced as the collective
beneficial ownership of Common Stock by AEP and AOEP declines below 50%: for any
period during which the collective beneficial ownership of AEP and AOEP is less
than 50% but at least 40%, the base annual management fee payable for the period
will be 80% of the original base annual management fee (as such original base
annual management fee may previously have been adjusted due to discretionary
increases by the Board of Directors or cost of living increases as described
above, the "Original Fee"); for any period during which AEP's and AOEP's
collective beneficial ownership is less than 40% but at least 30%, the base
annual management fee payable for the period will be 60% of the Original Fee;
and for any period during which the collective beneficial ownership of AEP and
AOEP is less than 30% but at least 20%, the base annual management fee payable
for the period will be 40% of the Original Fee. If AEP's and AOEP's collective
beneficial ownership declines below 20%, the Management Services Agreement will
terminate. For information regarding the general and certain of the limited
partners of ACP, see "Security Ownership of Certain Beneficial Owners and
Management."
15
<PAGE>
In October 1996, the Company granted options for an aggregate of
48,000 shares to certain directors and consultants of the Company who are
employees of ACP, including Mr. Hardy.
FACILITY LEASES
In connection with its acquisition of Aaron's, the Company entered
into a lease with an affiliate of Mr. Wehr for Aaron's headquarters and primary
remanufacturing facility located in Springfield, Missouri with an initial term
beginning January 1, 1994 and expiring December 31, 2004, subject to the
Company's option to extend the term for a period of five years. The monthly
base rent is $33,105 and the Company is responsible for paying property taxes,
insurance and maintenance expenses for the leased premises. The Company also
entered into three leases with affiliates of Mr. Wehr for three manufacturing
facilities comprising approximately 84,000 square feet for an aggregate rent of
$12,000 per month with an initial term beginning January 1, 1994 and expiring
December 31, 1996 and December 31, 1998 (depending upon the facility), subject
to the Company's option to extend the term of the lease for a 30,000 square foot
facility for one successive period of five years through December 31, 2003. In
November 1994, the Company entered into another lease with the same parties for
a 98,800 square foot storage facility for monthly rent of $7,300 per month. The
initial term of the lease expired during 1995 and pursuant to its terms,
continues as a month-to-month lease until terminated. In January 1996, the
Company entered into a new lease with an affiliate of Mr. Wehr for Aaron's
200,000 square foot core storage facility for an initial term of ten years,
expiring October 31, 2006, with an option to renew for five years. The base
monthly rent is currently $36,667 for the initial term, with specified increases
every three years. The Company is also required to pay taxes, maintenance and
operating expenses. On January 1, 1997 the Company entered into a three-year
lease with an affiliate of Mr. Wehr for a 60,430 square foot facility used for
core storage, warehousing and office space for rent of $5,973 per month. The
Company also leases from Mr. Wehr eight acres adjacent to the manufacturing
facility in Joplin, Missouri. This acreage is used for employee parking at the
manufacturing facility. The lease was entered into on July 1, 1996 and expires
on June 30, 2006 with a monthly base rent of $1,265. The Company is responsible
for paying property taxes, insurance and maintenance expenses for each of these
leased premises. Mr. Wehr has been an executive officer of the Company since
its acquisition of Aaron's.
PAYMENT OF PREFERRED STOCK REORGANIZATION CONSIDERATION
In connection with the formation of Holdings (the Company's former
stockholder), in July and August 1994 it issued Holdings preferred stock to each
purchaser of its common stock for consideration of $100 per share, totaling an
aggregate of 200,000 shares. In the Reorganization, each outstanding shares of
Holdings preferred stock was converted into one share of the Company's Preferred
Stock, following which the Company's preferred stock was redeemed for an amount
in cash equal to $100.00 plus an amount in cash equal to accrued and unpaid
dividends on the Holdings preferred stock to the date of the Reorganization.
Messrs. Smith, Wehr, Anderson, Crowell, Hardy, Parsky and Roeder held 563
shares, 11,250 shares, 188 shares, 1,264 shares, 109 shares 1,401 shares and 243
shares of preferred stock, respectively, and, upon redemption of such shares,
received $70,765, $1,414,051, $23,630, $159,195, $13,701, $176,403, and $30,596,
respectively. AEP and AOEP originally purchased 95,392 and 15,233 shares of
preferred stock, respectively, which were subsequently distributed to their
general and limited partners, including AOCP and ACP, which received $19,183 and
$120,159, respectively, upon redemption of the preferred stock.
