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EXHIBIT 4.1
INVESTMENT BANKING AGREEMENT
This Agreement is made as of this day, May 6, 1999, by and between Universal
Automotive Industries, Inc., having its business office at 3350 North Kedzie,
Chicago, Illinois 60618 (the "Company") and EBI Securities Corp., with its
principal office located at 6300 South Syracuse Way, Englewood, Colorado 80111
(the "Consultant").
WHEREAS, the Company desires to retain the Consultant and the Consultant desires
to be retained by the Company, all pursuant to the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing and the mutual promises and
covenants herein contained, it is agreed as follows:
1. Retention - The Company hereby retains the Consultant to perform
non-exclusive consulting services related to corporate finance and
other matters, and the Consultant hereby accepts such retention and
shall perform for the Company and the duties described herein,
faithfully and to the best of its ability. In this regard, subject to
paragraph 7 hereof, the Consultant shall devote such time and attention
to the business of the Company, as shall be determined by the
Consultant, subject to the direction of the President or Chief
Executive Officer of the Company.
(a) The Consultant agrees, to the extent reasonably required in
the conduct of the business of the Company, and at the
Company's request, to place at the disposal of the Company its
judgment and experience and to provide business development
services to the Company including the following:
(i) Review business plans and projections.
(ii) Review financial data as it relates to financing.
(iii) Advise on the Company's capital structure and on
alternatives for raising capital.
(iv) Review and advise on prospective mergers and
acquisitions, and on any financing required to
complete such transactions.
(v) Advise on issues relating to public offerings.
(vi) Provide fairness opinions.
(vii) Review managerial needs.
(viii) Advise on issues relating to public relations.
(ix) Review feasibility of Online advertising for business
transactions.
2. Term - The Consultant's retention hereunder shall be for a term of
twelve months commencing on the date of this Agreement and may be
extended for another term of one year upon written consent of the
parties.
3. Compensation - The Consultant shall be compensated in accordance with
the following schedule:
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(a) The Company shall pay to the Consultant $5,000 per month paid
quarterly in advance. The first installment is payable upon
the signing of this Agreement. An initial, one time fee of
$25,000 is also to be paid to the Consultant by the Company
upon the signing of this Agreement. The Company agrees that
separate fees shall be applicable for services provided in
1.(a)(vi). Any such fees will be subject to the Consultant's
customary terms and the prior written agreement of the
Company.
(b) The Company shall grant the Consultant a warrant (the
"Warrant") to purchase 200,000 shares of the common stock of
the Company exercisable not less than twelve (12) months from
the date of this Agreement for a period of forth-eight (48)
months thereafter at prices based on the following schedule:
100,000 shares at an exercise price of $1.4375 per share, and
100,000 shares at an exercise price of $2.00 per share.
The Warrant, shall possess anti-dilution provisions for stock dividends, splits,
mergers, sale of substantially all of the Company's assets, sale of stock at
below the then current exercise price of the Consultant's Warrant and for the
other events (other than employee benefit and stock option plans for the
employees and advisors of the Company and other than for all existing warrants
or stock options).
The Company also agrees, to grant to the Consultant, subject to the conditions
listed below, the right to demand registrations of the Common Stock issuable
upon exercise of the Warrant referred to above, on up to two (2) occasions with
all expenses of the first registration to be borne by the Company and all
expenses of the second registration to be borne by the Consultant; provided,
however, that such demand registration rights shall be exercisable after twelve
(12) months from the date of the Agreement. If the Common Stock trades at a 100%
premium to the strike price of the initial 100,000 warrants for 15 consecutive
trading days, then the warrants are immediately registerable.
The Company will, subject to the conditions listed below, to the extent
necessary to permit the sale of such shares, grant "piggy back" registration
rights to include the shares of the Common Stock issuable upon exercise of the
Warrant in any registration statement filed by the Company under the Securities
Act of 1933 relating to any underwriting of the sale of Common Stock or other
security. Inclusion of such shares is subject to the willingness of the managing
underwriter(s) to include said shares of Common Stock. In the event that the
Company after the date hereof grants registration rights to any other
shareholder on terms and conditions the Consultant deems to be more favorable
than these granted hereunder, the Company agrees to grant the same rights to the
Consultant.
