<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 (Amendment No. )
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
|X| Definitive Proxy Statement by Rule 14a-6(e)(2))
_
|_| Definitive Additional Materials
_
|_| Soliciting Material Under 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| 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>
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Aftermarket Technology Corp. on Wednesday, May 10, 2000, at 9:00 a.m. Central
time at the Hilton Lisle/Naperville, 3003 Corporate West Drive, Lisle, 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 and approve
the adoption of a new stock incentive plan. 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.
/s/ Michael T. DuBose
Michael T. DuBose
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
March 31, 2000
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
ONE OAK HILL CENTER, SUITE 400
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 Hilton Lisle/Naperville, 3003 Corporate West Drive, Lisle, Illinois
on Wednesday, May 10, 2000, at 9:00 a.m., Central time, for the purposes of
considering and acting upon the following:
1. election of ten directors to hold office until the 2001 Annual Meeting of
Stockholders and thereafter until their successors are elected and qualified;
2. approval of the adoption of the 2000 Stock Incentive Plan; and
3. 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 March 22,
2000 will be entitled to notice of, and to vote at, the meeting and any
adjournments thereof.
By Order of the Board of Directors,
/s/ Joseph Salamunovich
Joseph Salamunovich
Secretary
Dated: March 31, 2000
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.
ONE OAK HILL CENTER, SUITE 400
WESTMONT, ILLINOIS 60559
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
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 Hilton
Lisle/Naperville, 3003 Corporate West Drive, Lisle, Illinois, on May 10, 2000
at 9:00 a.m., Central time, and all adjournments thereof. This Proxy
Statement and the accompanying form of proxy are first being mailed to
stockholders on or about April 3, 2000.
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 March 22, 2000 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 20,566,812 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
ten 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
are:
Robert Anderson Dr. Michael J. Hartnett
Richard R. Crowell Gerald L. Parsky
Michael T. DuBose Richard K. Roeder
Dale F. Frey William A. Smith
Mark C. Hardy J. Richard Stonesifer
All of the nominees currently serve as directors of the
Company. 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.
2
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
<S> <C> <C>
Michael T. DuBose 46 Chairman of the Board, President and Chief Executive Officer
Barry C. Kohn 44 Vice President and Chief Financial Officer
John J. Machota 48 Vice President, Human Resources
Mary T. Ryan 46 Vice President, Communications and Investor Relations
Joseph Salamunovich 40 Vice President, General Counsel and Secretary
Jerry E. Kanis 56 President, Autocraft Group
Paul J. Komaromy 50 President, Aaron's Automotive Products, Inc.
Frank A. Papa 49 President, ATC Distribution Group
R. John Parry 53 President, Component Remanufacturing Specialists, Inc.
Robert Anderson 79 Director
Richard R. Crowell 45 Director
Dale F. Frey 67 Director
Mark C. Hardy 36 Director
Dr. Michael J. Hartnett 54 Director
Gerald L. Parsky 57 Director
Richard K. Roeder 51 Director
William A. Smith 54 Director
J. Richard Stonesifer 63 Director
</TABLE>
MICHAEL T. DUBOSE joined the Company as Chairman of the Board of
Directors, President and Chief Executive Officer in 1998. Prior to that he
served as a consultant to Aurora Capital Group from 1997. From 1995 to 1997
Mr. DuBose was Chairman and Chief Executive Officer of Grimes Aerospace
Company, an international engineering, manufacturing and distribution
company. From 1993 to 1995 he served as Senior Vice President of SAI
Corporation's computer equipment manufacturing and systems sector. Prior to
that Mr. DuBose held various positions at General Instrument and General
Electric Company. Mr. DuBose holds a M.S. in Management from the Stanford
University Graduate School of Business.
BARRY C. KOHN joined the Company as Vice President and Chief
Financial Officer in January 1999. During 1998 he served as a self-employed
financial consultant. From 1995 to 1997 Mr. Kohn was Senior Vice President
and Chief Financial Officer of Grimes Aerospace Company. Between 1987 and
1995 he held increasingly senior positions at Grimes including Treasurer,
Controller and Manager of Business Planning. Mr. Kohn holds a Masters of
Accounting from The Ohio State University and is a Certified Public
Accountant.
JOHN J. MACHOTA joined the Company as Vice President, Human
Resources in 1997. From 1996 to 1997 he was a self-employed human resources
consultant. From 1995 to 1996 Mr. Machota was Vice President, Compensation
for Waste Management, Inc. and from 1993 to 1995 served as Waste
Management's Vice President, Human Resource Services. From 1986 to 1993
Mr. Machota was Vice President, Human Resources for a subsidiary of Waste
Management and prior to that held various other positions in the human
resources area. Mr. Machota holds a M.S. in Industrial Relations from
Loyola University.
MARY T. RYAN joined the Company as Vice President, Communications
and Investor Relations in April 1999. From 1996 to 1998, Ms. Ryan served as
Vice President, Corporate Affairs for American Disposal Services, Inc.
From 1995 to 1996 she was a self-employed public relations consultant.
Prior to that Ms. Ryan was employed for more than ten years with Waste
Management, Inc. Ms. Ryan holds a M.B.A. from DePaul University.
JOSEPH SALAMUNOVICH joined the Company as Vice President, General
Counsel and Secretary in 1997. From 1995 to 1997 Mr. Salamunovich was a
partner in the law firm of Gibson, Dunn & Crutcher LLP, where he
3
<PAGE>
specialized in corporate and securities law matters. From 1986 to 1995 Mr.
Salamunovich was an associate of the same firm. Mr. Salamunovich holds a J.D.
from Loyola Law School.
JERRY E. KANIS joined the Company as President of the Company's
Autocraft Group (Autocraft Industries, Autocraft UK, Autocraft Electronics
and Material Recovery) in January 2000. Prior to joining the Company, Mr.
Kanis was employed with Ford Motor Company for over 25 years, most recently
serving as President of Ford Component Sales during 1999, as President of
Visteon Component Sales Group from 1998 to 1999, and as Director, Global
Sales and Marketing for the Power Products division of Ford's Geometric
Results subsidiary from 1995 to 1996. The Autocraft Group remanufactures
transmissions for Ford, remanufactures engines for certain European original
equipment manufacturers ("OEMs"), remanufactures engine control modules,
radios, instrument and display clusters and certain other electronic
components for General Motors Corporation, Ford and certain other OEMs, and
provides material recovery processing services primarily for Ford.
PAUL J. KOMAROMY joined the Company in February 2000 as President of
the Company's Aaron's Automotive Products, Inc. subsidiary. From 1997 to 1999
Mr. Komaromy was Vice President and General Manager of the Engine Systems and
Accessories division of AlliedSignal, Inc. From 1987 to 1997 Mr. Komaromy was
employed with Grimes Aerospace, serving as Senior Vice President and General
Manager of the Vision Systems division from 1996 to 1997 and as Senior Vice
President, Operations and Engineering from 1991 to 1995. From 1978 to 1987
Mr. Komaromy was employed with the Power Systems division of Cooper
Industries. Mr. Komaromy holds a M.S. in Industrial Administration from the
Carnegie-Mellon University Graduate School of Industrial Administration.
Aaron's remanufactures transmissions and engines for the Chrysler division of
DaimlerChrysler Corporation and remanufactures engines for sale to
independent aftermarket customers.
FRANK A. PAPA joined the Company as President of ATC Distribution
Group in March 2000. From 1998 to 2000 Mr. Papa was Vice President of
Worldwide Manufacturing & Distribution for the Stanley Mechanics Tools
division of Stanley Works and from 1997 to 1998 he was Senior Vice President,
Operations and Manufacturing for Sara Lee Corporation. From 1991 to 1997 he
was employed with Kayser Roth Corporation, a hosiery manufacturer, serving as
Senior Vice President, Operations from 1996 to 1997, Vice President,
Manufacturing and Distribution from 1993 to 1996 and Vice President,
Manufacturing for the Sock division from 1991 to 1993. Prior to that Mr. Papa
held various positions with Textron, Inc., an outdoor power equipment
manufacturer, General Electric Company and Byron Weston Company, a rag paper
manufacturer. Mr. Papa holds a M.B.A. from The University of Massachusetts.
ATC Distribution Group sells transmission parts and components used in
drivetrain repairs to independent transmission rebuilders and to a lesser
extent to general repair shops, wholesale distributors and retail automotive
parts stores.
R. JOHN PARRY joined the Company as President of the Company's
Component Remanufacturing Specialists, Inc. subsidiary in October 1999. Prior
to that Mr. Parry was employed for over 20 years with AlliedSignal, Inc.,
most recently serving as Vice President and General Manager, Global OEM
Business for the Friction Materials division from 1998 to 1999, as Vice
President, Business Planning and Development for the Friction Materials
division from 1997 to 1998, as Vice President, Global Sales for the Friction
Materials division from 1996 to 1997 and as Vice President, Business Planning
and Development for the Braking Systems division from 1993 to 1996. Prior to
that Mr. Parry held various positions with The Carborundum Company. Mr. Parry
holds a M.B.A. from The University of Rochester. CRS remanufactures
transmissions for General Motors and certain foreign OEMs.
ROBERT ANDERSON became a director of the Company in 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 Motor Cargo Industries, Inc.
RICHARD R. CROWELL became a director of the Company in 1994. Mr.
Crowell is President and a founding partner of Aurora Capital Group. Prior to
forming Aurora Capital Group in 1991, Mr. Crowell was a Managing Director of
Rosecliff, Inc., the management company for Acadia Partners L.P. since its
inception in 1987.
DALE F. FREY became a director of the Company in 1997. Prior to his
retirement in 1997, Mr. Frey was Chairman of the Board, President and Chief
Executive Officer of General Electric Investment Corporation, a position
4
<PAGE>
he had held since 1984, and was a Vice President of General Electric Company
since 1980. Mr. Frey is a director of Praxair, Inc. and Roadway Express.
MARK C. HARDY became a director of the Company in 1994. Mr. Hardy is
a Managing Director and partner of Aurora Capital Group. Prior to joining
Aurora Capital Group in 1993, Mr. Hardy was an Associate at Bain & Company, a
consulting firm.
DR. MICHAEL J. HARTNETT became a director of the Company in 1994.
Since 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. 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.
GERALD L. PARSKY became a director of the Company in 1997. Mr.
Parsky is the Chairman and a founding partner of Aurora Capital Group. Prior
to forming Aurora Capital Group in 1991, Mr. Parsky was a senior partner and
a member of the Executive and Management Committees of 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.
RICHARD K. ROEDER became a director of the Company in 1994. Mr.
Roeder is a founding partner and Managing Director of Aurora Capital Group.
Prior to forming Aurora Capital Group 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.
WILLIAM A. SMITH has been a director of the Company since 1994. He
served as Chairman Emeritus of the Board of Directors from 1997 to 1998 and
prior to that served as Chairman of the Board since 1994. Mr. Smith was
President and Chief Executive Officer of the Company from 1994 until 1996.
From 1993 to 1994 Mr. Smith served as a consultant to Aurora Capital Group in
connection with the formation of the Company and its initial acquisitions.
Prior to that Mr. Smith was President of the Rucker Fluid Power Division of
Lucas Industries, plc. and held various positions with Navistar International
Transportation Corporation, Labinal, Inc. (a French automotive and aerospace
equipment manufacturer) and Cummins Engine Company.
J. RICHARD STONESIFER became a director of the Company in 1997.
Prior to his retirement in 1996, Mr. Stonesifer was employed with the General
Electric Company for 37 years, serving most recently as President and Chief
Executive Officer of GE Appliances, and was an executive officer and Senior
Vice President of the General Electric Company, from January 1992 until his
retirement.
