<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BRAKE HEADQUARTERS U.S.A., INC.
(Name of Registrant as Specified In Its Charter)
None
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
(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:
- ------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
BRAKE HEADQUARTERS U.S.A., INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on October 28, 1998
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 Wednesday, October 28, 1998, 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 five Directors of the Company to serve until the next
annual meeting of stockholders and until their successors are duly
elected and qualified.
2. To authorize a reverse stock split of the Company's Common Stock, if
necessary.
3. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 1998.
4. 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 September 22,
1998 are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
Long Island City, NY By Order of the Board of Directors
October 8, 1998
Sandra Ende
Secretary
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 October 28, 1998. The record date of this proxy solicitation is
September 22, 1998. 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, for the approval of the proposal to authorize a reverse
stock split of the Company's Common Stock, if necessary, and to ratify the
appointment of Deloitte & Touche LLP as the Company's independent auditors for
the year ending December 31, 1998. 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 October 8, 1998.
The total number of shares of common stock, $.001 par value ("Common
Stock"), of the Company outstanding as of September 22, 1998, was 5,679,413
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 September 22, 1998, 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.
<PAGE>
The affirmative vote by a majority of the votes cast on the proposals
to authorize a reverse stock split of the Company's Common Stock, if necessary,
and to ratify the appointment of Deloitte & Touche LLP as the Company's auditors
for the year ending December 31, 1998, is required. Each share of Common Stock
has one vote and the Series B Preferred Stock will not vote on these proposals.
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 1997 Annual Report to Stockholders including
financial statements for the three-year period ended December 31, 1997 and the
Quarterly Report on Form 10-Q for the six month period ended June 30, 1998, are
expected to be mailed commencing on or about October 8, 1998 to stockholders of
record on September 22, 1998.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 22, 1998, 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. 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.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percentage
of Beneficial Owner Beneficial Ownership (1) of Class (2)
- ------------------- -------------------------- ------------
<S> <C> <C>
Joseph Ende (3) 2,601,212 (4)(5) 43.7%
Sandra Ende (3) 53,600 (6) 1.2%
Marc J. Ruskin (3) 19,500 (7) (12)
Scott Osias (3) 29,500 (8) (12)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percentage
of Beneficial Owner Beneficial Ownership (1) of Class (2)
- ------------------- -------------------------- ------------
<S> <C> <C>
Elliot H. Lutzker 25,000 (9) (12)
Adam E. Budish 5,000 (10) (12)
Officers and Directors 2,733,812 (11) 45.4%
as a Group (6 Persons)
</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 5,679,413 shares of Common Stock outstanding as of
September 22, 1998.
(3) The address of this person is c/o the Company, 33-16 Woodside Avenue,
Long Island City, New York 11101.
(4) Includes 270,000 shares issuable upon the exercise of currently
exercisable options, but does not include an aggregate of 510,000
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) Does not include 53,600 shares owned of record by the Joseph and Sandra
Ende Charitable Trust, of which Joseph and Sandra Ende are Trustees.
Also does not include a presently indeterminable number of shares
issuable upon conversion of up to $800,000 of 5% Convertible Debentures
dated November 7, 1997 (the "Debentures"). On September 14, 1998, Mr.
Ende entered into agreements with two Debentureholders to repurchase an
aggregate of $850,000 of Debentures prior to November 2, 1998, subject
to his obtaining personal bank financing. The Debentures mature on
November 7, 1998 and are convertible into Common Stock at the rate of
82.5% of the average closing bid price of the Company's Common Stock
for the five trading days preceding conversion. Mr. Ende has purchased
$50,000 of Debentures and converted them into 255,180 shares of Common
Stock. As of September 17, 1998, the remaining $800,000 of Debentures
were convertible into approximately 2,850,000 shares of Common Stock at
the assumed rate of $.28 per share. If all 2,850,000 shares were
issued to Mr. Ende he would then beneficially own 5,451,212 (62.4%) of
the 8,739,413 shares then outstanding for purposes of this computation.
There can be no assurance this proposed transaction will be completed
and this computation was made solely because Mr. Ende has the right to
acquire such shares within the next 60 days. Mr. Ende has agreed to
lock-up for a one-year period all shares acquired by him on conversion.
