<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] 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
</TABLE>
Universal Automotive Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(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> 2
Universal Automotive Industries, Inc.
3350 North Kedzie Avenue
Chicago, Illinois 60618
(773) 478-2323
--------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26, 1997
--------------------------------------------
To The Stockholders of Universal Automotive Industries, Inc.:
The Annual Meeting of Stockholders of Universal Automotive Industries,
Inc. (the "Company") will be held on Thursday, June 26, 1997, at 10:00 a.m., at
the Radisson Hotel Lincolnwood, 4500 West Touhy Avenue, Lincolnwood, Illinois,
for the following purposes:
1. To elect seven Directors to serve until the next annual
meeting of stockholders or until their successors are elected or
qualified;
2. To ratify the appointment of Altschuler, Melvoin and Glasser LLP as the
Company's independent auditors for 1997; and
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only Stockholders of record as of the close of business on May 2, 1997,
will be entitled to notice of and to vote at the meeting or at any adjournment
thereof.
By Order of The Board of Directors:
Jerome J. Hiss
Secretary
Chicago, Illinois
June 6, 1997
YOUR VOTE IS IMPORTANT
REGARDLESS OF WHETHER YOU EXPECT TO ATTEND THE ANNUAL MEETING OF
STOCKHOLDERS, YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED FOR
MAILING IN THE UNITED STATES. YOUR PROMPT RESPONSE WILL ASSURE THAT A QUORUM
IS PRESENT AT THE MEETING AND SAVE THE COMPANY THE EXPENSE OF FURTHER
SOLICITATION OF PROXIES.
<PAGE> 3
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
3350 North Kedzie Avenue
Chicago, Illinois 60618
----------------------
PROXY STATEMENT
----------------------
PROXY SOLICITATION AND GENERAL INFORMATION
This proxy statement (the "Proxy Statement") is furnished to the holders
(the "Stockholders") of shares of common stock of Universal Automotive
Industries, Inc., a Delaware corporation (the "Company") in connection with the
solicitation of proxies by the Company's Board of Directors (the "Board of
Directors") for use at the annual meeting of Stockholders (the "Meeting") to be
held on Thursday, June 26, 1997, at 10:00 a.m., at the Radisson Hotel
Lincolnwood, 4500 West Touhy Avenue, Lincolnwood, Illinois, and any adjournment
thereof. The Company's bylaws (the "Bylaws") require the Directors to call and
hold an annual meeting of stockholders each year. This Proxy Statement and the
enclosed proxy were mailed to the Company's Stockholders on or about June 6,
1997. Stockholders who wish to attend the meeting should contact the Company
at (773) 478-2323.
Only Stockholders of record at the close of business on May 2, 1997 (the
"Record Date") will be entitled to notice of and to vote at the Meeting. On
the Record Date, 6,729,425 shares of the Company's common stock, par value $.01
per share (the "Common Stock"), having one vote each, were issued and
outstanding. A majority of the outstanding shares of Common Stock, represented
at the Meeting in person or by proxy, will constitute a quorum.
The Company will bear all costs associated with the solicitation of
proxies, including the cost of preparing, printing and mailing this Proxy
Statement and the reimbursement of brokerage firms and other record holders of
shares of Common Stock for their expenses in forwarding proxy materials to
beneficial owners of such shares. Following the original solicitation of
proxies by mail, proxies may be solicited by officers and employees of the
Company by telephone, facsimile, telegraph or in person. Such officers and
employees will not be additionally compensated for soliciting proxies.
Shares represented by properly executed proxies in the accompanying form
received by the Board of Directors prior to the Meeting will be voted at the
Meeting. Shares not represented by properly executed proxies will not be
voted. If a Stockholder specifies a choice with respect to any matter to be
acted upon, the Shares represented by that proxy will be voted as specified.
If the Stockholder does not specify a choice, in an otherwise properly executed
proxy, with respect to any proposal referred to therein, the Shares represented
by that proxy will be voted with respect to that proposal in accordance with
the recommendations of the Board of Directors described herein. A Stockholder
who signs and returns a proxy in the accompanying form may revoke it by: (i)
giving written notice of revocation to the Company before the proxy is voted at
the Meeting; (ii) executing and delivering a later-dated proxy; or (iii)
attending the Meeting and voting the shares in person.
