<PAGE>
AID AUTO STORES, INC.
275 Grand Boulevard
Westbury, New York 11590
__________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS-AUGUST 4, 1997
__________________
TO THE STOCKHOLDERS OF THE AID AUTO STORES, INC.
Notice is hereby given that the Annual Meeting of Stockholders of Aid Auto
Stores,Inc. (the "Company") will be held at the Company's offices located at
275 Grand Boulevard, Westbury, New York 11590, on August 4, 1997, at 11:00 A.M.,
New York time, for the following purposes:
1. To elect a Board of Directors to serve until the next Annual Meeting of
Stockholders and until their successors are duly elected and qualified;
2. To ratify the selection by the Board of Directors of Grant Thornton LLP to
serve as independent certified public accountants for the year ending December
31, 1997; and
3. To transact such other business as may properly be presented for action at
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 1, 1997 as
the record date for the determination of shareholders entitled to notice of,
and to vote at, this meeting or any adjournment thereof.
Holders of a majority of the outstanding shares must be present in person
or by proxy in order for the meeting to be held. WHETHER OR NOT YOU EXPECT TO
ATTEND THE ANNUAL MEETING, YOUR PROXY VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE
REQUESTED TO MARK, SIGN AND DATE THE ENCLOSED PROXY FORM AND RETURN IT
IN THE ACCOMPANYING STAMPED ENVELOPE. The giving of such proxy will not affect
your right to revoke such proxy before it is exercised or to vote in person
should you later decide to attend the meeting.
All stockholders are cordially invited to attend this meeting.
By Order of the Board of Directors
Greg M. Stephen
Secretary
July 1, 1997
IT IS IMPORTANT THAT THE ENCLOSED PROXY FORM BE COMPLETED
AND RETURNED PROMPTLY.
</PAGE>
AID AUTO STORES, INC.
275 Grand Boulevard
Westbury, New York 11590
___________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 4, 1997
__________________
SOLICITATION AND REVOCATION OF PROXIES
This statement is furnished in connection with the solicitation by the
Board of Directors of Aid Auto Stores, Inc., a Delaware corporation (the
"Company"), of proxies to be voted at the Annual Meeting of the Stockholders
of the Company to be held on August 4, 1997, at 11:00 A.M. at the Company's
offices located at 275 Grand Boulevard, Westbury, New York 11590 and any
adjournments thereof.
A form of proxy is enclosed for use at the meeting. The proxy may be
revoked by a stockholder at any time before it is voted by execution of a
proxy bearing a later date or by written notice to the Secretary before the
meeting, and any stockholder present at the meeting may revoke his proxy
thereat and vote in person if he so desires. If no direction is indicated,
all shares represented by valid proxies received pursuant to this solicitation
(and not revoked prior to exercise) will be voted FOR the election of the
nominees for directors named herein, FOR the ratification of the appointment
of Grant Thornton LLP as the Company's independent certified public accountants
for 1997, and, as recommended by the Board of Directors, with regard to all
other matters or, if no such recommendation is given, in their own discretion.
The cost of soliciting proxies on behalf of the Board of Directors will
be borne by the Company. In addition to solicitation by mail, proxies may be
solicited by directors, officers or regular employees of the Company (who will
receive no extra compensation for those services) in person or by telephone or
telefax. The Company will also request brokerage houses, custodians, nominees
and fiduciaries to forward these proxy materials to the beneficial owners of
the common stock, par value $.001 per share, of the Company ("Common Stock")
and will reimburse such holders for their reasonable expenses in connection
therewith. The approximate date of mailing of this proxy statement is July 3,
1997.
Only stockholders of record at the close of business on July 1, 1997 will
be entitled to notice of, and to vote at, the Annual Meeting. At the close of
business on such record date the Company had issued and outstanding 3,957,596
shares of Common Stock. Each share entitles the holder thereof to one vote
and a vote of the majority of the shares present, or represented, and entitled
to vote at the meeting is required to approve each proposal to be acted upon
at the meeting.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards
a quorum, but are not counted for any purpose in determining whether a matter
has been approved.
