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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 13, 2000
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3973627
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
11859 S. CENTRAL AVE.
ALSIP, ILLINOIS 60803
(708) 293-4050
(ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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ARVIN SCOTT
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
11859 S. CENTRAL AVE.
ALSIP, ILLINOIS 60803
(708) 293-4050
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
WITH A COPY TO:
MITCHELL D. GOLDSMITH, ESQ.
DENNIS B. O'BOYLE, ESQ.
SHEFSKY & FROELICH LTD.
444 NORTH MICHIGAN AVENUE, SUITE 2500
CHICAGO, ILLINOIS 60611
(312) 527-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT HAS BECOME EFFECTIVE.
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If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box: | |
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box: |X|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities, Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering: | |
If this Form is a post-effective amendment filed pursuant to
Rule 462(b) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering: | |
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box: | |
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
COMMON STOCK, $.01 PAR VALUE (1) 1,495,000 SHARES $2.25 $3,363,750 $888.03
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(1) WE ISSUED 1,495,000 WARRANTS TO PURCHASE 1,495,000 SHARES AT AN
EXERCISE PRICE OF $7.00 PER SHARE TO THE PUBLIC IN A REGISTERED
OFFERING, WHICH BECAME EFFECTIVE ON DECEMBER 15, 1994. WE ARE REDUCING
THE STRIKE PRICE OF THESE WARRANTS TO $2.25 PER SHARE AND EXTENDING THE
EXERCISE PERIOD TO DECEMBER 31, 2000. WE WILL ISSUE THESE SHARES WHEN
WARRANT HOLDERS EXERCISE WARRANTS.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The Information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED January 13, 2000
PRELIMINARY PROSPECTUS
1,495,000 Shares of Common Stock
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UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
This Prospectus relates to our offer and sale of up to 1,495,000 shares
of common stock, issuable upon the exercise of outstanding warrants. We issued
the warrants in connection with our initial public offering which we commenced
in December 1994. These warrants are publicly traded.
Our common stock is included for quotation on the Nasdaq SmallCap
Market under the symbol UVSL and is listed for trading on the Chicago Stock
Exchange under the symbol UVS. On January 11, 2000, the last reported bid price
for our common stock on the Nasdaq SmallCap Market was $2.062.
We will receive the proceeds from the exercise of warrants in an amount
which will not exceed $3,363,750.
BROKERS/DEALERS MAY RECEIVE COMMISSIONS IN CONNECTION WITH A WARRANT
HOLDER'S SALE OF THE COMMON STOCK AFTER EXERCISE OF THE WARRANT. WE WILL PAY
SUBSTANTIALLY ALL OTHER EXPENSES OF THIS OFFERING (INCLUDING THE EXPENSE OF
PREPARING AND DUPLICATING THIS PROSPECTUS AND THE REGISTRATION STATEMENT OF
WHICH IT IS A PART).
Please review the "Risk Factors" beginning on page 7 before you
exercise your warrants and purchase shares in our Company.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January , 2000
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DOCUMENTS INCORPORATED BY REFERENCE
We are incorporating in this Prospectus by reference the following
documents which we filed with the U.S. Securities and Exchange Commission:
1. Our Annual Report on Form 10-K, for the year ended December 31,
1998.
2. Our Registration Statement on Form 8-A filed on December 5, 1994
including all amendments thereto.
3. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1999.
4. All documents that we file pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, after the
date of this Prospectus and prior to the termination of the offer
made by this Prospectus are incorporated by reference in this
Prospectus and made a part hereof from the date of our filing of
these documents.
Any statements contained in a document incorporated by reference shall
be deemed to be modified or superseded to the extent that a statement contained
herein or in any subsequently filed document which is also incorporated by
reference modifies or supersedes such statements. Any such statement so modified
or superseded shall constitute part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED OR DELIVERED WITH THIS PROSPECTUS. THESE DOCUMENTS (EXCEPT ANY
EXHIBITS TO THEM) ARE AVAILABLE WITHOUT CHARGE FROM US UPON WRITTEN OR ORAL
REQUEST BY ANY PERSON WHO RECEIVES THIS PROSPECTUS. REQUESTS TO OBTAIN SUCH
DOCUMENTS SHOULD BE DIRECTED TO US AT 11859 SOUTH CENTRAL AVENUE, ALSIP,
ILLINOIS 60803 (708) 293-4050.
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Some of the statements included in this Prospectus may be considered to
be "forward looking statements" since such statements relate to matters which
have not yet occurred. For example, phrases such as "the Company anticipates,"
"believes" or "expects" indicate that it is possible that the event anticipated,
believed or expected may not occur. Should such event not occur, then the result
which the Company expected also may not occur or occur in a different manner,
which may be more or less favorable to the Company. The Company does not
undertake any obligation to publicly release the result of any revisions to
these forward looking statements that may be made to reflect any future events
or circumstances.
Readers should carefully review the items included under the subsection
Risk Factors, as they relate to forward looking statements as actual results
could differ materially from those projected in the forward looking statement.
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THE COMPANY
We are a manufacturer and distributor of brake rotors, drums, disc
brake pads, relined brake shoes, wheel cylinders and brake hoses for the
automotive aftermarket. We market approximately 50% of our product under our UBP
trademark (Universal Brake Parts) and the balance under our customers' private
labels. We believe we are the leading North American supplier of "value line"
brake parts (brake parts sold at prices significantly below those of certain
leading national brand name brake parts) to mass-market retailers, traditional
warehouse distributors and specialty undercar distributors. Many of our "value
line" competitors specialize in only one category of brake parts. By offering a
full line of "value line" brake products, we believe that we have an advantage
over those competitors offering "value line" products in fewer brake part
categories in light of the industry trend to consolidate the number of
suppliers.
We also market a premium line of brake rotors and friction products
under our Ultimate trademark. We designed the Ultimate product line to compete
at the high end of the market by providing exceptional quality and features at
slightly lower prices than the established premium brands. The Ultimate product
line, since its launch in 1997, has experienced double digit growth. All the
friction products and the majority of the rotors in the Ultimate line are
manufactured at our manufacturing facilities.
We are one of four U.S. based aftermarket disc brake rotor and drum
manufacturers. We operate a facility in Laredo, Texas which finishes raw rotor
castings into finished products. In addition, we research, develop and produce
friction products at our Toronto, Canada and Walkerton, Virginia manufacturing
plants.
We also conduct a wholesale "commodities" operation from our
headquarters in Alsip, Illinois, purchasing certain automotive replacement parts
and maintenance items in large volume, at favorable prices, and reselling such
products at slightly higher prices.
We have experienced significant growth in sales of brake rotors and
other brake parts. Due to overall improvement of our brake parts business, sales
in this category increased by $10.9 million or 26% to $53.1 million in 1998
compared to $42.1 million in 1996, the year that we liquidated the non-brake
parts warehouse distributor business. However, we can give no assurance that
this percentage increase in sales will continue at such level in the future. We
currently market our UBP Universal Brake Parts line to warehouse distributors,
mass market retailers, specialty, "under-the-car" distributors and national
franchise and chain installers located throughout the United States and Canada,
principally through our salespeople, independent sales representatives and
telemarketing. We have been named a primary private label brake rotor and drum
supplier to several national buying groups.
Our brake part net sales and the related gross profit as a percentage
of total net sales and gross profit increased to 83% and 87%, respectively, in
1998 compared to 66% and 81%, respectively, in 1996, the year that we liquidated
the non-brake parts warehouse distribution business.
In October 1995, we acquired the assets of Csepel Iron Foundry Works, a
producer of high quality gray iron and ductile iron casting products, located in
Budapest, Hungary. We manufacture iron casting products at our Hungarian foundry
primarily for the European automotive and machine tool industries. The foundry
is not presently equipped to manufacture high volume, smaller-sized items such
as brake rotors. All of the foundry's sales are in Europe.
Our strategy is to capitalize on the increasing demand for brake parts
and the higher gross margins on sales of such brake parts by expanding our brake
parts manufacturing and distribution business. We
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believe that we can implement our expansion strategy by: (i) gaining additional
market share of friction brake products; (ii) being a complete "value line"
brake part supplier; (iii) possibly acquiring other specialty brake parts
distributors; (iv) being a low cost producer of brake parts; (v) increasing our
SKU coverage to existing customers; and (vi) building brand recognition through
our Ultimate brand brake parts (a premium product line). We may seek additional
debt or equity financing to finance this expansion.