COMMITTEES OF THE BOARD OF DIRECTORS AND BOARD MEETINGS
The Company maintains an Audit Committee and a Compensation and
Human Resources 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. During 1999 the
Audit Committee was comprised of Messrs. Anderson, Frey (Chairman) and
Roeder. The Audit Committee met six times during 1999.
The Compensation and Human Resources 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 salaries of executive officers and the granting of stock
options to eligible employees. During 1999 the Compensation and Human
Resources Committee was comprised of Messrs. Crowell, Parsky and Stonesifer
(Chairman). The Compensation and Human Resources Committee met three times
during 1999.
5
<PAGE>
The Board of Directors held four meetings during 1999. 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 1999.
DIRECTOR COMPENSATION
Directors do not receive cash compensation for service on the Board
of Directors or its committees, and the Company does not expect to pay fees
to its directors in the foreseeable future. The Company reimburses directors
for their expenses in connection with attending Board and committee meetings.
At the time that Messrs. Anderson, Frey and Stonesifer joined the
Board of Directors in 1997, they were each granted options to purchase 12,000
shares of the Common Stock at an exercise price of $15.25, $18.25 and $18.25
per share, respectively. In May 1998 these three directors were each granted
additional options to purchase 24,000 shares of the Common Stock at an
exercise price of $18.125 per share. In November 1998 all of the options
previously granted to Messrs. Anderson, Frey and Stonesifer were canceled and
replaced with an equal number of new options with an exercise price of
$5.3125 per share. In 1999 these three directors were each granted additional
options to purchase 14,000 shares of the Common Stock at an exercise price of
$9.00 per share. In each of these cases the options were granted with an
exercise price equal to the closing price of a share of the Common Stock on
the Nasdaq National Market System on the date the options were granted,
except in the case of the initial 12,000 options, which were granted with an
exercise price equal to such closing price less $3.00.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), 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 all such forms required during 1999 were filed on a
timely basis except for the following: a Form 4 for Mr. Crowell with respect
to purchases made by the Aurora Partnerships (as defined under "Executive
Compensation--Compensation and Human Resources Committee Interlocks and
Insider Participation in Compensation Decisions") in December 1998, which was
filed one month late; Form 4s for the Aurora Partnerships and Messrs.
Crowell, Parsky and Roeder with respect to purchases made by the Aurora
Partnerships in January 1999, which were filed one day late; and Form 4s for
the Aurora Partnerships and Messrs. Crowell, Parsky and Roeder with respect
to purchases made by the Aurora Partnerships in September 1999, which were
filed two days late.
6
<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 (i) the Company's Chief Executive Officer, (ii) the four
persons who, as of December 31, 1999, were the other most highly compensated
executive officers of the Company and its subsidiaries and (iii) one person
who would have been among the four other most highly compensated executive
officers of the Company and its subsidiaries during 1999 if he had continued
to serve as an executive officer through the end of the year (collectively,
the "Named Executive Officers"):
<TABLE>
<CAPTION>
ANNUAL LONG-TERM COMPENSATION
COMPENSATION AWARDS
------------------------ ----------------------
NUMBER OF SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS (2) OPTIONS (#) (3) COMPENSATION
- --------------------------- ---- ---------- --------- ----------------------- ------------
<S> <C> <C> <C> <C> <C>
Michael T. DuBose (4) 1999 $400,000 $319,500 -- $203,940 (5)
Chairman, President and 1998 17,534 -- 500,000 --
Chief Executive Officer 1997 -- -- -- --
Thomas R. Kawsky (6) 1999 187,633 202,260 15,000 11,663
President, Autocraft Industries 1998 156,667 73,135 15,000 8,399
1997 -- -- -- --
Barry C. Kohn (7) 1999 226,154 110,000 90,000 36,963 (8)
Chief Financial Officer 1998 -- -- -- --
1997 -- -- -- --
Kenneth A. Bear (9) 1999 194,616 118,814 -- 2,240
President, Aaron's 1998 176,538 18,000 20,000 --
1997 120,368 52,662 -- --
Joseph Salamunovich 1999 186,077 90,000 20,000 1,321
Vice President, General Counsel 1998 173,000 17,300 10,000 937
and Secretary 1997 126,500 68,751 35,088 50,000 (10)
Ronald E. Bradshaw (11) 1999 275,000 -- -- 8,462
Former Executive Vice President 1998 227,417 157,552 45,000 --
1997 -- -- -- --
- ---------------
</TABLE>
(1) For information regarding the current annual salary of certain executive
officers see "Executive Compensation--Employment Agreements."
(2) Bonuses for a particular year are paid during the first quarter of the
following year except in the cases of Mr. DuBose, whose bonus is paid at
the end of the year in which it is earned, and Mr. Bear, whose 1999 bonus
will be paid over time as part of his severance.
(3) Consists of options to purchase securities of the Company, which options
were issued pursuant to the Company's 1996 Stock Incentive Plan (the
"1996 Plan") or its 1998 Stock Incentive Plan (the "1998 Plan"). Pursuant
to the 1996 and 1998 Plans, the Compensation and Human Resources
Committee of the Board of Directors makes recommendations to the Board of
Directors regarding the terms and conditions of each option to be
granted.
(4) Mr. DuBose joined the Company as Chairman, President and Chief Executive
Officer in December 1998.
(5) Includes (i) $176,770 of relocation benefits (including $76,770 of
income tax "gross up") and (ii) $14,954 of car allowance.
(6) The position of President, Autocraft Industries ceased to be an executive
officer position in the Company as of January 1, 2000.
(7) Mr. Kohn joined the Company as Vice President and Chief Financial Officer
in January 1999.
(8) Includes $31,750 of relocation benefits (including $11,750 of income
tax "gross up").
7
<PAGE>
(9) Mr. Bear became President of Aaron's in February 1998 and ceased to hold
such position in February 2000.
(10) Consists of relocation benefits.
(11) Mr. Bradshaw joined the Company as Executive Vice President in March 1998
and ceased to hold such position in July 1999. Base salary for 1999
includes severance payments made after July.
OPTION GRANTS TABLE
Shown below is information concerning grants of options issued by the
Company to the Named Executive Officers during 1999:
<TABLE>
<CAPTION>
INDIVIDUAL POTENTIAL REALIZABLE
GRANTS VALUE AT ASSUMED
---------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM (1)
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ------------------------- ----------------- -------------- --------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Michael T. DuBose...... -- -- -- -- -- --
Thomas R. Kawsky....... 15,000 (2) 3.0 $9.00 5/5/09 $ 84,901 $215,155
Barry C. Kohn.......... 90,000 (3) 17.9 $5.0312 2/25/09 284,739 721,613
Kenneth A. Bear........ -- -- -- -- -- --
Joseph Salamunovich.... 20,000 (2) 4.0 $9.00 5/5/09 113,201 286,874
Ronald E. Bradshaw..... -- -- -- -- -- --
__________________
(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 1998 Plan. One-third of the
options vest and become exercisable on each of May 5, 2000, 2002
and 2004.
(3) These options were granted under the 1996 Plan. One-third of the options
vest and become exercisable on each of February 25, 2000, 2001 and 2002.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
Shown below is information relating to the exercise of stock options
during 1999 by the Named Executive Officers and the value of unexercised options
for each of the Named Executive Officers as of December 31, 1999:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ACQUIRED ON VALUE ----------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ------------ -------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael T. DuBose...... -- -- 166,667 333,333 $1,156,336 $1,312,664
Thomas R. Kawsky....... -- -- 5,000 25,000 -- 44,070
Barry C. Kohn.......... -- -- -- 90,000 -- 621,612
Kenneth A. Bear........ -- -- 76,843 (2) 13,333 (3) 720,567 --
Joseph Salamunovich.... -- -- 15,030 50,058 -- 58,760
Ronald E. Bradshaw..... -- -- -- -- -- --
- ---------------
</TABLE>
(1) Calculated using the closing price of the Common Stock on the Nasdaq
National Market System on December 31, 1999, which was $11.938 per share.
(2) 70,167 of these options were exercised in January 2000 and the balance
have terminated.
(3) These options have terminated.
8
<PAGE>
EMPLOYMENT AGREEMENTS
The Company typically enters into an employment agreement with each of
its executive officers (including the Named Executive Officers) that provides
for a three-year term and is automatically renewable thereafter on a
year-to-year basis. The agreement includes a noncompetition provision for a
period of 18 months from the termination of the executive officer's employment
with the Company and a nondisclosure provision which is effective for the term
of the employment agreement and indefinitely thereafter. The executive officer
is entitled to severance equal to his base salary for a period of 12 months
after termination if he is terminated without cause (as defined in the
employment agreement) except in the case of Mr. DuBose, whose severance period
is the longer of 24 months or the balance of the initial contract term, and Mr.
Kohn, whose severance period is 18 months. Set forth below is the current annual
base salary for the Company's Chief Executive Officer and each of its other four
most highly compensated executive officers as of March 27, 2000:
<TABLE>
<CAPTION>
ANNUAL END OF INITIAL
NAME BASE SALARY CONTRACT TERM
- --------------------------------------- ----------- --------------
<S> <C> <C>
Michael T. DuBose...................... $400,000 (1) 12/14/01
Paul J. Komaromy....................... 270,000 02/01/03
Frank A. Papa.......................... 260,000 03/27/03
Jerry E. Kanis......................... 250,000 02/14/03
Barry C. Kohn.......................... 240,000 (2) 01/25/02
</TABLE>
- ---------------
(1) Will be increased to $470,000 in April 2000.
(2) Will be increased to $270,000 in April 2000.
1996 AND 1998 STOCK INCENTIVE PLANS
Pursuant to the 1996 and 1998 Plans (the "Plans"), officers, directors,
employees and consultants of the Company and its affiliates are eligible to
receive options to purchase Common Stock and other awards. Awards under the 1996
Plan 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.
Awards under the 1998 Plan may take the form of stock options, annual incentive
bonuses and incentive stock.
The Plans are administered by the Compensation and Human Resources
Committee of the Board of Directors (the "Committee") although the Board of
Directors may exercise any authority of the Committee under the Plans in lieu of
the Committee's exercise thereof. While the Plans permit the Committee to grant
awards, such grants are typically made by the Board of Directors based on the
Committee's recommendations regarding the recipients and type and amount of
awards. Subject to the express provisions of the Plans, the Committee has broad
authority in administering and interpreting the Plans. Options granted to
employees may be options intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended, or options not
intended to so qualify. Awards to employees 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 Committee, any change of control of the
Company.
The aggregate number of shares of Common Stock that can be issued under
the Plans may not exceed 3,600,000. As of January 31, 2000, there were
outstanding options to purchase an aggregate of 1,786,325 shares of Common Stock
granted to directors, officers and employees of the Company and its subsidiaries
and certain independent contractors pursuant to the Plans, and the number of
shares available for issuance pursuant to options yet to be granted under the
Plans was 267,353. In February 2000 the Company granted options to employees to
purchase an additional 190,000 shares of Common Stock.
9
<PAGE>
In most cases outstanding options are subject to certain vesting
provisions and expire on the tenth anniversary of the date of grant. The
exercise prices of options outstanding under the Plans as of January 31, 2000
are as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTION SHARES EXERCISE PRICE
----------------------- --------------
<S> <C>
62,480 $ 1.67
83,088 4.67
632,000 5.00
95,000 5.0312
108,000 5.3125
3,000 5.5625
41,500 8.50
63,500 8.9375
268,000 9.00
23,000 9.125
200,000 10.00
6,000 10.938
35,088 14.75
1,500 18.00
164,169 18.125
</TABLE>
For information regarding options granted to directors and officers of
the Company, see "Security Ownership of Certain Beneficial Owners and
Management."
REPORT OF THE COMPENSATION AND HUMAN RESOURCES COMMITTEE ON EXECUTIVE
COMPENSATION
The executive compensation program is administered by the Compensation
and Human Resources Committee of the Board of Directors, which consists of three
non-employee directors, Messrs. Crowell, Parsky and Stonesifer.
