Hahn Automotive Warehouse, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 9, 2001
To Our Shareholders:
The Annual Meeting of Shareholders of Hahn Automotive
Warehouse, Inc. ("Company"), a New York corporation, will be held
at the Company's executive offices located at 415 West Main
Street, Rochester, New York 14608 on Wednesday, May 9, 2001, at
10:00 a.m. (Local Time), for the following purposes:
(1) To elect three directors of the Company, each for a
term of two years;
(2) To consider a proposal to amend the Company's
Restated Certificate of Incorporation to effect a one
(1) for three (3) split ("Reverse Stock Split") of the
issued and outstanding shares of common stock of the
Company, par value $.01 per share ("Common Stock"),
subject to cancellation by the Board of Directors, at
its discretion, at any time during or after the annual
meeting and prior to its effectiveness without further
action by the shareholders;
(3) To consider a proposal to approve a specific stock
option grant to each of the Company's five non-employee
directors to purchase up to 5,000 shares of Common
Stock; and
(4) To transact such other business as may properly
come before the meeting or any adjournment thereof.
<PAGE 1>
The Board of Directors of the Company has fixed the close of
business on April 2, 2001, as the record date for the
determination of shareholders entitled to notice of and to vote
at the Annual Meeting and at any continuation or adjournment
thereof. A Proxy Statement and proxy are enclosed. It is
important that all shares be represented at the Annual Meeting.
The Board of Directors extends a cordial invitation to all
shareholders to attend the Annual Meeting. If you are unable to
attend the meeting in person, you should sign, date and return
the enclosed proxy in the return envelope that has been provided.
You may revoke your proxy and vote in person if you decide to
attend the Annual Meeting.
By Order of the Board of Directors,
Daniel J. Chessin
Rochester, New York Executive Vice President
April 16, 2001 and Secretary
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 2001
This Proxy Statement and the accompanying proxy are
furnished to the shareholders of Hahn Automotive Warehouse, Inc.
("Company"), a New York corporation, in connection with the
solicitation by and on behalf of the Board of Directors of the
Company, to be used at the Annual Meeting of Shareholders of the
Company ("Annual Meeting"), which will be held on Wednesday, May
9, 2001, at 10:00 a.m. (Local Time) at the Company's executive
offices, 415 West Main Street, Rochester, New York 14608, to act
upon (1) the election of three directors, (2) the proposal to
approve a Reverse Stock Split, (3) the proposal to approve stock
option grants to the non-employee directors and (4) such other
business as may properly come before the Annual Meeting. This
Proxy Statement and the proxy are being first mailed to
shareholders on or about April 26, 2001.
If the enclosed proxy is properly executed and returned
prior to the Annual Meeting, the shares represented thereby will
be voted in accordance with the directions contained therein. If
the proxy is signed and returned without choices having been
specified, the shares represented thereby will be voted FOR the
election of the three director nominees, in favor of the Reverse
Stock Split proposal and the non-employee directors' option
proposal. The proxy may be revoked by the person giving it at
any time prior to its use by filing with the Company's Secretary
a written revocation, a duly signed later dated proxy or by
requesting return of the proxy at the Annual Meeting and voting
in person.
<PAGE 2>
The Board of Directors has fixed the close of business on
April 2, 2001 as the record date for determining the holders of
the Company's Common Stock , par value $.01 per share, ("Common
Stock") entitled to notice of and to vote at the Annual Meeting
and at any continuation or adjournment thereof. At the close of
business on April 9, 2001, the Company had outstanding 4,745,014
shares of Common Stock, each of which is entitled to one vote.
The Common Stock is the Company's only class of voting securities
outstanding. A majority of the outstanding shares of Common
Stock (2,372,508 shares) present in person or by proxy will
constitute a quorum, which is required to transact business at
the Annual Meeting.
Three directors are to be elected at the Annual Meeting.
Directors are elected by a plurality of the shares present at the
meeting, in person or by proxy, at which a quorum of shares is
represented. This means that those nominees receiving the
largest number of votes cast are elected, up to the maximum
number of directors to be elected at the Annual Meeting.
The Reverse Stock Split proposal requires the affirmative
vote of a majority of all of the outstanding shares of Common
Stock. The non-employee directors' stock option grant proposal
requires the affirmative vote of a majority of the votes cast by
holders of shares represented in person or by proxy and entitled
to vote at the meeting.
Boxes and a procedure of circling the name of a nominee have
been provided on the enclosed Proxy card to withhold authority to
vote for one or more of the director nominees. Votes withheld in
connection with the election of one or more of the nominees for
director will not be counted as votes cast for such persons.
Abstentions and broker non-votes proxies relating to "street
name" shares that are returned to the Company but marked by
brokers as "not voted" ("broker non-votes") are counted as
present for purposes of determining the presence or absence of a
quorum unless authority to vote is completely withheld on the
proxy, . These votes have no impact on the election of
directors, (except to the extent that the failure to vote for a
particular nominee may result in another nominee receiving a
larger number of votes) or the proposal to approve the non-
employee directors options grants, but will have the same effect
as a vote against the Reverse Stock Split proposal.
ELECTION OF DIRECTORS
(Proposal 1)
Pursuant to the Company's By-Laws, the Board of Directors
has fixed the size of the Board of Directors at seven directors.
The Board of Directors consists of two classes. All members of
one class are elected at each annual shareholders meeting to hold
office for a full term of two years.
<PAGE 3>
The terms of office of directors Daniel J. Chessin, Stephen
B. Ashley and E. Philip Saunders all expire at the Annual
Meeting. The Board of Directors has nominated Messrs. Chessin,
Ashley and Saunders for election to the Board at the Annual
Meeting. If elected, each such nominee will hold office until
the annual shareholders meeting to be held in 2003.
The Board of Directors recommends the election of all three
nominees and it is intended that the named proxies (unless
otherwise directed) will vote the enclosed proxy FOR the election
of these nominees. Although the Board of Directors believes that
all of the nominees will be available to serve, the proxies may
exercise discretionary authority to vote for substitutes proposed
by the Board of Directors of the Company if any nominee becomes
unavailable for any reason. The proxies, however, cannot vote
for more than three nominees.
INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR ELECTION
The name, principal occupation, business experience and age
of each director and his term of office and period of previous
service as a director of the Company are set forth below.
Term Expires in 2003
Daniel J. Chessin has been Executive Vice President of the
Company since March, 1995, and Secretary and a Director of the
Company since May, 1992. Prior to that time, he held various
offices with the Company since beginning employment with the
Company in March, 1988. From November, 1993, Mr. Chessin served
as Vice President and as Executive Vice President of the
Company's wholly owned subsidiary Autoworks, Inc. which
filed for protection under Chapter 11 of the Bankruptcy Code
("Bankruptcy Proceedings") in July, 1997 and which had its Plan
of Reorganization approved by the Bankruptcy Court in November,
1999. Since May, 1999, Mr. Chessin has been Secretary of the
Company's internet e-commerce auto parts business,
iAutoparts.com (R). Prior to joining the Company, Mr. Chessin was
engaged in the private practice of law. Mr. Chessin is a member
of the Board of Governors of the Car Care Council (a national
association for automobile maintenance awareness). Mr. Chessin
is 39 years of age.