As part of our strategy to expand our specialty brake parts
distribution business and increase our focus on this segment, we have taken the
following actions:
(i) April 1995 - we purchased the brake rotor and drum inventory and
customer list of the passenger car division of MHD Automotive, an
Illinois-based distributor of brake parts;
(ii) June 1995 - we acquired the inventory and customer list of North
American Rotor, Inc., a distributor of brake drums and rotors;
(iii) October 1995 - we acquired the assets of Csepel Iron Foundry Works in
Budapest, Hungary with a view toward potential future upgrading in
order to eventually produce brake rotors for internal requirements;
(iv) January 1996 - we acquired the remaining 50% of the outstanding stock
of UBP Friction, Inc., a Canadian-based specialty manufacturer of
brake friction parts, and now own 100% of the outstanding capital
stock of that company;
(v) March 1996 - we acquired the brake parts inventory and customer list
of MPW Brake Supply of Cambridge, Massachusetts, an aftermarket brake
parts distributor on the East Coast;
(vi) June 1996 - we acquired the assets and goodwill of North American
Friction Inc., a Canadian manufacturer of a brake friction component
used in our brake friction manufacturing process;
(vii) September 1996 - we substantially liquidated our non-brake parts
warehouse/distribution division which enabled us to utilize the
financial, warehouse and personnel resources previously used by such
division in our higher margin brake parts business. We substantially
completed the liquidation by December 31, 1996;
(viii) November 1996 - we acquired all of the assets of the MCI Automotive
Division of Excel Industries which was in bankruptcy. We acquired the
inventory at values substantially less than then current market values
and we have sold substantially all such inventory. We also acquired a
substantial number of additional brake rotor patterns and additional
equipment to increase our manufacturing capacity;
(ix) November 1997 - we launched our premium brake category, Ultimate Brake
Parts(TM);
(x) November 1999 - we purchased substantially all the assets of Total
Brake Industries, Inc. of Walkerton, Virginia, which will enable us to
expand our production of brake pads and brake shoes from both new and
used brake cores; and
(xi) December 1999 - we sold inventory, fixed assets and the customer list
associated with the Canadian distribution business headquartered in
Toronto, Canada.
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THE INDUSTRY
The brake parts segment of the automotive aftermarket is the segment of
that industry currently experiencing the most growth. While the overall market
is growing at a rate of approximately 2.75% per year (following the total growth
in the number of vehicles), the brake portion of the industry is currently
enjoying growth of 5% to 6% per year. This larger growth rate is supported by
several factors, including increasing wear and tear on brakes, changes in
vehicle design, improved components (e.g., front wheel drive, semi-metallic disc
pads and ABS braking systems), increased speed limits and an overall increase in
the number of miles driven per year.
The introduction of front wheel drive vehicles in 1980 resulted in
changes in vehicle design. The mix of front to rear braking changed over the
years from 60% front - 40% rear to as high as 85% front - 15% rear. This equates
to much higher heat on the front rotors as they are forced to do much more of
the braking, resulting in increased wear on rotors.
The government has mandated targets for improving fuel economy and
imposed sizable taxes for not attaining such targets. Car manufacturers have
generally chosen reducing vehicle weight as the short-term method of improving
fuel economy. One of the prime targets has been the braking system which has
always been over designed and, therefore, overweight. Rotors and calipers were
reduced in size to help achieve these new weight targets, which reduces rotor
and disc pad life. Lighter weight rotors are less costly than heavier rotors and
upon wearing down it is generally more cost effective to discard, rather than
refurbish the rotors.
Increased speed limits have increased braking system usage. Speed
limits in several states have been increased from the 55 mph of the mid 1970's
to as high as 75 mph in some states. This 36% increase in speed requires almost
300% more braking power to achieve the same stopping distance. In response to
these increased demands placed on braking systems, vehicle manufacturers created
anti-lock braking systems which electronically monitor the performance of each
wheel to assure that is does not lock and skid, thus reducing the braking power
of that wheel. This system rapidly activates and releases pressure on a wheel to
keep it from locking up and skidding. This rapid action on the brake system
tends to increase wear of the brake components.
Specifications for bringing a vehicle to a complete stop from 60 mph
have been reduced from 150 feet to 90 feet. To achieve this result, car
manufacturers specify metallic brake pads which have shorter life and which, in
turn, shorten the life of the brake rotor.
Demands on the braking systems associated with these factors have
increased dramatically (300% to 500%) while the basic design of the systems has
remained relatively constant. We believe that the brake category of the
automotive aftermarket will continue to grow at the 5% to 6% level well into the
next decade.
PRODUCTS
We supply a wide range of brake components to all levels of
distribution. Our manufacturing facilities in both the U.S. and Canada produce
brake drums and rotors as well as a full range of friction products, primarily
disc brake pads and brake shoes. We purchase from unaffiliated vendors those
products required to complete our product offering. We are one of four U.S.
based aftermarket disc brake rotor and drum manufacturers and the only "value
line" supplier with basic manufacturing capability. We believe that
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our "value line" competitors do not have our breadth or scope of manufacturing
capacity, and are, therefore, subject to the competitive disadvantages inherent
in dependence upon third party suppliers.
The development of this basic manufacturing capability has positioned
us to compete with the established brand names in the industry by marketing a
premium line of brake rotors and friction products under its Ultimate Brake
Parts(TM) label. Consolidation in the distribution and manufacturing segments of
the brake aftermarket has left customers with fewer and fewer alternatives. We
believe that this will offer us substantial opportunities for increasing market
penetration in the future. Although some new competitors have been formed
recently from executives leaving the consolidated companies, they tend to be
relatively small companies which lack the breadth of product offering and the
"value added" of manufacturing their products directly, rather than simply
purchasing their products from others.
MARKETING AND DISTRIBUTION
Marketing
We currently market products to all levels of distribution under the
name "UBP Universal Brake Parts" as well as under a number of private label
programs for large buying groups, national franchise programs and installer
chains. The long term strategy, while growing the private label program, is to
improve UBP brand recognition in the market place and position our product lines
to compete with established branded products. Branded products generally are
offered by our competitors at a premium price, thus offering customers who
choose UBP products substantial opportunity for improved margin performance.
This group of competitors also currently commands approximately 55% of the total
brake market, making them a prime competitive target.
We employ a sales force that directs our independent sales
representative network and the other brake marketing activities. Arrangements
with our independent sales representatives may be terminated at any time by
either party. We also perform telemarketing operations directed at national
franchise and chain installers.
Distribution
Our Alsip, Illinois facility acts as the primary facility for our
United States distribution. We also maintain a redistribution warehouse in
Southern California. We upgraded our California facility in 1997 to better
service our growing West Coast distribution.
We conduct a wholesale commodities operation from our headquarters
facility in Alsip, Illinois, purchasing certain automotive replacement parts and
maintenance items in large volume, at favorable prices, and reselling such
products at slightly higher prices. We make large volume purchases of products
on the open market, generally buying from foreign and domestic manufacturers and
other warehouse distributors, and resell such products to other warehouse
distributors, mass market retailers and jobbers. Such operations result in gross
margins that are significantly lower than gross margins from our other
operations. However, they generally require minimal resources and contribute to
our overall gross profit. We can make no assurance that future market conditions
will be favorable to our wholesale commodities operations or that
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we will continue to generate sufficient revenues or acceptable profit margins
from such wholesale operations. For the years ended December 31, 1996, 1997 and
1998, net sales from our wholesale commodities operations accounted for
approximately 15%, 7% and 8% of our total net sales, respectively, and 4%, 3%
and 5% of our total gross profits, respectively.
MANUFACTURING
The Laredo, Texas rotor machining facility has a current capacity of
approximately 750,000 units on a two shift basis. Through the acquisition of
Excel Industries' MCI operation in 1996, we acquired approximately 200 foundry
tools, which provided the base to manufacture approximately 210 different part
numbers representing approximately 80% of our total volume in the drum and rotor
category. We established a relationship with Waupaca Foundry, Inc. ("Waupaca")
to supply raw castings as a result of its MCI acquisition. Waupaca is the
premier rotor casting vendor in North America.
We acquired North American Friction in 1996 to provide a basic friction
manufacturing capability, currently from two factories located in suburban
Toronto, Ontario. We now offer a full line of a variety of friction grades in
both riveted and integrally molded disc brake pads. North American Friction was
awarded ISO 9001 certification in July 1999.
We acquired Total Brake Industries' assets in November, 1999 and
operate from a leased facility in Walkerton, Virginia. This enables us to
increase our manufacturing of pucks for disc brake pads and produce strip lining
for the remanufacturing of brake shoes, as well as to move our brake shoe
manufacturing and remanufacturing operations from Ontario, Canada, thereby
freeing up additional capacity for brake pad manufacture in Canada.
Our wholly-owned foundry operation in Budapest, Hungary is capable of
producing complex, handformed castings primarily for the European market.
Although this facility was originally contemplated to be upgraded with new
equipment to eventually produce rotors for internal requirements, it is unlikely
that such investment will be made in the foreseeable future. Accordingly, we are
currently examining our options regarding such facility, including its possible
sale.