COMPENSATION PHILOSOPHY
The goals of the Company's executive compensation program are to align
compensation with business objectives and performance and to ensure that the
Company is able to attract, retain and motivate high caliber executives whose
contributions are critical to its long-term success. A substantial portion of
executive compensation is to be linked to increased stockholder value and
achievement of financial results. The existing executive compensation program
consists of three elements: base salary, short-term incentives (annual bonus)
and long-term incentives (stock options). Each executive's compensation is
linked to the achievement of both the Company's annual operating plan and
specific individual goals.
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 independent 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 Committee intends to design the Company's compensation programs to
conform to 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.
BASE SALARY
The initial base salaries of the Company's executive officers are set
forth in their employment agreements, which were negotiated between the Company
and the officers at the time the officers joined the Company. See
10
<PAGE>
"Executive Compensation--Employment Agreements." With respect to increases in
base salary for any executive officers other than the Chief Executive
Officer, the Committee receives recommendations from the Chief Executive
Officer, which it considers, modifies (if appropriate) and approves. The
recommendations, as approved by the Committee, are then submitted to the full
Board of Directors for its consideration and approval. The salary level for
each person reflects, among other things, the Committee's assessment of (i)
the base salary necessary to attract and retain a person with the skills and
knowledge required by the position, (ii) the position's accountability and
impact on the results of the Company, and (iii) external salary data for the
similar position at comparable companies.
SHORT-TERM INCENTIVES - ANNUAL PERFORMANCE BONUS
With respect to annual performance bonuses for each of the Company's
executive officers other than the Chief Executive Officer, the Chief Executive
Officer submits recommendations to the Committee at the beginning of the year.
The recommendations consist of target bonuses (stated as a percentage of base
salary) tied to specific levels of achievement of the relevant operating plan
for the year. Bonuses for executive officers at the corporate headquarters
(E.G., the Chief Financial Officer) are tied to the Company's overall operating
plan while bonuses for executive officers at the various subsidiaries are tied
to both the Company's overall operating plan and the relevant subsidiary
operating plan. The Committee then considers, modifies (if appropriate) and
approves the Chief Executive Officer's recommendations, after which they are
submitted to the full Board of Directors for consideration and approval.
Following the end of the year, the bonuses are awarded based on the extent to
which the Company and the subsidiaries achieve their operating plans for the
year, as well as the Chief Executive Officer's and Committee's assessment of
each executive officer's individual performance during the year.
The annual operating plans for the Company and for each of its
subsidiaries for a given year are recommended by the Chief Executive Officer to
the Board of Directors for its approval at the beginning of the year.
LONG-TERM INCENTIVES -- STOCK OPTIONS
During 1999 the Company made stock option grants to certain of the
Company's executive officers under the 1996 and 1998 Plans. As part of the
Company's compensation program, the Chief Executive Officer annually submits to
the Committee a list of executive officers who are being recommended for stock
option awards, together with the recommended sizes of their awards. In assessing
these recommendations, the Committee's primary considerations are the
performance of each executive officer, the grant value of the award and the
number of options previously granted. The recommendations, as approved by the
Committee, are then submitted to the full Board of Directors for its
consideration and approval.
Each grant enables the officer to acquire, subject to the completion of
a vesting period, shares of the Common Stock at a fixed price per share (the
market price on the date of grant) over a ten-year period. The option grant
vests in periodic installments over a three- to five-year period, contingent
upon the executive officer's continued employment with the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. DuBose's 1999 base salary remained at its 1998 level of $400,000,
as set forth in the employment agreement that he entered into when he joined the
Company in December 1998. The terms of the employment agreement were the product
of arm's length negotiations between Mr. DuBose and the Board.
At the beginning of 1999, the Committee established Mr. DuBose's target
bonus for the year at 75% of base salary. In establishing this target bonus, the
Committee took into consideration the substantial improvements that the Company
would have to make during the year in order to achieve its 1999 operating plan.
The plan called for net income before special charges and non-recurring expense
to increase 38% over 1998 and EBITDA to increase 20% over 1998. At the end of
1999 the Committee noted that the plan had been achieved and that the Company's
stock price was 138% higher than when Mr. DuBose joined the Company a year
earlier. The Committee also noted that the Company had made significant progress
on several of the turnaround efforts initiated in 1999. Based upon these
performance levels, Mr. DuBose was granted a 1999 bonus of $319,500.
Mr. DuBose was not awarded any stock options during 1999.
11
<PAGE>
SUMMARY
The Committee believes that the current compensation arrangements
provide the Chief Executive Officer and the other executive officers with the
incentive to perform at superior levels and in a manner that is directly aligned
with the economic interests of the Company's stockholders.
The Compensation and Human Resources Committee
J. Richard Stonesifer, Chairman
Richard R. Crowell
Gerald L. Parsky
The Report of the Compensation and Human Resources 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,
as amended (the "Securities Act"), or under the Exchange Act except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
COMPENSATION AND HUMAN RESOURCES COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The members of the Compensation and Human Resources Committee are
Messrs. Crowell, Parsky and Stonesifer. Messrs. Crowell and Parsky are (i) two
of the three stockholders and directors of Aurora Advisors, Inc., the general
partner of Aurora Capital Partners, which is the general partner of Aurora
Equity Partners, L.P. ("AEP"), the largest 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. ("AOEP" and, together with
AEP, the "Aurora Partnerships"), a significant stockholder of the Company. See
"Security Ownership of Certain Beneficial Owners and Management." In addition,
Messrs. Crowell and Parsky are the senior members of Aurora Capital Group (of
which the Aurora Partnerships are a part), which provides investment banking and
management services to the Company pursuant to a management services agreement.
See "Certain Transactions--Relationship with Aurora Capital Group."
12
<PAGE>
PERFORMANCE GRAPH
The following graph shows the Company's total return to stockholders
compared to a Peer Group and the Nasdaq Market 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, 1999.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
AFTERMARKET TECHNOLOGY CORP., PEER GROUP AND NASDAQ MARKET INDEX
[GRAPH REPRESENTATION]
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
12/17/96 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Aftermarket Technology Corp. (1)... $100.00 $100.73 $105.84 $ 45.99 $ 69.71
Peer Group......................... 100.00 101.01 126.85 139.69 91.80
Nasdaq Market Index................ 100.00 100.00 122.32 172.52 304.29
</TABLE>
- ----------------------------
(1) Based on the investment being made at $17.125 per share (the closing price
on December 17, 1996). If the investment had been made at $13.50 (the
initial public offering price), the value of the investment as of December
31, 1996, 1997, 1998 and 1999 would have been $127.78, $134.26, $58.34 and
$88.43, respectively.
- --------------------------------------------------------------------------------
The Peer Group was originally comprised of seven publicly-traded
companies engaged primarily 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. Two of the Peer Group companies ceased to be
publicly traded during 1998. In 1999 another company was removed from the Peer
Group because it is now engaged primarily in businesses outside the automotive
aftermarket and management believes it is no longer comparable to the Company.
The current members of the Peer Group are Exide Corp., Federal-Mogul Corp.,
Genuine Parts Co. and Standard Motor Products.
Each line on the stock performance graph assumes that $100 was invested
in the Company's Common Stock and the respective indices at the closing price on
December 17, 1996 (the initial day of trading of the
13
<PAGE>
Company's Common Stock). The graph then presents the value of these
investments, assuming reinvestment of dividends, through the close of trading
on December 31, 1999.
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 or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock (the only class of issued and outstanding voting securities of the
Company) as of March 2, 2000 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 was known by the Company to beneficially
own 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)................. 11,655,204 56.7
Aurora Overseas Equity Partners I, L.P. (other beneficial owners:
Richard R. Crowell, Gerald L. Parsky and Richard K. Roeder) (3)(4)...... 4,581,418 22.2
General Electric Pension Trust (5)......................................... 2,038,152 9.9
Investment Advisors, Inc. (6).............................................. 1,212,300 5.9
Michael T. DuBose (7)(8)................................................... 181,767 *
Thomas R. Kawsky (9)....................................................... 7,000 *
Barry C. Kohn (8)(10)...................................................... 47,500 *
Kenneth A. Bear (11)....................................................... 32,476 *
Joseph Salamunovich (8)(12)................................................ 26,726 *
Ronald E. Bradshaw (13).................................................... 1,000 *
Robert Anderson (14)(15)................................................... 47,918 *
Richard R. Crowell (2)(3)(4)(15)........................................... 12,999,050 63.2
Dale F. Frey (16).......................................................... 44,000 *
Mark C. Hardy (3)(15)(17).................................................. 20,460 *
Dr. Michael J. Hartnett (18)............................................... 80,176 *
Gerald L. Parsky (2)(3)(4)(15)(19)......................................... 12,999,050 63.2
Richard K. Roeder (2)(3)(4)(15)............................................ 12,999,050 63.2
J. Richard Stonesifer (20)................................................. 29,000 *
William A. Smith (21)...................................................... 545,984 2.7
All directors and officers as a group (16 persons) (22).................... 14,011,203 66.8
</TABLE>
- ---------------
* Less than 1%.
(1) The shares of Common Stock underlying warrants or options granted under
the 1996 or 1998 Plans that are exercisable as of March 2, 2000 or that
will become exercisable within 60 days thereafter (such warrants or
options being referred to as "Exercisable") are deemed to be outstanding
for the purpose of calculating the beneficial ownership of the holder of
such warrants or options, but are not deemed to be outstanding for the
purpose of computing the beneficial ownership of any other person.
(2) Consists of (i) 8,417,632 shares owned by AEP (one of the Aurora
Partnerships), (ii) 2,038,152 shares owned by the General Electric
Pension Trust ("GEPT") (see Note 5 below) and (iii) 1,199,420 shares that
are subject
14
<PAGE>
to an irrevocable proxy granted to the Aurora Partnerships by
certain holders of Common Stock, including Messrs. Anderson, Crowell,
Hardy, Parsky and Roeder, certain other limited partners of AEP and
certain affiliates of a limited partner of AOEP (the other Aurora
Partnership). The proxy terminates upon the earlier of the transfer of
such shares or July 31, 2004. AEP is a Delaware limited partnership, the
general partner of which is Aurora Capital Partners, a Delaware limited
partnership, whose general partner is Aurora Advisors, Inc. Messrs.
Crowell, Parsky and Roeder are the sole stockholders and directors of
Aurora Advisors, are limited partners of Aurora Capital Partners and may
be deemed to beneficially share ownership of the Common Stock
beneficially owned by AEP and may be deemed to be the organizers of the
Company under regulations promulgated under the Securities Act.
(3) The address of this stockholder is 10877 Wilshire Boulevard, Suite
2100, Los Angeles, CA 90024.
(4) Consists of (i) 1,343,846 shares owned by AOEP, (ii) 2,038,152
shares owned by GEPT (see Note 5 below) and (iii) 1,199,420 shares
that are subject to an irrevocable proxy granted to the Aurora
Partnerships by certain holders of Common Stock including Messrs.
Anderson, 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 earlier of the transfer of such shares
or July 31, 2004. AOEP is a Cayman Islands limited partnership, the
general partner of which is Aurora Overseas Capital Partners, L.P., a
Cayman Islands limited partnership, whose general partner is Aurora
Overseas Advisors, Ltd. Messrs. Crowell, Parsky and Roeder are the
sole stockholders and directors of Aurora Overseas Advisor, are
limited partners of Aurora Overseas Capital Partners and may be deemed
to beneficially own the shares of the Company's Common Stock
beneficially owned by AOEP. AOEP's address is West Wind Building, P.O.
Box 1111, Georgetown, Grand Cayman, Cayman Islands, B.W.I.
