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
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BRAKE HEADQUARTERS U.S.A., INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
BRAKE HEADQUARTERS U.S.A., INC.
----------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 26, 1997
----------------------------------------------------------------
TO THE STOCKHOLDERS OF BRAKE HEADQUARTERS U.S.A., INC.:
Notice is hereby given that the Annual Meeting of Stockholders of Brake
Headquarters U.S.A., Inc., a Delaware corporation (the "Company"), will be held
on August 26, 1997, at the offices of the Company's attorneys, Snow Becker
Krauss P.C., 605 Third Avenue, 25th Floor, New York, New York 10158, at 10:00
a.m. for the following purposes:
1. To elect two Directors of the Company to serve until the next annual
meeting of stockholders and until their successors are duly elected and
qualified.
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 1997.
3. To transact such other business as may properly come before the Annual
Meeting or adjournments thereof.
Only stockholders of record at the close of business on July 11, 1997 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors
SANDRA ENDE
SECRETARY
Long Island City, NY
July 29, 1997
IMPORTANT:
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY, AND RETURN IT TO THE COMPANY. THE PROXY MAY BE REVOKED
AT ANY TIME BEFORE IT IS VOTED, AND STOCKHOLDERS EXECUTING PROXIES MAY ATTEND
THE MEETING AND VOTE IN PERSON SHOULD THEY SO DESIRE.
<PAGE>
BRAKE HEADQUARTERS U.S.A., INC.
33-16 Woodside Avenue
Long Island City, New York 11101
(718) 779-4800
-------------------------
PROXY STATEMENT
-------------------------
The Board of Directors of Brake Headquarters U.S.A., Inc. (the "Company")
presents this Proxy Statement and the enclosed proxy card to all stockholders
and solicits their proxies for the Annual Meeting of Stockholders to be held on
August 26, 1997. The record date of this proxy solicitation is July 11, 1997.
All proxies duly executed and received will be voted on all matters presented at
the Annual Meeting in accordance with the instructions given by such proxies. In
the absence of specific instructions, proxies so received will be voted for the
named nominees for election to the Company's Board of Directors and to ratify
the appointment of Deloitte & Touche LLP as the Company's independent auditors
for the year ending December 31, 1997. The Board of Directors does not
anticipate that any of its nominees will be unavailable for election and does
not know of any matters that may be brought before the Annual Meeting other than
those listed on the Notice of the Annual Meeting.
In the event that any other matter should come before the Annual Meeting or
that any nominee is not available for election, the persons named in the
enclosed proxy will have discretionary authority to vote all proxies not marked
to the contrary with respect to such matter in accordance with their best
judgment. A proxy may be revoked at any time before being voted by sending a new
proxy bearing a later date or a revocation notice to the Company at the above
address, attn: Secretary, or by notifying the Secretary of the Company at the
Annual Meeting. The Company is soliciting these proxies and will pay the entire
expense of solicitation, which will be made by use of the mails. This Proxy
Statement is being mailed on or about July 29, 1997.
The total number of shares of common stock, $.001 par value ("Common
Stock"), of the Company outstanding as of July 11, 1997, was 4,362,731 shares.
Each share of Common Stock has one vote. The affirmative vote by holders of a
plurality of the votes represented at the Annual Meeting is required for the
election of Directors. Only stockholders of record as of the close of business
on July 11, 1997 will be entitled to vote at the Annual Meeting or any
adjournments thereof. As the sole stockholder of the 1,000 shares of Series B
Preferred Stock, which votes as a separate class, Joseph Ende, the Company's
Chairman of the Board, has the exclusive right to elect a majority of the
Company's Board of Directors until the earlier of the redemption date of March
31, 2001 or the reporting by the Company of at least $75 million in net sales
for any year through December 31, 2000.
The affirmative vote by a majority of the votes cast on the proposal to
ratify the appointment of Deloitte & Touche LLP as the Company's auditors for
the year ending December 31, 1997 is required. Each share of Common Stock has
one vote and the Series B Preferred Stock will not vote on this proposal. Shares
represented by proxies which are marked "abstain" with respect to such
ratification will not be included in the vote totals on this proposal. All
proxies will be counted for determining the presence of a quorum. Votes withheld
in connection with the election of one or more nominees for Director will not be
counted as votes cast for such individuals. In addition, where brokers are
prohibited from exercising discretionary authority for beneficial owners who
have not provided voting instructions (commonly referred to as "broker
non-votes"), those shares will not be included in the vote totals.