<PAGE 4>
Stephen B. Ashley has been a Director of the Company since
May, 1992. Mr. Ashley is Chairman and Chief Executive Officer of
the Ashley Group (which includes related companies focused on
management, brokerage, financing and investment in commercial and
multi-family real-estate). Mr. Ashley served as Chairman and
Chief Executive Officer of both Sibley Mortgage Corporation and
Sibley Real Estate Services, Inc. from January, 1991 to March,
1996, at which time he resigned as Chief Executive Officer of
Sibley Mortgage Corporation. Prior to 1991 he served as President
and Chief Executive Officer of both corporations (or their
predecessors-in-interest) since 1975. He is also a director of
The Genesee Corporation (which engages in dry food processing),
the Federal National Mortgage Association, Inc. (Fannie Mae), and
the Exeter Fund, Inc. and Manning and Napier Insurance Fund, Inc.
(both of which are advisory firms to a family of mutual funds).
In December, 2000 Mr. Ashley became a director of the High Falls
Brewing Company and President of the Genesee Corporation, which
sold the High Falls Brewing Company to a group of private
investors. Mr. Ashley is 60 years of age.
E. Philip Saunders has been a director of the Company since
May, 1992. Mr. Saunders is the former Chairman and Chief
Executive Officer of Sugar Creek Corp. and its subsidiaries, W.W.
Griffith Oil Co. (a petroleum distributor) and Sugar Creek
Stores, Inc. (a convenience chain store operation) since 1977 and
1982, respectively. He has also been Chairman and Chief
Executive Officer of Travel Ports of America, Inc. (a truck stop
chain operation) since November, 1987. Mr. Saunders has been
Vice Chairman of the Genesee Regional Bank (formerly the Lyndon
Guaranty Bank) since April, 1997. He has also been a member of
the Board of Directors, since October, 1998, of American Rock
Salt, LLC and in November, 2000, he was named Chief Executive
Officer of that entity. Mr. Saunders previously served as a
director of Truckstops of America, Inc. (a regional chain of
truck stops) and of Ryder Systems, Inc. (which engages mainly in
the rental of vehicles) after that corporation acquired
Truckstops of America, Inc., and as a director of Richardson Food
Corporation (a distributor of dessert toppings and condiments).
Mr. Saunders is 63 years of age.
<PAGE 5>
Term Expires in 2002
Eli N. Futerman has been President of the Company since May,
1992. In January, 1999 he assumed the additional responsibility
of Chief Executive Officer. Prior to that time, he held various
offices with the Company, including Vice President and Secretary,
since beginning employment with the Company in June, 1980. From
November, 1993, Mr. Futerman served as President and as the Chief
Executive Officer respectively of the Company's wholly owned
subsidiary Autoworks, Inc. (R) which filed for protection under
Chapter 11 of the Bankruptcy Code ("Bankruptcy Proceedings") in
July, 1997 and which had its Plan of Reorganization approved by
the Bankruptcy Court in November, 1999. Since its inception in
May, 1999, Mr. Futerman has been the President of the Company's
internet e-commerce auto parts business, iAutoparts.com (R). Mr.
Futerman has been a director of the Company since September,
1979. Mr. Futerman is a member of the Board of Directors and
Treasurer of Aftermarket Auto Parts Alliance, Inc. formerly Auto
Value Associates, Inc., the programmed distribution group of
which the Company is a member. Mr. Futerman is 42 years of age.
William A. Buckingham has been a Director of the Company
since November, 1997 and is currently a consultant in the private
sector. From 1990 to 1997 he held several positions in the
banking industry which included Executive Vice President of First
Empire State Corporation and M&T Bank where he was responsible
for that Company's Retail Banking Division. From 1973 to 1990,
Mr. Buckingham held several positions with the Manufacturers
Hanover Trust Company where he was Executive Vice President with
responsibility for branch operations and consumer and small
business lending, and President and Chief Executive Officer of
Manufacturers Hanover, N.A. Mr. Buckingham currently serves as
Chairman of the Board of Trustees at the Rochester Institute of
Technology and as a Director of its for-profit RIT Research
Corporation subsidiary. Mr. Buckingham also serves as Vice
Chairman of the Directors Advisory Council of M&T Bank and as a
Director and member of the Management Continuity Committee of The
Genesee Corporation (which engages in dry food processing). Mr.
Buckingham is 58 years of age.
Nathan Lewinger is a private investor whose investments
include real estate and high tech companies. From 1976 until
1988 Mr. Lewinger served as President of Pennant Products Inc. (a
manufacturer of bakery ingredients) until Pennant Products was
sold in 1988 to Unilever Corporation. From 1988 to 1990 Mr.
Lewinger served as President of the Bakery Division of Van Den
Burgh Foods (a division of Unilever) and from 1990 to 1993 he was
a consultant to Unilever Corporation. He currently serves on the
Board of EKMS, an intellectual property consulting firm in
Cambridge, Massachusetts. Mr. Lewinger is 56 years of age.
<PAGE 6>
Gordon E. Forth has served as a director of the Company from
May, 1992, to June, 1997. Mr. Forth rejoined the Company's Board
of Directors in March, 2000. Mr. Forth is a partner of Woods
Oviatt Gilman LLP, a Rochester, New York based law firm, where he
has practiced law since 1987. Mr. Forth also serves as corporate
secretary for Zapata Corporation, a holding company and Zap.Com
Corporation, which until January, 2001, was an internet
advertising and e-commerce networking company. Woods Oviatt
provides legal services to the Company. Mr. Forth is 39 years of
age.
Family Relationships
Eli N. Futerman is the brother-in-law of Daniel J. Chessin.
There are no other family relationships between any of the other
directors or executive officers of the Company.
DIRECTORS MEETINGS AND BOARD COMMITTEES
The Board of Directors of the Company met 5 times during the
Fiscal Year Ended September 30, 2000. All directors except E.
Philip Saunders attended 75% or more of the aggregate of all
meetings of the Board of Directors and Board committees on which
they served during Fiscal 2000.
The standing committees of the Board of Directors consist of
the Executive, Compensation, Audit and Retirement Committees.
The Board of Directors does not have a nominating committee.
The Executive Committee consists of Messrs. Eli N. Futerman
Daniel J. Chessin, William A. Buckingham and Nathan Lewinger.
The Executive Committee may exercise all the powers and authority
of the Board of Directors in the management of the business and
affairs of the Company except as limited by law. The Executive
Committee did not hold any formal meetings during Fiscal 2000.
The Compensation Committee is comprised of Messrs. Eli N.
Futerman, William A. Buckingham and E. Philip Saunders. The
function of the Compensation Committee is to make recommendations
to the Board with respect to the salaries and other compensation
for the executive officers and certain key employees of the
Company and its subsidiaries. The Compensation Committee held a
meeting on November 15, 2000, pertaining to compensation for
Fiscal 2000 performance.
<PAGE 7>
The Audit Committee members include Messrs. Stephen B.
Ashley, William A. Buckingham, Gordon E. Forth and Nathan
Lewinger. The Committee members are "independent directors," as
such term is defined in Rule 4200(a)(14) of the National
Association of Securities Dealers Manual. The Audit Committee
reviews reports of the Company's financial condition, financial
controls and accounting procedures. The Committee also approves
and oversees services performed by, and serves as an interface
between, the Company and its independent auditors. This
Committee met three times during the last fiscal year. A copy of
the Audit Committee's written charter is attached hereto as
Appendix A.
Since the Board of Directors assumed responsibilities for
the administration of the 1992 Stock Option Plan, a standing
committee does not exist for this function.