(5) With limited exceptions, GEPT has agreed to vote these shares in the same
manner as the Aurora Partnerships vote their respective shares of Common
Stock. This provision terminates upon the earlier of the transfer of such
shares or July 31, 2004. GEPT's address is 3003 Summer Street, Stamford,
CT 06905.
(6) Based on a Schedule 13G/A filed with the Securities and Exchange
Commission on February 2, 2000. The address of Investment Advisors, Inc.
is 3700 First Bank Place, Box 357, Minneapolis, MN 55440.
(7) Includes 166,667 shares subject to options that are Exercisable.
Excludes 333,333 shares subject to options that are not Exercisable.
(8) The address of this stockholder is One Oak Hill Center, Suite 400,
Westmont, IL 60559.
(9) Includes 5,000 shares subject to options that are Exercisable. Excludes
25,000 shares subject to options that are not Exercisable.
Mr. Kawsky's address is 9901 West Reno Road, Oklahoma City, OK 73127.
(10) Includes 30,000 shares subject to options that are Exercisable. Excludes
60,000 shares subject to options that are not Exercisable.
(11) Mr. Bear's address is 1637 South Cobblestone Court,
Springfield, MO 65809.
(12) Consists of shares subject to options that are Exercisable. Excludes
38,362 shares subject to options that are not Exercisable.
(13) Mr. Bradshaw's address is 1607 Elmhurst Avenue, Oklahoma City, OK 73120.
(14) Includes (i) 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, and (ii) 24,000 shares subject
to options that are Exercisable. Excludes 26,000 shares subject to
options that are not Exercisable. Mr. Anderson's address is 10877
Wilshire Boulevard, Suite 1405, Los Angeles, CA 90024-4341.
(15) The shares actually owned by this person (as distinguished from the
shares that this person is deemed to beneficially own) are subject to an
irrevocable proxy granted to the Aurora Partnerships.
(16) Includes (i) 10,000 shares owned by a limited partnership of which Mr.
Frey is general partner, (ii) 4,000 shares held by him as trustee for his
grandchildren and (iii) 24,000 shares subject to options that are
Exercisable. Excludes 26,000 shares subject to options that are not
Exercisable. Mr. Frey disclaims beneficial ownership of 96% of the shares
owned by the limited partnership. Mr. Frey's address is One Gorham
Island, Westport, CT 06880.
(17) Includes 12,000 shares subject to options that are Exercisable.
15
<PAGE>
(18) Includes 70,176 shares subject to warrants that are Exercisable.
Mr. Hartnett's address is 60 Round Hill Road, Fairfield, CT 06430.
(19) Includes 2,000 shares held by Mr. Parsky's wife, as to which Mr.
Parsky disclaims beneficial ownership.
(20) Includes 24,000 shares subject to options that are Exercisable.
Excludes 26,000 shares subject to options that are not Exercisable.
Mr. Stonesifer's address is 8473 Bay Colony Drive, Naples, FL 34108.
(21) Mr. Smith's address is 1717 East LaRua, Pensacola, FL 32501.
(22) Excludes shares held by Named Executive Officers who are no longer
officers of the Company. Includes 387,569 shares subject to warrants
and options that are Exercisable. Excludes 619,695 shares subject to
options that are not Exercisable.
CERTAIN TRANSACTIONS
The Company believes the transactions described below were beneficial
to the Company and were on terms at least as favorable to the Company as could
have been obtained from unaffiliated third parties pursuant to arms-length
negotiations.
RELATIONSHIP WITH AURORA CAPITAL GROUP
The Company was formed in 1994 at the direction of Aurora
Capital Group, of which the Aurora Partnerships are a part. Aurora
Capital Group is controlled by Messrs. Crowell, Hardy, Parsky and Roeder,
who are directors of the Company. See "Security Ownership of Certain
Beneficial Owners and Management."
The Company pays to Aurora Management Partners ("AMP"), which is a part
of Aurora Capital Group, a base annual management fee of $550,000 for advisory
and consulting services pursuant to a written management services agreement (the
"Management Services Agreement"). AMP 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 Company's 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 has not
been increased as a result of any of the Company's acquisitions. The base annual
management fee is also subject to increase for specified cost of living
increases pursuant to which the base annual management fee was most recently
increased in January 1999 from $540,000. If the Company's EBITDA in any year
exceeds management's budgeted EBITDA by 15.0% or more for that year, AMP will be
entitled to receive an additional management fee equal to one half of its base
annual management fee for such year. Because the Company's EBITDA did not exceed
management's budgeted EBITDA by 15.0% in 1999, AMP did not receive this
additional management fee in 1999.
The base annual management fee payable to AMP will be reduced as the
collective beneficial ownership of Common Stock by the Aurora Partnerships
declines below 50% as follows: for any period during which the collective
beneficial ownership of the Aurora Partnerships 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 the Aurora Partnerships' 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 the Aurora Partnerships 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 the Aurora Partnerships' collective
beneficial ownership declines below 20%, the Management Services Agreement will
terminate. As of March 2, 2000, the collective beneficial ownership of the
Aurora Partnerships for purposes of the Management Services Agreement was
approximately 63%. See "Security Ownership of Certain Beneficial Owners and
Management."
If the Company consummates any significant acquisitions or
dispositions, AMP will be entitled to receive a fee from the Company for
investment banking services in connection with the transaction. The fee is
equal to 2.0% of the first $75.0 million of the acquisition consideration
(including debt assumed and current assets retained) and 1.0% of acquisition
consideration (including debt assumed and current assets retained) in excess
of $75.0 million. Since the
16
<PAGE>
Company's formation, it has paid approximately $5.2 million of fees to AMP
for investment banking services in connection with the Company's
acquisitions, including $800,000 for the acquisitions made in 1999.
Notwithstanding the foregoing, no payment will be made to AMP pursuant
to the Management Services Agreement at any time that certain events of default
shall have occurred and be then continuing under any of the Indentures governing
the Company's 12% Senior Subordinated Notes due 2004 or the Company's bank
credit facility. The Management Services Agreement also provides that the
Company shall provide Aurora Capital Group and its directors, employees,
partners and affiliates with customary indemnification against all actions not
involving gross negligence or willful misconduct.
In October 1996 the Company granted options for an aggregate of 48,000
shares of Common Stock to Mark C. Hardy (a director of the Company), Kurt Larsen
(a former director of the Company) and two consultants of the Company, all four
of whom were then employees of Aurora Capital Group. These options, which have
an exercise price of $4.67 per share, become exercisable in one-third increments
on each of the first three anniversaries of the date of grant and expire in
2006. In 1997 12,000 of these options terminated when Mr. Larsen resigned from
Aurora Capital Group.
INDEMNIFICATION AGREEMENTS
The Company has entered into separate but identical indemnification
agreements (the "Indemnification Agreements") with each director and executive
officer of the Company. 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.
REGISTRATION RIGHTS
The holders of the Common Stock outstanding before the Company's
initial public offering in December 1996 have certain "demand" and "piggyback"
registration rights pursuant to a stockholders agreement. In addition, GEPT has
certain "demand" and "piggyback" registration rights with respect to a portion
of the shares of Common Stock owned by it.
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APPROVAL OF ADOPTION OF
2000 STOCK INCENTIVE PLAN
At the Meeting, stockholders will be asked to approve the Company's
2000 Stock Incentive Plan (the "New Plan"), which was adopted by the Board of
Directors in February 2000 subject to approval by the Company's stockholders.
The New Plan is intended to replace the 1996 and 1998 Plans, under which less
than 110,000 shares of Common Stock were still available as of March 2, 2000 for
issuance pursuant to options not yet granted.
SUMMARY OF THE NEW PLAN
The following summary of the main features of the New Plan is qualified
in its entirety by reference to the complete text of the New Plan, which is set
forth as Appendix A to this Proxy Statement.
GENERAL
The New Plan is designed to enable the Company to attract, retain and
motivate its employees, non-employee directors and independent contractors, and
to further align their interests with those of the stockholders of the Company,
by providing for or increasing the proprietary interest of such employees,
non-employee directors and independent contractors in the Company.
The New Plan authorizes the grant and issuance of awards that may take
the form of stock options, annual incentive bonuses and incentive stock (any
such arrangement, an "Award"). The New Plan has various provisions so that
Awards under it may, but need not, qualify for an exemption from the "short
swing liability" provisions of Section 16(b) of the Exchange Act pursuant to
Rule 16b-3 and/or qualify as "performance-based compensation" that is exempt
from the $1 million limitation on the deductibility of compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Stockholder approval of the New Plan is required in order for each of these
exemptions to be satisfied.
ADMINISTRATION
The New Plan will be administered by the Committee (I.E., the
Compensation and Human Resources Committee) although the Board of Directors may
exercise any authority of the Committee under the New Plan in lieu of the
Committee's exercise thereof.
Subject to the express provisions of the New Plan, the Committee has
broad authority to administer and interpret the New Plan including, without
limitation, authority to (i) determine who is eligible to participate in the New
Plan and to which of such persons, and when, Awards are granted under the New
Plan, (ii) determine the number of shares of Common Stock subject to Awards and
the exercise or purchase price of such shares under an Award, (iii) establish
and verify the extent of satisfaction of any performance goals applicable to
Awards, (iv) prescribe and amend the terms of the agreements and other documents
evidencing Awards, and (v) make all other determinations deemed necessary or
advisable for the administration of the New Plan.
ELIGIBILITY
Any person who is a director, employee, prospective employee or
independent contractor of the Company or any of its affiliates is eligible to be
selected as a recipient of an Award (a "Participant") under the New Plan. The
Committee has not yet determined how many individuals are ultimately to
participate in the New Plan. While it is generally expected that executives and
senior middle managers will be eligible to participate, Awards may from time to
time be granted to employees who are not in these groups but who have otherwise
distinguished themselves for their contributions to the Company.
STOCK SUBJECT TO THE NEW PLAN
The aggregate number of shares of the Company's Common Stock that can
be issued under the New Plan may not exceed 750,000. The number of shares
subject to the New Plan and to outstanding Awards under the New
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Plan will be appropriately adjusted by the Board of Directors if the Common
Stock is affected through a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than
quarterly cash dividends) or other distribution, stock split, spin-off or
sale of substantially all of the Company's assets. For purposes of
calculating the aggregate number of shares of Common Stock issued under the
New Plan, only the number of shares actually issued upon exercise or
settlement of an Award and not returned to the Company upon cancellation,
expiration or forfeiture of an Award or in payment or satisfaction of the
purchase price, exercise price or tax withholding obligation of an Award
shall be counted, provided that no more than 750,000 shares may be issued
pursuant to ISOs (as defined below).
AWARDS
The New Plan authorizes the grant and issuance of the following types
of Awards: stock options, annual incentive bonuses and incentive stock:
STOCK OPTIONS. Subject to the express provisions of the New Plan and as
discussed in this paragraph, the Committee has discretion to determine the
vesting schedule of options, the events causing an option to expire, the number
of shares subject to any option, the restrictions on transferability of an
option and any other terms and conditions, in each case not inconsistent with
the New Plan, as may be determined from time to time by the Committee. Options
granted under the New Plan may be either incentive stock options qualifying
under Code Section 422 ("ISOs") or options not intended to qualify as ISOs
("NQSOs"). The exercise price for options may not be less than 100% of the fair
market value of the Common Stock on the date the option is granted, except that
(i) the exercise price of an option may be higher or lower in the case of
options granted to employees of a company acquired by the Company in assumption
and substitution of options held by such employees at the time such company is
acquired, (ii) in the event an employee is required to pay or forego the receipt
of any cash amount in consideration of receipt of an option, the exercise price
plus such cash amount shall equal or exceed 100% of the fair market value of the
Common Stock on the date the option is granted, and (iii) the exercise price of
an option granted to a non-employee director may be lower. The exercise price of
an option may be paid through various means specified by the Committee,
including in cash or check, by delivering to the Company of shares of Common
Stock, by a reduction in the number of shares of Common Stock issuable pursuant
to such option, or by a promissory note or other commitment to pay (including
such a commitment by a stock broker). The Committee may, but need not, provide
that the holder of an Award has a right (such as a stock appreciation right) to
receive a number of shares or cash, or a combination thereof, the amount of
which is determined by reference to the value of the Award.