REGISTRATION RIGHTS
The holders of the Common Stock outstanding before the initial public
offering in December 1996 have certain "demand" and "piggyback" registration
rights pursuant to a Stockholders Agreement. In addition, the General Electric
Pension Trust has certain "demand" and "piggyback" registration rights with
respect to 1,255,794 shares of Common Stock owned by it.
16
<PAGE>
APPROVAL OF AMENDMENT OF AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously approved an amendment (the
"Amendment") to Article IV of the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") to reduce the number of
shares of authorized capital stock of the Company from 35,000,000 to 26,000,000.
The Board's approval of the Amendment is subject to stockholder approval of the
Amendment.
Prior to the Amendment, the Company is authorized to issue up to
30,000,000 shares of Common Stock and up to 5,000,000 shares of preferred
stock in such series as the Board of Directors may decide from time to time.
The Amendment provides for the reduction of the number of authorized shares
of Common Stock to 24,000,000 and the number of authorized shares of
preferred stock to 2,000,000. As of the record date for the Meeting, there
were 16,993,794 shares of Common Stock outstanding and 2,703,362 shares of
Common Stock reserved for issuance under the Stock Incentive Plan and
presently outstanding warrants to purchase Common Stock. There are no shares
of preferred stock currently outstanding.
If approved by stockholders, the Amendment will result in the Company
paying less annual franchise tax in Delaware (the Company's state of
incorporation). This is because the formula for determining the Company's
franchise tax obligation is based in part on the number of shares of capital
stock that the Company is authorized to issue pursuant to the Certificate of
Incorporation. All other factors being equal, the Company will pay less
franchise tax if it has fewer authorized shares of capital stock.
The Amendment provides for Section 1 of Article IV of the Certificate
of Incorporation to be amended in its entirety to read as follows:
AUTHORIZED SHARES. The Corporation shall be
authorized to issue two classes of shares of stock to
be designated, respectively, "Preferred Stock" and
"Common Stock"; the total number of shares that the
Corporation shall have authority to issue is Twenty-Six
Million (26,000,000); the total number of shares of
Preferred Stock shall be Two Million (2,000,000) and
each such share shall have a par value of one cent
($.01); and the total number of shares of Common Stock
shall be Twenty-Four Million (24,000,000) and each such
share shall have a par value of one cent ($.01).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
APPROVAL OF THE AMENDMENT. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED FOR THIS PROPOSAL UNLESS SHAREHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.
APPROVAL AND AUTHORIZATION OF
INDEMNIFICATION AGREEMENTS
The Board of Directors has unanimously approved a form of
indemnification agreement in substantially the form attached hereto as Appendix
A (an "Indemnification Agreement") and has authorized the Company to enter into
Indemnification Agreements with the directors of the Company and its
subsidiaries and such officers of the Company and its subsidiaries as the Board
of Directors may determine from time to time. The Board of Directors has
directed that a proposal to approve the form of, and to authorize the Company to
enter into, Indemnification Agreements be submitted to a vote of stockholders
for approval. If the Indemnification Agreements are approved by the
stockholders, it is anticipated that such Indemnification Agreements will be
entered into with the directors and officers of the Company and the directors of
the Company's subsidiaries promptly after the Annual Meeting and that similar
agreements will be entered into from time to time with future directors and
officers as are designated from time to time by the Board of Directors.
17
<PAGE>
The following summary of the Indemnification Agreements is not
intended to be complete and is subject to, and qualified in its entirety by
reference to, Appendix A hereto.
The Indemnification Agreements provide for, among other things, the
following: (i) indemnification to the fullest extent permitted by law against
any and all expenses (including attorneys' fees and all other costs and
obligations of any nature whatever), judgments, fines, penalties and amounts
paid in settlement (including all interest, assessments and other charges
paid or payable in connection therewith) of any claim, unless the Company
determines that such indemnification is not permitted under applicable law;
(ii) the prompt advancement of expenses to the director or officer, including
attorneys' fees and all other costs, fees, expenses and obligations paid or
incurred in connection with investigating or defending any threatened,
pending or completed action, suit or proceeding related to the fact that such
director or officer, is or was a director or officer of the Company or is or
was serving at the request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise, and for repayment
to the Company if it is found that such director or officer is not entitled
to such indemnification under applicable law; (iii) a mechanism through which
the director or officer may seek court relief in the event the Company
determines that the director or officer is not permitted to be indemnified
under applicable law (and therefore is not entitled to indemnification under
the Indemnification Agreement); and (iv) indemnification against expenses
(including attorneys' fees) incurred in seeking to collect from the Company
an indemnity claim or advancement of expenses to the extent successful.