(6) Includes 53,600 shares owned of record by the Joseph and Sandra Ende
Charitable Trust, of which Joseph and Sandra Ende, husband and wife,
are Trustees.
(7) Includes 14,500 shares of Common Stock issuable upon the exercise of
currently exercisable options, but does not include 75,000 shares of
Common Stock issuable upon the exercise of options which are not
currently exercisable or exercisable within the next 60 days.
3
<PAGE>
- -------------
(8) Includes 23,500 shares of Common Stock issuable upon the exercise of
currently exercisable options, but does not include 53,000 shares of
Common Stock issuable upon the exercise of options which are not
currently exercisable or exercisable within the next 60 days.
(9) Includes (i) 20,000 shares of Common Stock issuable upon exercise of
currently exercisable options held by Snow Becker Krauss P.C., counsel
to the Company, and of which Mr. Lutzker is a partner, and (ii) 5,000
shares of Common Stock issuable upon exercise of currently exercisable
options held by Mr. Lutzker.
(10) Includes 5,000 shares of Common Stock issuable upon the exercise of
currently exercisable options.
(11) Includes 338,000 shares of Common Stock issuable upon exercise of
currently exercisable stock options, but does not include 638,000
shares of common stock which may be purchased pursuant to stock options
which are not currently exercisable, and does not include shares
issuable upon conversion of Debenture described in Note (5) above.
(12) 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 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 January 1, 1997 through December 31,
1997, 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 five persons, each of whom
are incumbent Directors.
The following table sets forth information concerning the nominees:
Name Age Position
- ---- --- --------
Joseph Ende 50 Chairman of the Board
and Chief Executive Officer
Marc J. Ruskin 46 Chief Financial Officer and
Director
4
<PAGE>
Name Age Position
- ---- --- --------
Sandra Ende 45 Secretary and Director
Elliot H. Lutzker 45 Director (1)
Adam E. Budish 38 Director (1)
- -----------------
(1) Member of Audit and Compensation Committees.
Joseph Ende has been Chief Executive Officer and Chairman of
the Board of Directors of the Company since July 9, 1992. He was also President
of the Company from July 1992 until August 1998. 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 and Secretary of the Company since July
1992. She had been employed by Sanyo Automotive since its inception in June 1976
through March 1997, 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.
Marc J. Ruskin, CPA, has been the Chief Financial Officer of the
Company since August 1995 and a director of the Company since February 1998. He
has 20 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, Inc., a
company specializing in film/television and real estate management, from 1982 to
1991. Mr. Ruskin holds an MBA from the University of Bridgeport.
Elliot H. Lutzker has been a Director of the Company since February
1998. Since 1985, Mr. Lutzker has been a partner in the law firm of Snow Becker
Krauss P.C., counsel to the Company. He was formerly an attorney with the
Division of Enforcement of the NorthEast Regional Office of the U.S. Securities
and Exchange Commission. Mr Lutzker serves on the Board of Directors of
Photonics Industries International, Inc.
Adam E. Budish has been a Director of the Company since February 1998.
Mr. Budish has been Vice President- Business Affairs at Reuters Health
Information Inc. (a wholly-owned subsidiary of Reuters PLC) since June 1994.
From January 1994 to June 1994 Mr. Budish was General Counsel to GeoMedica
Networks, which was acquired by Reuters PLC in June 1994. From 1992 to 1994 Mr.
Budish was Legal Counsel, Business Affairs at Rebo Studio, Inc. Mr. Budish has
an M.B.A. from The Wharton School of the University of Pennsylvania, and a J.D.
from George Washington University School of Law.
5
<PAGE>
Certain Information Concerning the Board of Directors
The Board of Directors held one meeting during 1997 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 and Chief Executive Officer, Marc J. Ruskin, the Company's Chief
Financial Officer, and Sandra Ende, the Company's Secretary, the following
individual serves as an executive officer of the Company:
Scott Osias has been President of the Company since August 1998 and
prior thereto was Executive Vice President and Chief Operating Officer from
April 1997. Prior thereto, he was Vice President of Sales and Marketing of the
Company from October 1992. Mr. Osias has been employed in the retail automotive
industry since 1973 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.
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, 1997, 1996 and 1995, by the Company's Chief Executive Officer, who was the
Company's only executive officer ("Named Executive Officers") whose total
compensation exceeded $100,000.