ANNUAL INCENTIVE BONUSES. The New Plan authorizes the grant of annual
incentive bonuses pursuant to which a Participant may become entitled to receive
an amount based on satisfaction of such performance criteria as are specified by
the Committee. Subject to the express provisions of the New Plan and as
discussed in this paragraph, the Committee has discretion to determine the terms
of any annual incentive bonus, including the target and maximum amount payable
to a Participant as an annual incentive bonus, the performance criteria (which
may be based on financial performance and/or personal performance evaluations)
and level of achievement versus these criteria that determines the amount
payable under an annual incentive bonus, the fiscal year as to which performance
will be measured for determining the amount of any payment, the timing of any
payment earned by virtue of performance, restrictions on the alienation or
transfer of an annual incentive bonus prior to actual payment, forfeiture
provisions and any other terms and conditions, in each case not inconsistent
with the New Plan, as the Committee may determine from time to time. All or any
portion of an annual incentive bonus may be designed to qualify as
"performance-based compensation" that is exempt from the $1 million limit on
deductible compensation under Section 162(m) of the Code. The performance
criteria for any portion of an annual incentive bonus that is intended to
satisfy the requirements for "performance-based compensation" will be a measure
based on one or more Qualifying Performance Criteria (as defined below).
Notwithstanding satisfaction of any performance goals, the amount paid under an
annual incentive bonus may be reduced by the Committee on the basis of any other
considerations as the Committee in its sole discretion may determine.
INCENTIVE STOCK. Incentive stock is an award or issuance of shares of
Common Stock, the grant, issuance, retention, vesting and/or transferability of
which is subject during specified periods of time to such conditions (including
performance conditions) and terms as the Committee deems appropriate. Subject to
the express provisions of the New Plan and as discussed in this paragraph, the
Committee has discretion to determine the terms of any incentive stock Award,
including the number of shares subject to an incentive stock Award or a formula
for determining such, the purchase price, if any, for the shares (which may be
below fair market value), the performance
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criteria, if any, and level of achievement versus these criteria that
determine the number of shares granted, issued, retainable and/or vested, the
period as to which performance shall be measured for determining achievement
of performance, forfeiture provisions, the effect of termination of
employment for various reasons and any other terms and conditions, in each
case not inconsistent with the New Plan, as may be determined from time to
time by the Committee. The performance criteria upon which shares are
granted, issued, retained and/or vested may be based on financial performance
and/or personal performance evaluations, except that for any incentive stock
that is intended by the Committee to satisfy the requirements for
"performance-based compensation" under Code Section 162(m) the performance
criteria shall be a measure based on one or more Qualifying Performance
Criteria. Notwithstanding satisfaction of any performance goals, the number
of shares granted, issued, retainable and/or vested under an incentive stock
Award may be reduced by the Committee on the basis of any other
considerations as the Committee in its sole discretion may determine.
QUALIFYING PERFORMANCE CRITERIA AND SECTION 162(m) LIMITS
Subject to stockholder approval of the New Plan, the performance
criteria for any annual incentive bonus or any incentive stock that is intended
to satisfy the requirements for "performance-based compensation" under Code
Section 162(m) shall be any one or more of the following performance criteria
(either individually, alternatively or in any combination) applied to either the
Company as a whole or to a business unit or subsidiary (either individually,
alternatively or in any combination) and measured either annually or
cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years' results or to a designated comparison
group, in each case as specified by the Committee in the Award: (a) cash flow,
(b) earnings per share, (c) earnings before interest, taxes and amortization,
(d) return on equity, (e) total stockholder return, (f) return on capital, (g)
return on assets or net assets, (h) revenue, (i) income or net income, (j)
operating income or net operating income, (k) operating profit or net operating
profit, (l) operating margin, (m) return on operating revenue, (n) market share
and (o) overhead or other expense reduction. The Committee shall adjust
appropriately any evaluation of performance under a Qualifying Performance
Criteria to exclude any of the following events that occurs during a performance
period: (i) asset write-downs, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs, and (v) any extraordinary
non-recurring items as described in Accounting Principles Board Opinion No. 30
and/or in management's discussion and analysis of financial condition and
results of operations appearing in the Company's annual report to stockholders
for the applicable year.
The aggregate number of shares of Common Stock subject to options
granted under the New Plan during any calendar year to any one Participant may
not exceed 100,000 unless such limitation is not required under Section 162(m)
of the Code. The aggregate number of shares issued or issuable under all Awards
granted under the New Plan (other than options) during any calendar year to any
one Participant shall not exceed 75,000. The maximum amount payable pursuant to
that portion of an annual incentive bonus Award granted for any fiscal year to
any person that is intended to satisfy the requirements for "performance-based
compensation" under Code Section 162(m) shall not exceed $1,000,000.
CHANGE OF CONTROL
The Committee may provide that in connection with a Change of Control
(as defined in the New Plan), Awards will become exercisable, payable, vested,
paid, or canceled, and may provide for an absolute or conditional exercise,
payment or lapse of conditions or restrictions on an Award that would be
effective only if, upon the announcement of a transaction intended or reasonably
expected to result in a Change of Control, no provision is made under the terms
of such transaction for the holder of an Award to realize the full benefit of
the Award.
TRANSFERABILITY OF AWARDS
Generally, Awards granted under the New Plan may not be sold, assigned,
conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner
prior to the vesting or lapse of any and all restrictions applicable thereto,
other than by will or the laws of descent and distribution, except that the
Committee may permit an Award to be transferable to a member or members of the
Participant's family or to entities owned or established for the benefit of a
Participant's family.
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AMENDMENTS AND TERMINATION
The Board of Directors may amend, alter or discontinue the New Plan or
any agreement or other document evidencing an Award made under the New Plan, but
no such amendment shall, without the approval of the shareholders of the
Company: (a) materially increase the maximum number of shares of Common Stock
for which Awards may be granted under the New Plan; (b) reduce the price at
which options may be granted below the price provided for in the New Plan; (c)
reduce the exercise price of outstanding options; (d) impair the rights of any
Award holder, without such holder's consent, under any Award granted prior to
the date of any Change of Control; (e) extend the term of the New Plan; or (f)
change the class of persons eligible to be Participants. No Award granted under
the New Plan shall be granted pursuant to the New Plan more than 10 years after
the date of the Board's adoption of the New Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the New Plan's federal income tax
consequences is intended to be a summary of applicable federal law as currently
in effect. State, local and foreign tax consequences may differ, and tax laws
may be amended or interpreted differently during the term of the New Plan or of
Awards under the New Plan. This discussion does not discuss all federal tax
provisions that may apply to a Participant's particular tax situation, including
federal gift tax, estate tax and alternative minimum tax issues. Because the
federal income tax rules governing Awards and related payments are complex,
subject to frequent change and depend on individual circumstances, Participants
should consult their tax advisor prior to exercising options or other Awards or
disposing of stock acquired pursuant to Awards.
ISOs
An optionee generally will not pay tax, and the Company will not
receive a deduction, on the grant or the exercise of an ISO if the optionee
exercises the option while an employee of the Company or within three months
following termination of employment (or one year, if termination was due to a
permanent disability).
If an optionee sells the shares acquired upon the exercise of an ISO at
any time within one year after the exercise date or two years after the date of
grant of the ISO, then:
- If the optionee's sales price exceeds the exercise price of the
ISO, the optionee will recognize capital gain equal to the
excess, if any, of the sales price over the fair market value of
the shares on the date of exercise, and the optionee will
recognize ordinary income equal to the excess, if any, of the
lesser of the sales price or the fair market value of the shares
on the date of exercise over the exercise price of the ISO; or
- if the optionee's sales price is less than the exercise price of
the ISO, the optionee will recognize a capital loss equal to the
excess of the exercise price of the ISO over the sales price of
the shares.
In this event, the Company will generally be entitled to a deduction equal to
the ordinary income the optionee recognizes. The ordinary income the optionee
recognizes generally will be subject to employment and income withholding taxes
in addition to any other taxes that might apply.
If the optionee sells shares acquired upon exercise of an ISO at any
time after the optionee has held the shares for at least one year after the
exercise of the ISO and at least two years after the date the Company grants the
ISO, then the optionee will recognize capital gain or loss equal to the
difference between the sales price and the exercise price of the ISO, and the
Company will not be entitled to any deduction. If the optionee is an "insider",
the optionee should consult the optionee's tax advisor about the possibility of
making an election under Section 83(b) of the Code upon the optionee's exercise
of an ISO.
NQSOs
The grant of a NQSO to an optionee is generally not a taxable event for
the optionee. Upon the optionee's exercise of a NQSO, the optionee will
generally recognize ordinary income equal to the excess of the fair market
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value of the shares the optionee acquired upon exercise (determined as of the
date of exercise) over the exercise price of the NQSO. The Company will be
entitled to a tax deduction for the same amount. The ordinary income the
optionee recognizes upon exercise may be subject to employment and income
withholding taxes or self-employment taxes in addition to any other taxes
that might apply. The subsequent sale of the shares generally will give rise
to capital gain or loss equal to the difference between the sale price and
the sum of the exercise price paid for the shares plus the ordinary income
recognized with respect to the shares, and these capital gains will be
taxable as long term capital gains if the optionee held the shares for more
than one year.
INCENTIVE STOCK
Incentive stock Awards under the New Plan may be subject to provisions
for the delayed vesting of the Participant's rights to the shares. Unless the
Participant makes a proper election under Section 83(b) of the Code within 30
days after receipt of the incentive stock (or if the incentive stock is not
subject to delayed vesting provisions), the Participant generally will not be
taxed on his or her receipt of incentive stock until the restrictions on the
incentive stock expire or the Company removes them. When the vesting provisions
expire or the Company removes them, the Participant will generally recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares at that time over the purchase price, if any, of the incentive stock. The
Company will be entitled to a tax deduction for the same amount.
If the Participant makes a valid Section 83(b) election (or if the
Participant's incentive stock is not subject to delayed vesting provisions), he
or she will generally recognize ordinary income in an amount equal to the excess
of the fair market value of the shares on the date of receipt over the purchase
price, if any, of the incentive stock. The Company will be entitled to a tax
deduction for the same amount. Participants should consult their tax advisor to
determine the tax consequences of making a Section 83(b) election.
The ordinary income a Participant recognizes in connection with
incentive stock may be subject to employment and income withholding taxes or
self-employment taxes in addition to any other taxes that might apply. A
subsequent sale of the shares generally will give rise to capital gain or loss
equal to the difference between the sale price and the sum of the exercise price
the Participant paid for the shares plus the ordinary income he or she
recognized with respect to the shares. The capital gains will be taxable as
long-term capital gains if the Participant has held the shares for more than one
year.
ANNUAL INCENTIVE BONUSES
Upon the Company's payment of an annual incentive bonus, the
Participant will generally recognize ordinary income in an amount equal to the
Award, and the Company will be entitled to a tax deduction for the same amount.
The ordinary income the Participant recognizes may be subject to employment and
income withholding taxes or self-employment taxes in addition to any other taxes
that might apply.