4. Expenses - The Company agrees to reimburse the Consultant for
reasonable expenses incurred by the Consultant in connection with the
services rendered hereunder, including but not limited to the
Consultant's due diligence activities with respect to the Company. Any
such expenses shall require the prior written approval of the Company.
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5. Indemnification - Since the Consultant will be acting on behalf of the
Company in connection with its engagement hereunder, the Company and
Consultant have entered into a separate indemnification agreement
substantially in the form attached hereto as Exhibit A and dated the
date hereof, providing for the indemnification of Consultant by the
Company. The Consultant has entered into this Agreement in reliance on
the indemnification set forth in such indemnification agreement.
6. Status of Consultant - The Consultant shall be deemed to be an
independent contractor and, except as expressly provided or authorized
in this Agreement, shall have no authority to act for or represent the
Company.
7. Other Activities of Consultant - The Company recognizes that the
Consultant now rendered and may continue to render financial consulting
and other investment banking services to other companies, which may or
may not conduct business and activities similar to those of the
Company. The Consultant shall not conduct business and activities
similar to those of the Company. The Consultant shall not be required
to devote its full time and attention to the performance of its duties
under this Agreement, but shall devote only so much of its time and
attention as it deems reasonable or necessary for such purposes. The
Consultant shall give written notice to the Company upon acceptance of
any investment banking agreement with other companies in similar
industries and businesses. The Consultant agrees to maintain as
confidential any information it procures in rendering consulting
services hereunder regarding the Company that is not generally known to
the public, and agrees to not transmit any of such information to: (i)
any employees of Consultant engaged in the trading of the Company's
securities; or (ii) any competitors of the Company for whom Consultant
performs consulting services. Consultant agrees that for so long as it
provides services under this Agreement or owns warrants or common stock
of the Company either directly or through affiliates, that neither
Consultant nor its affiliates will sell short any of the Company
securities, except to maintain an orderly market as a market maker.
8. Control - Nothing contained herein shall be deemed to require the
Company to take any action contrary to its Certificate of Incorporation
or By-Laws, or any applicable statute or regulation, or to deprive its
Board of Directors of their responsibility for any control of the
conduct of the affairs of the Company.
9. Notices - Any notices hereunder shall be sent to the Company and the
Consultant at their respective addresses above set forth. Any notices
shall be given by registered or certified mail, postage prepaid, or
overnight receipted delivery service (such as Federal Express) and
shall be deemed to have been given when deposited in the United States
mail. Either party may designate any other address to which notice
shall be given, by giving written notice to the other of such change in
address in the manner herein provided. Copies of all notices to the
Company shall simultaneously be sent to Shefsky and Froelich Ltd., 444
North Michigan Avenue, Chicago, Illinois, 60611 (Tel. 312-836-4006/Fax
312-527-3194), Attn: Mitchell Goldsmith.
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10. Governing Law - This Agreement has been made in the State of Colorado
and shall be construed and governed in accordance with the laws thereof
without regard to conflicts of laws.
11. Entire Agreement - This Agreement contains the entire agreement between
the parities, may not be altered or modified, except in writing and
signed by the party to be charged thereby and supersedes any and all
previous agreements between the parties.
12. Binding Effect - This Agreement shall be binding upon the parties
hereto and their respective heirs, administrators, successors and
assigns.
13. Termination - Either party may terminate this Agreement in writing with
or without cause during the first six months of this Agreement. If
during this period the Agreement is terminated by either party, the
Consultant shall forfeit the Warrant exercisable at $2.00 per share,
but shall retain the warrants exercisable at $1.4375 per share and any
cash portion of its compensation which it has earned up to the date of
such termination. If either the Company or EBI Securities terminates
the Agreement at any time after the above six month period, EBI shall
retain both Warrants and any cash portion of its compensation which it
has earned up to the date of such termination.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
By: /s/ Arvin Scott
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Title: President and Chief Executive Officer
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EBI SECURITIES CORPORATION
/s/ Steven Hinkel /s/ Clifford T. Morgan
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Steven Hinkel Clifford T. Morgan
Director of Corporate Finance Senior Vice President
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