The affirmative vote of a majority of the shares of Common Stock present
in person or represented by proxy at the Meeting is required for the election
of Directors and the ratification of the independent auditors. With regard to
the election of Directors, votes may be cast in favor or withheld; votes that
are withheld will be excluded entirely from the vote and will have no effect.
Broker non-votes (shares not voted by brokers due to the absence of
instructions from street name holders) on a matter are not considered voted or
as present or represented on that matter and will have no effect on the outcome
of the election of Directors. Unless the context otherwise requires, the term
the "Company" includes Universal Automotive Industries, Inc. and its direct and
indirect subsidiaries, including its predecessor, Universal Automotive, Inc.
<PAGE> 4
ELECTION OF DIRECTORS
The Board of Directors has nominated the seven persons named below for
election as Directors at the Meeting to serve until the 1997 Meeting of
Stockholders and until their elected successors are qualified. The Bylaws
provide that the Board of Directors shall consist of seven directors. The
Board of Directors may increase or decrease this number from time to time. Six
of the seven nominees below are presently serving as a member of the Board of
Directors. Each nominee has consented to have his name appear as a nominee in
this Proxy Statement and to serve as a Director of the Company if elected.
Should any nominee become unable to serve as a Director, shares of Common Stock
represented at the Meeting by valid proxies may be voted for the election of
such substitute nominee(s) as may be designated by the Board of Directors. The
Board of Directors has no reason to believe that any nominee will be unable to
serve as a Director.
The following information is provided concerning the nominees for election
as Directors of the Company:
<TABLE>
<CAPTION>
====================================================================================
NAME AGE DIRECTOR SINCE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ----------------- --- -------------- --------------------------------------------
<S> <C> <C> <C>
Arvin Scott 40 1986 Mr. Scott has served as President and Chief
Executive Officer of the Company since
March 1996. Mr. Scott served as Executive
Vice President of the Company from October
1994 to March 1996 and served as Vice
President of the Company from 1986 to
October 1994. Mr. Scott joined the Company
in 1981 as a purchaser of automotive
aftermarket replacement parts for
distribution in the Chicago jobber market.
From 1984 to 1986, Mr. Scott served as Vice
President of an unaffiliated Chicago-based
warehouse distributor, of which he was a
50% owner. Mr. Scott oversees the
distribution of the UBP Universal Brake
Parts line and the Company's manufacturing
operations.
- ------------------------------------------------------------------------------------
Yehuda Tzur 44 1981 Mr. Tzur, the founder of the Company, has
served as its Chairman of the Board of
Directors since October 1994. From 1981 to
March 1996, Mr. Tzur served as President
and Chief Executive Officer of the Company.
Mr. Tzur oversees the Company's wholesale
commodities operations.
- ------------------------------------------------------------------------------------
Eric Goodman 40 1994 Mr. Goodman has served as Executive Vice
President - Canadian Operations of the
Company since October 1994 and served as
Vice President of the Company from April
1994 to October 1994. Mr. Goodman oversees
the Company's Canadian operations. From
1982 to 1994, Mr. Goodman was the owner and
President of Aaron Automotive Industries,
Inc. ("Aaron"). Prior to founding Aaron in
1982, Mr. Goodman was employed for eight
years by Aimco Industries, a leading
manufacturer of brake components, now owned
by ITT Automotive, Inc.
- ------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
====================================================================================
NAME AGE DIRECTOR SINCE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ----------------- --- -------------- --------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
Sami Israel 55 1984 Mr. Israel has served as Vice President of
the Company since October 1994 and served
as Treasurer of the Company from 1984 to
October 1994. Mr. Israel has been a
Director of the Company since 1984. Mr.
Israel manages the Company's shipping and
receiving operations from the Company's
headquarters located in Chicago, Illinois.
- ------------------------------------------------------------------------------------
Sol S. Weiner 78 1995 Mr. Weiner is a private investor and
currently is a Director of Comtech
Telecommunications, Inc.