The Board of Directors believes that it is in the best interest of
the Company to indemnify its directors and certain of its officers to the
fullest extent possible. The Indemnification Agreements are proposed to be
adopted as an adjunct to the limitation of personal liability of directors
provided for by Delaware law and in conjunction with the indemnification
provisions set forth in the Certificate of Incorporation and Bylaws of the
Company. Among other things, the Indemnification Agreements would provide
the indemnified directors and officers with a specific contractual assurance
that the rights to indemnification currently provided to them will remain
available, regardless of, among other things, any amendment to or revocation
of the indemnification provisions in the Certificate of Incorporation or the
Bylaws of the Company or any change in composition or philosophy of the Board
of Directors such as might occur following an acquisition or change of
control of the Company. If court assistance to obtain such indemnity is
required, the director or officer can receive indemnity against costs
incurred in pursuing his or her rights to indemnification. In addition, the
Indemnification Agreements would guarantee to directors and officers that
they would realize the benefit of any subsequent changes in Delaware law
relating to indemnification.
The Indemnification Agreements provide that a director's or
officer's rights thereunder are not exclusive of any other rights he or she
may have under Delaware law, directors' and officers' insurance, the
Certificate of Incorporation, the Bylaws of the Company or otherwise.
However, the Indemnification Agreements do prevent double payment.
Notwithstanding the above discussion, all terms and rights under the
Indemnification Agreements exist only to the extent permitted by applicable law.
There is not to the knowledge of the Company any threatened or
pending action that might result in claims of indemnification under the
Indemnification Agreements.
Delaware law does not require that stockholder approval be obtained
in order to enter into the Indemnification Agreements. The Board of Directors
is seeking stockholder approval, however, because each of the directors
potentially will benefit by such an agreement and, therefore, has an inherent
conflict of interest with regard thereto. Shareholder approval of the
Indemnification Agreements may not prevent a stockholder from later seeking to
challenge the Agreements. Although the Board of Directors cannot determine in
advance its position with respect to any challenge of the enforceability of the
Indemnification Agreements by its stockholders, it may
18
<PAGE>
assert stockholder approval of such Indemnification Agreements as a defense. If
the Indemnification Agreements are not approved by the stockholders, the Board
will reconsider whether the Indemnification Agreements should be entered into.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
INDEMNIFICATION AGREEMENTS. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED FOR THIS PROPOSAL UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.
ANNUAL REPORT
The Company's Annual Report to Stockholders is being mailed to all
stockholders. Any stockholder who has not received a copy may obtain one by
writing to the Company at 900 Oakmont Lane, Suite 100, Westmont, Illinois
60559. In addition, any person wishing to receive a copy of the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 (excluding the
exhibits thereto) may obtain a copy by sending a written request to the Company
at the same address.
INDEPENDENT AUDITORS
Ernst & Young LLP was the Company's independent auditors for the year
ended December 31, 1996. The appointment of independent auditors is approved
annually by the Board of Directors, based in part on the recommendation of the
Audit Committee. The Board of Directors has not taken action yet regarding the
appointment of the Company's auditors for fiscal 1997. Stockholder approval is
not sought in connection with the selection of auditors.
Representatives of Ernst & Young LLP will be present at the Meeting
and will be given an opportunity to make a statement if they desire to do so and
will respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
Any eligible stockholder of the Company wishing to have a proposal
considered for inclusion in the Company's 1998 proxy solicitation materials
must set forth such proposal in writing and file it with the Secretary of the
Company on or before December 26, 1997. The Board of Directors will review
new proposals received from eligible stockholders by that date and will
determine whether such proposals will be included in its 1998 proxy
solicitation materials. Generally, a stockholder is eligible to present
proposals if he or she has been for at least one year the record or
beneficial owner of at least 1% or $1,000 in market value of securities
entitled to be voted at the 1998 Annual Meeting of Stockholders and he or she
continues to own such securities through the date on which the meeting is
held.