The Retirement Committee consists of Eli N. Futerman, Gordon
E. Forth and Nathan Lewinger. The Retirement Committee is
authorized to make decisions relating to the Company's retirement
plans. The Retirement Committee did not meet in Fiscal 2000.
The Company's non-employee directors are paid $1,000 for
each Board meeting and $500 for each committee meeting attended
and reimbursed for ordinary and necessary expenses incurred in
connection with such meetings. On March 15, 2000 the Board of
Directors approved a grant to each of the non-employee directors
of an option to purchase up to 5,000 shares of Common Stock. The
grant was subject to shareholder approval. See "Approval of
Option Grants to Outside Directors (Proposal 3)".
<PAGE 7>
INFORMATION ABOUT EXECUTIVE OFFICERS
The following table sets forth certain information about the
Company's executive officers:
Name Age Position
Eli N. Futerman 42 Chief Executive Officer and President
Daniel J. Chessin 39 Executive Vice President and Secretary
Daniel R. McDonald 50 Vice President - General Counsel
Albert J. Van Erp 63 Vice President - Finance
Timothy Vergo 51 Vice President - Wholesale Operations
Peter J. Adamski, Vice President - Finance and Chief
Financial Officer since August, 1998, resigned from the Company
in July, 2000.
David M. Appelbaum, Vice President - Direct Distribution,
resigned from the Company in May, 2000.
<PAGE 8>
Albert J. Van Erp has been Vice President - Finance of the
Company since March, 2001. Mr. Van Erp was Vice President -
Controller from August, 1998 to March, 2001. From May, 1992
until August, 1998 he served as Vice President - Finance. From
December, 1985 to May, 1992, he served as Controller of the
Company. Mr. Van Erp has over 35 years experience in corporate
internal accounting. Mr. Van Erp is 63 years of age.
Timothy Vergo has been Vice President - Wholesale Operations
of the Company since May, 1992. From August, 1981 to May, 1992,
he served as Director of Operations of the Company. Mr. Vergo is
51 years of age.
Daniel R. McDonald joined the Company as Vice President -
General Counsel in July, 1997. Prior to joining the Company, Mr.
McDonald was Associate General Counsel of First Federal Savings
and Loan Association of Rochester, which was headquartered in
Rochester, New York. Before joining First Federal in April,
1993, Mr. McDonald was engaged in private law practice. Mr.
McDonald has also served as Vice President and Deputy General
Counsel of Goldome FSB and was previously a partner in the
Buffalo law firm of Jaeckle, Fleischmann & Mugel. Mr. McDonald
is 50 years of age.
See Election of Directors above for information concerning
the Company's other executive officers.
COMPLIANCE WITH SECTION 16(a) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires directors, officers and beneficial owners of
more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission (the "Commission") and NASDAQ
reports of transactions in its Common Stock. Directors, Officers
and greater than 10% stockholders are required by the Commission
to furnish the Company with copies of all Section 16(a) forms
they file. Based solely upon a review of the copies of such
forms actually furnished to the Company and written
representations of the Company's directors and executive officers
that no further forms were required to be filed, the Company
believes that during Fiscal 2000, Section 16(a) filing
requirements applicable to its executive officers, directors and
greater than 10% beneficial owners were complied with by all such
persons.
<PAGE 9>
EXECUTIVE COMPENSATION
The summary compensation table below sets forth the
compensation paid or accrued for services rendered in all
capacities to the Company during the last three fiscal years to
the Company's Chief Executive Officer and each of the Company's
four other most highly compensated executive officers who were
serving as executive officers at the end of Fiscal 2000 and whose
total annual salary and bonuses exceeded $100,000, including one
executive officer who was not serving as an executive officer at
the end of Fiscal 2000 (collectively the "Named Executive
Officers").
Summary Compensation Table
Annual Compensation
Name and Principal Position Fiscal Salary ($)(1) Bonus ($)
Year
Eli N. Futerman 2000 318,663 ____
President and 1999 318,663 ____
Chief Executive Officer 1998 315,189 ____
Daniel J. Chessin 2000 176,642 ____
Executive Vice President 1999 176,642 ____
1998 171,490 ____
Peter J. Adamski(5) 2000 143,884 10,000
Vice President-Finance and 1999 147,109 ____
Chief Financial Officer 1998 10,338 ____
Timothy Vergo 2000 142,189 ____
Vice President 1999 142,189 ____
Wholesale Operations 1998 139,131 ____
Albert J. Van Erp 2000 116,755 ____
Vice President - Finance 1999 116,755 ____
1998 114,367 ____
<PAGE 10>
Summary Compensation Table
Long-Term Compensation
Securities
Underlying All Other
Options/SARs Compensations
Name and Principal Position (#) ($)(2)(3)
Eli N. Futerman ____ 32,699 (4)
President and ____ 32,799 (4)
Chief Executive Officer ____ 32,745 (4)
Daniel J. Chessin ____ 2,990
Executive Vice President ____ 2,990
____ 3,006
Peter J. Adamski(5) ____ ____
Vice President-Finance and ____ ____
Chief Financial Officer ____ ____
Timothy Vergo ____ 2,343
Vice President ____ 2,353
Wholesale Operations 10,000 2,336
Albert J. Van Erp ____ 2,836
Vice President - Controller ____ 2,836
____ 2,761
(1) Includes portion of salary deferred under the Company's
401(k) Profit Sharing and Savings Plan.
(2) Includes the aggregate value of the Company's matching
contribution during Fiscal 2000 to the Company's 401(k) Profit
Sharing and Savings Plan. During the 2000 Fiscal Year, the
Company made matching contributions in the following amounts to
the accounts of the following executive officers: Eli N.
Futerman, $1,400; Daniel J. Chessin, $1,511; Timothy Vergo,
$1,260; Albert J. Van Erp, $1,575.
<PAGE 11>
(3) Includes premiums paid by the Company during Fiscal 2000 on
insurance policies on the lives of the executive officers named
in the table. The Company is the owner and beneficiary of such
insurance policies that were purchased in connection with the non-
qualified selective incentive plan provided by the Company which
provides for certain retirement or death benefits to the officers
or their designated beneficiaries. During Fiscal 2000, the
Company made premium payments in the following amounts for such
insurance policies on the lives of the following executive
officers: Eli N. Futerman, $2,206; Daniel J. Chessin, $1,520;
Timothy Vergo, $1,083, and Albert J. Van Erp, $1,261.
(4) Includes $29,093 of premiums paid by the Company during
Fiscal 2000 on four insurance policies owned by, and on the life
of, Mr. Futerman, which have a total death benefit of
approximately $2,525,000 and under which Mr. Futerman has the
discretion to designate the beneficiary or beneficiaries.
(5) Peter J. Adamski, Vice President-Finance and Chief Financial
Officer since August, 1998, resigned from the Company in July,
2000.
OPTIONS GRANTS IN FISCAL 2000
The Company did not make any stock option grants during
Fiscal 2000 to the Company's President and Chief Executive
Officer or the Company's other Named Executive Officers during
such fiscal year.
OPTION EXERCISES IN FISCAL 2000
The following table sets forth stock options exercised by
the Company's President and Chief Executive Officer and the other
Named Executive Officers during Fiscal 2000 and the number and
value of all unexercised options at September 30, 2000.