- ------------------------------------------------------------------------------------
Sheldon Robinson 70 1995 Mr. Robinson is an owner and President of
Associated Financial Consultants, Inc. and
Robinson Financial Group, Inc., which
companies sell insurance and investment
products. Mr. Robinson has been in the
insurance business since 1963.
- ------------------------------------------------------------------------------------
Dennis L. Kessler 58 Mr. Kessler is Co-President of Fel-Pro
Incorporated which manufactures and
distributes gaskets, engine parts and
industrial chemicals. Mr. Kessler has
served in various capacities with Fel-Pro
since 1964.
====================================================================================
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED ABOVE.
CERTAIN INFORMATION REGARDING
THE BOARD OF DIRECTORS
In 1996, the Board of Directors held six meetings, at which all Directors
were present, and took action by unanimous written consent one time. The Board
of Directors presently has a Compensation Committee and an Audit Committee. The
Board of Directors has no standing nominating committee. The Compensation
Committee is responsible for reviewing, determining and establishing the
salaries, bonuses and other compensation of the Company's executive officers.
Because the Company's executive officers' employment agreements presently
control the compensation paid to such executive officers, the Compensation
Committee met only one time during 1996. The Audit Committee is responsible for
recommending independent auditors, reviewing with the independent auditors the
scope and results of the audit engagement, establishing and monitoring the
Company's financial policies and control procedures, reviewing and monitoring
the provision of non-audit services by the Company's independent auditors and
reviewing all potential conflict of interest situations. The Audit Committee
met two times during 1996. The Compensation Committee and Audit Committee are
each presently comprised of Mr. Robinson and Mr. Weiner, neither of whom has
ever been an officer or employee of the Company. Mr. Robinson is Chairman of
the Compensation Committee and Mr. Weiner is Chairman of the Audit Committee.
EXECUTIVE OFFICERS
The following sets forth information with respect to the Corporation's
executive officer who is not a director. Such officer is elected annually by
the Directors and serves until his successor is elected and qualified or until
his death, resignation or removal by the Directors:
Jerome J. Hiss, 46, has served as the Chief Financial Officer of the
Company since August 1996 and Secretary and Assistant Treasurer since September
1996. He is a Certified Public Accountant and a 1972 graduate of the
University of Notre Dame (B.B.A). From 1983 to August 1996, Mr. Hiss was
employed at ANTEC Corporation serving initially as controller of the
manufacturing business and later as a corporate division controller. Prior to
1983, Mr. Hiss was employed by Household International and the public
accounting firm of Deloitte & Touche.
3
<PAGE> 6
SHARE OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 30, 1997 by (i)
each Director of the Company who beneficially owns Common Stock, (ii) each
Executive Officer named in the Summary Compensation Table, (iii) each person
that is known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, and (iv) all Directors and executive
officers as a group.
<TABLE>
<CAPTION>
Number of Shares Percent of
Name (1) Beneficially Owned Shares Outstanding
- ------------------------------------------------------ ------------------ ------------------
<S> <C> <C>
Yehuda Tzur .......................................... 1,162,000(3) 17%
Arvin Scott .......................................... 1,049,000(4) 16%
Eric Goodman (2) ..................................... 979,000(5) 15%
Sami Israel .......................................... 1,001,000(6) 15%
Sheldon Robinson ..................................... 12,000(7) *
Sol S. Weiner ........................................ 6,000(8) *
Reuben Gabay ......................................... 631,000 9%
Dennis L. Kessler .................................... 0 *
All directors, director nominees and officers
as a group (8 persons) ............................... 4,209,000(9) 63%
</TABLE>
________________________
* less than one percent
(1) The address of each of Messrs. Tzur, Scott, Israel and Gabay are 3350
North Kedzie Avenue, Chicago, Illinois 60618-5722. The address of Mr.
Goodman is 18 Gail Grove Road, North York, Ontario, Canada M9M 1M4. The
address of Messrs. Robinson and Weiner are 6633 N. Sacramento, Chicago,
Illinois 60645 and 101 Hamilton, Evanston, Illinois 60202, respectively.