By Order of the Board of Directors
Joseph Salamunovich,
Secretary
April 25, 1997
19
<PAGE>
APPENDIX A
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement"), dated as of
______________, 199__, is made by and between Aftermarket Technology Corp., a
Delaware corporation (the "Corporation"), and ___________________, an
individual ("Indemnitee").
R E C I T A L S
A. Indemnitee is currently serving as, or is assuming the position
of, a director and/or officer of the Corporation and/or, at the Corporation's
request, a director, officer, employee and/or agent of another corporation,
partnership, joint venture, trust or other enterprise, and the Corporation
wishes Indemnitee to continue in such capacity(ies);
B. The Corporation and Indemnitee recognize that the present state
of the law is too uncertain to provide the Corporation's directors and officers
with adequate and reliable advance knowledge or guidance with respect to the
legal risks and potential liabilities to which they may become personally
exposed as a result of performing their duties for the Corporation;
C. The Certificate of Incorporation (the "Charter") and the Bylaws
(the "Bylaws") of the Corporation each provide that the Corporation may
indemnify, to the fullest extent permitted by law, certain persons, including
directors, officers, employees or agents of the Corporation, against specified
expenses and losses arising out of certain threatened, pending or completed
actions, suits or proceedings;
D. Section 145(f) of the Delaware General Corporation Law (the
"DGCL") expressly recognizes that the indemnification provided by the other
subsections of Section 145 of the DGCL shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in an official capacity
and as to action in another capacity while holding such office;
E. Indemnitee has indicated that he may not be willing to serve, or
continue to serve, as a director and/or officer of the Corporation and/or, at
the Corporation's request, as a director, officer, employee and/or agent of
another corporation, partnership, joint venture, trust or other enterprise in
the absence of an indemnification agreement from the Corporation;
F. The Board of Directors of the Corporation has concluded that, to
retain and attract talented and experienced individuals to serve as directors
and officers of the Corporation and to encourage such individuals to take the
business risks necessary for the success of the Corporation, it is necessary for
the Corporation to contractually indemnify them, and to assume for itself
liability for expenses and damages in connection with claims against them in
connection with their service to the Corporation, and has further concluded that
the failure to provide such contractual indemnification could result in great
harm to the Corporation and its stockholders.
A G R E E M E N T
NOW, THEREFORE, the Corporation and Indemnitee agree as follows:
1. DEFINITIONS.
(a) "Expenses" means, for the purposes of this Agreement,
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, any fees and disbursements of Indemnitee's counsel,
accountants and other experts and other out-of-pocket costs) actually and
reasonably incurred by Indemnitee in connection with the investigation,
preparation, defense or appeal of a Proceeding; PROVIDED, HOWEVER, that
<PAGE>
Expenses shall not include judgments, fines, penalties or amounts paid in
settlement of a Proceeding unless such matters may be indemnified under
applicable provisions of the DGCL.
(b) "Proceeding" means, for the purposes of this Agreement,
any threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative (including actions, suits or
proceedings brought by or in the right of the Corporation) in which Indemnitee
may be or may have been involved as a party or otherwise, by reason of the fact
that Indemnitee is or was a director or officer of the Corporation, by reason of
any action taken by him or of any inaction on his part while acting as such
director or officer or by reason of the fact that he is or was serving at the
request of the Corporation as a director or officer of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise, or
was a director and/or officer of the foreign or domestic corporation which was a
predecessor corporation to the Corporation or of another enterprise at the
request of such predecessor corporation, whether or not he is serving in such
capacity at the time any liability or expense is incurred for which
indemnification or reimbursement can be provided under this Agreement.