<PAGE 12>
Aggregated Option/SAR Exercises in the Last Fiscal Year and
Fiscal Year-End Option/SAR Values
Shares Acquired Value
Name on Exercise (#) Realized ($)
Eli N. Futerman
President and Chief
Executive Officer ____ ____
Daniel J. Chessin
Executive Vice President ____ ____
Peter J. Adamski(2)
Vice President-Finance and
Chief Financial Officer ____ ____
Timothy Vergo
Vice President
Wholesale Operations ____ ____
Albert J. Van Erp
Vice President - Finance ____ ____
Aggregated Option/SAR Exercises in the Last Fiscal Year and
Fiscal Year-End Option/SAR Values
Number of Securities Underlying
Unexercised Options/SARs at
Fiscal Year End 2000
Name Exercisable Unexercisable
Eli N. Futerman
President and Chief
Executive Officer 46,683 ____
Daniel J. Chessin
Executive Vice President 61,152 ____
Peter J. Adamski(2)
Vice President-Finance and
Chief Financial Officer ____ ____
Timothy Vergo
Vice President
Wholesale Operations 51,117 ____
Albert J. Van Erp
Vice President - 43,517 ____
Finance
<PAGE 13>
Value of
Unexercised
In-The-Money
Options/SARs
Fiscal Year End
2000
Name Exercisable Unexercisable(1)
Eli N. Futerman
President and Chief
Executive Officer ____ ____
Daniel J. Chessin
Executive Vice President ____ ____
Peter J. Adamski(2)
Vice President-Finance and
Chief Financial Officer ____ ____
Timothy Vergo
Vice President
Wholesale Operations ____ ____
Albert J. Van Erp
Vice President - Finance ____ ____
(1) An "in-the-money" stock option is an option for which the
market price on September 30, 2000 of the Company's Common Stock
underlying the option exceeds the options exercise price. As of
September 30, 2000, the market price of the Company's Common
Stock was $0.813. The exercise price of the options disclosed in
the above table exceeded the market price of the Company's Common
Stock on that date.
(2) Peter J. Adamski, Vice President-Finance and Chief Financial
Officer since August, 1998, resigned from the Company in July,
2000.
<PAGE 14>
COMPENSATION OF DIRECTORS
The Company's non-employee directors are paid $1,000 for
each Board meeting and $500 for each committee meeting attended
and reimbursed for ordinary and necessary expenses incurred in
connection with such meetings. On March 15, 2000 the Board of
Directors approved a grant to each of the non-employee directors
of an option to purchase up to 5,000 shares of Common Stock. The
grant is subject to shareholder approval. See "Approval of
Option Grants to Outside Directors (Proposal 3)".
REPORT ON EXECUTIVE MANAGEMENT COMPENSATION
The Company's goals for the compensation of its executive
management are to compensate fairly for a job well done and to
retain key employees while providing them with proper motivation
to maximize shareholder value. The Company's executive
compensation program consists of three principal elements: (1)
base salary, (2) annual bonuses, which reward for overall Company
performance and individual performance, and (3) options awarded
under the Company's 1992 Stock Option Plan, which also reward and
provide long-term incentives that are intended to align the
interests of option recipients with those of shareholders.
The Compensation Committee annually recommends to the Board
of Directors the salary and bonuses to be paid to the Company's
Chief Executive Officer and other members of executive
management. In Fiscal 1998, the Committee adopted a performance
based plan and has used it as the basis for making annual bonus
recommendations to the Board. Under the plan, executives are
awarded bonuses if certain financial criteria are met. These
financial criteria require the Company to achieve certain levels
of quarterly and annual free cash flow and working capital
account balances and ratios. The financial criteria are not
weighted. Individual goals are related to the functions managed
by the executive and the key financial indicators in their
respective operations. The Board members vote on the Committee's
recommendations (except with respect to salary and bonuses
proposed for them individually to the extent they are officers of
the Company) in light of their own experiences and familiarities
with compensation practices. Certain of the financial criteria
were achieved in Fiscal 2000 and bonuses have been recommended
for that fiscal year at a meeting that was held on November 15,
2000. For Fiscal 2000, all recommendations contained in the
Compensation Committee Report were approved by the Board on
November 29, 2000.
<PAGE 15>
The Board of Directors is responsible for, and has the
discretion to, award stock options under and otherwise administer
the Company's 1992 Plan. During Fiscal 2000, the Board of
Directors did not award options under the 1992 Plan to executive
management members. The Board of Directors bases the amount of
such awards on the subjective determination of the members as to
the past contribution and potential contribution of the option
recipients as well as the Company's overall success, without
particular emphasis on either such component.
Section 162(m) of the Internal Revenue Code generally limits
the tax deductibility of annual compensation paid to certain
executive officers to $1 million, unless specified requirements
are met. The Committee does not believe that this provision will
have an affect on the Company at this time given the current
compensation practices. Thus, the Committee expects that most,
if not all, compensation paid to officers will qualify as a tax
deductible expense. However, it is possible that at some point
in the future circumstances may cause the Committee to authorize
compensation that is not deductible under Section 162 (m).
Respectfully submitted,
January 29, 2001 Eli N. Futerman* Daniel J. Chessin
Stephen B. Ashley William A. Buckingham*
E. Philip Saunders* Nathan Lewinger
Gordon E. Forth
* Compensation Committee Member
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 2000, the Compensation Committee was comprised
of Messrs. Eli N. Futerman, William A. Buckingham and E. Philip
Saunders. Eli N. Futerman is the Company's President and Chief
Executive Officer. Mr. Robert I. Israel, a former director who
did not stand for re-election, served on the Board of Directors
and was a compensation committee member from October 1, 1999
through March 15, 2000. He is a Managing Director of an
Investment Banking firm which has, in the past, provided
investment banking services to the Company.
AUDIT COMMITTEE REPORT
The Company's management has the primary responsibility for
the financial statements and the reporting process including the
systems of internal controls. The primary purpose of the Audit
Committee of the Company's Board of Directors is to monitor: (1)
the integrity of the Company's financial statements; (2) the
Company's compliance with legal and regulatory requirements; and
(3) the independence and performance of the Company's internal
auditing function and external auditors.
<PAGE 16>
The Audit Committee met three times during Fiscal 2000.
Representatives from the Company's independent auditors,
PricewaterhouseCoopers, LLC ("PwC"), were present at each of the
Committee's three meetings.
On August 10, 2000, the Audit Committee received from PwC
the written disclosures and the letter regarding PwC's
independence required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees.
Additionally, the Audit Committee and PwC have also discussed
PwC's independence relative to the Company.
The Audit Committee has discussed with PwC the Company's
financial management and financial structure and the matters
relating to the conduct of the audit required to be discussed by
Statement on Auditing Standards 61. The Audit Committee has also
reviewed and discussed with the Company's management the
Company's audited consolidated financial statements relating to
Fiscal 2000.
Based upon the review and discussions described above, the
Audit Committee recommended to the Company's Board of Directors
that the Company's audited consolidated financial statements
prepared by PwC be included in the Company's 2000 Annual Report
on Form 10-K filed with the Securities and Exchange Commission on
December 19, 2000.
AUDIT COMMITTEE
Stephen B. Ashley, Chairman
William A. Buckingham
Gordon E. Forth
Nathan Lewinger
PERFORMANCE TABLE
The Performance Table shown below compares the cumulative total
shareholder return on the Company's Common Stock, based on the
market price of the Common Stock, with the total return on the
CRSP Total Return Index for the NASDAQ Stock Market (U.S.