NOMINATION AND ELECTION OF DIRECTORS
Six persons are nominees for election to hold office until the next annual
meeting and until their respective successors are elected and qualified. Unless
authority to vote for the election of directors shall have been withheld, it is
intended that proxies in the accompanying form will be voted at the meeting for
the election of six nominees named below. If any nominees, for any reason
presently unknown to the Company, should refuse or be unable to serve, the
shares represented by the proxies will be voted for such person as shall be
designated by the Board of Directors to replace any such nominees.
The following information is submitted concerning the nominees named for
election as directors based upon information received by the Company for such
person:
Director
Nominee Age Office Since
- -----------------------------------------------------------------------------
Philip L. Stephen 61 Chairman of the Board,
Chief Executive Officer,
President and Treasurer 1995
Greg M. Stephen 31 Vice President of Sales,
Secretary and Director 1995
Lewis R. Cowan 66 Director 1995
Ira Scott Greenspan 38 Director 1995
Leonard Genovese 62 Director 1995
Werner Neuburger 61 Director 1996
Philip L. Stephen has been the Chief Executive Officer, President,
Treasurer and a director (Chairman of the Board) of the Company since 1985
(when he acquired control of the Company). Prior to his acquisition of the
Company and through 1988 and 1989, respectively, Mr. Stephen was the owner and
President of Export Agencies International, an automotive export management
company, and Minthorne InternationalCo., Inc., a company engaged in the
marketing and exporting of medical communications equipment and other electronic
industrial products.
Greg M. Stephen has been Vice President of the Company since 1991,
Secretary and a director of the Company since February, 1995 and was General
Manager of one of the Company-owned stores during 1990. From 1988 to 1989, he
held various other positions with the Company, primarily at Company-owned
stores. Mr. Stephen worked at the Retirement System for Savings Institutions,
a pension fund management firm, from 1987 to 1988. Mr. Stephen is the son of
Philip L. Stephen.
Lewis R. Cowan has been a director of the Company since February 1995.
Since 1994, Mr. Cowan has been Senior Counsel of the law firm Cowan, Liebowitz
& Latman, P.C., of which he was a founding member. Mr. Cowan held the position
of partner of such law firm for over 30 years prior to 1994.
Leonard Genovese has been a director of the Company since December 1995.
Mr. Genovese has been President of Genovese Drug Stores, Inc. ("Genovese
Stores"), a major drug store chain, since 1974 and has also served as Chairman
of the Board since 1978. He served as Executive Vice President of Genovese
Stores from 1968 to 1974 and as Vice President, Director of Operations from
1966 to 1968. Mr. Genovese is a member of the Board of Directors of TR
Financial, Inc., the parent company of Roosevelt Savings Bank, and of the
National Association of Chain Drug Stores.
Ira Scott Greenspan has been a director of the Company since February 1995.
From October 1994 to the present, Mr. Greenspan has been a Managing Director of
Harmonie Capital Group L.P., a private banking firm. From September 1993 to
October 1994, Mr. Greenspan was a Managing Director of Brenner Securities
Corporation, an investment banking firm. From June 1992 to September 1993,
Mr. Greenspan was Executive Vice President and Head of Investment Banking of
GKN Securities Corp., an investment banking and brokerage firm. For more than
five years prior thereto, Mr. Greenspan was a corporate and securities lawyer at
Tenzer, Greenblatt LLP, a New York law firm, and most recently was a Partner of
that firm.
Werner S. Neuburger has been a director of the Company since January 1996
and was a Vice President of the Company from December 1995 to April 1996. From
1967 to December 1995, Mr. Neuburger was Chief Executive Officer and President
of Nuby's Auto, Inc. and affiliated companies which operated ten Aid Auto
franchises until they were acquired by the Company in December 1995. Pursuant
to the agreement related to such acquisition, the Company and Mr. Philip L.
Stephen agreed to elect Mr. Neuburger as a director of the Company so long as
the note of the Company to Mr. Neuburger is still owing. Mr. Neuburger serves
as a member of the Board of Directors of the Long Island Commercial Bank, a
commercial bank located exclusively on Long Island.