6
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
----------------------------- ------------
Securities
Other Underlying
Name and Annual Options/
Principal Compen- SARs
Position Year Salary Bonus sation (#)
- --------- ---- ------ ----- ------- -------
<S> <C> <C> <C> <C> <C>
Joseph Ende, 1997 $156,000 $ -0-(2) $ -0- -0-
Chief Executive 1996 $156,000 -0-(2) -0- 30,000(1)
Officer and Director 1995 $127,500 -0-(2) -0- 300,000(1)
Marc Ruskin 1997 $ 75,000 $ -0- $52,000(3) -0-
Chief Financial Officer
and Director
</TABLE>
- ------------
(1) 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. On
December 15, 1995, Mr. Ende was granted non-qualified stock options
under the 1994 Stock Option Plan, to purchase 120,000 shares of Common
Stock at $2.50 per share expiring on December 15, 2000. 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.
See "Stock Option Plans" below.
(2) The Board of Directors has the discretion to grant Mr. Ende a bonus of
$50,000 for each of the six-month periods ending June 30 and December
31 during the three-year term of his employment agreement entered into
on July 31, 1995, as amended, provided the Company reports operating
income, but after payment of such bonus for the applicable six-month
period. No bonus was issued for the periods ended December
31,1997,1996, and 1995.
(3) Represents the difference between the exercise price and the fair
market value of options (the "spread") on the date of exercise.
Individualized Option/Grants in Last Fiscal Year
The following table sets forth the number of stock options granted to
the Named Executive Officers in the Summary Compensation Table during the year
ended December 31, 1997, exercise information and potential realizable value.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
Number of Percent of Value at Assumed
Shares Total Options Annual Rates of Stock
Underlying Granted to Price Appreciation
Options Employees in Exercise Expiration for Option Term
Name Granted (#) Fiscal Year Price ($/sh) Date 5% ($) 10% ($)
- ---- ----------- ----------- ------------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
None
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY End Option/SAR Values
----------------------------------------------------
(a) (b) (c) (d) (e)
Number of Value of
Unexercised Unexercised
Shares Options/SARs at In-The-Money
Acquired FY-End (#) Options/SARs
on Exer- Value Exercisable/ at FY-End ($)
Name cise (#) Realized Unexercisable Exercisable
- --------- --------- -------- -------------- -------------
<S> <C> <C> <C> <C>
Joseph Ende -0- -0- 210,000/120,000 $492,300/$285,600(1)
Marc Ruskin 8,000 $52,000 9,500/20,000 $7,235/$50,600(1)
Scott Osias -0- -0- 13,500/33,000 $18,255/$ 8,640(1)(2)
</TABLE>
- --------------------
(1) The closing price of the Company's Common Stock on December 31, 1997 was
$5.38 per share.
(2) Does not include 30,000 options exercisable at $6.75 per share which were
not in-the-money at December 31, 1997.
Employment Agreements
On July 31, 1995, the Company entered into a three-year employment
agreement with Joseph Ende, then 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. The
agreement was renewed on July 31, 1998, with Mr. Ende currently serving as Chief
Executive Officer and Chairman of the Board. In 1997, 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. No bonus was paid or accrued in 1997. 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, then Executive Vice President and Chief Operating
Officer and currently President. 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. No
bonus was paid for 1997. Under the agreement, Mr. Osias is also entitled to the
use of an automobile, health insurance and other benefits and five-year options
to purchase 30,000 shares of the Company's Common Stock at $6.75 per share. 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.
8
<PAGE>
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 10,638 shares have been purchased under such plan as of December 31, 1997.
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.
9
<PAGE>
Since the 1994 Plan's adoption, ISOs to purchase 383,000 shares of
Common Stock have been granted (of which options to purchase 123,000 shares have
been cancelled and are available for reissuance under the 1994 Plan), and no
SARs have been granted under the 1994 Plan. Options to purchase 260,000 shares
of Common Stock remain outstanding and options to purchase 40,000 shares of
Common Stock remain reserved for grant under the 1994 Plan.
Joseph Ende was granted 120,000 options to purchase 120,000
shares of Common Stock exercisable at $20 per share under the 1994 Plan, which
in December 1994, were canceled by the Company. These options were re-granted 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.