A list of stockholders entitled to vote at the Annual Meeting will be
available at the Company's principal office, 33-16 Woodside Avenue, Long Island
City, NY 11101, during business hours, for a period of ten (10) days prior to
the Annual Meeting for examination by any stockholder. Such list shall also be
available at the Annual Meeting.
The Proxy Statement, the accompanying Notice of Annual Meeting of
Stockholders and the Proxy, the 1996 Annual Report to Stockholders including
financial statements, are expected to be mailed commencing on or about July 29,
1997 to stockholders of record on July 11, 1997.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 11, 1997, the number of shares
of the Company's outstanding Common Stock, $.001 par value, beneficially owned
(as such term is defined in Rule 13d-3 under the Securities Exchange Act of
1934) by each person known by the Company to be the beneficial owner of more
than 5% of the outstanding shares, by each director, by each Named Executive
Officer, and by all directors and officers as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS (2)
- -------------------- ------------------------ -------------
<S> <C>
Joseph Ende (3)........................................................ 2,359,633(4) 51.9%
Sandra Ende (3)........................................................ 40,000(5) (9)
Marc J. Ruskin (3)..................................................... 7,500(6) (9)
Scott Osias (3)........................................................ 21,500(7) (9)
Officers and Directors as a Group (4 Persons).......................... 2,428,633(8) 53.5%
</TABLE>
- ---------------
(1) Unless otherwise noted, the Company believes that all persons named in this
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within 60
days from the date of this filing upon the exercise of warrants or options.
Unless otherwise noted, 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) and which are exercisable within 60
days from the date hereof have been exercised.
(2) Based on 4,362,731 shares of Common Stock outstanding as of July 11, 1997.
(3) The address of this person is c/o the Company, 33-16 Woodside Avenue, Long
Island City, New York 11101.
(4) Does not include (i) 40,000 shares owned of record by the Joseph and Sandra
Ende Charitable Trust, of which Joseph and Sandra Ende are Trustees.
Includes 210,000 shares issuable upon the exercise of currently exercisable
options, but does not include an aggregate of 120,000 shares underlying
options which are not currently exercisable or exercisable within the next
60 days.
In March 1996, the Company amended its Certificate of Incorporation to
authorize the issuance of 1,000 shares of Series B Preferred Stock to be
held by Joseph Ende. As sole stockholder of the Series B Preferred Stock,
which votes as a separate class, Mr. Ende has the exclusive right to elect a
majority of the Company's Board of Directors until the earlier of the
redemption date of March 31, 2001 or the reporting by the Company of at
least $75 million in net sales for any year through December 31, 2000. See
"Certain Relationships and Related Transactions."
(5) Includes 40,000 shares owned of record by the Joseph and Sandra Ende
Charitable Trust, of which Joseph and Sandra Ende, husband and wife, are
Trustees.
(6) Includes 7,500 shares of common stock issuable upon the exercise of
currently exercisable options, but does not include 22,000 shares of common
stock issuable upon the exercise of options which are not currently
exercisable or exercisable within the next 60 days.
(7) Includes 11,500 shares of common stock issuable upon the exercise of
currently exercisable options, but does not include 35,000 shares of common
stock issuable upon the exercise of options which are not currently
exercisable or exercisable within the next 60 days.
(8) Includes 229,000 shares issuable upon exercise of currently exercisable
stock options, but does not include 177,000 shares of common stock which may
be purchased pursuant to stock options which are not currently exercisable.
(9) Less than one percent of the issued and outstanding shares.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Officers, Directors and persons who own more than ten percent of the registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
Directors and ten percent Stockholders are required by regulation to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on the
Company's copies of
2
<PAGE>
such forms received or written representations from certain reporting persons
that no form 5's were required for those persons, the Company believes that,
during the time period of August 1996 through December 31, 1996, all filing
requirements applicable to its Officers, Directors and greater than ten percent
beneficial owners were complied with.