The address of Mr. Kessler is 170 Lakeside Place, Highland Park, Illinois
60035.
(2) Mr. Goodman granted to each of Messrs. Tzur, Scott, Israel, and Gabay a
non-transferable option to acquire from him for the nominal sum of $1.00
that number of shares of Common Stock as have a market value of
$62,500-CDN, determined as of July 1, 1998 and exercisable from and after
July 1, 1998 subject to certain conditions. See "Certain Transactions."
Includes 2,000 shares issuable upon the exercise of options which are
currently exercisable.
(3) Includes 5,000 shares issuable upon the exercise of options which are
currently exercisable.
(4) Includes 27,000 shares issuable upon the exercise of options which are
currently exercisable.
(5) Includes 2,000 shares issuable upon the exercise of options which are
currently exercisable.
(6) Includes 527,050 shares owned by Mr. Israel's spouse and children.
(7) Includes 12,000 shares issuable upon the exercise of options which are
currently exercisable.
(8) Includes 6,000 shares issuable upon the exercise of options which are
currently exercisable.
(9) Includes 52,000 shares issuable upon the exercise of options which are
currently exercisable.
4
<PAGE> 7
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
total annual compensation paid by the Company to the Chief Executive Officer
and each of the other executive officers ("Named Executive Officers") whose
total cash compensation for the year ended December 31, 1996 exceeded $100,000:
<TABLE>
<CAPTION>
===========================================================================================================
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
YEAR ANNUAL COMPENSATION ----------------- ALL OTHER
NAME AND PRINCIPAL POSITION ---- ------------------- NUMBER OF OPTIONS COMPENSATION
- --------------------------- SALARY BONUSES ------------
<S> <C> <C> <C> <C> <C>
Yehuda Tzur.......................... 1996 $160,000 --- 25,000 ---
Chairman of the Board 1995 $139,795 --- -- ---
1994 $130,921 --- -- $95,431(1)
- -----------------------------------------------------------------------------------------------------------
Arvin Scott.......................... 1996 $154,800 --- 25,000 ---
President and Chief Executive Officer 1995 $128,806 --- 55,000 ---
1994 $128,321 --- -- $11,286(1)
- -----------------------------------------------------------------------------------------------------------
Eric Goodman......................... 1996 $134,578 --- 10,000 ---
Executive Vice President 1995 $122,404 --- -- ---
- -----------------------------------------------------------------------------------------------------------
Sami Israel.......................... 1996 $135,000 --- -- ---
Vice President 1995 $139,795 --- -- ---
1994 $130,921 --- -- $94,083(1)
===========================================================================================================
</TABLE>
(1) Such amount includes: (i) distributions made to such individual for
estimated 1994 tax liabilities associated with the Company's election to
be treated as an S corporation for the period from January 1, 1992 to
April 30, 1994; and (ii) perquisites and other personal benefits, the
aggregate amount of which is greater than 10% of the total annual salary
and bonus reported for the executive officer.
OPTION TABLES.
The following table sets forth certain information with respect to options
granted to Messrs. Tzur, Scott and Goodman during the year ended December 31,
1996 under the Company's Stock Option Plan (as hereinafter defined). The
Company did not grant any stock appreciation rights during the year.
5
<PAGE> 8
Option Grants in 1996
---------------------
<TABLE>
<CAPTION>
===========================================================================================================================
Potential Realized
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
- ---------------------------------------------------------------------------------------------------------------------------
Number of % of Total Options
Securities Granted to
Underlying Options Employees In Fiscal Exercise Price Expiration
Name Granted Year (per Share) Date 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Yehuda Tzur 25,000 33% $5.00 9/10/07 --- $22,114
- ---------------------------------------------------------------------------------------------------------------------------
Arvin Scott 25,000 33% $5.00 9/10/07 --- $22,114
- ---------------------------------------------------------------------------------------------------------------------------
Eric Goodman 10,000 13% $5.00 9/10/07 --- $8,845
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises during the
year ended December 31, 1996 by the Named Executive Officers and the value of
such officers' unexercised stock options as of December 31, 1996.