Our principal executive offices are located at 11859 South Central
Avenue, Alsip, Illinois 60803, and our telephone number is (708) 293-4050.
Unless the context otherwise requires, the term "we" includes Universal
Automotive Industries, Inc. and our direct and indirect subsidiaries, including
our predecessor. Universal Automotive, Inc.
RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SHOULD NOT BE
PURCHASED BY PERSONS WHO CAN NOT AFFORD THE LOSS OF THEIR TOTAL INVESTMENT.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN,
THE FOLLOWING RISK FACTORS:
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EXPANSION; POSSIBLE NEED FOR ADDITIONAL FINANCING
Our continued growth and financial performance will depend in part on
our ability to continue to expand our business through: (i) gaining additional
market share for friction brake products; (ii) the purchase of additional
manufacturing machinery and brake rotor patterns to increase the number of brake
rotor SKUs we manufacture; (iii) the possible acquisition of other brake parts
manufacturers or distributors on favorable terms; (iv) additional sales
penetration of current customers; and (v) the successful operation of our
Hungarian foundry facility. While we regularly evaluate and discuss possible
acquisitions, we have not entered into any binding agreement with any potential
acquisition candidates, we cannot assure you that we will be successful in
locating suitable acquisition candidates or that we will consummate any
additional acquisitions in the future. In addition, we can make no assurances
that any operations that we acquire will be effectively and profitably
integrated into our current operations. Our future results will be affected by
our ability to manage our operations and growth effectively and to continue to
obtain an adequate supply of quality brake parts on a timely and cost-effective
basis to meet the growing demand for our UBP Universal Brake Parts products. We
can offer no assurance that any future expansion of our operations or
acquisitions will not have an adverse effect on our operating results,
particularly during the periods immediately following any such expansion or
acquisition. We will be required to seek additional financing to fund our
expansion through acquisitions or the upgrade of existing facilities. We have no
current commitments or arrangements for additional financing and we can make no
assurances that additional financing will be available to us on acceptable
terms, or at all. We may also issue common stock or other securities in
connection with future acquisitions, resulting in additional dilution to our
existing stockholders.
LEGAL PROCEEDINGS
We have reserved $301,000 as a loss reserve with respect to a lawsuit
with First National Parts Exchange (the "Estate"). We cannot assure you that
such reserve is adequate. In the event a judgment in excess of such sum is
entered in favor of the Estate pursuant to the appeal of the lower court's
decision in this case, we will be required to pay or bond over (on appeal)
against such judgment. We cannot assure you that we will have sufficient
resources to cover any judgment in excess of our resources.
BANK FINANCING
We have incurred significant indebtedness in connection with our
operations. As of December 31, 1998 and September 30, 1999, our total
consolidated indebtedness was approximately $21.4 million and $23.9 million,
respectively. A substantial portion of this indebtedness is secured by
substantially all of our assets (except the Hungarian foundry assets) and by a
pledge of all of our subsidiaries' outstanding capital stock. As a result of
such indebtedness, we: (i) are prohibited from paying cash dividends pursuant to
certain covenants and restrictions contained in the loan agreements governing
such indebtedness; (ii) could be hindered in our efforts to obtain additional
financing in the future for working capital, capital expenditures, acquisitions
or general corporate or other purposes; and (iii) would be vulnerable to
increases in interest rates since substantially all of our borrowings are at
floating rates of interest.
On July 14, 1997, we entered into a credit agreement with LaSalle
National Bank (the "Bank") for: (i) a revolving line of credit of up to
$20,000,000 based on eligible accounts receivable and inventory; and (ii) a term
loan in the initial amount of $4,450,000. On September 29, 1999, we entered into
a new credit facility ("New Facility") with the Bank and its affiliate, LaSalle
Business Credit, containing a revolving line of credit of up to $22,000,000
based on eligible accounts receivable and inventory, and a $3,856,672 term loan
facility secured by the Company's equipment and real estate. In connection with
the sale of our Chicago
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facility in October of 1999, the term loan was paid down at that time by
$2,890,000. Our revolving credit facility bears interest at the Bank's announced
prime rate plus 0.5% per annum, subject to an ongoing option to convert to an
interest rate at LIBOR plus 2.5% per annum. The term loan is payable in monthly
principal installments of $18,705, with a balloon payment of $3,183,292 due on
May 1, 2002, and bears interest at prime plus 0.75% per annum. The New Facility
expires May 1, 2002.
On July 14, 1997, we sold a $4,500,000 subordinated debenture to Tandem
Capital, Inc. (an affiliate of Sirrom Capital Corporation and now known as
Finova Mezzanine Capital Corporation), calling for payments of interest at
12.25% per annum through maturity on July 14, 2002. We issued Tandem a warrant
to purchase 450,000 shares of our common stock at an exercise price equal to 80%
of the average closing bid price of our common stock for the 20 days preceding
the first anniversary of the debenture closing date, computed to be $.83 per
share. On each of August 14, 1998, February 14, 1999 and August 14, 1999, we
issued Tandem warrants to purchase an additional 225,000 shares of common stock.
We will also issue Tandem warrants to purchase an additional 225,000 shares of
common stock on August 14, 2000 and August 14, 2001 unless we prepay the
debenture before a scheduled warrant issue date, then we will not issue any
subsequent warrants. In each instance, the exercise price for the warrants is
80% of the average closing bid price of our common stock for the 20 days
preceding each such warrant issue date.
DEPENDENCE UPON KEY PERSONNEL
Our continued success will depend to a significant degree upon the
efforts and abilities of our senior management, in particular, Arvin Scott, our
President and Chief Executive Officer, and Yehuda Tzur, our Chairman of the
Board, respectively. The loss of the services of Mr. Scott or Mr. Tzur could
have a material adverse effect on us. We have employment agreements with each of
these individuals. We maintain, and intend to continue to maintain, key man term
life insurance policies covering the life of each of Mr. Scott or Mr. Tzur in
the amount of $6,000,000 and $1,000,000, respectively, the proceeds of which
would be payable to us.
ACQUISITION OF HUNGARIAN FOUNDRY
In October 1995, we acquired at substantially below replacement cost
the assets of Csepel Iron Foundry Works, a producer of high quality gray iron
and ductile iron casting products, located in Budapest, Hungary. Csepel Iron
Foundry Works has been a supplier of gray iron and ductile castings to the
machine tool, transport and automotive industries in Europe for over 50 years.
We are operating the foundry facility in its existing location and have retained
the management and manufacturing staff. We have renovated the foundry to improve
the manufacturing facilities. The operations of the foundry have been
unsatisfactory, to date, due to challenges associated with the loss of its major
customer and economic instability in the region. The foundry has successfully
rebuilt some of its lost sales and continues to manufacture high quality
products, but has operated below break-even for much of 1999 and for much of the
time preceding such date. We are presently seeking to sell the foundry. There
can be no assurances that the foundry can be sold at its current book value, or
at all.
Our investment in the Hungarian facility involves certain special risks
not usually associated with an investment in a U.S. company, including risks
related to: (i) greater social, economic and political uncertainty and
instability of its customer base; (ii) certain restrictions on foreign
investment and repatriation of capital; (iii) exchange control regulations; (iv)
currency exchange rate fluctuations, which may increase the costs associated
with conversion of the investment principal and income from one currency to
another;
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(v) higher rates of inflation; (vi) greater governmental involvement in the
economy; and (vii) the application of certain environmental regulations to the
foundry property.
INSURANCE
Although we currently have general liability insurance for all our
operations, prior to September 1994 we did not have general or products
liability insurance for our brake rotor manufacturing operations.
We would be adversely affected if we should incur liability for a general or
products liability claim relating to an incident which occurred prior to the
time that we obtained general and products liability coverage for our
manufacturing operations. To date, no such claim has been asserted against us.
In addition, we would be adversely affected by the incurrence of liability which
is not covered by insurance or is in excess of policy limits.
NO DIVIDENDS
We do not currently intend to declare or pay any cash dividends on our
common stock in the foreseeable future and anticipate that earnings, if any,
will be used to finance the development and expansion of our business. Moreover,
our bank lines of credit prohibit the declaration and payment of cash dividends.
Prospective investors should not expect us to pay dividends on our common stock
until such time, if any, that we are able, if at all, to obtain a release of the
prohibition on the payments of dividends imposed by the terms of our credit
facilities. Any payment of future dividends and the amounts thereof will be
dependent upon our earnings, financial requirements and other factors deemed
relevant by our Board of Directors, including our contractual obligations.