ELECTION OF DIRECTORS
The Directors to be elected at the Annual Meeting will serve until the next
Annual Meeting of Stockholders and until their successors are duly elected and
qualified. Proxies not marked to the contrary will be voted "FOR" the election
to the Board of Directors of the following two persons, each of whom are
incumbent Directors.
The following table sets forth information concerning the nominees:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- ---------------------------------------------------
<S> <C>
Joseph Ende 49 Chairman of the Board, President and Chief
Executive Officer
Sandra Ende 44 Secretary and Director
</TABLE>
Joseph Ende has been President, Chief Executive Officer and Chairman of the
Board of Directors of the Company since July 9, 1992. He has been the President
and a Director of Sanyo Automotive Parts, Ltd. ("Sanyo Automotive") since its
inception in June 1976. Mr. Ende is the husband of the Company's Secretary,
Sandra Ende.
Sandra Ende has been a Director of the Company since July 1992. She has
been employed by Sanyo Automotive since its inception in June 1976 in various
capacities including bookkeeper, Personnel Manager, Director of Marketing and
Office Manager. Ms. Ende is the wife of the Company's President, Joseph Ende.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held one meeting during 1996 and conducted other
business by unanimous written consent. Each Director attended all Board
meetings.
All directors hold office until the next annual meeting of stockholders and
the election and qualification of their successors. Directors currently receive
no cash compensation for serving on the Board of Directors. Officers are elected
annually by the Board of Directors and, subject to existing employment
agreements, serve at the discretion of the Board. The Company's Placement Agent,
G-V Capital Corp., has the right at its discretion for a three-year period
ending August 13, 1999 to designate either a member of the Board of Directors or
an advisor to the Board.
INFORMATION ABOUT EXECUTIVE OFFICERS
In addition to Joseph Ende, the Company's Chairman of the Board of
Directors, President, and Chief Executive Officer and Sandra Ende, the Company's
Secretary, the following individuals serve as executive officers of the Company:
Scott Osias has been Vice President and Chief Operating Officer since April
1997 and thereto, was Vice President of Sales and Marketing of the Company from
October 1992. Mr. Osias has been employed in the retail automotive industry for
23 years and was the principal owner and operator of Automotive Discount
Centers, a 14 store retail automotive parts store chain in New York from 1973 to
1988. Prior to joining the Company, from 1988, Mr. Osias was General Manager of
Prime Automotive Warehouse, a warehouse distribution automotive parts chain.
Marc J. Ruskin, CPA, has been the Chief Financial Officer of the Company
since August 1995. He has 19 years of financial experience, including a combined
five years at Ernst & Young LLP and Deloitte & Touche LLP. From 1993 until he
joined the Company, Mr. Ruskin was Vice President of Finance and Administration
for the Nason Group LLC, a Connecticut company formed to purchase and develop
real estate. From 1991 to 1993, Mr. Ruskin was the Chief Financial Officer of
REBO Group Incorporated, a New York based international corporation specializing
in the research, development and production of high definition television. Mr.
Ruskin was Vice President of Finance and Administration of Kaufman Astoria
Studios, a company specializing in film/television and real estate management,
from 1982 to 1991. Mr. Ruskin holds an MBA from the University of Bridgeport.
3
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth all compensation awarded to, earned by, or
paid for all services rendered to the Company during the years ended December
31, 1996, 1995 and 1994, by the Company's Chief Executive Officer, who was the
Company's only executive officer ("Named Executive Officers") whose total
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
(A) --------------------------------- -------------------------------
(B) (C) (D) (E) (F)
----------
OTHER ----------------
- ---------------------------------- ANNUAL SECURITIES
NAME AND ---- ---------- --------- COMPEN- UNDERLYING
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SATION ($) OPTIONS/SARS (#)
- -------------------------- ---- ---------- --------- ---------- ----------------
<S> <C>
Joseph Ende, 1996 $ 156,000 -0-(2) -0- 30,000(1)
Chief Executive 1995 $ 127,500 -0-(2) -0- 180,000(2)
Officer and Director 1994 $ 130,000 -0- -0-(4) 120,000(5)
</TABLE>
- ---------------
(1) On November 19, 1996, Mr. Ende was granted a non-qualified stock option
under the Company's 1994 Stock Option Plan to purchase 30,000 shares of
Common Stock at $5.25 per share expiring on November 18, 2001.