<TABLE>
<CAPTION>
========================================================================================================
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at 12/31/96 at 12/31/96
- --------------------------------------------------------------------------------------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Yehuda Tzur --- --- 5,000 20,000 --- ---
- --------------------------------------------------------------------------------------------------------
Arvin Scott --- --- 27,000 53,000 $23,375 $35,062
- --------------------------------------------------------------------------------------------------------
Eric Goodman --- --- 2,000 8,000 --- ---
========================================================================================================
</TABLE>
COMPENSATION OF DIRECTORS
Each Director of the Company, who is not an officer or employee of the
Company, receives a fee of $2,500 per quarter and is reimbursed for
out-of-pocket expenses incurred in connection with attending meetings of the
Board of Directors. During 1996, each of Messrs. Weiner and Robinson received
$10,000 in directors fees and options to purchase 1,000 shares of Common Stock
at a price of $5.00 per share which were exercisable immediately.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Compensation Committee of the Board of Directors is comprised of Sol
S. Weiner and Sheldon Robinson, neither of whom has ever been an officer or
employee of the Company.
6
<PAGE> 9
EMPLOYMENT AGREEMENTS
Each of Messrs. Tzur, Scott, Goodman and Israel are parties to employment
agreements with the Company, all of which extend to May 1999, unless terminated
sooner in accordance with the provisions of such agreements, as amended, and
which provide for the renewal thereof for successive periods of one year at the
option of the Company. The employment agreements of each of such individuals
currently provide for an annual base salary of $135,000 and periodic bonuses.
Pursuant to the terms of the employment agreements, as amended, the officers'
compensation thereunder is subject to periodic adjustment by the Board of
Directors, or a committee thereof.
The foregoing employment agreements contain certain non-competition
covenants pursuant to which Messrs. Tzur, Scott, Goodman and Israel are
prohibited from owning (subject to limited exceptions) or providing certain
services to businesses similar to or in competition with the business of the
Company, so long as each of such individuals is employed pursuant to such
employment agreements, and for a period of one-year thereafter.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION.
Presently, all compensation decisions relating to the salaries of the
Named Executive Officers are governed by employment agreements between the
Company and each of Mr. Tzur, Scott, Goodman and Israel, which agreements
provide for the payment of annual base salaries of $135,000, subject to
increases or decreases in amount as determined by either the Board of Directors
or the Compensation Committee, to each of such individuals and periodic
bonuses. Because the Named Executive Officers' employment agreements presently
control the compensation paid to such executive officers, the Compensation
Committee did not formulate policies with respect to the Named Executive
Officers' compensation during 1996.
COMPARATIVE PERFORMANCE GRAPH.
The graph set forth below compares cumulative total shareholder return on
the Company's Common Stock with the cumulative total return of the companies
listed on the Nasdaq Stock Market (U.S. Companies) ("Nasdaq Market Index") and
an industry group consisting of publicly-traded companies included in the
Company's Standard Industrial Classification Code (SIC Code 5013 - Motor
Vehicle Supplies & New Parts) (the "Industry Index") for the period from
December 15, 1994 (the date of the Company's initial public offering) to
December 31, 1996. The comparison assumes the investment of $100 in Common
Stock, the Nasdaq Market Index and the Industry Index on December 15, 1994 and
the reinvestment of all dividends. The shareholder return of each of the
companies in the Industry Index has been weighted according to market
capitalization at the beginning of each measurement period. Although most of
the companies included in the Industry Index engage in the distribution of
brake parts, such companies also engage in other lines of business.
7
<PAGE> 10
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG UNIVERSAL AUTOMOTIVE INDUSTRIES,
NASDAQ MARKET INDEX AND SIC CODE INDEX
<TABLE>
<CAPTION>
12/15/94 12/31/94 12/31/95 12/31/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNIVERSAL AUTO 100 100 100 25
- --------------------------------------------------------------------------------
NASDAQ
Market
Index 100 100 100 110
- --------------------------------------------------------------------------------
SIC Code
Index 100 100 125 160
- --------------------------------------------------------------------------------
</TABLE>
ASSUMES $100 INVESTED ON DEC. 15, 1994
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1996
STOCK OPTION PLAN
The Company maintains the Universal Automotive Industries, Inc. Share
Option Plan (the "Stock Option Plan") for the benefit of its key employees,
non-employee directors, advisors, independent contractors and such other
persons as the Board of Directors believes valuable to the Company ("Eligible
Persons"). Options granted under the Stock Option Plan may be either incentive
stock options ("ISOs") under Section 422 of the Code or nonstatutory options
(an option which is not intended to be an "incentive stock option," as defined
in Section 422 of the Code). Options to purchase an aggregate of 138,026
shares of Common Stock are outstanding under the Stock Option Plan.