SHARES ISSUED IN CONNECTION WITH
THE EXERCISE OF WARRANTS
In connection with our public offering on December 15, 1994, we sold to
the public 1,495,000 units consisting of one share of common stock and one
five-year Warrant (the "Warrants"). Each Warrant originally was scheduled to
expire December 15, 1994 and was immediately detachable and separately
transferable from the shares and entitles the holder thereof to purchase one
share at a price of $7.00 per share, which we have since amended to $2.25 per
share. There is no antidilution protection to the Warrants as extended (except
for equitable adjustments for stock splits, reverse stock splits and stock
dividends). We extended the expiration of the exercise period for the Warrants
to December 31, 2000.
To exercise a Warrant, a Warrantholder must complete, sign and date the
Letter of Transmittal, attached as Exhibit A hereto, or a facsimile thereof,
have his signature guaranteed, if required by the Letter of Transmittal, and
forward: (i) to our transfer and warrant agent, Continental Stock Transfer and
Trust Company (the "Transfer and Warrant Agent"), 2 Broadway, New York, New York
10004 for the exercise of the Warrants.
THE METHOD OF DELIVERY OF NOTICE OF THE WARRANT EXERCISE AND THE LETTER
OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE TRANSFER AND WARRANT
AGENT FOR THE EXERCISE OF THE WARRANTS IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, WE RECOMMEND THAT HOLDERS USE AN OVERNIGHT
OR HAND DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO
ASSURE DELIVERY TO THE TRANSFER AND WARRANT AGENT FOR THE
10
<PAGE> 12
EXERCISE OF THE WARRANTS BEFORE THE APPLICABLE EXPIRATION DATE. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTION ON THEIR BEHALF.
Any beneficial owner whose Warrants are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to exercise Warrants should contact the registered holder promptly and instruct
such registered holder to exercise such Warrants on such beneficial owner's
behalf.
For the exercise of the Warrants only, signatures on a Letter of
Transmittal must be guaranteed by an Eligible Institution (as defined below)
unless the Warrants exercised pursuant thereto are exercised: (i) by a
registered holder who has not completed the box entitled "Special Delivery
Instructions" on the Letter of Transmittal; or (ii) for the account of an
Eligible Institution, as defined below. In the event that signatures on a Letter
of Transmittal are required to be guaranteed, such guarantee must be by a member
firm of a registered national securities exchange or of the National Association
of Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondence in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Warrants listed therein, such Warrants must be endorsed
or accompanied by a properly completed stock power, signed by such registered
holder as such registered holder's name appears on the Warrants.
If the Letter of Transmittal or any Warrants or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and submit to us evidence of their
authority to so act with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), and acceptance of Warrant exercises will be determined by us in our
sole discretion, which determination will be final and binding. We reserve the
absolute right to reject any and all Warrants not properly exercised or any
Warrants which our acceptance of would, in the opinion of our counsel, be
unlawful. We also reserve the right to waive any defects, irregularities or
conditions of exercise as to particular Warrants. Our interpretation of the
terms and conditions of the Warrant exercise (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. You must cure
many defects or irregularities in connection with exercise of the Warrants
within such time as we determine, unless we notify you that we have waived the
defect. Although we intend to notify holders of defects or irregularities with
respect to exercises of the Warrants, neither us, the Transfer and Warrant Agent
nor any other person shall incur any liability for failure to give such
notification. Exercises of the Warrants will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Warrants
received by the Transfer and Warrant Agent for the Warrants that are not
exercised and as to which the defects or irregularities have not been cured or
waived will be returned to the exercising Warrantholders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable.
11
<PAGE> 13
USE OF PROCEEDS
If all Warrants are exercised, we will receive proceeds of
approximately $3,363,750, less expenses of this offering, which we estimate to
be approximately $10,000. We will add these proceeds to funds that we generate
from other sources, including operating cash flow, and use the proceeds for
general business purposes. Pending use of the net proceeds as described above,
we intend to invest the net proceeds in high grade, short-term interest bearing
investments. We have the right to use the services of a broker-dealer to help us
contact Warrantholders, assist them in exercising their Warrants and pay a 7%
commission based upon the proceeds we receive.
DESCRIPTION OF SECURITIES REGISTERED
We are authorized to issue 15,000,000 shares of common stock, $.01 par
value per share, and 1,000,000 shares of preferred stock, $.01 par value per
share. As of the date of this Prospectus, we have issued 6,829,310 shares of
common stock and no shares of preferred stock.
The following description of our capital stock is a summary and is
qualified in its entirety by the provisions of our Amended and Restated
Certificate of Incorporation and Bylaws, copies of which were included as
exhibits to the Registration Statement filed in connection with our initial
public offering.
COMMON STOCK
Holders of our common stock are entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Our common stock does not have
cumulative voting rights, which mean that the holders of a majority of voting
shares voting for the election of directors could elect all of the members of
the Board of Directors. The common stock has no preemptive rights and no
redemption or conversion privileges. Subject to any preferences of any
outstanding preferred stock, the holders of the outstanding shares of common
stock are entitled to receive dividends out of assets legally available at such
times and in such amounts as the Board of Directors may, from time to time,
determine, and upon liquidation and dissolution are entitled to receive all
assets available for distribution to the stockholders. A majority vote of shares
represented at a meeting at which a quorum is present is sufficient for all
actions that require the vote of stockholders. All of the outstanding shares of
common stock are, and any shares that we issue on exercise of the Warrants will
be, when issued and paid for, fully-paid and nonassessable.
LIMITATION OF DIRECTOR LIABILITY
COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Certificate of Incorporation includes a provision which eliminates
our personal liability of our directors for monetary damages resulting from
breaches of their fiduciary duty of care (provided that such provision does not
eliminate liability for breaches of the duty of loyalty, acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, violations of Section 174 of the Delaware General Corporation Law, or for
any transactions form which the director derived an improper personal benefit).
This provision does not limit or eliminate our right or the right of any of our
stockholders to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care. Our Certificate of
Incorporation also provides that we shall indemnify our directors and officers
to
12
<PAGE> 14
the fullest extent permitted by Section 145 of the Delaware General Corporation
Law, including circumstances in which indemnification is otherwise
discretionary. We believe that these provisions are necessary to attract and
retain qualified persons as directors and officers.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered
hereby has been passed on for us by Shefsky & Froelich Ltd., Chicago, Illinois.
EXPERTS
Our financial statements as of and for the years ended December 31,
1998, 1997 and 1996 have been audited by Altschuler, Melvoin and Glasser LLP,
independent auditors, as stated in their report with respect thereto and are
incorporated by reference herein in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We filed with the Securities and Exchange Commission a Registration
Statement (of which this Prospectus is a part) on Form S-3 under the Securities
Act with respect to the shares of common stock offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Securities and Exchange Commission. The Registration Statement and any
amendments thereto, including exhibits filed as a part thereof, are available
for inspection and copying as set forth below.
We are subject to the informational requirements of the Exchange Act
and in accordance therewith file reports, proxy statements and other information
with the Securities and Exchange Commission. These reports, proxy statements and
other information at the public reference facilities of the Securities and
Exchange Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
New York Regional Office, Public Reference Room, Seven World Trade Center, 13th
Floor, New York, New York 10048, and Midwest Regional Office, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661. You can request copies of this
material from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Our common stock and
warrants are included for quotation on the Nasdaq SmallCap Market and listed on
The Midwest Stock Exchange and you may also inspect reports, proxy statements
and other information concerning us at the office of the Nasdaq SmallCap Market,
1735 K Street, N.W., Washington, D.C. 20006 and The Midwest Stock Exchange,
Inc., 440 South LaSalle Street, Chicago, Illinois 60605.
We will provide without charge to each person to whom a Prospectus is
delivered, on the written or oral request of any such person, a copy of any or
all of the documents incorporated by reference herein, other than exhibits to
such documents. Please address your requests to Jerome Hiss, Universal
Automotive Industries, Inc., 11859 South Central Avenue, Alsip, Illinois 60803
(telephone number (708) 293-4050).
13
<PAGE> 15
================================================================================
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO
RIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUM STANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN OUR AFFAIRS OR THAT INFORMA TION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
DOCUMENTS INCORPORATED
BY REFERENCE......................................................................................................2
THE COMPANY.......................................................................................................3
THE INDUSTRY......................................................................................................5
PRODUCTS..........................................................................................................5
MARKETING AND DISTRIBUTION........................................................................................6
MANUFACTURING.....................................................................................................7
RISK FACTORS......................................................................................................7
SHARES ISSUED IN CONNECTION
WITH THE EXERCISE OF WARRANTS....................................................................................10
USE OF PROCEEDS..................................................................................................12
DESCRIPTION OF SECURITIES
REGISTERED.......................................................................................................12
LIMITATION OF DIRECTOR LIABILITY.................................................................................12
LEGAL MATTERS....................................................................................................13
EXPERTS..........................................................................................................13
AVAILABLE INFORMATION............................................................................................13
</TABLE>
================================================================================
================================================================================
1,495,000 SHARES OF COMMON STOCK
UNIVERSAL AUTOMOTIVE
INDUSTRIES, INC.