The Board of Directors held three meetings during the calendar year ended
December 31, 1996. Each director attended all of these meetings, except that
Mr. Greenspan did not attend one meeting.
Except as described above, no family relationship exists between any
director or executive officer and any other director or executive officer.
The Company had no nominating, compensation or audit committees during the
year ended December 31, 1996.
</PAGE>
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth, as of February 28, 1997, the shares of
Common Stock owned beneficially and of record (unless otherwise indicated)
by each person owning more than five percent (5%) of the outstanding shares,
each director of the Company, each executive officer of the Company named in
the following tables and all directors and officers of the Company as a group.
Name (and addresses Number of
of 5% holders) Shares Owned (1) Percent
- ---------------------- ---------------- ----------
Philip L. Stephen
275 Grand Boulevard
Westbury, NY 11590 2,075,000 (2) 51.5%
Greg M. Stephen 35,333 (3) *
Lewis R. Cowan 12,500 (4) *
Ira Scott Greenspan 22,500 (5) *
Leonard Genovese 22,500 (6) *
Werner S. Neuburger 157,596 4.0%
Bruce Allen Ziskin 33,333 (4) *
Whale Securities Co. L.P.
650 Fifth Avenue
New York, NY 10019 360,000 (7) 8.3%
All officers and directors as a
group (8 persons) 2,358,762 (8) 56.8%
______________________
* less than 1%.
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person upon the exercise of options or warrants. Each
beneficial owner's percentage ownership is determined by assuming that
options or warrants that are held by such person (but not those held by
any other person) have been exercised. Unless otherwise note, the
Company believes that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially
owned by them.
(2) Includes 75,000 shares of Common Stock underlying currently exercisable
options.
(3) Includes 33,333 shares of Common Stock underlying currently exercisable
options but does not include options to purchase 16,667 shares of Common
Stock, which options were not exercisable within 60 days of February 28,
1997.
(4) Represents shares of Common Stock underlying currently exercisable stock
options.
(5) Includes 12,500 shares of Common Stock underlying currently exercisable
options and 10,000 shares of Common Stock underlying currently exercisable
warrants.
(6) Includes 12,500 shares of Common Stock underlying currently exercisable
options and 5,000 shares of Common Stock underlying currently exercisable
warrants.
(7) Represents 360,000 shares underlying currently exercisable warrants and
other securities held in Whale's name for the account of certain employees,
former employees and equity owners of Whale.
(8) Includes options to purchase an aggregate of 179,166 shares of Common Stock
and warrants to purchase 15,000 shares of Common Stock. Does not include
options to purchase an aggregate of 83,334 shares of Common Stock granted
to executive officers of the Company, which options were not exercisable
within 60 days of February 28, 1997.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
The Company's officers, directors and beneficial owners of more than 10%
on any class of its equity securities registered, pursuant to Section 12 of the
Securities Exchange Act of 1934 (the "Exchange Act") ("Reporting Persons") are
required under the Exchange Act to file reports of ownership and changes in
beneficial ownership of the Company's equity securities with the Securities
and Exchange Commission (the "SEC"). Copies of these reports must also be
furnished to the Company. Based solely on a review of the copies of reports
furnished to the Company pursuant to the Exchange Act, the Company believes that
during the year ended Decemebr 31, 1996, all filing requirements applicable to
Reporting Persons were compiled with, except that each of Mr. Philip Stephen
and Mr. Ira Greenspan failed to file a timely Form 4 with respect to the grant
of options to purchase shares of Common Stock and Mr. Werner Neuburger failed
to file a timely Form 3.
</PAGE>
EXECUTIVE COMPENSATION
The following table shows the compensation received by the person who
acted as Chief Executive Officer and President during the year ended December
31, 1996 and another executive officer whose compensation exceeded $100,000
during said year (the "named executive officers").