Companies) and the Motor Vehicle New Parts Supply and Wholesale
Industry peer group constructed by the Company. The comparison
of total return assumes that a fixed investment of $100 was
invested on September 30, 1995, in the Company's Common Stock and
in the foregoing index and peer group and further assumes the
reinvestment of dividends. The stock price performance shown on
the table is not necessarily indicative of future price
performance.
<PAGE 17>
The Performance Table shall not be deemed incorporated by
reference by any general statement incorporating by reference the
Proxy Statement into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates this document
by reference and shall not otherwise be deemed filed.
Comparison of Cumulative Total Return(1)
TOTAL SHAREHOLDERS RETURN
Return Return Return Return Return Return
9/95 9/96 9/97 9/98 9/99 9/00
Hahn
Automotive
Warehouse,
Inc. 100.00 126.29 100.43 85.27 19.31 12.56
Peer Group 100.00 111.38 117.10 118.46 107.90 81.06
NASDAQ 100.00 118.68 162.92 165.50 270.38 358.96
(1) The component issuers of the Motor Vehicle New Parts Supply
and Wholesale Industry Group shown above include: Rankin
Automotive Group, Inc., Coast Distributor Systems, Inc., Genuine
Auto Parts Company, Hahn Automotive Warehouse, Inc. and
Oakhurst Co., Inc. (f/k/a Oakhurst Capital Inc.). The returns
of the component issuers have been weighted according to their
respective market capitalizations as of the beginning of each
period for which a return is indicated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the number of shares of
Common Stock beneficially owned at December 31, 2000 by (i) each
director, (ii) each Named Executive Officer, (iii) by all
directors and Named Executive Officers of the Company as a group
and (iv) each person or other entity known by the Company to
beneficially own more than 5% of the outstanding common stock.
Director, Nominee Amount and Nature of
or Group Beneficial Ownership(1) Percent of Class(6)
Eli N. Futerman, 2,917,317(2) 60.9
President, Chief
Executive Officer
and Director
<PAGE 18>
Daniel J. Chessin, 146,794(3) 3.1
Executive Vice
President, Secretary
and Director
Stephen B. Ashley, 9,348(4) *
Director
William A. Buckingham, 5,000(4) *
Director
Gordon E. Forth, 0 *
Director
Nathan Lewinger, 0 *
Director
E. Philip Saunders, 7,747(4) *
Director
Albert J. Van Erp, 43,517(4) *
Vice President -
Finance
Timothy Vergo, 51,117(4) 1.1
Vice President -
Wholesale Operations
All Directors and Named
Executive Officers of
the Company as a Group
(9 persons) 3,197,833(5) 64.4
*Indicates the number of shares constitutes less than 1% of the
outstanding Common Stock.
(1) Unless otherwise indicated, the persons included in the
table have sole voting and sole investment power with respect to
the shares owned by him. Shares of common stock subject to
options that are either currently exercisable or exercisable with
the Company within 60 days of December 31, 2000 are deemed to be
outstanding and to be beneficially owned by the option holder for
purposes of computing the percentage of ownership of the option
holder. These shares, however, are not treated as outstanding
for purposes of computing the percentage ownership of any other
person.
<PAGE 19>
(2) Includes 16,482 shares owned by Mr. Futerman's immediate
family and 46,683 shares which may be purchased by Mr. Futerman
pursuant to stock options that are currently exercisable or
become exercisable within 60 days from December 31, 2000. Also
includes 2,362,060 shares over which Mr. Futerman has voting and
investment control as the executor of Michael Futerman's Estate
and trustee of the Michael Futerman Living Trust and voting and
investment control over 179,960 shares in the name of Sara
Futerman. Under Michael Futerman's will and Living Trust, his
shares have been distributed to a marital trust under the Living
Trust, for the benefit of Michael Futerman's wife, Sara Futerman.
Eli N. Futerman will continue to have voting and investment
control over these shares as trustee of the marital trust. Mr.
Futerman disclaims beneficial ownership of shares not held of
record by him, individually, as executor or as trustee.
(3) Includes 74,654 shares owned jointly of record by Mr. and
Mrs. Chessin, 61,152 shares which may be purchased by Mr. Chessin
pursuant to stock options that are currently exercisable or
become exercisable within 60 days of December 31, 2000 and 10,988
shares controlled by Mrs. Chessin, as custodian for their minor
children. Mr. Chessin disclaims beneficial ownership over all
shares owned by his immediate family members.
(4) Includes shares issuable upon exercise of stock options
presently exercisable or which become exercisable within 60 days
from December 31, 2000 as follows: Stephen B. Ashley, 7,747
shares; William A. Buckingham, 3,000 shares; E. Philip Saunders,
7,747 shares; Timothy Vergo, 51,117 shares; and Albert J. Van
Erp, 43,517 shares.
(5) Includes 223,463 shares issuable upon exercise of stock
options presently exercisable or which become exercisable within
60 days of December 31, 2000.
(6) The percentages in this column have been calculated on the
basis of the 4,745,014 shares outstanding on December 29, 2000,
plus the number of shares of Common Stock deemed outstanding
pursuant to Securities and Exchange Commission Rule 13d-3(d)(1).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 6, 2001 the Company entered into a definitive
merger agreement (the "Merger Agreement") for a cash-out merger
of the Company with an acquisition entity formed and controlled
by Eli N. Futerman and Daniel J. Chessin, the Company's President
and Chief Executive Officer and Executive Vice President,
respectively, and who are also directors of the Company. Messrs.
Futerman and Chessin, together with the related shareholders,
(the "Buy-Out Group"), currently hold approximately 64% of the
Company's 4,745,014 shares of outstanding common stock.
The merger will result in the Buy-Out Group acquiring the
approximately 36% of the Company's shares of outstanding Common
Stock that are publicly held by minority shareholders. Under the
Merger Agreement, these shareholders will receive $1.00 in cash
for each common share held. Following the merger, the Company's
common stock will cease to be publicly traded.
<PAGE 20>
The completion of the merger is subject to certain
conditions, including the availability of satisfactory financing
to the Buy-Out Group to pay the merger consideration and approval
of the holders of at least 66 2/3% of the Company's outstanding
common shares. The Buy-Out Group has indicated their intent to
vote in favor of the transaction at the shareholders' meeting at
which the proposal is presented for consideration. In addition,
the merger is subject to the approval of a majority of the
holders of minority shares who vote in person or by proxy at the
shareholders' meeting. No assurance can be given that the merger
transaction will occur unless and until the above conditions are
satisfied. It is anticipated that a special shareholders'
meeting will be held on July 10, 2001 to act upon the merger.
As of September 30, 2000, the Company leased from Michael
Futerman's estate, Eli N. Futerman, Daniel J. Chessin and Ira D.
Jevotovsky, a former director, and their wives or partnerships,
corporations or trusts in which such persons have interest, 14 of
its 21 distribution center sites and 33 of its 77 Advantage Auto
Stores sites. (Michael Futerman, deceased, was the Company's
Chairman of the Board of Directors and a greater than 5%
beneficial owner of Common Stock; Eli N. Futerman is the
Company's President and Chief Executive Officer, a director and a
greater than 5% beneficial owner of Common Stock; Daniel J.
Chessin is the Company's Executive Vice President, Secretary and
a Director.) The approximate total gross distribution center
space under such leases was 355,360 square feet. The approximate
aggregate store space under such leases was 181,008 square feet.