(2) The Board of Directors has the discretion to grant Mr. Ende a bonus of
$50,000 for each of the six-month periods ending June 30 and December 31
during the three-year term of his employment agreement entered into on July
31, 1995, as amended, provided the Company reports operating income, but
after payment of such bonus for the applicable six-month period. No bonus
was issued for periods ended December 31, 1996 and December 31, 1995.
(3) On July 31, 1995, Mr. Ende was granted non-qualified stock options under the
Company's 1995 Stock Option Plan, to purchase 180,000 shares of Common Stock
at $3.00 per share expiring on July 30, 2000. See "Employee Stock Option
Plans" and "Certain Relationships and Related Transactions," below.
(4) Excludes $2,314,000 non-cash compensatory expenses related to the release of
escrow shares, the exercise of warrants, the conversion of preferred stock
and the payment of dividends on preferred stock during 1994, pursuant to the
terms of the Reverse Merger Agreement. See "Certain Relationships and
Related Transactions," below.
(5) The Company cancelled 120,000 options, exercisable at $20 per share,
previously granted to Joseph Ende, and re-granted such options to Mr. Ende
at an exercise price of $2.50 per share. See "1994 Employee Stock Option
Plans," below.
INDIVIDUALIZED OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
(F)
-------------------
POTENTIAL
REALIZABLE
(C) VALUE AT ASSUMED
-------------- ANNUAL RATES OF
(B) % OF TOTAL (D) STOCK
----------- OPTIONS/SAR'S -------- (E) PRICE APPRECIATION
(A) SAR'S GRANTED TO EXERCISE ---------- FOR OPTION TERM
- ------------ OPTIONS/ EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------ ----------- -------------- -------- ---------- ------- -------
<S> <C>
Joseph Ende 30,000 33% $ 5.25 11/18/01 $43,500 $96,000
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(D) (E)
--------------- -------------
NUMBER OF VALUE OF
(B) UNEXERCISED UNEXERCISED
------------ (C) OPTIONS/SARS AT IN-THE- MONEY
(A) SHARES -------- FY-END (#) OPTIONS/SARS
- ------------ ACQUIRED ON VALUE EXERCISABLE/ AT FY-END ($)
NAME EXERCISE (#) REALIZED UNEXERCISABLE EXERCISABLE
- ------------ ------------ -------- --------------- -------------
<S> <C>
Joseph Ende -0-(1) -0- 150,000/180,000 $ 742,500
</TABLE>
4
<PAGE>
EMPLOYMENT AGREEMENTS
On July 31, 1995, the Company entered into a three-year employment
agreement with Joseph Ende, the President and Chief Executive Officer of the
Company. The agreement automatically renews for consecutive one-year periods
unless terminated on thirty days' prior written notice by either party. In 1996,
Mr. Ende received a base annual salary of $156,500. The Board of Directors has
the discretion to grant Mr. Ende a performance bonus of $50,000 for each of the
six-month periods ending June 30 and December 31 during the term of the
agreement, provided the Company reports operating income, but after payment of
such bonus for the applicable six-month period. Such bonus will not accrue in
the event the income level is not met. Under the Agreement, Mr. Ende is also
entitled to an automobile or a monthly allowance equal to the cost of leasing
such automobile, and health and other benefits. Mr. Ende has agreed not to
compete with the Company during the term of, and for a one-year period from the
date of termination of, his employment with the Company.
On April 10, 1997, the Company entered into a three-year employment
agreement with Scott Osias, Vice President and Chief Operating Officer. The
agreement automatically renews for one additional three-year period unless
terminated on thirty days' prior written notice by either party. Under this
agreement, Mr. Osias receives a base annual salary of $91,000, with a bonus to
be determined by the Board of Directors. Mr. Osias has agreed not to compete
with the Company during the term of, and for a period of six months from the
date of termination of, his employment with the Company.