---------------------------
PROSPECTUS
---------------------------
January __, 2000
================================================================================
<PAGE> 16
FORM A
LETTER OF TRANSMITTAL
- --------------------------------------------------------------------------------
THE RIGHT TO EXERCISE WARRANTS OF UNIVERSAL AUTOMOTIVE INDUSTRIES,
INC. WILL EXPIRE AT 5:00 P.M., CHICAGO TIME, ON DECEMBER 31, 2000 (AS SUCH
DATE AND TIME MAY BE EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION,
THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
COMMON STOCK PURCHASE WARRANTS EXERCISABLE FOR
1,495,000 SHARES OF COMMON STOCK, $.01 PAR VALUE (THE "WARRANTS")
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to exercise your Warrants, this Letter of Transmittal
should be completed, signed and submitted to the transfer and warrant agent (the
"Transfer and Warrant Agent"):
By Registered or Certified Mail, by Overnight Courier or by Hand:
Continental Stock Transfer and Trust Company
2 Broadway
New York, New York 10004
(212) 509-4000
Delivery of this Letter of Transmittal to an address other than as set
forth above will not constitute a valid delivery.
The undersigned hereby acknowledges receipt of the Prospectus dated
January _____, 2000 (the "Prospectus") of Universal Automotive Industries, Inc.,
a Delaware corporation (the "Company"), and this Letter of Transmittal (the
"Letter of Transmittal"), in connection with the exercise of Warrants for Common
Stock, $.01 par value (the "Shares") at an exercise price of $2.25 per Share.
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Prospectus.
The Registration Statement on Form S-3 (File No. 333-_______) of which
the Prospectus is a part was declared effective by the Securities and Exchange
Commission on January ____, 2000.
The undersigned hereby exercises Warrants for the purchase of that number
of Shares indicated in Box 1 below, pursuant to the terms and conditions
described in the Prospectus and this Letter of Transmittal. The undersigned is
the registered owner of all the Warrants and the undersigned represents that, if
necessary, it has received from each beneficial owner of Warrants ("Beneficial
Owner") a duly completed and executed form of "Instruction to Registered Holder
from Beneficial Owner" accompanying this Letter of Transmittal, instructing the
undersigned to take the action described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance of the Warrants for
exercise, the undersigned hereby exchanges, assigns, and transfers to, or upon
the order of, the Company, all right, title, and interest in, to, and under the
Warrants exercised.
<PAGE> 17
Please issue the Shares purchased in connection with the exercise of the
Warrants in the name(s) of the undersigned. Similarly, unless otherwise
indicated under "Special Delivery Instructions" below (Box 3), please send or
cause to be sent the certificate(s) for Shares (and accompanying documents, as
appropriate) to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Transfer
and Warrant Agent as the true and lawful agent and attorney in fact of the
undersigned with respect to the Warrants with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with
uninterested) to: (i) deliver the Warrants to the Company or cause ownership of
the Warrants to be transferred to, or upon the order of, the Company, on the
books of the Transfer and Warrant Agent and deliver all accompanying evidences
of transfer and authenticity to, or upon the order of, the Company upon receipt
by the Transfer and Warrant Agent, as the undersigned's agent, of the Shares to
which the undersigned is entitled upon the acceptance by the Company of the
Public Offering Warrants pursuant to the exercise of the Warrants; and (ii)
receive all benefits and otherwise exercise all rights of beneficial ownership
of the Warrants, all in accordance with the terms in this Transmittal Letter and
the Prospectus.
The undersigned understands that exercise of the Warrants pursuant to the
procedures described under the caption "Shares Issued In Connection With the
Exercise of Warrants" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Warrant exercise. All authority
herein conferred or agreed to be conferred shall survive the death or incapacity
of the undersigned and any Beneficial Owner(s), and every obligation of the
undersigned or any Beneficial Owners hereunder shall be binding upon the heirs,
representatives, successors and assigns of the undersigned and such Beneficial
Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to exercise the Warrants. The undersigned and each
Beneficial Owner will, upon request, execute and deliver any additional
documents reasonably requested by the Company as necessary or desirable to
complete and give effect to the transactions contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
The undersigned agrees to make payment in full for the number of Shares
purchased in connection with the exercise of the Warrants as set forth in Box 2.
Payment shall be made by either certified or cashier's check or wire transfer.
If payment is made by check, such check will be transmitted to the Transfer and
Warrant Agent along with this Transmittal Letter. If payment is made by wire
transfer, the undersigned will contact the Transfer and Warrant Agent, at the
telephone number set forth above, to obtain wire transfer instructions. The
undersigned understands that if the undersigned does not transmit a certified or
cashier's check or wire transfer funds to the Transfer and Warrant Agent for the
full amount of Shares to be purchased, prior to the termination of the Warrant
exercise period, no Shares will be issued in connection with the exercise of
such Warrants.
A-2
<PAGE> 18
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
<TABLE>
<CAPTION>
===================================================================================================================================
BOX 1
DESCRIPTION OF WARRANTS EXERCISED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Name(s) and address(es) of (a) (b) (c) (d) *
Registered Warrantholder(s) Aggregate Number Total Dollar
of Shares Which Aggregate Number Amount of Shares
Certificate May Be Received of Shares To Be Purchased Upon
Number(s) If All Warrants Purchased By Exercise of
of Warrants Are Exercised This Warrant Exercise Warrants
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Total
===================================================================================================================================
</TABLE>
* The figures in this column are the number of Shares set forth in column (c)
multiplied by $2.25 per Share. See Instruction 4.
<TABLE>
<CAPTION>
=============================================================================================================================
BOX 2
BENEFICIAL OWNER(S)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
State of Principal Residence of Each Beneficial Owner of Warrants Number of Warrants Held for Account of Beneficial Owner
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
</TABLE>
A-3
<PAGE> 19
================================================================================
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if the Shares are to be sent to someone other than the
undersigned, or to the undersigned at an address other than that to which the
Prospectus was delivered.
Mail Shares to:
Name(s):
- --------------------------------------------------------------------------------
(please print)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(include Zip Code)
Tax Identification or
Social Security No(s).:
================================================================================
================================================================================
BOX 4
USE OF GUARANTEED DELIVERY
[ ] CHECK HERE ONLY IF WARRANTS ARE BEING EXERCISED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
See Instruction 2. If this box is checked, please provide the following
information:
Name(s) of Registered Holder(s):
------------------------------------------------
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Name of Institution which Guaranteed Delivery:----------------------------------
================================================================================
A-4
<PAGE> 20
BOX 5
EXERCISING WARRANTHOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
<TABLE>
<CAPTION>
<S> <C>
Signature Guarantee
X__________________________________________ (If required by Instruction 5)
Authorized Signature
X__________________________________________
(Signature of Registered Holder(s) or X_____________________________________________
Authorized Signatory)
Note: The above lines must be signed by the registered Name:_________________________________________
holder(s) of Warrants or by person(s) authorized to (please print)
become registered holder(s) (which must be transmitted
with this Letter of Transmittal). If signature is by a Title:________________________________________
trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his Name of Firm:_________________________________
or her full title below. See Instruction 5. (Must be an Eligible Institution as defined in
Instruction 2)
Name(s): __________________________________
__________________________________ Address:______________________________________
Capacity:__________________________________ ______________________________________
__________________________________ ______________________________________
(include Zip Code)
Street Address:____________________________
Area Code and Telephone Number:
__________________________________
______________________________________
__________________________________
(Include Zip Code) Dated:______________________________________
Area Code and Telephone Number:
____________________________________
Tax Identification or Social Security Number:
____________________________________
====================================================================================================================
</TABLE>
A-5
<PAGE> 21
<TABLE>
<CAPTION>
======================================================================================================================
PAYOR'S NAME: UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
======================================================================================================================
<S> <C>
SUBSTITUTE Name (if joint names, list first and
circle the name of the person or entity
whose number you enter in Part 1 below.
See instructions if your name has
changed).
------------------------------------------------------------------------------
FORM W-9 Address
------------------------------------------------------------------------------
City, state and ZIP Code
------------------------------------------------------------------------------
Department of the Treasury
List account number(s) here (optional)
------------------------------------------------------------------------------
Internal Revenue Service Part 1 - PLEASE PROVIDE YOUR TAXPAYER Social Security
IDENTIFICATION NUMBER ("TIN") IN THE Number or TIN
BOX AT RIGHT AND CERTIFY BY SIGNING
AND DATING BELOW
------------------------------------------------------------------------------
Part 2 - Check the box if you are NOT
subject to backup withholding under the
provisions of section 3408(a)(1)(C) of
the Internal Revenue Code because (1)
you have not been notified that you are
subject to backup withholding as a
result of failure to report all interest
or dividends or (2) the Internal Revenue
Service has notified you that you are no
longer subject to backup withholding. [ ]
- ----------------------------------------------------------------------------------------------------------------------
Payor's Request for TIN CERTIFICATION - UNDER THE PENALTIES OF Part 3 -
PERJURY, I CERTIFY THAT THE INFORMATION
PROVIDED ON THIS FORM IS TRUE, CORRECT AWAITING TIN
AND COMPLETE.