Scott Osias, Vice President of Sales and Marketing, 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.
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 of which 8,000 options were exercised in
1997. The options are exercisable at various dates beginning in November 1996.
An additional 7,500 options were granted on November 19, 1996 and are currently
exercisable at $5.25 per share.
On September 16, 1998, Elliot H. Lutzker and Adam Budish, non-employee
directors, were each granted NQSO's under the 1994 Plan to each purchase 5,000
shares of Common Stock at $.75 per share, immediately exercisable and
terminating on September 16, 2003. On November 21, 1996, Snow Becker Krauss
P.C., counsel to the Company, and of which Mr. Lutzker is a member, was granted
NQSO's outside of any plan to purchase 20,000 shares of Common Stock immediately
exercisable at $5.625 per share.
10
<PAGE>
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, as amended,
provides for the grant of ISOs, NQSOs and SARs to purchase an aggregate of
1,500,000 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 SARs have been granted, and
ISOs and NQSOs to purchase 980,000 shares of Common Stock have been granted and
options to purchase 520,000 shares of Common Stock remain available for grant
under the 1995 Plan as of September 9, 1998.
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.
On January 13, 1998, Mr. Osias was granted 30,000 ISO's under the 1995
Plan to purchase common stock at an exercise price of $4.38 per share. These
options were repriced on July 31, 1998 at $.75 per share as an incentive for
management. These options become exercisable on a cumulative basis on January
13, 1999 to the extent of 10,000 shares, on January 13, 2000 to the extent of an
additional 10,000 shares, and the balance on January 13, 2001.
On January 13, 1998, Mr. Ruskin was granted 60,000 ISO's under the 1995
Plan to purchase Common Stock at an exercise price of $4.38 per share. These
options were repriced on July 31, 1998 at $.75 per share as an incentive for
management. These options become exercisable on a cumulative basis on January
13, 1999 to the extent of 20,000 shares, on January 13, 2000 to the extent of
20,000 shares and the balance on January 13, 2001.
On January 13, 1998, Mr. Ende was granted 381,450 NQSO's under the 1995
Plan to purchase Common Stock at an exercise price of $4.38 per share. These
options were repriced on July 31, 1998 at $.75 per share as an incentive for
management. Mr. Ende was also granted 68,550 ISO's at an exercise price of $4.81
per share which were repriced on July 31, 1998 at $.83 per share, as an
incentive for management. These options become exercisable on a cumulative basis
on January 13, 1999, to the extent of one-third of the option; on January 13,
2000 to the extent of an additional one-third; and the balance on January 13,
2001. See "Certain Relationships and Related Transactions."
Compensation Committee, Interlocks and Insider Participation
In February 1998, the Company formed an audit committee and a
compensation committee consisting of Elliot H. Lutzker and Alan E. Budish, the
Company's two non-officer members of
11
<PAGE>
the Board of Directors. There are no Board of Directors interlock relationships
with respect to the Company.
Compensation of Directors
Directors currently receive no cash compensation for serving
on the Board of Directors.
Performance Graph
The graph and chart 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 and
chart below is not necessarily indicative of future price performance.
12
<PAGE>
TOTAL SHAREHOLDER RETURN
250 |--------------------------------------------------------------------|
| []
D | |
200 |--------------------------------------------------------------------|
O | O |
| [] |
L 150 |--------------------------------------------------------------------|
| [] O
L | [] [] |
100 []-------------------------------------------------------------------|
A V O O |
| V V V |
R 50 |--------------------------------------------------------------------|
| V V
S | O |
0 |--------------------------------------------------------------------|
2Jan92 Dec93 Dec94 Dec95 Dec96 Dec97
YEAR ENDING
---------------------------------------------------------------------
0 BRAKE HEADQUARTERS USA INC [] S&P SMALLCAP 600 INDEX V PEER GROUP
---------------------------------------------------------------------
Total Return To Shareholders
(Dividends reinvested monthly)
<TABLE>
<CAPTION>
ANNUAL RETURN PERCENTAGE
Years Ending
Company Name/Index Dec93 Dec94 Dec95 Dec96 Dec97
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BRAKE HEADQUARTERS USA INC -18.57 -92.98 1000.00 190.91 -32.81
S&P SMALLCAP 600 INDEX 18.79 -4.77 29.96 21.32 25.58
PEER GROUP -37.04 2.89 -13.45 -35.34 -1.77
INDEXED RETURNS
Years Ending
Base
Period
Company Name/Index 2Jan92 Dec93 Dec94 Dec95 Dec96 Dec97
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BRAKE HEADQUARTERS USA INC 100 81.43 5.72 62.88 182.92 122.90
S&P SMALLCAP 600 INDEX 100 118.79 113.12 147.01 178.35 223.98
PEER GROUP 100 62.96 64.78 56.07 36.25 35.61
</TABLE>
Peer Group Companies
- ------------------------------
AID AUTO STORES INC
HI-LO AUTOMOTIVE INC
JPE INC
NEWCOR INC
TRAK AUTO CORP
UNIVERSAL AUTOMOTIVE INDS
<PAGE>
PROPOSAL 2
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO AUTHORIZE, IF
NECESSARY, A REVERSE STOCK SPLIT OF NOT MORE THAN ONE-FOR-TEN.