EMPLOYEE STOCK BONUS PLAN
In April 1995, the Company adopted an Employee Stock Bonus Plan which
enables all full-time permanent employees to purchase shares of Common Stock at
85% of its then fair market value through payroll deductions. There are 100,000
shares available for sale under such plan without limitation as to the number of
shares which may be purchased by any employee. These shares may be newly-issued
shares or which may be purchased by the Company in the open market. An aggregate
of 8,701 shares have been purchased under such plan as of December 31, 1996. The
100,000 shares of Common Stock reserved and/or issued to date under this plan
are registered for sale on the Company's Registration Statement on Form S-8,
which became effective when filed with the Commission on September 27, 1996 (the
"S-8").
EMPLOYEE STOCK OPTION PLANS
1994 EMPLOYEE STOCK OPTION PLAN
The Company has established the 1994 Employee Stock Option Plan (the "1994
Plan"). The 1994 Plan is intended to provide the employees, directors,
independent contractors and consultants of the Company with an added incentive
to continue their services to the Company and to induce them to exert their
maximum efforts toward the Company's success. The 1994 Plan provides for the
grant of options to qualified directors, employees (including officers),
independent contractors and consultants of the Company to purchase an aggregate
of 300,000 shares of Common Stock. Options to purchase no more than 120,000
shares of Common Stock may be granted to any one person in any two-year period.
The 1994 Plan is currently administered by the Board of Directors. The Board
determines, among other things, the persons to be granted options under the 1994
Plan, the number of shares subject to each option and the option price. The
shares of Common Stock authorized under the 1994 Plan are registered for sale on
the S-8.
The 1994 Plan allows the Company to grant incentive stock options ("ISOs"),
as defined in Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), Non-Qualified Stock Options ("NQSOs") not intended to qualify
under Section 422(b) of the Code and Stock Appreciation Rights ("SARs";
collectively, with ISOs and NQSOs referred to as "Options") at any time within
10 years from the date the 1994 Plan was adopted. The exercise price of ISOs may
not be less than the fair market value of the Common Stock on the date of grant,
provided that the exercise price of ISOs granted to an optionee owning more than
10% of the outstanding Common Stock may not be less than 110% of the fair market
value of the Common Stock on the date of grant. In addition, the aggregate fair
market value of stock with respect to which ISOs are exercisable for the first
time by an optionee during any calendar year shall not exceed $100,000. Options
may not have a term exceeding ten years, except that ISOs granted to an optionee
owning more than 10% of the outstanding Common Stock may not have a term of more
than five years and ISOs must be granted to, and exercised by, employees of the
Company (including officers). Options are not transferable, except upon the
death of the optionee. From the 1994 Plan's adoption until June 1, 1997, ISOs to
purchase 300,000 shares of Common Stock have been granted (of which options to
purchase 123,000 shares have been cancelled), and no NQSOs or SARs have been
granted under the 1994 Plan. Options to purchase 32,000 shares of Common Stock
remain reserved for grant under the 1994 Plan. The following chart sets forth in
further detail, for options outstanding as of the date hereof, the amount of
options granted, the options vested, the exercise price thereof, the number of
options exercised and the expiration dates thereof.
5
<PAGE>
<TABLE>
<CAPTION>
# OF OPTIONS # OPTIONS # OPTIONS EXERCISE EXPIRATION
GRANTED VESTED EXERCISED PRICE DATE
- ------------ --------- --------- -------- ----------
<S> <C>
9,000 0 0 $ 2.50 11/1/99
120,000 120,000 0 $ 2.50 12/15/99
6,000 0 0 $ 2.25 9/4/00
24,000 8,000 8,000 $ 3.00 5/29/01
45,000 45,000 0 $ 5.25 11/18/01
2,000 2,000 0 $ 3.75 11/18/01
20,000 0 0 $5.625 11/21/01
30,000 0 0 $ 6.75 4/10/02
9,000 0 0 $ 6.75 2/28/02
3,000 0 0 $ 6.75 2/28/02
</TABLE>
Scott Osias, Vice President and Chief Operating Officer, was granted a
stock option under the 1994 Plan to purchase 9,000 shares of Common Stock at
$2.50 per share, which option became exercisable on a cumulative basis on
January 1, 1997 to the extent of 4,000 shares; on January 1, 1998 for an
additional 3,000 shares, and on January 1, 1999 an additional 2,000 shares. Mr.