[ ]
Signature Date
-------------------- ----------
======================================================================================================================
</TABLE>
Note: PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
A-6
<PAGE> 22
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXERCISE OF WARRANTS
1. Delivery of this Letter of Transmittal and Warrants. The
Warrants to be exercised, as well as a properly completed and duly executed copy
of this Letter of Transmittal, and any other documents required by this letter
of Transmittal must be received by the Transfer and Warrant Agent or the
Company, as appropriate, at the proper address set forth herein prior to the
expiration date, which for December 31, 2000 (the "Expiration Date"). The method
of delivery of Warrants which are being exercised and all other required
documents is at the election and risk of the exercising Warrantholder and
delivery will be deemed made only when actually received by the Transfer and
Warrant Agent or the Company, as appropriate. If delivery is by mail, registered
mail with return receipt requested, property insured, is recommended. Instead of
delivery by mail, it is recommended that the holder use an overnight or hand
delivery service. In all cases, sufficient time should be allowed to assure
timely delivery. The Transfer and Warrant Agent is not under any obligation to
notify any exercising Warrantholder of the Company's acceptance of any Warrant
exercise prior to the applicable Expiration Date.
2. Guaranteed Delivery Procedures. Holders who wish to exercise their
Warrants but whose Warrants are not immediately available and who cannot deliver
their Warrants, Letter of Transmittal and any other documents required by the
Letter of Transmittal to the Transfer and Warrant Agent prior to the applicable
Expiration Date must exercise their Warrants according to the guaranteed
delivery procedures set forth below, including completion of Box 4. Pursuant to
such procedures: (i) such Warrant exercises must be made by or through a firm
which is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., or is otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (an "Eligible Institution"), and the Notice of
Guaranteed Delivery must be signed by the holder; (ii) prior to the applicable
Expiration Date, the Transfer and Warrant Agent must have received from the
holder and the Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail, or hand delivery
setting forth the name and address of the holder, the certificate number or
numbers of the Warrants stating that the Warrant exercise is being made thereby
and guaranteeing that, within five business days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof) together with the Warrants being
exercised and any other required documents will be deposited by the Eligible
Institution with the Transfer and Warrant Agent; and (iii) such properly
completed and executed documents required by the Letter of Transmittal and the
Warrants being exercised in proper form for exercise must be received by the
Transfer and Warrant Agent within five business days after the Expiration Date.
Any holder who wishes to exercise Warrants pursuant to the guaranteed delivery
procedures described above must ensure that the Transfer and Warrant Agent
receives the Notice of Guaranteed Delivery relating to such Warrants prior to
the Expiration Date. Failure to complete the guaranteed delivery procedures
outlined above will not, of itself, affect the validity or effect a revocation
of any Letter of Transmittal form properly completed and executed by a
Warrantholder who attempted to use the guaranteed delivery process.
3. Beneficial Owner Instructions to Registered Holders. Only a holder
in whose name the Warrants are registered on the books of the Transfer and
Warrant Agent, (or the legal representative or attorney-in-fact of such
registered holder) may execute and deliver this Letter of Transmittal. Any
Beneficial Owner of Warrants who is not the registered holder must arrange
promptly with the registered holder to execute and deliver this Letter of
Transmittal on his or her behalf through the execution and delivery to the
<PAGE> 23
registered holder of the Instruction to Registered Holder from Beneficial Owner
form accompanying this Letter of Transmittal.
4. Partial Exercises. If less than the entire number of a
Warrantholder's Warrants are exercised, the exercising Warrantholder should fill
in the number of Warrants being exercised in the column labeled "Aggregate
Number of Shares To Be Purchased By This Warrant Exercise" in the box entitled
"Description of Warrants Exercised" (Box 1) above. The entire number of Warrants
delivered to the Transfer and Warrant Agent will be deemed to have been
exercised unless otherwise indicated. If less than all Warrants are being
exercised, all unexercised Warrants will be terminated and have no further value
after the Expiration Date.
5. Signatures on the Letter of Transmittal; Stock Powers and
Endorsements; Guarantee of Signatures. If this Letter of Transmittal is signed
by the registered holder(s) of the Warrants, the signatures must correspond with
the names(s) as written on the face of the Warrant certificate, without
alteration, enlargement, or any change whatsoever.
If any of the Warrants are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Warrants
are held in different names on several Warrants, it will be necessary to
complete, sign, and submit as many separate copies of the Letter of Transmittal
documents as there are names in which Warrants are held.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Warrants, the Warrants must be endorsed or
accompanied by appropriate stock powers, in each case, signed as the name of the
registered holder(s) appears on the Warrant certificate, with the signature on
the endorsement or stock power guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Warrants or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with this Letter of Transmittal.
Endorsements on Warrants or signatures on stock powers required by
this Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal Warrants must be
guaranteed with a medallion guaranty recognized by the Securities Transfer
Association, Inc. which may be obtained from an Eligible Institution unless the
Warrants are exercised: (i) by a registered holder who has not completed the box
set forth herein entitled "Special Delivery Instruction" (Box 3); or (ii) by an
Eligible Institution.
6. Special Delivery Instruction. Exercising Warrantholders should
indicate, in the applicable box (Box 3), the name and address to which the
Shares are to be sent, if different from the name and address of the person
signing this Letter of Transmittal.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exercise of any Warrants.
2
<PAGE> 24
8. Tax Identification Number. Federal income tax law requires that a
holder of any Warrants which are exercised must provide the Company (as payor)
with its correct taxpayer identification number ("TIN"), which, in the case of a
holder who is an individual, is his or her social security number. If the
Company is not provided with the correct TIN, the holder may be subject to a $50
penalty imposed by the Internal Revenue Service. (If withholding results in an
over-payment of taxes, a refund may be obtained.) Certain holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
To prevent backup withholding, each exercising Warrantholder must
provide such holder's correct TIN by completing the Substitute Form W-9 set
forth herein, certifying that the TIN provided is correct (or that such holder
is awaiting a TIN), and that: (i) the holder has not been notified by the
Internal Revenue Service that such holder is subject to backup withholding as a
result of failure to report all interest or dividends; or (ii) the Internal
Revenue Service has notified the holder that such holder is no longer subject to
backup withholding. If the Shares are registered in more than one name or are
not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
information on which TIN to report.
The Company reserves the right in its sole discretion to take
whatever steps are necessary to comply with the Company's obligation regarding
backup withholding.
9. Validity of Warrant Exercises. All questions as to the validity,
form, eligibility (including time of receipt), and acceptance of Warrants for
exercise will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the right to
reject any and all Warrants not validly exercised. The Company also reserves the
right to waive any conditions of the Prospectus or defects or irregularities in
the exercise of Warrants as to any ineligibility of any holder who seeks to
exercise any Warrants. The interpretation of the terms and conditions of the
exercise of Warrants (including this letter of Transmittal and the instructions
hereto) by the Company shall be final and binding on all parties. Unless waived,
any defects or irregularities in connection with the exercise of any Warrants
must be cured within such time as the Company shall determine. The Company will
use reasonable efforts to give notification of defects or irregularities with
respect to any Warrant exercise, but shall not incur any liability for failure
to give such notification.
10. Waiver of Conditions. The Company reserves the absolute right to
amend, waive, or modify specified conditions in the Prospectus or this Letter of
Transmittal concerning the exercise of Warrants.
11. No Conditional Warrant Exercises. No alternative, conditional,
irregular, or contingent Warrant exercises or transmittal of this Letter of
Transmittal will be accepted.
12. Mutilated, Lost, Stolen, or Destroyed Warrants. Any exercising
Warrantholders whose Warrants have been mutilated, lost, stolen or destroyed
should contact the Transfer and Warrant Agent, at the address indicated above
for further instruction.
13. Request for Assistance or Additional Copies. Questions and
requests for assistance and requests for additional copies of the Prospectus may
be directed to the Company. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning
exercising their Warrants.
3
<PAGE> 25
14 Acceptance of Warrants and Issuance of Shares. Subject to the
terms and conditions concerning the exercise of Warrants set forth in the
Prospectus and the Letter of Transmittal, the Company will accept for exercise
all Warrants received as soon as practicable and will issue Shares therefor as
soon as practicable thereafter. For purposes of any Warrant exercise, the
Company shall be deemed to have accepted the Warrants when, as and if the
Company has given written or oral notice thereof to the Transfer and Warrant
Agent. If any Warrants are not exercised for any reason, such unexercised
Warrants will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under "Special
Delivery Instructions."