Long-Term
Compensations
Securities
Annual Compensation Underlying
Name and Principal Position Year Salary($)(1) Other($) Options (#)
- --------------------------- ---- ------------- -------- -----------------
Philip L. Stephen, 1996 $204,334 0 75,000
Chief Executive Officer 1995 $181,836 0 0
and President 1994 $132,000 0 0
Bruce Allen Ziskin, 1996 $107,809 0 0
Vice President of 1995 $101,923 0 50,000
Merchandising 1994 $97,403 0 0
(1) The columns for "Bonus," "Restricted Stock Award(s)," "LTIP Payouts" and
"All Other Compensation" have been omitted because there is no compensation
of the type required to be reported in such columns.
OPTION GRANTS IN 1996
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term
------------------------ ------------------
No. of % of Total
Securities options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted (#) in Year ($/Sh) Date 5% ($) 10% ($)
- ---------- ----------- ---------- -------- ---------- ------ -------
Philip L. 36,832 24.2% 2.38 7/15/2001 24,219 53,517
Stephen 38,168 25.1% 2.62 7/15/2001 27,628 61,051
Bruce Allen - - - - - -
Ziskin
(1) In accordance with the rules of the Commission, shown are the gains or
"option spreads" that would exist for the respective options granted.
These gains are based on the assumed rates of annually compounded stock
price appreciation of 5% and 10% from the date the option was granted
over the full option term. These assumed annually compounded rates of
stock price appreciation are set forth in the rules of the Commission
and do not represent the Company's estimates or projection of future
Common Stock prices.
AGGREGATED OPTION EXERCISES DURING 1996
AND YEAR END OPTION VALUES
The following table provides information related to options exercised by
each of the named executive officers during 1996 and the number and value of
options held at December 31, 1996. The Company does not have any outstanding
stock appreciation rights.
Number of Value of Unexercised
Unexercised In-the-Money Options
Options at Money Options at
Year End (#) Year End ($) (1)
-------------- -----------------
Shares
Acquired On Value Exerc- Unexer- Exerc- Unexer-
Name Exercise (#) Realized ($) isable cisable isable cisable
- -------- ------------ ------------ ------ ------- ------- ---------
Philip L.
Stephen - - 75,000 0 0 0
Bruce Allen
Ziskin - - 33,333 16,667 0 0
_______________
(1) The closing price for the Company's Common Stock as reported on the NASDAQ
Small-Cap Market on December 31, 1996 was $2.25. The exercise price of
Messrs. Stephen's and Ziskin's options exceed such price and, accordingly,
no values are set forth in the above table.
COMPENSATION OF DIRECTORS
The Company pays directors who are not employees of the Company at a rate
of $500 per board meeting attended in person, and will reimburse all directors
for their expenses in connection with their activities as directors of the
Company. In February 1995, two of the Company's outside directors (Messrs.
Cowan and Greenspan) were granted non-incentive stock options to purchase
7,500 shares of Common stock at $5.00 per share and in December 1995,
Mr. Genovese, an outside director, was similarly granted a non-incentive option
to purchase 7,500 shares of common stock at $5.00 per share. In June 1996, each
of these three outside directors were granted a non-incentive option to purchase
5,000 shares of common stock at $4.50 per share pursuant to the Company's Stock
Option Plan.
EMPLOYMENT AGREEMENTS
The Company has entered into a three-year employment agreement with
Philip L. Stephen effective April 19, 1995. The agreement provides for annual
base compensation of $200,000, a cost-of-living increase in the second and third
years, and, based upon the Company's performance in the first two years, a bonus
or salary increase in the third year at the discretion of the Board of
Directors. In the event of a takeover or other acquisition of the Company, the
agreement provides that Mr. Stephen shall receive a severance payment equal
to six months of his base salary. The employment agreement requires that
Mr. Stephen devote his full time to the Company and contains a provision that
Mr. Stephen shall not compete or engage in a business competitive with the
current or anticipated business of the Company for the term of the agreement
and for two years thereafter.
CERTAIN TRANSACTIONS
At December 31, 1996, the Company was indebted to Mr. Philip L. Stephen,
Chairman of the Board, Chief Executive Office, President and majority
Stockholder of the Company in the aggregate amount of $2,187,500. The
$2,187,500 loan was evidenced by two promissory notes. In connection with
the new revolving credit facility with GE Capital Corp., these notes were
consolidated into one promissory note. The new note bears interest monthly at
the same rate as the revolving credit facility with principal payable in
quarterly installments commencing November 1, 1996 through February 1, 2000.