Osias was granted 7,500 options on November 19, 1996 which are exercisable at
$5.25 per share. On April 10, 1997, Mr. Osias was granted ISOs to purchase
30,000 shares of Common Stock at $6.75 per share terminating on April 10, 2002.
The option becomes exercisable on a cumulative basis in one-third increments on
April 10, 1998, 1999, and 2000.
In December 1994, the Company cancelled options to purchase 120,000 shares
of Common Stock exercisable at $20 per share, previously granted to Joseph Ende
under the 1994 Plan, and re-granted such options to Mr. Ende at an exercise
price of $2.50 per share. Such options were re-granted because the Company's
Board of Directors determined that such re-grant would provide a greater
incentive to Mr. Ende. All 120,000 of such options are currently exercisable. An
additional 30,000 options were granted on November 19, 1996 and are currently
exercisable at $5.25 per share.
Marc J. Ruskin, Chief Financial Officer, was granted a stock option under
the 1994 Plan to purchase 6,000 shares of Common Stock at $2.25 per share, which
option becomes exercisable on a cumulative basis on September 5, 1997 to the
extent of 2,000 shares; on September 5, 1998 to the extent of an additional
2,000 shares, and the balance on September 5, 1999. An additional 24,000 options
were granted at $3.00 on May 29, 1996. The options are exercisable at various
dates beginning with 8,000 shares in May, 1997, which option was exercised. An
additional 7,500 options were granted on November 19, 1996 and are currently
exercisable at $5.25 per share.
1995 EMPLOYEE STOCK OPTION PLAN
In July 1995, the Company's Board of Directors adopted the 1995 Employee
Stock Option Plan (the "1995 Plan"). The 1995 Plan provides for the grant of
ISOs, NQSOs and SARs to purchase an aggregate of 300,000 shares of Common Stock.
The provisions of the 1995 Plan are otherwise identical to the above-stated
terms of the 1994 Plan.
Since the adoption of the 1995 Plan, no ISOs or SARs have been granted, and
NQSOs to purchase 180,000 shares of Common Stock have been granted and options
to purchase 120,000 shares of Common Stock remain available for grant under the
1995 Plan. The following chart sets forth in further detail, as of the date
hereof, the amount of the options granted, the options vested, the exercise
price thereof, the number of options exercised and the expiration dates thereof.
<TABLE>
<CAPTION>
# OF OPTIONS # OPTIONS # OPTIONS EXERCISE EXPIRATION
GRANTED VESTED EXERCISED PRICE DATE
- ------------- --------- --------- -------- ----------
<S> <C>
180,000 60,000 0 $ 3.00 7/30/00
</TABLE>
On July 31, 1995, Joseph Ende was granted NQSOs under the 1995 Plan to
purchase 180,000 shares of Common Stock at $3.00 per share terminating on July
30, 2000. The option becomes exercisable on a cumulative basis in one-third
increments on July 31, 1997, 1998 and 1999. The option will become immediately
exercisable, in full, upon a change in control (as defined in the 1995 Plan) of
the Company. See "Certain Relationships and Related Transactions."
COMPENSATION COMMITTEE, INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a compensation committee or another Board
committee performing equivalent functions, and both members of the Board of
Directors, consisting of Joseph Ende and Sandra Ende, participate in
deliberations of the Board of Directors concerning executive compensation. There
are no Board of Directors interlock relationships with respect to the Company.
6
<PAGE>
COMPENSATION OF DIRECTORS
Directors currently receive no cash compensation for serving on the Board
of Directors.
PERFORMANCE GRAPHS
The graphs below compare the performance of the Company's Common Stock with
the performance of the Standard & Poor's Smallcap 600 Index and a Peer Group
index, assuming a $100.00 investment made on January 1, 1993 when public trading
of the Company's stock commenced. Cumulative return data assumes reinvestment of
dividends. The stock performance shown on the graph below is not necessarily
indicative of future price performance.