The Stock Option Plan, which was adopted by the Board of Directors on
October 13, 1994 and approved by the Company's stockholders on October 13,
1994, is intended to encourage ownership of Common Stock by Eligible Persons,
in order to attract such persons or to encourage such persons to serve or
continue to serve the Company, and to provide additional incentives for such
persons to promote the success of the Company. There are a total of 300,000
shares of Common Stock reserved for issuance under the Stock Option Plan. The
Stock Option Plan is administered by the Board of Directors, which may delegate
its authority to a committee.
No ISOs shall be granted after the expiration of the earlier of ten years
from the date of adoption and approval of the Stock Option Plan by the Company
and its stockholders. The fair market value of shares of Common Stock with
respect to which ISOs are exercisable for the first time by any Eligible Person
during any calendar year shall not exceed $100,000.
The exercisable price per share for shares underlying each nonstatutory
option shall be determined by the Board of Directors, which has the power to
determine eligibility to receive options and terms of any options granted,
including the exercise price, the number of shares subject to such nonstatutory
option, the vesting schedule and the exercise period. The exercise price per
share for shares underlying all ISOs granted under the Stock Option Plan must
be at least equal to the fair market value of a share of Common Stock on the
date of the grant. With respect to any participant who owns stock possessing
more than 10% of the voting power of the Company's outstanding capital stock,
the exercise price per share for shares underlying any ISO granted must equal
at least 110% of the fair market value of a share of Common Stock covered by
such ISO on the grant date and the ISO shall terminate not more than five years
from the grant date.
8
<PAGE> 11
ISOs shall terminate not more than ten years from the date of grant.
Nonstatutory options shall terminate not more than eleven years from the date
of grant. All options granted under the Stock Option Plan may be exercised
over a period of time after such person leaves the Company or after death. All
options granted under the Stock Option Plan are non-transferable.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's Directors, Executive Officers and persons who own more than
10% of the outstanding shares of the Common Stock file with the Securities and
Exchange Commission, certain reports relating to their ownership of Common
Stock and changes in such ownership. The Company is required to identify in
this Proxy Statement any persons subject to this requirement who failed to file
any such report on a timely basis. Based solely on a review of the copies of
such reports furnished to the Company, all such reports were filed on a timely
basis.
CERTAIN TRANSACTIONS
Until June 1995, the Company's former headquarters facility located in
Chicago, Illinois, from which it moved in June 1994 to its present facility,
was owned by a land trust, operating as a partnership, of which Yehuda Tzur,
Reuben Gabay and Sami Israel are the beneficiaries (the "Talman Trust"). The
Company stored obsolete inventory at its former headquarters facility. The
Company paid $58,800 and $115,233 in rent for such facility during 1995 and
1994, respectively.
In April 1994, the Company acquired all the voting capital stock of UBP
Canholdings, an Ontario, Canada corporation, which is the parent company of
Universal Brake Parts, Inc., an Ontario, Canada corporation (hereinafter
referred to together as "UBP Canholdings"), pursuant to a stock exchange
agreement effective April 30, 1994 (the "Stock Exchange Agreement"), under which
Eric Goodman, the owner of UBP Canholdings, exchanged all of the outstanding
voting Common Stock of UBP Canholdings for 20% of the outstanding Common Stock
of the Company. Mr. Goodman became an executive officer and a Director of the
Company contemporaneously with the consummation of such transactions.
Immediately prior to the exchange of shares between Mr. Goodman and the Company,
the Company purchased the assets of a subsidiary of UBP Canholdings which
operated a specialty brake parts warehouse in Michigan.