2. INDEMNIFICATION.
(a) THIRD PARTY PROCEEDINGS. To the fullest extent
permitted by law, the Corporation shall indemnify Indemnitee against Expenses
and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, penalties, and amounts paid in settlement (if the settlement
is approved in advance by the Corporation)) actually and reasonably incurred by
Indemnitee in connection with a Proceeding (other than a Proceeding by or in the
right of the Corporation) if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in, or not opposed to, the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe Indemnitee's conduct was unlawful. The
termination of any Proceeding by judgment, order, settlement, conviction, or
upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a manner that
Indemnitee reasonably believed to be in, or not opposed to, the best interests
of the Corporation, or, with respect to any criminal Proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful. Notwithstanding the
foregoing, no indemnification shall be made in any criminal proceeding where
Indemnitee has been adjudged guilty unless a disinterested majority of the
directors determines that Indemnitee did not receive, participate in or share in
any pecuniary benefit to the detriment of the Corporation and, in view of all
the circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification for Expenses or liabilities.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION. To
the fullest extent permitted by law, the Corporation shall indemnify
Indemnitee against Expenses actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of a Proceeding by or in the right
of the Corporation to procure a judgment in its favor if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in, or not
opposed to, the best interests of the Corporation. Notwithstanding the
foregoing, no indemnification shall be made in respect of any claim, issue or
matter as to which Indemnitee shall have been adjudged to be liable to the
Corporation in the performance of Indemnitee's duty to the Corporation unless
and only to the extent that the court in which such Proceeding is or was
pending shall determine upon application that, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification for Expenses and then only to the extent that the court shall
determine.
(c) SCOPE. Notwithstanding any other provision of this
Agreement other than Sections 3 and 13, the Corporation shall indemnify
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by other provisions of this
Agreement, the Charter, the Bylaws or statute.
3. LIMITATIONS ON INDEMNIFICATION. Any other provision herein to
the contrary notwithstanding, the Corporation shall not be obligated pursuant to
the terms of this Agreement:
2
<PAGE>
(a) EXCLUDED ACTS. To indemnify Indemnitee for any acts or
omissions or transactions from which a director may not be relieved of liability
under Section 102(b)(7) of the DGCL; or
(b) CLAIMS INITIATED BY INDEMNITEE. To indemnify or
advance Expenses to Indemnitee with respect to Proceedings or claims initiated
or brought voluntarily by Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as
required under Section 145 of the DGCL, but such indemnification or advancement
of Expenses may be provided by the Corporation in specific cases if a majority
of the disinterested directors has approved the initiation or bringing of such
suit; or
(c) LACK OF GOOD FAITH. To indemnify Indemnitee for any
Expenses incurred by Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such proceeding was not made in good faith or was frivolous; or
(d) INSURED CLAIMS. To indemnify Indemnitee for Expenses
or liabilities of any type whatsoever (including, but not limited to, judgments,
fines or penalties, and amounts paid in settlement) that have been paid
directly to or on behalf of Indemnitee by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by the Corporation or
any other policy of insurance maintained by the Corporation or Indemnitee; or
(e) CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee
for Expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
4. DETERMINATION OF RIGHT TO INDEMNIFICATION. Upon receipt of a
written claim addressed to the Board of Directors for indemnification pursuant
to Section 2 of this Agreement, the Corporation shall determine by any of the
methods set forth in Section 145(d) of the DGCL whether Indemnitee has met the
applicable standards of conduct that make it permissible under applicable law to
indemnify Indemnitee. If a claim under Section 2 of this Agreement is not paid
in full by the Corporation within 90 days after such written claim has been
received by the Corporation, Indemnitee may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, unless
such action is dismissed by the court as frivolous or brought in bad faith,
Indemnitee shall be entitled to be paid also the expense of prosecuting such
claim. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to make a
determination prior to the commencement of such action that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct under applicable law, nor an actual determination
by the Corporation (including its Board of Directors, independent legal counsel
or its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has not met the applicable
standard of conduct. The court in which such action is brought shall determine
whether Indemnitee or the Corporation shall have the burden of proof concerning
whether Indemnitee has or has not met the applicable standard of conduct.
5. ADVANCEMENT AND REPAYMENT OF EXPENSES. The Expenses incurred by
Indemnitee in defending and investigating any Proceeding shall be paid by the
Corporation prior to the final disposition of such Proceeding within 30 days
after receiving from Indemnitee copies of invoices presented to Indemnitee for
such Expenses and an undertaking by or on behalf of Indemnitee to the
Corporation to repay such amount to the extent it is ultimately determined that
Indemnitee is not entitled to indemnification. In determining whether or not to
make an advance hereunder, the ability of Indemnitee to repay shall not be a
factor. Notwithstanding the foregoing, in a proceeding brought by the
Corporation directly, in its own right (as distinguished from an action brought
derivatively or by any receiver or trustee), the Corporation shall not be
required to make the advances called for hereby if a majority of the
disinterested directors determine that it does not appear that Indemnitee has
met the standards of conduct that made it permissible under applicable law to
indemnify Indemnitee and that the advancement of Expenses would not be in the
best interests of the Corporation and its stockholders.