All such leases provide for security deposits equal to one
month's rent, annual base rental increases equal to the annual
increase in a specified Consumer Price Index ("CPI") applied to
the preceding year's base rent, and for the Company to pay
insurance, real property taxes, utilities and to perform all
maintenance and repairs. In Fiscal 2000, the Company paid
approximately $1,835,000 as base rental for all distribution
centers and store properties under such related party leases. As
of September 30, 2000, the total base rentals payable under all
such distribution center and store leases through the end of
their respective terms was approximately $7.1 million, subject to
CPI-based increases described above. Some of the aforementioned
leases have been capitalized. These rental figures are total
rents for all such leases, including amounts representing
interest under those leases which have been capitalized.
<PAGE 21>
The Company leases two direct distribution locations from
the Company's former Vice President of Direct Distribution, David
M. Appelbaum and a third location from a partnership comprised of
David M. Appelbaum and an additional unaffiliated party. The
total gross space under such leases is approximately 54,400
square feet. The leases require the Company to pay insurance,
real property taxes, utilities and to perform all maintenance and
repairs. As of September 30, 2000, the total base rentals
payable under these leases through the end of their respective
terms was approximately $1.3 million or approximately $335,000
annually.
The Company is liable under guarantees in favor of the
holder of first priority mortgages covering the property leased
from Mr. Appelbaum pursuant to which approximately $1.5 million
in the aggregate was outstanding as of September 30, 2000. Mr.
Appelbaum agreed to indemnify, defend and hold harmless the
Company from any losses which arise from or are related to such
guarantees.
By an Agreement dated August 14, 1995, the Company entered
into a split-dollar arrangement with a Trust established by Eli
N. Futerman of which Manufacturers and Traders Trust Company is
the Trustee. Pursuant to the Agreement, the Company pays a
portion of the annual premium on an insurance policy held in the
Trust. The policy is a single life policy payable upon the death
of Mr. Futerman. The face value of the policy is $1 million.
Pursuant to the terms of the Trust, Mr. Futerman's wife will
receive the proceeds of the policy (less reimbursement to the
Company for premiums) if she survives her husband. The amount of
all premiums paid by the Company constitutes indebtedness from
the Trust to the Company. Upon termination of the Agreement, the
Company is entitled to receive from the Trust the amount equal to
the premiums it has paid. The Company paid $14,008 of premiums
during the 2000 fiscal year in connection with this arrangement.
Mr. Futerman acquired this policy during Fiscal 1994.
By an Agreement dated January 18, 1996, and later amended on
June 1, 2000, the Company entered into a split-dollar arrangement
with a Trust established by Daniel J. Chessin of which Fleet
Trust Company is the Trustee. Pursuant to the Agreement, the
Company pays a portion of the annual premium on an insurance
policy held in the Trust. The policy is a single life policy
payable upon the death of Mr. Chessin. The face value of the
policy is $3 million. Pursuant to the terms of the Trust, Mr.
Chessin's wife will receive the proceeds of the policy (less
reimbursement to the Company for premiums) if she survives her
husband. The amount of all premiums paid by the Company
constitutes indebtedness from the Trust to the Company. Upon
termination of the Agreement, the Company is entitled to receive
from the Trust the amount equal to the premiums it has paid. The
Company paid $11,851 of premiums during the 2000 fiscal year in
connection with this agreement. Mr. Chessin acquired this policy
during Fiscal 1994.
<PAGE 22>
In February, 1996, Michael Futerman, since deceased, and Eli
N. Futerman advanced $2.5 million to the Company. The Company
repaid $350,000 of this debt and exchanged five-year subordinated
demand notes representing the $2,150,000 principal balance of
this debt. The Futermans' subordinated notes bear interest at
the rate of 12% per annum. Interest is payable monthly. The
notes are redeemable at the option of the Company, in whole or
part, at any time, subject to a subordination agreement with the
Company's lender, Fleet Capital Corporation. During Fiscal 2000,
the Estate of Michael Futerman, (the former Chairman of the Board
and majority stockholder of the Company), and Eli N. Futerman,
(President and Chief Executive Officer of the Company), deferred
principal payments due them from the Company under the
subordinated notes until 2003. As a result, in Fiscal 2000, the
Company made interest payments only on the subordinated notes.
In the event that the Company's net income is $4,141,000 or
greater in any fiscal year, then the Company must make a
principal prepayment on the notes equal to 19.186% of its net
income in excess of such amount, provided the Company is not in
default under the credit facility with Fleet Capital Corporation.
The notes are unsecured and subordinate to all of the Company's
indebtedness to Fleet Capital Corporation.
On or about December 3, 1998, FCA Associates, a partnership
consisting of, at that time, Eli N. Futerman, Daniel J. Chessin
and David M. Appelbaum, entered into a purchase and sale
agreement with a third party for the purchase of three (3)
properties located in Rochester, New York and the Towns of Gates,
New York and Farmington, New York. The Company is a tenant with
direct distribution facilities at the latter two locations. The
closing of the transaction took place on January 15, 1999 and the
Company leases were assigned from the third party to FCA
Associates. In May, 2000, Eli N. Futerman withdrew from FCA
Associates and no longer has any ownership interest in FCA
Associates. The total gross space of the Gates, New York and
Farmington, New York leases is approximately 9,500 square feet.
The leases require the Company to pay for liability insurance,
real property taxes, utilities and to perform all interior
maintenance and repairs. The Company closed its Merchants Road
direct distribution facility in Rochester, New York on or about
October 1, 1999 and ended its occupancy and terminated the lease
on or about December 31, 1999. As of September 30, 2000, the
total base rentals payable under the leases for Gates, New York
and Farmington, New York, until the end of their terms on October
31, 2001, will be approximately $104,000, or $96,000 annually.
Gordon E. Forth, a director of the Company, is a partner in
Woods Oviatt Gilman LLP, which serves as the Company's principal
outside counsel.
<PAGE 23>
PROPOSAL TO AMEND THE CERTIFICATE OF
INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT
(Proposal 2)
Reason For Submission To Shareholders
The Board of Directors believes that the Reverse Stock Split
is desirable for several reasons. The Board of Directors expects
a Reverse Stock Split to help the Company satisfy the maintenance
requirements established by the Nasdaq SmallCap Market ("Nasdaq")
necessary for continued listing, which among other things,
requires that the Company's Common Stock maintain a bid price of
at least $1.00 per share. Over the past several months, the bid
price of the Company's shares of Common Stock has fallen below
$1.00. The Company was notified by Nasdaq, in a letter dated
November 7, 2000, that it is subject to possible delisting as a
result of its Common Stock trading below the $1.00 minimum bid
price for 30 consecutive trading days. On March 16, 2001 the
Company appeared at a hearing before Nasdaq in an effort to
maintain the Company's continued listing. Following the hearing,
on March 30, 2001, Nasdaq granted the Company an extension until
May 14, 2001 to regain compliance with Nasdaq listing
requirements. Nasdaq also required the Company to maintain the
$1.00 minimum bid price for at least 10 consecutive trading days
after the trading price reaches $1.00 per share.
Management believes that if the Reverse Stock Split is
approved by the shareholders, then the Company's shares of Common
Stock will have a minimum bid price in excess of $1.00 per share
and, therefore continue to be listed and traded on Nasdaq. There
can be no assurance that after the Reverse Stock Split, a higher
price will result or that any increased share price can be
maintained at a level above a $1.00 bid price, or that the
Company will continue to be in compliance with all other
requirements for listing on the Nasdaq.