GENERAL
The Board of Directors has approved a proposal to amend the Company's
Certificate of Incorporation to authorize, if necessary, a reverse stock split
of not more than one-for-ten of the presently issued and outstanding shares of
the Company's Common Stock (the "Reverse Split"), by changing each of up to ten
issued and outstanding shares of Common Stock into one issued and outstanding
share of Common Stock, (i) to increase the marketability and liquidity of the
Company's Common Stock by attracting an increased number of market makers and a
wider following (many investment banking firms are prohibited from trading
securities of issuers that trade below $1.00 per share), (ii) to maintain its
Nasdaq listing and (iii) to reduce the Company's stated capital $.001 for each
share of Common Stock changed into up to one-tenth share of Common Stock as a
result of the Reverse Split.
REASONS FOR THE REVERSE SPLIT
The Company's shares of Common Stock are listed on the Nasdaq SmallCap
Market. On August 25, 1998, the Company received a notice from Nasdaq stating
that unless the Company's Common Stock reports a closing bid price of $1.00 per
share or greater, for 10 consecutive trading days during the 90 day period
ending November 25, 1998, the Company's securities will be delisted from
Nasdaq, effective November 25, 1998. In such event, the Company's Common Stock
will be quoted on the OTC Bulletin Board or in the "pink sheets" maintained by
the National Quotation Bureau, Inc.
Stock traded on the over-the-counter Bulletin Board ("OTCBB") is
subject to Rule 15g-9 promulgated under the Securities Exchange Act of 1934, as
amended, which imposes various sales practice requirements on broker-dealers who
sell securities governed by Rule 15g-9 to persons
13
<PAGE>
other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse). For transactions covered by Rule 15g-9, the broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser's written consent to the transaction prior to sale.
Consequently, Rule 15g-9 may have an adverse effect on the ability of
broker-dealers to sell the Company's securities and may affect the ability of
Stockholders to sell the Company's securities and otherwise affect the trading
market in the Common Stock.
The Commission has adopted rules that regulate broker-dealer practices
in connection with transactions in "penny stocks." If the Company's securities
become subject to the penny stock rules, investors may find it more difficult to
sell their shares. Penny stocks generally are equity securities with a price of
less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in that security is provided by the
exchange or system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Commission that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker dealer salesperson compensation information,
must be given to the customer orally or in writing before or with the customer's
confirmation. These disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules.
Requirements for a new listing on the NASDAQ SmallCap Market include a
minimum bid price of $4.00 per share. In order to increase the marketability and
liquidity of the Company's Common Stock by attracting an increased number of
market members and a wider following and to maintain its Nasdaq listing, the
Company has authorized the Company's Board of Directors to effect a Reverse
Stock Split, if necessary. Many investment banking firms are prohibited from
trading securities of issuers that trade below $1.00 per share and/or that are
traded on the OTCBB. In connection with any determination by the Board of
Directors to such effect, the Board will also in its discretion, determine the
ratio of the Reverse Split based on prevailing market conditions, the likely
effect on the market price of the Common Stock, and other relevant factors.