4
<PAGE> 26
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
COMMON STOCK PURCHASE WARRANT
The Undersigned hereby acknowledges receipt of the Prospectus dated
, 2000 (the "Prospectus") of Universal Automotive Industries, Inc., a
Delaware corporation (the "Company"), and the accompanying Letter of Transmittal
(the "Letter of Transmittal"), that together constitute the exercise of the
Warrants into shares of Common Stock, $.01 par value (the "Shares"). Capitalized
terms used but not defined herein have the meanings ascribed to them in the
Prospectus.
This will instruct you, the registered holder, as to the action to be
taken by you relating to the exercise of Warrants held by you for the account of
the undersigned.
You hold Warrants in the account for the undersigned which may be
exercised for the purchase of Shares.
With respect to the exercise of any such Warrants, the undersigned
hereby instructs you (check appropriate box):
[ ] To exercise Warrants for the purchase of Shares.
[ ] NOT to exercise any such Warrants.
If the undersigned instructs you to exercise any Warrants held by you for the
account of the undersigned, it is understood that you are authorized to make, on
behalf of the undersigned (and the undersigned, by its signature below, hereby
makes to you), the representations and warranties contained in the Letter of
Transmittal that are to be made with respect to the undersigned as a Beneficial
Owner (as defined in the Letter of Transmittal), including but not limited to
the representation that the undersigned's principal residence is in the state of
(fill in state) .
SIGN HERE
Name of Beneficial Owner(s):
----------------------------------------------------
Signature(s):
-------------------------------------------------------------------
Name(s) (please print):
---------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Taxpayer Identification or Social Security Number:
------------------------------
Date:
---------------------------------------------------------------------------
5
<PAGE> 27
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
COMMON STOCK PURCHASE WARRANT
This form must be completed by a holder of the Warrants who wishes to
exercise his, her or its Warrants pursuant to the guaranteed delivery procedures
described in the Universal Automotive Industry, Inc.'s (the "Company")
Prospectus dated January , 2000 (the "Prospectus") and in Instruction 2 to
the Letter of Transmittal. Any holder who wishes to exercise his, her or its
Warrants pursuant to such guaranteed delivery procedures must ensure that the
Transfer and Warrant Agent receives this Notice of Guaranteed Delivery prior to
the Warrant exercise. Capitalized terms not defined herein have the meanings
ascribed to them in the Prospectus or the Letter of Transmittal.
By Registered or Certified Mail, by Overnight
Courier or by Hand:
Continental Stock Transfer and Trust Company
2 Broadway
New York, New York 10004
(212) 509-4000
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
6
<PAGE> 28
Ladies and Gentlemen:
The undersigned hereby exercises Warrants upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, pursuant to the Guaranteed
Delivery procedures set forth is the Prospectus and in Instruction 2 of the
Letter of Transmittal. The undersigned hereby exercises the Warrants listed
below.
<TABLE>
<CAPTION>
======================================================================================================================
Number of Shares
Which May Be Number of Shares
Received If All to be Purchased
Warrants Are By This Warrant
Certificate Number(s) (if known) of Warrants Exercised Exercise
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
======================================================================================================================
</TABLE>
SIGN HERE
Name of Holder:
---------------------------------------------------------------
Signature(s):
-----------------------------------------------------------------
Name(s) (please print):
-------------------------------------------------------
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Date:
-------------------------------------------------------------------------
7
<PAGE> 29
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Transfer and Warrant Agent of the Letter of
Transmittal (or facsimile thereof), together with the Warrants exercised hereby
in proper form for exercise and any other required documents, all by 5:00 P.M.,
Chicago time, on the fifth business day following the Expiration Date.
================================================
SIGN HERE
Name of Firm:
-----------------------------------
Authorized Signature:
---------------------------
Name (please print):
----------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
Telephone Number:
-------------------------------
Date:
-------------------------------------------
================================================
DO NOT SEND WARRANTS WITH THIS FORM. ACTUAL EXERCISE OF THE WARRANTS MUST
BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMIT
TAL.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly
completed and duly executed copy of this Notice of Guaranteed Delivery and any
other documents required by this Notice of Guaranteed Delivery must be received
by the Transfer and Warrant Agent at the proper address set forth herein prior
to the Expiration Date. The method of delivery of this Notice of Guaranteed
Delivery and any other required documents to the Transfer and Warrant Agent is
at the election and risk of the holder, and the delivery will be deemed made
only when actually received by the Transfer and Warrant Agent. If delivery is by
mail, registered mail with return receipt requested, properly insured, is
recommended. Instead of delivery by mail, it is recommended that the holder use
an overnight or hand delivery service. In all cases sufficient time
8
<PAGE> 30
should be allowed to assure timely delivery. For a description of the guaranteed
delivery procedure, see Instruction 2 of the Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice
of Guaranteed Delivery is signed by the registered holder(s) of the Warrants
referred to herein, the signatures must correspond with the names(s) written on
the face of the Warrant certificates without alteration, enlargement, or any
change whatsoever.
If this Notice of Guaranteed Delivery is signed by a person other
than the registered holder(s) of any Warrants listed, this Notice of Guaranteed
Delivery must be accompanied by appropriate bond powers, signed as the name of
the registered holder(s) appears on the Warrant certificates.
If this Notice of Guaranteed Delivery is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing.
3. Requests for Assistance or Additional Copies. Questions and
requests for assistance and requests for additional copies of the Prospectus may
be directed to the Company at the address specified in the Prospectus.
9
<PAGE> 31
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payor.
Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the Payor.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Give the Give the EMPLOYER
SOCIAL SECURITY IDENTIFICATION
For this type of account: number of -- For this type of account: number of --
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. An individual account The individual 8. Sole proprietorship The owner (4)
account
2. Two or more individuals The actual owner of the 9. A valid trust, estate, or The legal entity (Do not furnish
(joint account) account or, if combined funds, pension trust the identifying number of the
any one of the individuals (1) personal representative or trustee
unless the legal entity itself is not
3. Husband and wife (joint The actual owner of the designated in the account.) (5)
account) account or, if joint funds,
either person (1)
10. Corporate account The corporation
4. Custodian account of a The minor (2)
minor (Uniform Gift to 11. Religious, charitable The organization
Minors Act) or educational organ-
ization account
5. Adult and minor (joint The adult or, if the minor is
account) the only contributor, the 12. Partnership account The partnership
minor (1) held in the name of
the business
6 Account in the name of The ward, minor or
guardian or committee for incompetent person (3) 13. Association, club or The organization
a designated ward, minor, other tax-exempt
or incompetent person organization
7. a. The usual revocable The grantor-trustee (1) 14. A broker or registered The broker or nominee
savings trust account nominee
(grantor is also trustee)
b. So-called trust account The actual owner (1) 15. Account with the The public entity
that is not a legal or Department of Agricul-
valid trust under State ture in the name of
law a public entity (such as a
State or local govern-
ment, school district,
or prison) that receives
agricultural program
payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
10
<PAGE> 32
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know the number,
obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation;
- - A financial institution;
- - An organization exempt from tax under section 501(1), or an individual
retirement plan;
- - The United States or any agency or instrumentality thereof;
- - A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof;
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof;
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.;
- - A real estate investment trust;
- - A common trust fund operated by a bank under section 584(a);
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1); and
- - An entity registered at all times under the Investment Company Act of 1940.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to
withholding under section 1441;
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one non-resident partner;
- - Payments of patronage dividends where the amount received is not paid in
money;
- - Payments made by certain foreign organizations; and
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer;
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852);
11
<PAGE> 33
- - Payments described in section 6049(b)(5) to
non-resident aliens;
- - Payments on tax-free covenant bonds under
section 1451;
- - Payments made by certain foreign organizations; and
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup with holding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that are
not subject to information reporting are also not subject to backup withholding.
For details, see the regulations under sections 6041, 6041A(a), 6045, and
6050A.
Privacy Act Notice -- Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 20% of taxable interest, dividends and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number -- If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments -- If you fail to
include any portion or an includible payment for interest, dividends or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) Civil Penalty for False Information With Respect to Withholding -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION
CONTACT YOUR TAX
CONSULTANT OR THE
INTERNAL REVENUE SERVICE
12
<PAGE> 34
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a schedule of the estimated expenses to be incurred by
the Company in connection with the issuance and sale of the securities being
registered hereby.