<PAGE 23>
If the Company's stock price does not regain compliance by
May 14, 2001 and the Reverse Stock Split is not approved by the
shareholders, then the Company's shares of Common Stock will
cease to be listed and traded on Nasdaq. In such event, the
shares of Common Stock will likely be quoted on the OTC
Electronic Bulletin Board. If after the date of this Proxy
Statement the Company's share price reaches a level that would
cause the Company to regain compliance with its NASDAQ Stock
Market listing requirements, it is unlikely that a Reverse Stock
Split will be effectuated.
<PAGE 24>
The Reverse Stock Split proposal is being submitted to
shareholders to satisfy the requirements of the New York Business
Corporation Law in the event the Board of Directors of the
Company decides to effectuate a Reverse Stock Split. The
decision as to whether to effectuate a Reverse Stock Split will
be entirely that of the Board of Directors of the Company. A
copy of the Certificate of Amendment to the Restated Certificate
of Incorporation is attached hereto as Appendix B.
Effects Of A Reverse Stock Split
The Company currently is authorized to issue 20,000,000
shares of Common Stock, of which 4,745,014 shares of Common Stock
are issued and outstanding. Upon the effectiveness of a Reverse
Stock Split, the number of shares owned by each holder of Common
Stock shall be reduced by the ratio of 3 to 1, so that each such
shareholder will thereafter own one share of Common Stock for
every three shares of Common Stock he or she owned immediately
prior to the Reverse Stock Split.
The principal effect of the Reverse Stock Split will be that
the number of shares of Common Stock issued and outstanding will
be reduced from 4,745,014 shares to approximately 1,581,671
shares. A Reverse Stock Split will not alter the percentage
ownership interest in the Company of any shareholder, except to
the extent that the Reverse Stock Split results in a shareholder
of the Company owning a fractional share (see "Reverse Stock
Split - Fractional Shares"). Voting and other rights
accompanying the Common Stock will not be altered.
Pursuant to a Reverse Stock Split, the par value of the
Company Stock will remain $0.01 per share. As a result, on the
effective date of any Reverse Stock Split, the stated capital on
the Company's balance sheet attributable to the Common Stock will
be reduced by a ratio equal to the Reverse Stock Split ratio, and
the additional paid-in capital account shall be credited with the
amount by which the stated capital is reduced.
A Reverse Stock Split could result in shareholders holding
odd-lots (lots less than 100 shares), the sale of which could
result in higher transaction costs.
<PAGE 25>
There also are outstanding options for employees to purchase
337,040 shares of common stock with a price range of $3.50 to
$13.75 per share and outstanding options for non-employee
directors to purchase 18,494 shares of common stock, with a price
range of $6.25 to $12.75. These options were issued pursuant to
the Company's Amended 1992 Stock Option Plan and 1993 Non-
Employee Directors' Plan, which has expired. In addition, a
proposal is being presented to shareholders at the Annual Meeting
to approve a specific stock option grant to each of the Company's
five non-employee directors to purchase up to 5,000 shares of
Common Stock. See Approval of Option Grants to Outside Directors
(Proposal No. 3). Upon the effectiveness of the Reverse Stock
Split, the 1992 Plan and the 1993 Plan provide for a proportional
downward adjustment to the number of shares subject to
outstanding options and a corresponding upward adjustment in the
per-share exercise prices to reflect the Reverse Stock Split.
Proposal No. 3 also provides that the director options and the
related exercise price will be proportionately adjusted to
account for the Reverse Stock Split. In addition, under the 1992
Plan, the number of shares reserved for issuance under future
awards will be proportionally decreased.
Fractional Shares
No fractional shares of Common Stock or scrip representing
fractional shares of Common Stock will be issued in connection
with a Reverse Stock Split. In lieu of issuing fractional
shares, each fractional share will be rounded up to the next
highest whole share of Common Stock.
Exchange Of Shares
A Reverse Stock Split will be effective at the close of
business on the date of filing of the appropriate certificate of
amendment to the Company's Restated Certificate of Incorporation
with the Secretary of State of the State of New York, unless the
Company specifies otherwise. The record date for the Reverse
Stock Split will be the effective date of the amendment to the
Company's Restated Certificate of Incorporation (the "Record
Date"). On or about the Record Date, notice of the Reverse Stock
Split (the "Split Notice") will be mailed to each shareholder of
record at the most recent address of such shareholder appearing
on the Company's records. The Split Notice shall be accompanied
by a Letter of Transmittal and shall request that each
shareholder surrender his or her existing stock certificate(s)
(the "Old Certificate") evidencing ownership of the pre-Reverse
Stock Split Common Stock (the "Old Shares"), together with the
Letter of Transmittal, to American Stock Transfer & Trust Company
to be exchanged for a new stock certificate(s) evidencing
ownership of the number of shares of Common Stock resulting from
the Reverse Stock Split (the "New Shares"). From and after the
Record Date, all Old Certificates will be deemed to represent
only that number of New Shares resulting from the Reverse Stock
Split.
<PAGE 26>
Federal Income Tax Consequences
The Company believes that the federal income tax
consequences of a Reverse Stock Split will be as follows: the
exchange of Old Shares for New Shares will not result in
recognition of gain or loss. The holding period of the New
Shares will include the shareholders' holding period for the Old
Shares exchanged therefor, provided that the Old Shares were held
as a capital asset. The shares of Common Stock to be issued to
each shareholder will have an aggregate basis, for computing gain
or loss, equal to the aggregate basis of the Old Shares.
The foregoing summary is not, and should not be relied on
as, a comprehensive analysis of the tax issues arising from or
relating to the proposed Reverse Stock Split. ACCORDINGLY,
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS FOR AN
ANALYSIS OF THE EFFECT OF THE TRANSACTION CONTEMPLATED BY THE
PROPOSED AMENDMENT ON THEIR RESPECTIVE TAX SITUATIONS.
No Right Of Appraisal
Under the New York Business Corporation Law, dissenting
shareholders are not entitled to appraisal rights with respect to
the Company's proposed amendment to the Company's Restated
Certificate of Incorporation to effect a Reverse Stock Split, and
the Company will not provide shareholders with any such right.
Voting Requirements
The affirmative vote of the holders of stock representing a
majority of the votes entitled to be cast at the Annual Meeting
is required to approve Proposal No. 2.
Eli N. Futerman has informed the Company that he intends to
vote the shares of Common Stock of the Company that are
registered in his name, and shares registered in the names of his
family members, the Estate of Michael Futerman and the Michael
Futerman Living Trust as to which he has voting control, in favor
of the Proposal. Daniel J. Chessin has informed the Company that
he intends to vote the shares of Common Stock of the Company
registered in his name, and shares registered in the names of his
family members as to which he has voting control, in favor of the
Proposal. Together, these shares of Common Stock represent
approximately 62.2% of the Company's outstanding Common Stock.
<PAGE 27>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT THE REVERSE STOCK SPLIT.
APPROVAL OF OPTION GRANTS
TO OUTSIDE DIRECTORS
(PROPOSAL NO. 3)
Options Granted
On March 15, 2000, the Board of Directors approved specific
stock option grants to the Company's non-employee directors
subject to shareholder approval. The New York Business
Corporation Law and the Nasdaq SmallCap market rules require that
such grants of stock options be submitted to the Company's
shareholders for approval.