EXCHANGE OF SHARES
If the Shareholders approve the Reverse Split and it is subsequently
determined by the Board of Directors that the Reverse Split is necessary, upon
the filing of the following amendment to the Company's Certificate of
Incorporation with the Secretary of State of Delaware, the Reverse Split will be
deemed effective. The Reverse Split will be formally implemented by amending the
present
14
<PAGE>
Article Fourth of the Company's Certificate of Incorporation, as amended, to add
the following Section with the ratio determined as set forth above:
Fourth: (c) Effective as of 5:00 p.m., Eastern time, on November ___,
1998, all outstanding shares of Common Stock held by each holder of
record on such date shall be automatically combined at the rate of
one-for__________ without any further action on the part of the holders
thereof or this Corporation. No fractional shares shall be issued. All
fractional shares shall be increased to the next higher whole number of
share.
Following the effectiveness of the amendment, assuming a one-for-ten
ratio, each certificate representing shares of Common Stock outstanding
immediately prior to the Reverse Split (the "Old Shares") will be deemed
automatically, without any action on the part of the Shareholders, to represent
1/10 of the number of shares of Common Stock after the Reverse Split (the "New
Shares"). After the Reverse Split becomes effective, Shareholders will be asked
to surrender certificates representing Old Shares in accordance with the
procedures set forth in a letter of transmittal to be sent by the Corporation.
SHAREHOLDERS SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO. Upon
such surrender, a certificate representing the New Shares will be issued and
forwarded to the shareholders. However, each certificate representing Old Shares
will continue to be valid and represent New Shares equal to 1/10 of the number
of Old Shares (plus one additional New Share where such Old Shares are not
evenly divisible by 10).
If Proposal 2 is approved by the shareholders and determined by the
Board of Directors that the Reverse Split is necessary, the Reverse Split will
become effective upon filing a Certificate of Amendment of the Certificate of
Incorporation with the Secretary of State of Delaware. If the Reverse Split is
not deemed necessary by the Board of Directors on or prior to the next Annual
Meeting of Shareholders, the Board shall have no further right to effect the
Reverse Split.
PRINCIPAL EFFECTS OF THE REVERSE SPLIT AND THE ADDITIONAL REVERSE SPLIT
Shareholders have no right under the Delaware General Corporation Law
(the "DGCL") or under the Company's Certificate of Incorporation or Bylaws to
dissent from the Reverse Split or to dissent from the rounding to the nearest
whole share of any fractional share resulting from the Reverse Split in lieu of
issuing fractional shares.
The authorized capital stock of the Company will not be reduced or
otherwise affected by the Reverse Split. The number of issued and outstanding
shares of Common Stock of the Company on September 22, 1998, was 5,679,413 and
the number of issued and outstanding shares of Preferred Stock was 1,000. The
Company's stated capital as of June 30, 1998 was $6,109,583. Based upon these
figures, the aggregate number of shares of Common Stock and Preferred Stock that
would be issued and outstanding if the Reverse Split is effected on a
one-for-ten basis will be approximately 567,942 and 1,000, respectively, and the
stated capital will be approximately $610,958. Although the authorized shares of
Preferred Stock will not be affected by the Reverse
15
<PAGE>
Split, the number of shares of Common Stock issuable upon conversion of the
Preferred Stock will be adjusted in the same proportion.
The Reverse Split may result in some shareholders owning "odd-lots" of
less than 100 shares of Common Stock. Brokerage commissions and other costs of
transactions in odd-lots are generally somewhat higher than the costs of
transactions in "round-lots" of even multiples of 100 shares.
There can be no assurance that any or all of the foregoing effects will
occur. In particular, there can be no guarantee that the market price for each
New Share after the Reverse Split will be its sum multiple of the market price
(per Old Share) before the Reverse Split and the number of shares of Common
Stock charged for one share of Common Stock, or that such price will either
exceed or remain in excess of the current market price. Furthermore, there can
be no assurance that the market for shares of Common Stock will be improved or
that the Common Stock will continue to remain listed on the NASDAQ/SmallCap or
any other market. The Board of Directors cannot predict what effect the Reverse
Split will have on the market for or the market price of the Common Stock.
DILUTION
The Company has suffered recurring losses from operations. The Company
may issue additional shares of its Common Stock on an ongoing basis in order to
satisfy all or a portion of its need for cash. If and to the extent that the
Company issues additional shares of Common Stock, either prior or subsequent to
the implementation of the Reverse Split, each Shareholder's percentage ownership
interest in the Company and proportional voting power will be proportionately
reduced.