TOTAL SHAREHOLDER RETURN
(DIVIDENDS REINVESTED)
ANNUAL RETURN PERCENTAGE
YEARS ENDING
Company Name/Index Dec93 Dec94 Dec95 Dec96
- --------------------------------------------------------------------------------
BRAKE HEADQUARTERS USA INC -18.57 -92.98 1,000.00 190.91
S&P SMALLCAP 600 INDEX 18.79 -4.77 29.96 21.32
PEER GROUP -37.04 2.89 -13.45 -35.34
INDEXED RETURNS
YEARS ENDING
Base
Period
Company Name/Index 2Jan93 Dec93 Dec94 Dec95 Dec96
- --------------------------------------------------------------------------------
BRAKE HEADQUARTERS USA INC 100 81.43 5.71 62.86 182.86
S&P SMALLCAP 600 INDEX 100 118.79 113.12 147.01 178.35
PEER GROUP 100 62.96 64.78 56.07 36.25
Peer Group Companies
- -------------------------------------------------------------------------------
AID AUTO STORES INC
HI-LO AUTOMOTIVE INC
JPE INC
NEWCOR INC
TRAK AUTO CORP
UNIVERSAL AUTOMOTIVE INDS
7
<PAGE>
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP as the Company's
auditors and to audit the books of account and other records of the Company for
the year ending December 31, 1997.
Deloitte & Touche LLP has audited the Company's financial statements since
December 31, 1995. They have no financial interest, either direct or indirect,
in the Company. Representatives of Deloitte & Touche LLP are expected to be
present at the Annual Meeting to respond to appropriate questions from
stockholders and to make a statement if they desire to do so.
Management recommends voting "FOR" the ratification of the appointment of
the auditors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1996, Joseph Ende had personally guaranteed payment of
up to an aggregate of $1,000,000 of the Company's indebtedness under one of its
credit facilities. He also personally guarantees another line of credit to the
extent the Company's equity falls below $4,250,000.
In March 1996, the Company amended its Certificate of Incorporation to
authorize 1,000 shares of Series B Preferred Stock, $.001 par value per share
(the "Series B Preferred Stock"), all of which shares are held by Joseph Ende.
See "Security Ownership of Certain Beneficial Owners and Management."
In January 1995, Joseph Ende and two non-affiliated persons purchased all
of the Brennan Trusts' shares in the Company, as the Company was without the
funds to do so. Thus, as of January 1995 and at present, management has no
knowledge that Robert E. Brennan, who never attempted to exercise any control
over the Company, or the Brennan Trusts or any of Mr. Brennan's affiliates,
holds any beneficial interest in the Company's securities.
In connection with the Reverse Merger, Mr. Ende received 2,000,000 shares
of Preferred Stock of the Company in exchange for existing debt of $507,500 owed
by Sanyo Automotive to Mr. Ende. Under the terms of the Reverse Merger
Agreement, the Preferred Stock was converted into 1,000,000 shares of Common
Stock as of April 30, 1995, since the Company had revenues of at least
$25,000,000 for fiscal 1994 and the Company had cumulative pre-tax operating
income for the years ended December 31, 1992, 1993 and 1994 of at least
$2,125,000.
See "Executive Compensation -- Employment Agreements" for a description of
the terms of current Employment Agreements between the Company and Joseph Ende,
President, and Scott Osias, Vice President and Chief Operating Officer.
SHAREHOLDER PROPOSALS
No person who intends to present a proposal for action at a forthcoming
stockholders' meeting of the Company may seek to have the proposal included in
the proxy statement or form of proxy for such meeting unless that person (a) is
a record beneficial owner of at least 1% or $1,000 in market value of shares of
Common Stock, has held such shares for at least one year at the time the
proposal is submitted, and such person shall continue to own such shares through
the date on which the meeting is held, (b) provides the Company in writing with
his name, address, the number of shares held by him and the dates upon which he
acquired such shares with documentary support for a claim of ownership, (c)
notifies the Company of his intention to appear personally at the meeting or by
a qualified representative under Delaware law to present his proposal for
action, and (d) submits his proposal timely. A proposal to be included in the
proxy statement or proxy for the Company's next Annual Meeting of Stockholders,
will be submitted timely only if the proposal has been received at the Company's
principal executive office no later than March 17, 1998. If the date of such
meeting is changed by more than 30 calendar days from the date such meeting is
scheduled to be held under the Company's By-Laws, or if the proposal is to be
presented at any meeting other than the next Annual Meeting of Stockholders, the
proposal must be received at the Company's principal executive office a
reasonable time before the solicitation of proxies for such meeting is made.