The Company's 1993 Non-Employee Directors Stock Option Plan
expired on December 1, 1998. The Board has elected not to adopt
a new plan, but rather to make specific grants to directors. To
this end, in March, 2000, the Company granted, subject to
shareholder approval, to each of Stephen B. Ashley, William A.
Buckingham, Gordon E. Forth, Nathan Lewinger and E. Philip
Saunders, all of whom are members of the Board of Directors who
are not employees of the Company, 10 year options each to
purchase 5,000 shares of Common Stock. The exercise price for
these stock options was $ 1.281 per share, which was the closing
price of the Common Stock on the date of grant. The Board of
Directors considers the grant of these stock options to be an
economical, non cash method for compensating the Company's
outside directors.
Vote Required
The affirmative vote of a majority of the votes cast is
required to approve Proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSAL TO APPROVE THESE STOCK OPTION GRANTS.
<PAGE 28>
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has not, as of the date hereof,
selected independent auditors for the fiscal year ending
September 30, 2001. PricewaterhouseCoopers LLP audited the
Company's financial statements for the 2000 Fiscal Year and has
performed such services since 1988. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting, and will have an opportunity to make a statement
if they so desire and will be available to respond to appropriate
questions.
OTHER BUSINESS
As of the date of this Proxy Statement, the Company's
management does not intend to present, and has not been informed
that any other person intends to present, any matter for action
at the Annual Meeting other than those described above. If any
other matters properly come before the meeting, it is intended
that the persons named in the enclosed proxy will vote the proxy
on such matters in accordance with their best judgment.
The cost of solicitation of proxies in connection with the
Annual Meeting will be paid by the Company. In addition to
solicitation by use of mails, some of the officers and regular
employees of the Company, without extra remuneration, may solicit
Proxies personally or by telephone, telegraph, e-mail or cable.
The Company will reimburse any banks, brokers and other
custodians, nominees and fiduciaries for their expenses in
forwarding proxy and solicitation material to the beneficial
owners of the Common Stock held by them.
PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Shareholder proposals for inclusion in the proxy statement
and form of proxy for the next Annual Meeting of Shareholders
must be received by the Company at its executive offices on or
before September 30, 2001.
Daniel J. Chessin,
Executive Vice President
and Secretary
Rochester, New York
April 16, 2001
<PAGE 29>
APPENDIX A
Hahn Automotive Warehouse, Inc.
Audit Committee Charter
Organization
There shall be a committee of the board of directors to be known
as the audit committee. The audit committee shall be composed of
directors who are independent of the management of the
corporation and are free of any relationship that, in the opinion
of the board of directors, would interfere with their exercise of
independent judgment as a committee member.
State of Policy
The audit committee shall provide assistance to the corporate
directors in fulfilling their responsibility to the shareholders,
potential shareholders, and investment community relating to
corporate accounting, reporting practices of the corporation, and
the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit
committee to maintain free and open means of communication
between the directors, the independent auditors, and the
financial management of the corporation.
Responsibilities
In carrying out its responsibilities, the audit committee
believes its policies and procedures should remain flexible, in
order to best react to changing conditions and to ensure to the
directors and shareholders that the corporate accounting and
reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
Review and recommend to the directors the independent
auditors to be selected to audit the financial statements of
the corporation and its divisions and subsidiaries.
Meet with the independent auditors and financial management
of the corporation to review the scope of the proposed audit
for the current year and the audit procedures to be
utilized, and at the conclusion thereof review such audit,
including any comments or recommendations of the independent
auditors.
<PAGE 30>
Review with the independent auditors, and financial and
accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the corporation, and
elicit any recommendations for the improvement of such
internal control procedures or particular areas where new or
more detailed controls or procedures are desirable.
Particular emphasis should be given to the adequacy of such
controls to expose any payments, transactions, or procedures
that might be deemed illegal or otherwise improper.
Further, the committee periodically should review company
policy statements to determine their adherence to the code
of conduct.
Review the financial statements contained in the annual
report to shareholders with management and the independent
auditors to determine that the independent auditors are
satisfied with the disclosure and content of the financial
statements to be presented to the shareholders. Any changes
in accounting principles should be reviewed.
Provide sufficient opportunity for the independent auditors
to meet with the members of the audit committee without
members of management present. Among the items to be
discussed in these meetings are the independent auditors'
evaluation of the corporation's financial, accounting, and
auditing personnel, and the cooperation that the independent
auditors received during the course of the audit.
Review accounting and financial human resources and
succession planning within the company.
Submit the minutes of all meetings of the audit committee
to, or discuss the matters discussed at each committee
meeting with, the board of directors.
Investigate any matter brought to its attention within the
scope of its duties, with the power to retain outside
counsel for this purpose if, in its judgment, that is
appropriate.
APPENDIX B
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF HAHN AUTOMOTIVE WAREHOUSE, INC.
UNDER SECTION 805 OF THE
BUSINESS CORPORATION LAW
<PAGE 31>
The undersigned, being the President and Secretary,
respectively, of HAHN AUTOMOTIVE WAREHOUSE, INC. (the
"Corporation"), pursuant to Section 805 of the New York Business
Corporation Law, do hereby certify as follows:
FIRST: The name of the Corporation is Hahn Automotive
Warehouse, Inc. and the name under which it was formed is Hahn
Tire & Accessory Co., Inc.
SECOND: The Restated Certificate of Incorporation of the
Corporation was originally filed by the Department of State on
December 19, 1958.
THIRD: The Restated Certificate of Incorporation of the
Corporation, as now in full force and effect, is hereby amended
as authorized by Section 801 of the New York Business Corporation
Law to (a) change the 4,745,014 shares of common stock, par value
$.01 per share, presently issued and outstanding into 1,581,671
shares of common stock, par value $.01 per share, on the basis of
one share of common stock, par value $.01 per share, for each
three shares of common stock, par value $.01 per share, presently
issued and outstanding, and (b) reduce the stated capital by
virtue of such change. The presently authorized but unissued
15,254,986 shares of Common Stock, par value $.01 per share,
shall not be changed but shall remain as authorized but unissued
shares of Common Stock, par value $.01 per share, of the
Corporation.
FOURTH: The stated capital of the Corporation is reduced
from $47,450.14 to $15,816.71 by a change of issued shares under
subparagraph (b)(11) of Section 801 of the New York Business
Corporation Law.
FIFTH: The shares of common stock, par value $.01 per
share, which are no longer issued and outstanding by virtue of
the change effected hereby are hereby cancelled and restored to
the status of authorized but unissued shares.
SIXTH: This Certificate of Amendment to the Restated
Certificate of Incorporation was authorized by vote of a majority
of the Board of Directors of the Corporation followed by vote of
the holders of a majority of all outstanding shares entitled to
vote thereon at a meeting of shareholders.
IN WITNESS WHEREOF, we have executed this Certificate in the
name and on behalf of Hahn Automotive Warehouse, Inc., on the ___
day of ________, 2001, and do affirm, under the penalties of
perjury, that the statements contained herein have been examined
and are true, correct and complete.
<PAGE 32>
HAHN AUTOMOTIVE WAREHOUSE, INC.
By:
Eli N. Futerman
President and Chief Executive
Officer
By:
Daniel Chessin
Executive Vice President and
Secretary