SPECIAL RULES FOR AWARDS GRANTED TO INSIDERS
If the Participant is an "insider" (a director, officer or other
individual subject to Section 16 of the Exchange Act), he or she may be required
to defer his or her determination of the amount of income and the timing of
income recognition in connection with an Award under the New Plan, and the
beginning of the holding period for any shares the Participant receives, until
the expiration of any period during which he or she would be restricted from
disposing of any shares he or she received. The Participant will not be required
to defer these determinations if he or she makes a valid Section 83(b) election.
Participants who are insiders should consult their tax advisor to determine the
tax consequences of exercising options granted under the New Plan.
OTHER TAX ISSUES
A Participant generally may not deduct investment-related interest to
the extent that this interest exceeds his or her net investment income for any
year. Investment interest generally includes interest the Participant pays on
indebtedness he or she incurs to purchase shares of Common Stock. A Participant
may deduct any interest disallowed under this rule in later years, subject to
the same limitation.
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Special rules will apply to a Participant if he or she pays for the
exercise or purchase of an Award, or any applicable withholding tax obligations
under the New Plan, by delivering previously owned shares of Common Stock or by
reducing the amount of Common Stock otherwise issuable under the Award. This
surrender or withholding of shares will in some circumstances cause the
Participant to recognize income with respect to such shares or take a carryover
basis in the shares that he or she acquires. Participants should consult their
tax advisor to determine the tax consequences of surrendering or withholding
shares.
The Company generally will be entitled to withhold any required taxes
in connection with the exercise or payment of an Award, and the Company may
require the Participant to pay these taxes as a condition to exercise of an
Award.
The terms of the agreements or other documents pursuant to which the
Company makes specific Awards under the New Plan may provide for accelerated
vesting or payment of an Award in connection with a Change of Control of the
Company. In that event and depending upon the Participant's individual
circumstances, certain amounts with respect to such Awards may constitute
"excess parachute payments" under the "golden parachute" provisions of the Code.
Under these provisions, the Participant would be subject to a 20% excise tax on
any "excess parachute payments" and the Company would be denied any deduction
with respect to these payments. Participants should consult their tax advisor as
to whether accelerated vesting of an Award in connection with a Change of
Control would give rise to an "excess parachute payment."
As described above, Awards under the New Plan may qualify as
"performance-based compensation" under Section 162(m) of the Code in order to
preserve the Company's federal income tax deductions with respect to any
compensation the Company must take into account under Section 162 that is in
excess of $1,000,000 and paid to a "covered employee" (as defined in Section
162). The Company may not be able to deduct any compensation for any year that
is attributable to an Award granted to a covered employee and that does not so
qualify to the extent this compensation, when combined with other compensation
paid to the employee for the year, exceeds $1,000,000. The Committee currently
includes members who are not "outside directors" within the meaning of Section
162(m). Therefore, the Company anticipates that compensation payable pursuant to
Awards under the New Plan will not qualify as performance-based compensation
unless the Company changes the Committee to satisfy Section 162(m).
INITIAL GRANTS
The Committee has full discretion to determine the timing and
recipients of any Awards under the New Plan and the number of shares subject to
any such Awards, subject to any limitations contained in the New Plan.
Therefore, the benefits and amounts that will be received by each of the Named
Executive Officers, the executive officers as a group, the non-employee
directors and all other key employees under the New Plan are not presently
determinable.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE NEW PLAN.
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 1999 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 One Oak Hill Center, Suite 400, 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, 1999 (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 auditor for the year
ended December 31, 1999. The appointment of independent auditors is approved
annually by the Board of Directors, based in part on the
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recommendation of the Audit Committee. The Board of Directors has not taken
action yet regarding the appointment of the Company's auditors for fiscal
2000. 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 2001 ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals submitted pursuant to Rule 14a-8 under the
Exchange Act must be received by the Company on or before December 2, 2000 to be
considered for inclusion in the proxy statement for the Company's 2001 Annual
Meeting of Stockholders, which is expected to be held on or about May 9, 2001.
Generally, a stockholder is eligible to present proposals under Rule 14a-8 if he
or she has been for at least one year the record or beneficial owner of at least
1% or $2,000 in market value of securities entitled to be voted at the 2001
Annual Meeting and he or she continues to own such securities through the date
on which the meeting is held. Management of the Company may exercise
discretionary voting authority with respect to any stockholder proposal that is
not submitted for inclusion pursuant to Rule 14a-8 in the proxy statement for
the 2001 Annual Meeting if such proposal is received by the Company after
February 17, 2001.
By Order of the Board of Directors,
/s/ Joseph Salamunovich
Joseph Salamunovich
Secretary
March 31, 2000
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APPENDIX A
AFTERMARKET TECHNOLOGY CORP.
2000 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE OF PLAN
The purpose of this 2000 Stock Incentive Plan (this "Plan") of
Aftermarket Technology Corp., a Delaware corporation (the "Company"), is to
enable the Company to attract, retain and motivate its employees,
non-employee directors and independent contractors, and to further align the
interests of such employees, non-employee directors and independent
contractors with those of the stockholders of the Company by providing for or
increasing the proprietary interest of such employees, non-employee directors
and independent contractors in the Company.
SECTION 2. ADMINISTRATION OF PLAN
2.1 COMPOSITION OF COMMITTEE. Subject to Section 2.04, this Plan
shall be administered by the Compensation and Human Resources Committee of
the Board of Directors (the "Committee"), as appointed from time to time by
the Board of Directors, PROVIDED, HOWEVER, that with respect to any Award (as
defined in Section 5.1) intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), the term "Committee" shall refer to a
committee of two or more "outside directors" as determined for purposes of
applying Code Section 162(m). The Board of Directors shall fill vacancies on,
and from time to time may remove or add members to, the Committee. The
Committee shall act pursuant to a majority vote or unanimous written consent.
The Committee may designate the Secretary of the Company or other Company
employees to assist the Committee in the administration of this Plan and may
grant authority to such persons to execute agreements or other documents
evidencing Awards made under this Plan or other documents entered into under
this Plan on behalf of the Committee or the Company.
2.2. POWERS OF THE COMMITTEE. Subject to the express provisions of
this Plan, the Committee shall be authorized and empowered to do all things
necessary or desirable, in its sole discretion, in connection with the
administration of this Plan, including, without limitation, the following:
(a) to prescribe, amend and rescind rules and regulations
relating to this Plan and to define terms not otherwise defined herein;
PROVIDED that, unless the Committee shall specify otherwise, for
purposes of this Plan (i) the term "fair market value" shall mean, as
of any date, the closing price for a Share (as defined in Section 3.1)
reported for that date by the Nasdaq National Market System (or such
other stock exchange or quotation system on which Shares are then
listed or quoted) or, if no Shares traded on the Nasdaq National Market
System (or such other stock exchange or quotation system) on the date
in question, then for the next preceding date for which Shares traded
on the Nasdaq National Market System (or such other stock exchange or
quotation system); and (ii) the term "Company" shall mean the Company
and its subsidiaries and affiliates unless the context otherwise
requires;
(b) to determine which persons are Eligible Persons (as
defined in Section 4), to which of Eligible Persons, if any, Awards
shall be granted hereunder and the timing of any such Awards;
(c) to determine the number of Shares subject to Awards
and the exercise or purchase price of such Shares;
(d) to establish and verify the extent of satisfaction of
any performance goals applicable to Awards;
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(e) to prescribe and amend the terms of the agreements or
other documents evidencing Awards made under this Plan (which need not
be identical);
(f) to determine whether, and the extent to which,
adjustments are required pursuant to Section 10;
(g) to interpret and construe this Plan, any rules and
regulations under this Plan and the terms and conditions of any
Award granted hereunder and to make exceptions to any such
provisions in good faith and for the benefit of the Company; and
(h) to make all other determinations deemed necessary or
advisable for the administration of this Plan.
2.3 DETERMINATIONS OF THE COMMITTEE. All decisions, determinations
and interpretations by the Committee regarding this Plan shall be final and
binding on all Eligible Persons and Participants (as defined in Section 4). The
Committee shall consider such factors as it deems relevant to making such
decisions, determinations and interpretations including, without limitation, the
recommendations or advice of any director, officer or employee of the Company
and such attorneys, consultants and accountants as it may select.
2.4 AUTHORITY OF THE BOARD OF DIRECTORS. The Board of Directors, in
its sole discretion, may exercise any authority of the Committee under this
Plan in lieu of the Committee's exercise thereof.
SECTION 3. STOCK SUBJECT TO PLAN
3.1 AGGREGATE LIMITS. At any time, the aggregate number of shares of
the Company's Common Stock, $.01 par value ("Shares"), issued and issuable
pursuant to all Awards (including all ISOs (as defined in Section 5.1))
granted under this Plan shall not exceed 750,000; PROVIDED that no more than
750,000 of such Shares may be issued pursuant to all Incentive Bonuses (as
defined in Section 5.1(b)) and Incentive Stock (as defined in Section 5.1(c))
Awards granted under this Plan, and PROVIDED FURTHER that, notwithstanding
Section 3.3, the aggregate number of Shares that may be issued pursuant to
the exercise of ISOs (as defined in Section 5.1(a)) granted under this Plan
shall not exceed 750,000. The Shares subject to this Plan may be either
Shares reacquired by the Company, including Shares purchased in the open
market, or authorized but unissued Shares. Such limits shall be subject to
adjustment as provided in Section 10.
3.2 CODE SECTION 162(M) LIMITS. The aggregate number of Shares
subject to Options (as defined in Section 5.1(a)) granted under this Plan
during any calendar year to any one employee of the Company (an "Employee)"
shall not exceed 100,000. The aggregate number of Shares issued or issuable
under all Awards granted under this Plan, other than Options, during any
calendar year to any one Employee shall not exceed 75,000. Notwithstanding
anything to the contrary in this Plan, the foregoing limitations shall be
subject to adjustment under Section 10 only to the extent that such
adjustment will not affect the status of any Award intended to qualify as
"performance-based compensation" under Code Section 162(m).
3.3 ISSUANCE OF SHARES. For purposes of Section 3.1, the aggregate
number of Shares issued under this Plan at any time shall equal only the number
of Shares actually issued upon exercise or settlement of an Award and not
returned to the Company upon cancellation, expiration or forfeiture of an Award
or in payment or satisfaction of the purchase price, exercise price or tax
withholding obligation of an Award.
SECTION 4. PERSONS ELIGIBLE UNDER PLAN
Any person who is an employee, prospective employee, consultant,
director or advisor of the Company (an "Eligible Person") shall be eligible
to be considered for the grant of Awards hereunder. A
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"Participant" is any current or former Eligible Person to whom an Award has
been made and any person (including any estate) to whom an Award has been
assigned or transferred pursuant to Section 9.1.
SECTION 5. PLAN AWARDS
5.1 AWARD TYPES. The Committee, on behalf of the Company, is
authorized under this Plan to enter into certain types of arrangements with
Employees and to confer certain benefits on them. The following arrangements
or benefits are authorized under this Plan if their terms and conditions are
not inconsistent with the provisions of this Plan: Options, Incentive Bonuses
and Incentive Stock. Such arrangements and benefits are sometimes referred to
herein as "Awards." The authorized types of arrangements and benefits for
which Awards may be granted are defined as follows:
(a) OPTIONS: An Option is a right granted under Section 6 to
purchase a number of Shares at such exercise price, at such times and
on such other terms and conditions as are specified in the agreement or
other document evidencing the Award (the "Option Document "). Options
intended to qualify as Incentive Stock Options ("ISOs") pursuant to
Code Section 422 and Options not intended to qualify as ISOs
("Nonqualified Options") may be granted under Section 6.
(b) INCENTIVE BONUS: An Incentive Bonus is a bonus opportunity
awarded under Section 7 pursuant to which a Participant may become
entitled to receive an amount based on satisfaction of such performance
criteria as are specified in the agreement or other document evidencing
the Award (the "Incentive Bonus Document").