3
<PAGE>
6. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification or advancement by the Corporation
of some or a portion of any Expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, penalties, and amounts paid in
settlement) incurred by him in the investigation, defense, settlement or appeal
of a Proceeding, but is not entitled to indemnification or advancement of the
total amount thereof, the Corporation shall nevertheless indemnify or pay
advancements to Indemnitee for the portion of such Expenses or liabilities to
which Indemnitee is entitled.
7. NOTICE TO CORPORATION BY INDEMNITEE. Indemnitee shall notify the
Corporation in writing of any matter with respect to which Indemnitee intends to
seek indemnification hereunder as soon as reasonably practicable following the
receipt by Indemnitee of written notice thereof; provided that any delay in so
notifying the Corporation shall not constitute a waiver by Indemnitee of his
rights hereunder. The written notification to the Corporation shall be
addressed to the Board of Directors and shall include a description of the
nature of the Proceeding and the facts underlying the Proceeding and be
accompanied by copies of any documents filed with the court, if any, in which
the Proceeding is pending. In addition, Indemnitee shall give the Corporation
such information and cooperation as it may reasonably require and as shall be
within Indemnitee's power.
8. DEFENSE OF CLAIM. In the event that the Corporation shall be
obligated under Section 5 hereof to pay the Expenses of any Proceeding against
Indemnitee, the Corporation, if appropriate, shall be entitled to assume the
defense of such Proceeding, with counsel approved by Indemnitee, which approval
shall not be unreasonably withheld, upon the delivery to Indemnitee of written
notice of its election to do so. After delivery of such notice, approval of
such counsel by Indemnitee and the retention of such counsel by the Corporation,
the Corporation will not be liable to Indemnitee under this Agreement for any
fees of counsel subsequently incurred by Indemnitee with respect to the same
Proceeding; provided that (i) Indemnitee shall have the right to employ his own
counsel in any such Proceeding at Indemnitee's expense, and (ii) if (A) the
employment of counsel by Indemnitee has been previously authorized by the
Corporation, or (B) Indemnitee shall have reasonably concluded that there may be
a conflict of interest between the Corporation and Indemnitee in the conduct of
such defense or (C) the Corporation shall not, in fact, have employed counsel to
assume the defense of such Proceeding, then the fees and expenses of
Indemnitee's counsel shall be paid by the Corporation.
9. ATTORNEYS' FEES. If any legal action is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to recover, in
addition to other amounts to which the prevailing party may be entitled, actual
attorneys' fees and court costs as may be awarded by the court.
10. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
the Corporation contained herein shall continue during the period Indemnitee is
a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, and shall
continue thereafter so long as Indemnitee shall be subject to any possible
Proceeding by reason of the fact that Indemnitee served in any capacity referred
to herein.
11. SUCCESSORS AND ASSIGNS. This Agreement establishes contract
rights that shall be binding upon, and shall inure to the benefit of, the
successors, assigns, heirs and legal representatives of the parties hereto.
12. NON-EXCLUSIVITY.
(a) The provisions for indemnification and advancement of
expenses set forth in this Agreement shall not be deemed to be exclusive of any
other rights that Indemnitee may have under any provision of law, the Charter
or Bylaws, the vote of the Corporation's stockholders or disinterested
directors, other agreements or otherwise, both as to action in his official
capacity and action in another capacity while occupying his position as a
director or officer of the Corporation.
(b) In the event of any changes, after the date of this
Agreement, in any applicable law, statute, or rule that expand the right of a
Delaware corporation to indemnify its directors and officers, Indemnitee's
rights and the Corporation's obligations under this Agreement shall be expanded
to the fullest extent permitted by such
4
<PAGE>
changes. In the event of any changes in any applicable law, statute or rule,
that narrow the right of a Delaware corporation to indemnify a director and
officer, such changes, to the extent not otherwise required by such law, statute
or rule to be applied to this Agreement, shall have no effect on this Agreement
or the parties' rights and obligations hereunder.
13. EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective
as of the date set forth on the first page hereof and may apply to acts or
omissions of Indemnitee that occurred prior to such date if Indemnitee was a
director or officer of the Corporation or its predecessor, or was serving at
the request of the Corporation or its predecessor as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
at the time such act or omission occurred.