<TABLE>
<CAPTION>
<S> <C>
Registration Fee..................................................................... $ 888.03
Blue Sky Fees and Expenses........................................................... 0*
-----------
Accounting Fees and Expenses......................................................... 1,000.00*
-----------
Legal Fees and Expenses.............................................................. 10,000.00*
-----------
Miscellaneous........................................................................ 2,000.00*
-----------
Total................................................................................ $ 13,888.03*
===========
</TABLE>
*Estimated
- ------------------------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes
indemnification of directors, officers, employees, and agents of the Company,
allows the advancement of costs of defending against litigation and permits
companies incorporated in Delaware to purchase insurance on behalf of directors,
officers, employees and agents against liabilities whether or not in the
circumstances such companies would have the power to indemnify against such
liabilities under the provisions of the statute.
The Company's Certificate of Incorporation provides for indemnification
of the Company's officers and directors to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law. The Company maintains
directors and officers insurance covering its executive officers and directors.
The Delaware General Corporation Law authorizes corporations to limit
or eliminate the personal liability of directors and officers to corporations
and their stockholders for monetary damages for breach of directors' fiduciary
duty of care. The duty of care requires that, when acting on behalf of the
corporation, directors must exercise an informed business judgment based on all
material information reasonably available to them. Absent the limitations
authorized by the Delaware statute, directors could be accountable to
corporations and their stockholders for monetary damages for conduct that does
not satisfy their duty of care. Although the statute does not change directors'
duty of care, it enables corporations to limit available relief to equitable
remedies such as injunction or rescission. The Company's Certificate of
Incorporation limits the liability of the Company's directors and officers to
the Company or its stockholders to the fullest extent permitted by the Delaware
statute. The inclusion of this provision in the Certificate of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefitted the Company and its
stockholders.
II-1
<PAGE> 35
ITEM 16. EXHIBITS
EXHIBIT NO.
- -----------
5 Opinion of Shefsky & Froelich Ltd. regarding legality.
10 Amendment to Warrant Agreement dated November 9, 1999.
23.1 Consent of Altschuler Melvoin and Glasser LLP.
23.2 Consent of Shefsky & Froelich Ltd. (included in Exhibit 5
above).
ITEM 17. UNDERTAKINGS
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
reg istration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply
if the information required to the included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 36
(c) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on January 12, 2000.
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
By: /s/ Arvin Scott
--------------------------------------------------
Arvin Scott, President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Arvin Scott and Jerome Hiss, jointly and
severally, his attorneys-in-fact, each with power of substitution for him in any
and all capacities, to sign any future amendments to the Registration Statement,
and to file the same, with the exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ ARVIN SCOTT
- ------------------------------------ Chief Executive Officer, President and January 12, 2000
Arvin Scott Director (Principal Executive Officer)
/s/ JEROME HESS
- ------------------------------------ Chief Financial Officer (Principal January 12, 2000
Jerome Hiss Financial Officer and Principal Account-
ing Officer)
/s/ YEHUDA TZUR Director January 12, 2000
- ------------------------------------
Yehuda Tzur
/s/ DENNIS KESSLER Director January 12, 2000
- ------------------------------------
Dennis Kessler
/s/ SAMI ISRAEL Director January 12, 2000
- ------------------------------------
Sami Israel
/s/ SHELDON ROBINSON Director January 12, 2000
- ------------------------------------
Sheldon Robinson
/s/ SOL WEINER Director January 12, 2000
- ------------------------------------
Sol Weiner
</TABLE>
<PAGE> 1
EXHIBIT 5
Opinion of Shefsky & Froelich Ltd. regarding legality
<PAGE> 2
[SHEFSKY & FROELICH LTD LETTERHEAD]
9188-00012-0001
January 13, 2000
Universal Automotive Industries, Inc.
11859 South Central Avenue
Alsip, Illinois 60803
Re: Universal Automotive Industries, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special securities counsel to Universal Automotive
Industries, Inc., a Delaware corporation (the "Company"), in connection with the
preparation and filing of the registration statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act") and the
prospectus contained therein with respect to the public offering of up to
1,495,000 shares of the Company's common stock, par value $0.01 (the "Shares")
to be issued in connection with the exercise of warrants (the "Warrants") issued
to persons pursuant to the Company's initial public offering in December 1994.
In connection with the registration of the Shares, you have requested our
opinion with respect to the matters set forth below.
For purposes of this opinion, we have reviewed the Registration
Statement. In addition, we have examined the originals or copies certified or
otherwise identified to our satisfaction of: (i) the Company's Certificate of
Incorporation, as amended to date; (ii) the By-laws of the Company, as amended
to date; (iii) records of the corporate proceedings of the Company as we deemed
necessary or appropriate as a basis for the opinions set forth herein; and (iv)
those matters of law as we have deemed necessary or appropriate as a basis for
the opinions set forth herein. We have not made any independent review or
investigation of the organization, existence, good standing, assets, business or
affairs of the Company, or of any other matters. In rendering our opinion, we
have assumed without inquiry the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of the originals of
these documents submitted to us as copies.
<PAGE> 3
Universal Automotive Industries, Inc.
January 13, 2000
Page 2
We have not undertaken any independent investigation to determine facts
bearing on this opinion, and no inference as to the best of our knowledge of
facts based on an independent investigation should be drawn from this
representation. Further, our opinions, as hereinafter expressed, are subject to
the following exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; and (ii) the effect of general
principles of equity whether enforcement is considered in a proceeding in equity
or at law and the discretion of the court before which any proceeding therefore
may be brought.
We are admitted to the practice of law only in the State of Illinois
and, accordingly, we do not purport to be experts on the laws of any other
jurisdiction nor do we express an opinion as to the laws of jurisdictions other
than the laws of the State of Illinois and the General Corporation Law of the
State of Delaware, as currently in effect, including all statutory provisions,
applicable provisions of the Delaware Constitution and reported judicial
decisions thereof.
On the basis of, and in reliance upon, the foregoing, and subject to
the qualifications contained herein, we are of the opinion that the Shares, when
issued in connection with the exercise of the Warrants and receipt of the
exercise price therefore, will be validly issued, fully-paid and nonassessable.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose or furnished, or quoted to, or relied upon by
any other person, firm or corporation for any purpose without our prior express
written consent.
Respectfully submitted,
/s/ Shefsky & Froelich Ltd.
SHEFSKY & FROELICH LTD.
<PAGE> 1
EXHIBIT 10
Amendment to Warrant Agreement dated November 9, 1999
<PAGE> 2
AMENDMENT TO WARRANT AGREEMENT
Amendment No. 1 dated November 9, 1999, to that certain Warrant Agreement
between Universal Automotive Industries, Inc. (the "Company") and Continental
Stock Transfer & Trust Company dated as of December 22, 1994 (the "Warrant
Agreement").
Pursuant to Section 4.14 of the Warrant Agreement, the Company hereby
amends the following provisions of the Warrant Agreement effective as of
December 15, 1999:
Section 2.1. The Exercise Price of the Warrants is hereby reduced from
$7.00 per share to $2.25 per share.
Section 2.2. Each Warrant may not be exercised after 5:00 p.m., New York
City time on the earlier of (i) December 31, 2000, and (ii) the business day
immediately preceding the Call Date.
Section 4.1. Section 4.1(a) of the Warrant is hereby deleted and is
replaced with:
(a) In the event that the Company, after 5:00 p.m., New York City time on
December 15, 1999 either (i) declares a dividend or makes a distribution on
the outstanding shares of its Common Stock in shares of its Common Stock;
(ii) subdivides the outstanding shares of its Common Stock into a greater
number of shares; (iii) combines the outstanding shares of its Common Stock
into a smaller number of shares, or (iv) issues any shares of its capital
stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation). In each case, the Exercise Price,
and the number of shares of Common Stock issuable upon exercise of each
Warrant, in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination, or reclassification,
shall be proportionately adjusted so that the holders of each Warrant after
such time shall be entitled to receive the aggregate number and kind of
shares which, if such Warrant had been exercised immediately prior to such
time, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination, or
reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur.
Section 4.1(b), (c) and (d). These Sections and any references to such
sections contained in the Warrant Agreement are hereby deleted.
Section 4.4. This Section is hereby deleted.
In all other respects, the Warrant Agreement remains in full force and
effect.
<PAGE> 3
IN WITNESS WHEREOF, this Amendment No. 1 to the Warrant Agreement has been
duly executed by the Company as of the day and year first written above.
UNIVERSAL AUTOMOTIVE INDUSTRIES,
INC.
By: /s/ Arvin Scott
----------------------------
Name: Arvin Scott
Title: President
<PAGE> 1
EXHIBIT 23.1
Consent of Altschuler Melvoin and Glasser LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Form S-3 of our
report dated March 12, 1999 relating to the audits of the consolidated financial
statements of Universal Automotive Industries, Inc. for the years ended
December 31, 1998, 1997 and 1996. We also consent to the reference to our firm
under the caption "Experts."
ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
January 12, 2000
<PAGE> 1
EXHIBIT 23.2
Consent of Shefsky & Froelich Ltd. (included in Exhibit 5 above).