As of September 22, 1998, the Company had issued and outstanding
various options and warrants to purchase an aggregate of approximately
1,886,000 shares of Common Stock. In addition, the Company had outstanding
debentures to purchase as of September 18, 1998 approximately 7,538,000 shares
of Common Stock.
If Proposal 2 is approved, in general, both the conversion price and
the number of shares subject to such Preferred Stock and Convertible Debentures
and Convertible Notes will be affected by the Reverse Split.
As a result, if the Reverse Split is implemented, it is possible that
the holders of all or a substantial number of the outstanding options, warrants,
Preferred Stock, Convertible Debentures and Convertible Notes to purchase or
convert to shares of the Company's Common Stock will determine that it is not in
their best interests to exercise or convert such options, warrants, stock,
debentures or notes. If and to the extent that such is the case, each
Shareholder's percentage ownership interest in the Company and proportional
voting power will not be proportionately maintained as the result of the
exercise of such outstanding options, warrants, and rights.
16
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based
upon the Internal Revenue Code of 1986, as amended, the applicable Treasury
Regulations promulgated thereunder, judicial authority, and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
consequences that may apply to special classes of taxpayers (e.g., non-resident
aliens, broker-dealers or insurance companies). Shareholders are urged to
consult their own tax advisors to determine the particular consequences to them.
The exchange of Old Shares of Common Stock for New Shares of Common
Stock will not result in recognition of gain or loss. The holding period for the
New Shares will include the Shareholder's holding period for the Old Shares
exchanged therefor, provided that the Old Shares were held as a capital asset.
The adjusted basis of the New Shares will be the same as the adjusted basis of
the Old Shares exchanged therefor.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF AND URGES YOU
TO VOTE "FOR" THE PROPOSED AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION IN THE FOREGOING PROPOSAL 2.
PROPOSAL 3. 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, 1998.
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
The Company leases an office and warehouse facilities from the Company's
Chief Executive Officer, Joseph Ende, pursuant to a lease dated July 1, 1992,
which was amended in July 1997 to reduce the annual rent from $312,000 to
$258,000. The lease term expires July 1, 1999.
See "Executive Compensation - Employment Agreements" for a description
of the terms of current Employment Agreements between the Company and Joseph
Ende, Chief Executive Officer, and Scott Osias, President and Chief Operating
Officer; and "Employee Stock Options" for a description of the terms of stock
options granted to each of the Company's executive officers.
17
<PAGE>
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 $2,000 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 August 24, 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.
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 1997 Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, as filed with the Securities and Exchange
Commission, including the financial statements, accompany these proxy materials.
Additional copies of the Company's 1997
18
<PAGE>
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
October 8, 1998
19
<PAGE>
BRAKE HEADQUARTERS U.S.A., INC.
P R O X Y
The undersigned, a holder of Common Stock of Brake Headquarters U.S.A.,
Inc., a Delaware corporation (the "Company"), hereby appoints Joseph Ende, the
proxy of the undersigned, with full power to appoint his substitute, and hereby
authorizes him to attend, represent and vote for the undersigned, all of the
shares of the Company held of record by the Undersigned on September 22, 1998,
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
October 28, 1998 and any adjournment(s) thereof, as follows:
1. ELECTION OF DIRECTORS, as provided in the Company's Proxy Statement:
|_| 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, Marc J. Ruskin, Adam E. Budish and
Elliot H. Lutzker
2. To authorize a reverse split of the Company's Common Stock, if necessary.
|_| FOR |_| AGAINST |_| ABSTAIN
3. To ratify the appointment of Deloitte & Touche LLP as the Company's
auditors for the year ending December 31, 1998.
|_| FOR |_| AGAINST |_| ABSTAIN
4. Upon such other matters as may properly come before the meeting or any
adjournments thereof.
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
PROPOSALS 2 AND 3 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 October 8, 1998 relating to the
Annual Meeting, the 1997 Annual Report to Shareholders including financial
statements for the period ended December 31, 1997 and the Quarterly Report on
Form 10-Q for the six-month period ended June 30, 1998.
Date:___________________, 1998
_______________________________ __________________________________
Signature Signature
Signature of Shareholder. The signature hereon should correspond exactly with
the name of the Shareholder 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.