Prior to May 1994, Messrs. Tzur, Scott, Gabay and Israel owned all of the
issued and outstanding capital stock of IDC Holdings Corporation, an Ontario,
Canada corporation and Universal Automotive, Inc. Immediately prior to the
consummation of the acquisition of UBP Canholdings, Messrs. Tzur, Scott, Gabay
and Israel, pursuant to a stock exchange agreement between such individuals and
the Company, exchanged all of such IDC Holdings Corporation and Universal
Automotive Industries, Inc. capital stock for the issuance to each of them of a
25% interest in the Company.
In connection with the acquisition of UBP Canholdings by the Company, the
Company and Messrs. Tzur, Scott, Gabay and Israel agreed to guarantee the
repayment of approximately $350,000 owed by UBP Canholdings to an individual
who was previously associated with UBP Canholdings. In exchange for such
guarantee Mr. Goodman, pursuant to the terms of the Stock Exchange Agreement,
granted to each of Messrs. Tzur, Scott, Gabay and Israel a non-transferable
option to acquire from him for the nominal sum of $1.00 that number of shares
of Common Stock as have a market value of $62,500-CDN, determined as of July 1,
1998, and exercisable during the period from July 1, 1998 through January 1,
1999.
For the period during which the Company was an S corporation, the Company
made periodic distributions of S corporation income to its then existing
stockholders, the majority of which distributions were to correspond with such
stockholders' tax liabilities associated with the Company's earnings. In 1994,
the Company made distributions of S corporation income to each of Messrs. Tzur,
Gabay and Israel of approximately $79,124 including approximately $46,665 in
connection with their respective remaining 1993 income tax liabilities.
9
<PAGE> 12
In 1991, each of Messrs. Tzur, Gabay and Israel and in 1993, Mr. Scott,
loaned the Company $90,000, which loans are evidenced by separate promissory
notes, which bear interest at the fixed rate of 10% per annum and are due on
December 31, 1996. In 1994, Mr. Goodman loaned the Company approximately
$90,000, which loan bears interest from May 1, 1994 at 10% per annum. Messrs.
Tzur, Scott, Gabay, Goodman and Israel agreed with the Company, effective
December 15, 1994, to forgive the payment of any accrued interest by the
Company on these notes and to the repayment by the Company of only the
principal portion of such notes over a 24-month period beginning in 1995. As
of December 31, 1996 amounts outstanding on Messrs. Scott, Tzur, Goodman, Gabay
and Israel's notes were $11,981, $45,000, $20,735, $35,008 and $45,000,
respectively.
The Company maintains key man life insurance policies, which it purchased
through the insurance agency of which Sheldon Robinson, a director of the
Company, is an owner, covering the life of each of Mr. Tzur, Mr. Scott, Mr.
Gabay and Mr. Israel in the amount of $1,000,000, the proceeds of which would
be payable to the Company. The Company paid premiums of approximately $69,000
for these policies in 1996.
Mr. Kessler is a stockholder and Co-President of Fel-Pro Incorporated which
was a supplier to Universal Automotive, Inc., a subsidiary of the Company. This
supply arrangement ended amicably in 1996.
The Company has borrowed a total of $1,430,000 on a short term basis from
Messrs. Tzur, Gabay and Weiner and a general partnership managed by Mr.
Robinson, the terms and current outstanding balances of which are set forth in
the following table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Outstanding
Amount Balance
Lender Borrowed As of 12/31/96 Interest Rate Maturity
- -------------------- ----------- -------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Yehuda Tzur $100,000 $40,000 0 Demand
- ---------------------------------------------------------------------------------------------
$100,000 $100,000 Mr. Tzur's cost of Later of 1/1/98 or
borrowing demand
- ---------------------------------------------------------------------------------------------
General Partnership
Managed by Sheldon
Robinson $250,000 0 12.0% 10/15/96
- ---------------------------------------------------------------------------------------------
$250,000(1) $250,000 11.0% 6 payments of
$30,000 through
4/15/97 and
2 payments of
$35,000 through
5/15/97
- ---------------------------------------------------------------------------------------------
Sol S. Weiner $100,000(2) $100,000 11.0% 5/12/97
- ---------------------------------------------------------------------------------------------
Reuben Gabay $630,000 $630,000 11.0% Later of 1/1/98 or
demand
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Plus options to purchase 10,000 shares of Common Stock at $5.00 per share
which are exercisable immediately.