The interest rate at December 31, 1996 was 8.45%. The new revolving credit
facility with GE Capital Corp. allows the Company to make quarterly payments
and scheduled monthly interest payments to Mr. Stephen so long as prior to and
after giving affect to such payments no default has occurred and is continuing
or would occur on the GE Capital Corp. indebtedness as a result thereof. The
note provides for immediate payment thereof upon, among other things, a change
in a majority of the continuing directors of the Company (as defined in the
note) or a demand by GE Capital Corp. of payment in full of outstanding GE
Capital Corp. indebtedness.
As of December 31, 1996, the Company leased space for two of its Company
- -owned Aid Auto Stores from Mr. Werner S. Neuburger, Director of the Company.
The leases on both of these stores expire December 15, 2000 and have annual
rentals of $19,008 and $37,500 with annual increases based upon the consumer
price index or 4%, whichever is higher. A third location was leased from
Mr. Neuburger for the first ten months in 1996, whereby the Company then moved
to a larger square footage location to accommodate its Superstore program.
Rents paid to Mr. Neuburger in 1996 aggregated approximately $136,000. In
addition, at December 31, 1996, the Company was indebted to Mr. Neuburger in
the amount of $1,369,218 in connection with the acquisition in December 1995
of 10 franchised Aid Auto Stores. The original face value of the note was
$1,507,396. The note had an interest rate equal to one percentage point below
the prime rate in 1996 and at the prime rate thereafter. The note is payable
in 120 equal monthly installments of principal plus accrued interest commencing
February 1,1996. The note provides for immediate payment thereof upon, among
other things, the failure to pay an installment when due, the insolvency of the
Company, the filing of a bankruptcy petition by the Company, the sale of
substantially all of the assets of the Company or a reduction in the stock
ownership of the current majority shareholder (Mr. Philip L. Stephen) to below
10%. The Note is subordinate to the GE Capital indebtedness. Also in
connection with the Acquisition, a repayment of $2,000,000 short term promissory
note was made on January 2, 1996
to Mr. Neuburger.
For the year ended December 31, 1996, the Company paid $275,000 for
professional services to the law firm of Cowan, Liebowitz & Latman, P.C.
Mr. Lewis R. Cowan, Director of the Company has been Senior Council of the law
firm since 1994.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected the accounting firm of Grant Thornton
LLP to serve as independent certified public accountants of the Company for the
year ended December 31, 1997 and proposes the ratification of such decision.
A representative of Grant Thornton LLP is expected to be present at the meeting
to make a statement if he wishes to do so and to respond to appropriate
shareholder questions.
The Board of Directors recommends a vote FOR ratification
of the selection of Grant Thornton LLP as the independent auditors
for the Company for the year ending December 31, 1997.
SHAREHOLDER PROPOSALS
Shareholders who wish to present proposals for action at the 1998 Annual
Meeting should submit their proposals in writing to the Secretary of the Company
at the address of the Company set forth on the first page of this Proxy
Statement. Proposals must be received by the Secretary no later than February
26,1998 for inclusion in next year's proxy statement and proxy card.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to shareholders of the Company for the year ended
December 31, 1996, including audited consolidated financial statements, has
been mailed to the shareholders concurrently herewith, but such report is not
incorporated in this Proxy Statement and is not deemed to be a part of the
proxy solicitation material.
OTHER MATTERS
The Board of Directors of the Company does not know of any other matters
that are to be presented for action at the Annual Meeting. Should any other
matters come before the meeting or any adjournments thereof, the persons named
in the enclosed proxy will have the discretionary authority to vote all proxies
received with respect to such matters in accordance with their judgments.
A copy of the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission (exclusive of exhibits), will be furnished
without charge to any shareholder upon written request to Frank Mangano, Chief
Financial Officer, 275 Grand Boulevard, Westbury, NY 11590.
By the Board of Directors
/s/Greg M. Stephen
Secretary
Westbury, New York
July 1, 1997
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION WILL BE APPRECIATED.