(c) INCENTIVE STOCK: Incentive Stock is an award or issuance
of Shares made under Section 8, the grant, issuance, retention, vesting
and/or transferability of which is subject during specified periods of
time to such conditions (including performance conditions) and terms as
are expressed in the agreement or other document evidencing the Award
(the "Incentive Stock Document").
5.2 GRANTS OF AWARDS. An Award may consist of one such arrangement
or benefit or two or more of them in tandem or in the alternative.
SECTION 6. OPTIONS
The Committee may grant an Option or provide for the grant of an
Option, either from time to time in the discretion of the Committee or
automatically upon the occurrence of specified events, including, without
limitation, the achievement of performance goals, the satisfaction of an event
or condition within the control of the recipient of the Award or within the
control of others.
6.1 OPTION DOCUMENT. Each Option Document shall contain provisions
regarding (a) the number of Shares that may be issued upon exercise of the
Option, (b) the purchase price of the Shares and the means of payment for the
Shares, (c) the term of the Option, (d) such terms and conditions of
exercisability as may be determined from time to time by the Committee, (e)
restrictions on the transfer of the Option and forfeiture provisions, and (f)
such further terms and conditions, in each case not inconsistent with this
Plan, as may be determined from time to time by the Committee. Option
Documents evidencing ISOs shall contain such terms and conditions as may be
necessary to comply with the applicable provisions of Section 422 of the Code.
6.2 OPTION PRICE. The purchase price per share of the Shares subject
to each Option granted under this Plan shall equal or exceed 100% of the fair
market value of such Shares on the date the Option is granted except that (i)
the exercise price of an Option may be higher or lower in the case of Options
granted to employees of a company acquired by the Company in assumption and
substitution of options held by such employees at the time such company is
acquired, (ii) in the event an Employee is required to pay or forego the
receipt of any cash amount in consideration of receipt of an Option, the
exercise price plus such cash amount shall equal or exceed 100% of the fair
market value of such Stock on the date the Option is
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granted, and (iii) the exercise price of an Option granted to a director who
is not an Employee may be lower.
6.3 OPTION TERM. The "Term" of each Option granted under this
Plan, including any ISOs, shall be ten (10) years from the date of its
grant unless the Committee shall provide otherwise.
6.4 OPTION VESTING. Options granted under this Plan shall be
exercisable at such time and in such installments during the period prior to
the expiration of the Option's Term as determined by the Committee. The
Committee shall have the right to make the timing of the ability to exercise
any Option granted under this Plan subject to such performance requirements
as deemed appropriate by the Committee. At any time after the grant of an
Option the Committee may reduce or eliminate any restrictions surrounding any
Participant's right to exercise all or part of the Option.
6.5 TERMINATION OF EMPLOYMENT. Subject to Section 11, upon a
termination of employment by a Participant prior to the full exercise of an
Option, the unexercised portion of the Option shall be subject to such
procedures as the Committee may establish except, in the case of an ISO, if
and to the extent that other procedures are necessary to comply with the
provisions of Section 421, 422 or 424 of the Code.
6.6 PAYMENT OF EXERCISE PRICE. The exercise price of an Option shall
be paid in the form of one of more of the following, as the Committee shall
specify, either through the terms of the Option Document or at the time of
exercise of an Option: (a) cash or certified or cashiers' check, (b) shares
of capital stock of the Company that have been held by the Participant for
such period of time as the Committee may specify, (c) other property deemed
acceptable by the Committee, (d) a reduction in the number of Shares or other
property otherwise issuable pursuant to such Option, (e) a promissory note of
or other commitment to pay by the Participant or of a third party, the terms
and conditions of which shall be determined by the Committee, or (f) any
combination of (a) through (e).
SECTION 7 INCENTIVE BONUSES
Each Incentive Bonus Award will confer upon the Employee the
opportunity to earn a future payment tied to the level of achievement with
respect to one or more performance criteria established for a performance period
of not less than one year.
7.1 INCENTIVE BONUS DOCUMENT. Each Incentive Bonus Document shall
contain provisions regarding (a) the target and maximum amount payable to the
Participant as an Incentive Bonus, (b) the performance criteria and level of
achievement versus these criteria that shall determine the amount of such
payment, (c) the term of the performance period as to which performance shall
be measured for determining the amount of any payment, (d) the timing of any
payment earned by virtue of performance, (e) restrictions on the alienation
or transfer of the Incentive Bonus prior to actual payment, (f) forfeiture
provisions, and (g) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Committee. The maximum amount payable as an Incentive Bonus may be a multiple
of the target amount payable, but the maximum amount payable pursuant to that
portion of an Incentive Bonus Award granted under this Plan for any fiscal
year to any Participant that is intended to satisfy the requirements for
"performance-based compensation" under Code Section 162(m) shall not exceed
$1,000,000.
7.2 PERFORMANCE CRITERIA. The Committee shall establish the
performance criteria and level of achievement versus these criteria that
shall determine the target and maximum amount payable under an Incentive
Bonus Award, which criteria may be based on financial performance and/or
personal performance evaluations. The Committee may specify the percentage of
the target Incentive Bonus that is intended to satisfy the requirements for
"performance-based compensation" under Code Section 162(m). Notwithstanding
anything to the contrary herein, the performance criteria for any portion of
an Incentive Bonus that is intended by the Committee to satisfy the
requirements for "performance-based compensation" under Code Section 162(m)
shall be a measure based on one or more Qualifying Performance Criteria (as
defined in Section 9.2) selected by the Committee and specified at the time
the Incentive Bonus Award is
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granted. The Committee shall certify the extent to which any Qualifying
Performance Criteria has been satisfied and the amount payable as a result
thereof prior to payment of any Incentive Bonus that is intended to satisfy
the requirements for "performance-based compensation" under Code Section
162(m).
7.3 TIMING AND FORM OF PAYMENT. The Committee shall determine the
timing of payment of any Incentive Bonus. The Committee may provide for or,
subject to such terms and conditions as the Committee may specify, may permit a
Participant to elect the payment of any Incentive Bonus to be deferred to a
specified date or event.
7.4 DISCRETIONARY ADJUSTMENTS. Notwithstanding satisfaction of any
performance goals, the amount paid under an Incentive Bonus Award on account
of either financial performance or personal performance evaluations may be
reduced by the Committee on the basis of such further considerations as the
Committee shall determine.
SECTION 8. INCENTIVE STOCK
Incentive Stock is an award or issuance of Shares the grant,
issuance, retention, vesting and/or transferability of which is subject
during specified periods of time to such conditions (including performance
conditions) and terms as the Committee deems appropriate.
8.1 INCENTIVE STOCK DOCUMENT. Each Incentive Stock Document shall
contain provisions regarding (a) the number of Shares subject to such Award
or a formula for determining such, (b) the performance criteria, if any, and
level of achievement versus these criteria that shall determine the number of
Shares granted, issued, retainable and/or vested, (c) the period, if any, as
to which performance shall be measured for determining achievement of
performance, (d) forfeiture, (e) transferability and (f) such further terms
and conditions, not inconsistent with this Plan as may be determined from
time to time by the Committee.
8.2 SALE PRICE. Subject to the requirements of applicable law, the
Committee shall determine the price, if any, at which Shares of Incentive
Stock shall be sold or awarded to an Eligible Person, which may vary from
time to time and among Eligible Persons and which may be below the fair
market value of such Shares at the date of grant or issuance.
8.3 PERFORMANCE CRITERIA. The grant, issuance, retention and/or
vesting of Incentive Stock may but need not be subject to such performance
criteria and level of achievement versus these criteria as the Committee
shall determine, which criteria may be based on financial performance and/or
personal performance evaluations. Notwithstanding anything to the contrary
herein, the performance criteria for any Incentive Stock that is intended to
satisfy the requirements for "performance-based compensation" under Code
Section 162(m) shall be a measure based on one or more Qualifying Performance
Criteria selected by the Committee and specified at the time the Incentive
Stock Award is granted.
8.4 DISCRETIONARY ADJUSTMENTS. Notwithstanding satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under an Incentive Stock Award on account of either financial
performance or personal performance evaluations may be reduced by the
Committee on the basis of such further considerations as the Committee shall
determine.
8.5 TERMINATION OF EMPLOYMENT. Subject to Section 11, upon a
termination of employment by a Participant prior to the vesting of or the
lapsing of restrictions on Incentive Stock, the Incentive Stock Awards granted
to such Participant shall be subject to such procedures as determined by the
Committee.
SECTION 9. OTHER PROVISIONS APPLICABLE TO AWARDS
9.1 TRANSFERABILITY. Unless the agreement or other document
evidencing an Award (or an amendment thereto authorized by the Committee)
expressly states that the Award is transferable as provided hereunder, no
Award granted under this Plan (nor any interest in such Award) may be sold,
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assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in
any manner prior to the vesting or lapse of any and all restrictions
applicable thereto, other than by will or the laws of descent and
distribution. The Committee may grant an Award or amend an outstanding Award
to provide that the Award is transferable or assignable to a member or
members of the Participant's "immediate family," as such term is defined in
Rule 16a-1(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or to a trust for the benefit solely of a member or members
of the Participant's immediate family or to a partnership or other entity
whose only owners are members of the Participant's immediate family, PROVIDED
that (i) no consideration is given in connection with the transfer of such
Award, and (ii) following any such transfer or assignment the Award will
remain subject to substantially the same terms applicable to the Award while
held by the Participant, as modified as the Committee shall deem appropriate,
and the transferee shall execute an agreement agreeing to be bound by such
terms.
9.2 QUALIFYING PERFORMANCE CRITERIA. For purposes of this Plan, the
term "Qualifying Performance Criteria" shall mean any one or more of the
following performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit
or subsidiary, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an
absolute basis or relative to a pre-established target, previous years'
results or a designated comparison group, in each case as specified by the
Committee in the Award: (a) cash flow, (b) earnings per share, (c) earnings
before interest, taxes and amortization, (d) return on equity, (e) total
stockholder return, (f) return on capital, (g) return on assets or net
assets, (h) revenue, (i) income or net income, (j) operating income or net
operating income, (k) operating profit or net operating profit, (l) operating
margin, (m) return on operating revenue, (n) market share, and (o) overhead
or other expense reduction. The Committee shall appropriately adjust any
evaluation of performance under a Qualifying Performance Criteria to exclude
any of the following events that occurs during a performance period: (i)
asset write-downs, (ii) litigation or claim judgments or settlements, (iii)
the effect of changes in tax law, accounting principles or other such laws or
provisions affecting reported results, (iv) accruals for reorganization and
restructuring programs, and (v) any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 and/or in
management's discussion and analysis of financial condition and results of
operations appearing in the Company's annual report to stockholders for the
applicable year.
9.3 DIVIDENDS. Unless otherwise provided by the Committee, no
adjustment shall be made in Shares issuable under Awards on account of cash
dividends that may be paid or other rights that may be issued to the holders
of Shares prior to their issuance under any Award. The Committee shall
specify whether dividends or dividend equivalent amounts shall be paid to any
Participant with respect to the Shares subject to any Award that have not
vested or been issued or that are subject to any restrictions or conditions
on the record date for dividends.
9.4 DOCUMENTS EVIDENCING AWARDS. The Committee shall, subject to
applicable law, determine the date an Award is deemed to be granted, which,
for purposes of this Plan, shall not be affected by the fact that an Award is
contingent on subsequent stockholder approval of this Plan. The Committee or,
except to the extent prohibited under applicable law, its delegate(s) may
establish the terms of agreements or other documents evidencing Awards under
this Plan and may, but need not, require as a condition to any such
agreement's or document's effectiveness that such agreement or document be
executed by the Participant and that such Participant agree to such further
terms and conditions as specified in such agreement or document. The grant of
an Award under this Plan shall not confer any rights upon the Participant
holding such Award other than such terms, and subject to such conditions, as
are specified in this Plan as being applicable to such type of Award (or to
all Awards) or as are expressly set forth in the agreement or other document
evidencing such Award.