(2) Plus options to purchase 4,000 shares of Common Stock at $5.00 per share
which are exercisable immediately.
10
<PAGE> 13
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee,
has appointed, subject to stockholder ratification, the firm of Altschuler,
Melvoin and Glasser LLP, certified public accountants, as the Company's
independent auditors for 1997. If the shareholders do not ratify the
appointment of Altschuler, Melvoin and Glasser LLP, the Board of Directors will
reconsider its appointment upon the recommendation of the Audit Committee.
A representative of Altschuler, Melvoin and Glasser LLP is expected to be
present at the Meeting. Such representative will have the opportunity to make
a statement if he desires to do so and will be available to respond to
appropriate shareholder questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
ALTSCHULER, MELVOIN AND GLASSER LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
1997.
DATE FOR RECEIPT OF PROPOSALS
In order for stockholder proposals to be included in the proxy materials
for the Company's 1997 Meeting of Stockholders, any such proposal must be
received by the Company at its executive offices not later than February 5,
1998 and meet all other applicable requirements for inclusion therein.
OTHER BUSINESS
The Board of Directors is not aware of any other matter to come before the
Meeting. However, if any such matter does come before the Meeting which
requires the vote of the Stockholders, it is the intention of the persons named
in the enclosed Proxies to vote the shares of Common Stock represented thereby
in accordance with the recommendations of the Company's management and their
judgment on such matter.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996 WILL BE PROVIDED FREE OF CHARGE TO STOCKHOLDERS UPON WRITTEN
REQUEST DIRECTED TO UNIVERSAL AUTOMOTIVE INDUSTRIES, INC., 3350 NORTH KEDZIE
AVENUE, CHICAGO, ILLINOIS 60618, ATTENTION: JEROME HISS.
By order of the Board of Directors,
Jerome J. Hiss, Secretary
Chicago, Illinois
June 6, 1997
11
<PAGE> 14
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
3350 North Kedzie
Chicago, Illinois 60616
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Yehuda Tzur and Jerome Hiss, and each of
them, as Proxies, with the power to appoint their substitutes, and hereby
authorizes them to represent and to vote, as designated on the reverse side,
all the Shares of Common Stock of Universal Automotive Industries, Inc. (the
"Corporation") held of record by the undersigned on May 2, 1997, at the Annual
Meeting of Stockholders when convened on June 26, 1997, or any adjournment
thereof.
1. ELECTION OF DIRECTORS--PROPOSAL to elect seven Directors to hold office
until the next Annual Meeting of Stockholders, or otherwise as provided in the
Corporation's Certificate of Incorporation (check one box):
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as withheld in the space to vote for all the nominees
provided below) listed below
Mr. Yehuda Tzur, Mr. Arvin Scott, Mr. Eric Goodman, Mr. Sami Israel, Mr. Sol S.
Weiner, Mr. Sheldon Robinson and Dennis L. Kessler
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. SELECT AUDITOR--PROPOSAL to concur in the selection of Altschuler, Melvoin
and Glasser LLP as the Corporation's independent auditor for the fiscal year
ending December 31, 1997 (check one box); and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. OTHER BUSINESS--In their discretion, the Proxies are authorized to transact
any other business as may properly come before the Meeting, or any adjournment
thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR Proposals 1 and 2.
-------------------------------------------
Signature Date
-------------------------------------------
Signature Date
NOTE: Sign exactly as name appears above.
If joint tenant, both should sign. If
attorney, executor, administrator,
trustee, or guardian, give full title as
such. If a corporation, please sign
corporate name by President or authorized
officer. If a partnership, sign in full
partnership name by authorized person.
Please promptly mark, date, sign, and return this card using the enclosed
envelope. Please contact Jerome Hiss at (773) 478-2323 with any questions
regarding the above.