Even if the foregoing requirements are satisfied, a person may submit only
one proposal of not more than 500 words with a supporting statement if the
latter is required by the proponent for inclusion in the proxy materials, and
under certain circumstances enumerated in the Securities and Exchange
Commission's rules relating to the solicitation of proxies, the Company may be
entitled to omit the proposal and any statement in support thereof from its
proxy statement and form of proxy.
8
<PAGE>
EXPENSES
The entire cost of preparing, assembling, printing and mailing this Proxy
Statement, the enclosed Proxy and other materials, and the cost of soliciting
Proxies with respect to the Annual Meeting, will be borne by the Company. The
Company will request banks and brokers to solicit their customers who
beneficially own shares listed of record in names of nominees, and will
reimburse those banks and brokers for the reasonable out-of-pocket expenses of
such solicitations. The original solicitation of Proxies by mail may be
supplemented by telephone and facsimile by officers and other regular employees
of the Company, but no additional compensation will be paid to such individuals.
REQUEST FOR ANNUAL REPORT ON FORM 10-K
Copies of the Company's 1996 Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, as filed with the Securities and Exchange Commission,
including the financial statements, accompany these proxy materials. Additional
copies of the Company's 1996 Annual Report can be obtained without charge by
stockholders (including beneficial owners of Common Stock) upon written request
to Sandra Ende, the Company's Secretary, Brake Headquarters U.S.A., Inc., 33-16
Woodside Avenue, Long Island City, N.Y. 11101. The Company's EDGAR filing may be
found on the Worldwide Web at www.sec.gov.
By Order of the Board of Directors
SANDRA ENDE, SECRETARY
New York, New York
July 29, 1997
9
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<PAGE>
BRAKE HEADQUARTERS U.S.A., INC.
P R O X Y
The undersigned, a holder of Common Shares of Brake Headquarters U.S.A.,
Inc., a Delaware corporation (the "Company"), hereby appoints Joseph Ende and
Sandra Ende, and each of them, the proxies of the undersigned, each with full
power to appoint their substitutes, and hereby authorizes them to attend,
represent and vote for the undersigned, all of the shares of the Company held of
record by the undersigned on July 11, 1997, at the Annual Meeting of
Shareholders of the Company to be held at the offices of the Company's
attorneys, Snow Becker Krauss P.C., 605 Third Avenue, 25th Floor, New York, New
York 10158, at 10:00 a.m. (Eastern Standard Time), on August 26, 1997 and any
adjournment(s) thereof, as follows:
1. ELECTION OF DIRECTORS, AS PROVIDED IN THE COMPANY'S PROXY STATEMENT:
M FOR ALL NOMINEES LISTED BELOW
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL THE NOMINEES LISTED BELOW
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH OR OTHERWISE STRIKE OUT THE NOMINEE'S NAME BELOW)
JOSEPH ENDE / SANDRA ENDE
2. TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued Over)
<PAGE>
(Continued from Other Side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS INDICATED HEREON. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTORS NAMED IN PROPOSAL 1, FOR THE ADOPTION OF
PROPOSAL 2 AND AS SUCH PROXIES SHALL DEEM ADVISABLE ON SUCH OTHER BUSINESS AS
MAY COME BEFORE THE MEETING. EACH MATTER ABOVE WAS PROPOSED BY THE BOARD OF
DIRECTORS.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated July 29, 1997 relating to the
Annual Meeting and the 1996 Annual Report to Shareholders.
Date: ___________________________, 1997
----------------------------------
----------------------------------
SIGNATURE(S) OF SHAREHOLDER(S) The
signature(s) hereon should
correspond exactly with the
name(s) of the Shareholder(s)
appearing on the Stock
Certificate. If stock is jointly
held, all joint owners should
sign. When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title as such. If signer is a
corporation, please sign the full
corporate name, and give title of
signing officer.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF BRAKE HEADQUARTERS U.S.A.,
INC. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. IT IS IMPORTANT THAT YOU VOTE.