9.5 TANDEM STOCK OR CASH RIGHTS. Either at the time an Award is
granted or by subsequent action, the Committee may, but need not, provide
that an Award shall contain as a term thereof, a right, either in tandem with
the other rights under the Award or as an alternative thereto, of the
Participant to receive, without payment to the Company, a number of Shares,
cash or a combination thereof, the amount of which is determined by reference
to the value of the Award.
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9.6 FINANCING. The Committee may provide financing to a Participant
in a principal amount sufficient to pay the purchase price of any Award
and/or to pay the amount of taxes required by law to be withheld with respect
to any Award. Any such loan shall be subject to all applicable legal
requirements and restrictions pertinent thereto, including Regulation G
promulgated by the Federal Reserve Board. The grant of an Award shall in no
way obligate the Company or the Committee to provide any financing whatsoever
in connection therewith.
SECTION 10. CHANGES IN CAPITAL STRUCTURE
If the outstanding securities of the class then subject to this Plan
are increased, decreased or exchanged for or converted into cash, property or
a different number or kind of shares or securities, or if cash, property or
shares or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, restructuring, reclassification, dividend
(other than a regular, quarterly cash dividend) or other distribution, stock
split, reverse stock split, spin-off or the like, or if substantially all of
the property and assets of the Company are sold, then, unless the terms of
such transaction shall provide otherwise, the Committee shall make
appropriate and proportionate adjustments in (i) the number and type of
shares or other securities or cash or other property that may be acquired
pursuant to Awards theretofore granted under this Plan and the exercise or
settlement price of such Awards, PROVIDED, HOWEVER, that such adjustment
shall be made in such a manner that will not affect the status of any Award
intended to qualify as an ISO under Code Section 422 or as "performance-based
compensation" under Code Section 162(m), and (ii) the maximum number and type
of shares or other securities that may be issued pursuant to such Awards
thereafter granted under this Plan.
SECTION 11. CHANGE OF CONTROL
11.1 EFFECT OF CHANGE OF CONTROL. The Committee may, through the
terms of the Award or otherwise, provide that any or all of the following
shall occur in connection with a Change of Control or a Change of Control
Transaction (as those terms are defined in Section 11.2) or upon termination
of the Participant's employment following a Change of Control or a Change of
Control Transaction: (a) in the case of an Option, the acceleration of the
Participant's ability to exercise any portion of the Option not previously
exercisable, (b) in the case of an Incentive Bonus, the acceleration of the
Participant's right to receive a payment equal to the target amount payable
or, if greater, a payment based on performance through a date determined by
the Committee prior to the Change of Control, and (c) in the case of Shares
issued in payment of any Incentive Bonus and/or in the case of Incentive
Stock, the lapse and expiration of any conditions to the grant, issuance,
retention, vesting or transferability of, or any other restrictions
applicable to, such Award. The Committee also may, through the terms of the
Award or otherwise, provide for an absolute or conditional exercise, payment
or lapse of conditions or restrictions on an Award that shall only be
effective if, upon the announcement of a Change of Control Transaction, no
provision is made in such Change of Control Transaction for the exercise,
payment or lapse of conditions or restrictions on the Award or other
procedure whereby the Participant may realize the full benefit of the Award.
11.2 DEFINITIONS. Unless the Committee shall provide otherwise,
"Change of Control" shall mean an occurrence of any of the following
events:
(a) an acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any
"person or group" (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) immediately after which such person or group has
"Beneficial Ownership" (within the meaning of Rule 13d-3 under the
Exchange Act) of more than 50% of the combined voting power of the
Company's then outstanding Voting Securities, except in the case of an
acquisition by any person or group that immediately prior to such
acquisition already had Beneficial Ownership of more than 50% of the
combined voting power of the Company's then outstanding Voting
Securities;
(b) approval by the stockholders of (i) a merger,
consolidation or reorganization involving the Company unless the
company resulting from such merger, consolidation or
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reorganization (the "Surviving Corporation") shall adopt or assume
this Plan and all Participants' Awards under this Plan and either (A)
the stockholders of the Company immediately before such merger,
consolidation or reorganization own, directly or indirectly
immediately following such merger, consolidation or reorganization,
more than 50% of the combined voting power of the Surviving
Corporation in substantially the same proportion as their ownership
immediately before such merger, consolidation or reorganization, or
(B) at least a majority of the members of the Board of Directors of
the Surviving Corporation were directors of the Company immediately
prior to the execution of the agreement providing for such merger,
consolidation or reorganization, or (ii) a complete liquidation or
dissolution of the Company; or
(c) such other events as the Committee from time to time may
specify.
"Change of Control Transaction" shall mean any tender offer, offer,
exchange offer, solicitation, merger, consolidation, reorganization or other
transaction that is intended to or reasonably expected to result in a Change of
Control.
SECTION 12. TAXES
12.1 WITHHOLDING REQUIREMENTS. The Committee may make such provisions
or impose such conditions as it may deem appropriate for the withholding or
payment by a Participant of any taxes that the Committee determines are
required in connection with any Award granted under this Plan, and a
Participant's rights in any Award are subject to satisfaction of such
conditions.
12.2 PAYMENT OF WITHHOLDING TAXES. Notwithstanding the terms of
Section 12.1, the Committee may provide in the agreement or other document
evidencing an Award or otherwise that all or any portion of the taxes
required to be withheld by the Company or, if permitted by the Committee,
desired to be paid by the Participant, in connection with the exercise of a
Nonqualified Option or the exercise, vesting, settlement or transfer of any
other Award shall be paid or, at the election of the Participant, may be paid
by the Company by withholding shares of the Company's capital stock otherwise
issuable or subject to such Award or by the Participant delivering previously
owned shares of the Company's capital stock, in each case having a fair
market value equal to the amount required or elected to be withheld or paid.
Any such election is subject to such conditions or procedures as may be
established by the Committee and may be subject to disapproval by the
Committee.
SECTION 13. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue this Plan or any agreement
or other document evidencing an Award made under this Plan, but no such
amendment shall, without the approval of the stockholders of the Company:
(a) materially increase the maximum number of Shares for which
Awards may be granted under this Plan;
(b) reduce the price at which Options may be granted below
the price provided for in Section 6.2;
(c) reduce the exercise price of outstanding Options;
(d) impair the rights of any Participant, without such
Participant's consent, under any Award granted to such Participant
prior to the date of any Change of Control;
(e) extend the term of this Plan; or
(f) change the class of persons eligible to be Participants.
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SECTION 14. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.
This Plan, the grant and exercise of Awards thereunder, and the
obligation of the Company to sell, issue or deliver Shares under such Awards,
shall be subject to all applicable federal, state and foreign laws, rules and
regulations and to such approvals by any governmental or regulatory agency as
may be required. The Company shall not be required to register in a
Participant's name or deliver any Shares prior to the completion of any
registration or qualification of such Shares under any federal, state or
foreign law or any ruling or regulation of any government body which the
Committee shall determine to be necessary or advisable. This Plan is intended
to constitute an unfunded arrangement for a select group of management or
other key employees, directors and consultants.
No Option shall be exercisable unless a registration statement with
respect to the Option is effective or the Company has determined that such
registration is unnecessary. Unless the Awards and Shares covered by this
Plan have been registered under the Securities Act of 1933, as amended, or
the Company has determined that such registration is unnecessary, each person
receiving an Award and/or Shares pursuant to any Award may be required by the
Company to give a representation in writing that such person is acquiring
such Shares for his or her own account for investment and not with a view to,
or for sale in connection with, the distribution of any part thereof.
SECTION 15. OPTION GRANTS BY SUBSIDIARIES
In the case of a grant of an option to any Eligible Person employed
by a subsidiary of the Company, such grant may, if the Committee so directs,
be implemented by the Company issuing any subject shares to the subsidiary
for such lawful consideration as the Committee may determine, upon the
condition or understanding that the subsidiary will transfer the shares to
the optionholder in accordance with the terms of the option specified by the
Committee pursuant to the provisions of this Plan. Notwithstanding any other
provision hereof, such option may be issued by and in the name of the
subsidiary and shall be deemed granted on such date as the Committee shall
determine.
SECTION 16. NO RIGHT TO COMPANY EMPLOYMENT
Nothing in this Plan or as a result of any Award granted pursuant to
this Plan shall confer on any individual any right to continue in the employ
of the Company or interfere in any way with the right of the Company to
terminate an individual's employment at any time. The agreements or other
documents evidencing Awards may contain such provisions as the Committee may
approve with reference to the effect of approved leaves of absence.
SECTION 17. EFFECTIVENESS AND EXPIRATION OF PLAN
This Plan shall be effective on the date the Board adopts this Plan.
All Awards granted under this Plan are subject to, and may not be exercised
before, the approval of this Plan by the stockholders prior to the first
anniversary date of the effective date of this Plan, by the affirmative vote
of the holders of a majority of the outstanding shares of the Company
present, or represented by proxy, and entitled to vote at a meeting of the
Company's stockholders or by written consent in accordance with the laws of
the State of Delaware; PROVIDED that if such approval by the stockholders of
the Company is not forthcoming, all Awards previously granted under this Plan
shall be void. No Awards shall be granted pursuant to this Plan more than ten
(10) years after the effective date of this Plan.
SECTION 18. NON-EXCLUSIVITY OF PLAN
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed
as creating any limitations on the power of the Board or the Committee to
adopt such other incentive arrangements as either may deem desirable,
including without limitation, the granting of restricted stock or stock
options otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
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SECTION 19. GOVERNING LAW
This Plan and any agreements or other documents hereunder shall be
interpreted and construed in accordance with the laws of the State of
Delaware and applicable federal law. The Committee may provide that any
dispute as to any Award shall be presented and determined in such forum as
the Committee may specify, including through binding arbitration. Any
reference in this Plan or in the agreement or other document evidencing any
Award to a provision of law or to a rule or regulation shall be deemed to
include any successor law, rule or regulation of similar effect or
applicability.
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APPENDIX B
[FRONT OF PROXY CARD]
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF
AFTERMARKET TECHNOLOGY CORP.
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
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 March 31, 2000, and the
undersigned hereby revokes all prior proxies and hereby constitutes and appoints
Michael T. DuBose, Barry C. Kohn 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 May 10,
2000 at 9:00 a.m., Central time, at the Hilton Lisle/Naperville, 3003 Corporate
West Drive, Lisle, Illinois, and at any adjournment thereof.
PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
[REVERSE SIDE OF PROXY CARD]
THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED BELOW; WHERE NO
CHOICE IS SPECIFIED, IT WILL BE VOTED FOR PROPOSALS 1 AND 2 AND IN THE
DISCRETION OF THE PROXIES WITH RESPECT TO MATTERS DESCRIBED IN PROPOSAL 3.
Please mark
your vote as /X/
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. Election of Directors:
FOR all nominees WITHHOLD
listed to the right AUTHORITY INSTRUCTION: To vote against any nominee, strike a line through the
(except as marked to to vote for all nominees nominee's name in the list below:
the contrary) listed to the right
/ / / / Robert Anderson Mark C. Hardy William A. Smith
Richard R. Crowell Dr. Michael J. Hartnett J. Richard Stonesifer
Michael T. DuBose Gerald L. Parsky
Dale F. Frey Richard K. Roeder
2. Approval of 2000 Stock Incentive Plan: 3. To vote upon such other business as may properly come before the meeting
or any adjournment thereof.
FOR AGAINST ABSTAIN
/ / / / / /
DATED: _______________________________________________, 2000
____________________________________________________________
____________________________________________________________
(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 your full title as such.)
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