14. SEVERABILITY. Nothing in this Agreement is intended to require
or shall be construed as requiring the Corporation to do or fail to do any act
in violation of applicable law. The Corporation's inability, pursuant to court
order, to perform its obligations under this Agreement shall not constitute a
breach of this Agreement. The provisions of this Agreement shall be severable
as provided in this Section 14. If this Agreement or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify Indemnitee to the fullest extent
permitted by any applicable portion of this Agreement that shall not have been
invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.
15. GOVERNING LAW. This Agreement shall be interpreted and enforced
in accordance with the laws of the State of Delaware without regard to its rules
pertaining to conflicts of laws. To the extent permitted by applicable law, the
parties hereby waive any provisions of law that render any provision of this
Agreement unenforceable in any respect.
16. NOTICE. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressed, on the date of such
receipt, or (ii) if delivered by facsimile transmission to the recipient
followed by a copy sent by mail on the same date as the facsimile transmission,
on the date of receipt of such facsimile transmission, or (iii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown
below, or as subsequently modified by written notice:
If to the Corporation:
Aftermarket Technology Corp.
900 Oakmont Lane, Suite 100
Westmont, Illinois 60559
Fax: (630) ___-____
If to Indemnitee:
To the address set forth on the
signature page hereof.
17. MUTUAL ACKNOWLEDGMENT. Both the Corporation and Indemnitee
acknowledge that in certain instances federal law or applicable public policy
may prohibit the Corporation from indemnifying its directors and officers under
this Agreement or otherwise. Indemnitee understands and acknowledges that the
Corporation has undertaken or may be required in the future to undertake with
the Securities and Exchange Commission to submit the question of indemnification
to a court in certain circumstances for a determination of the Corporation's
right under public policy to indemnify Indemnitee.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original.
5
<PAGE>
19. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year set forth above.
AFTERMARKET TECHNOLOGY CORP.
By:________________________________________
Name:
Title:
INDEMNITEE:
__________________________________________
[Name]
__________________________________________
__________________________________________
[Address]
6
<PAGE>
APPENDIX B
[FRONT OF PROXY CARD]
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF
AFTERMARKET TECHNOLOGY CORP.
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
The undersigned stockholder of Aftermarket Technology Corp. (the "Company")
acknowledges receipt of the Notice of Annual Meeting of Stockholders of the
Company and the accompanying Proxy Statement, each dated April 25, 1997, and
the undersigned hereby revokes all prior proxies and hereby constitutes and
appoints Stephen Perkins, John Kent and Joseph Salamunovich, and each of them
(each with full power of substitution and with full power to act without the
others), the proxies of the undersigned, to represent the undersigned and to
vote all the shares of common stock of the Company that the undersigned would
be entitled to vote at the Annual Meeting of Stockholders of the Company to
be held on June 3, 1997 at 10:00 a.m., Chicago time, at the Hyatt Regency
Hotel, 1909 Spring Road, Oakbrook, Illinois, and at any adjournment or
postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED BELOW; WHERE NO CHOICE
IS SPECIFIED, IT WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND IN THE DISCRETION OF
THE PROXIES WITH RESPECT TO MATTERS DESCRIBED IN PROPOSAL 4.
PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT IN THE
ENCLOSED ENVELOPE.
[REVERSE OF PROXY CARD]
The Board of Directors recommends a vote FOR each of Proposals 1, 2 and 3.
<TABLE>
<CAPTION>
<S><C>
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all nominees listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
William A. Smith Stephen J. Perkins Robert Anderson
Richard R. Crowell Mark C. Hardy Dr. Michael J. Hartnett
William E. Myers, Jr. Gerald L. Parsky Richard K. Roeder
2. AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION: / /FOR / /AGAINST / /ABSTAIN
3. APPROVAL AND AUTHORIZATION OF INDEMNIFICATION AGREEMENTS: / /FOR / /AGAINST / /ABSTAIN
4. TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
DATED: __________________________, 1997
_______________________________________
_______________________________________
(Please sign exactly as your name
appears hereon. If the stock is
registered in the name of two or more
persons, each should sign. When signing
as an executor, administrator, trustee,
guardian, attorney, or corporate
officer, please add you full title as
such.)
