<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 2000.
REGISTRATION NO. 333-45538
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
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)
--------------------------
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
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT HAS BECOME EFFECTIVE.
--------------------------
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
<TABLE>
<CAPTION>
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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) 200,000 SHARES $1.71875 $343,750 $ 90.75
COMMON STOCK, $.01 PAR VALUE (2) 200,000 SHARES $2.31 (3) $462,000 $121.68
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$212.46
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</TABLE>
(1) Two hundred thousand shares represent shares to be issued pursuant to
warrants which were granted to a consultant as partial compensation for
its services. These warrants provide for the purchase of 100,000 shares at
$1.4375 per share and 100,000 shares at $2.00 per share. We will issue
these shares when the warrantholder exercises its warrants.
(2) Two hundred thousand shares represent shares to be offered for sale by the
holder of warrants after the holder has exercised the warrants. These
warrants were granted to a consultant as partial consideration for its
services. These warrants provide for the purchase of 100,000 shares at
$2.50 per share and 100,000 shares at $2.00 per share.
(3) Established solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and 457 (d) of Regulation C, on the basis of the
high and low prices of our shares of common stock on the Nasdaq SmallCap
market on September 15, 2000.
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.
<PAGE> 2
SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 2000
PRELIMINARY PROSPECTUS
400,000 Shares of Common Stock
--------------------------
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
This Prospectus relates to our offer and sale of up to 200,000 shares
of common stock, par value $.01 per share (the "Shares"), issuable upon the
exercise of outstanding warrants (the "Warrants"). We issued the Warrants to EBI
Securities Corporation ("EBI") as partial compensation for its consulting
services. All of the Warrants are restricted as to transfer and there is no
market for the Warrants.
This Prospectus also relates to the public offering of up to 200,000
shares of common stock (the "Resale Shares") which may be sold from time to time
by EBI, which will receive the Resale Shares upon the exercise of additional
warrants issued by the Company as partial compensation for its additional
consulting services to the Company.
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 September 15, 2000, the last reported bid
price for our common stock on the Nasdaq SmallCap Market was $2.31.
We will receive the proceeds from the exercise of the Warrants in an
amount which will not exceed $525,000.
BROKERS/DEALERS MAY RECEIVE COMMISSIONS IN CONNECTION WITH A
WARRANTHOLDER'S SALE OF THE COMMON STOCK AFTER EXERCISE OF ANY OF THE WARRANTS.
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).
EBI and any broker-dealers through which the Resale Shares are sold may
be deemed "underwriters," as the term is defined in the Securities Act of 1993,
as amended (the "Securities Act"). The Resale Shares to be offered by EBI may be
offered in one or more transactions on the Nasdaq/SmallCap Market or in
negotiated transactions or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The Company will not receive any proceeds
from the sale of any of the Resale Shares by EBI.
BROKERS OR DEALERS MAY RECEIVE COMMISSIONS OR DISCOUNTS FROM EBI IN
AMOUNTS TO BE NEGOTIATED IMMEDIATELY PRIOR TO SALE.
Please review the "Risk Factors" beginning on page 8 before you
exercise your Warrants and purchase shares in our Company.
---------------------------
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 September ___, 2000
<PAGE> 3
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,
1999.
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 and June 30, 2000.
4. Our proxy statement for our Annual Meeting of Stockholders dated
May 12, 2000.
5. 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.
------------------------
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 "we anticipate," "believe"
or "expect" indicate that it is possible that the event anticipated, believed or
expected may not occur. Should such event not occur, then the result which we
expected also may not occur or occur in a different manner, which may be more or
less favorable to us. We do 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.
<PAGE> 4
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" business 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. Our commodity business has grown steadily,
with annual revenues in excess of $5 million. Management determined that
separating the core brake parts business and the commodities business would
allow each to focus directly on its individual market and unlock the inherent
value in each. In late December 1999, we formed a new subsidiary company named
eParts eXchange, Inc. ("EPX"). EPX has built and runs a business-to-business
e-commerce Internet platform (www.goepx.com) for worldwide buyers and sellers of
automotive aftermarket parts focusing on the commodity, surplus and
international trade segments. EPX offers an automotive specific, easy to use web
site where parts manufacturers, distributors and retailers can sell their parts
to each other and accrue significant economic advantages. Effective May 1, 2000,
we contributed our existing commodities business to EPX.
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 $19.2 million or 45.6% to $61.3 million in 1999
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 90.5% and 94.7%, respectively,
in 1999 compared to 73.9% and 76.4%, respectively, in 1996, the year that we
liquidated the non-brake parts warehouse distribution business.
<PAGE> 5
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. In December 1999, we decided to exit the foundry business.
Our plan is to market the foundry for sale and, should that effort not be
successful, then discontinue all operations at the Hungarian foundry and
liquidate. In the 1999 financial statements, we have written down the carrying
value of the foundry property to its estimated net realizable value and have
provided a reserve for estimated costs to dispose and estimated losses of the
foundry until it is disposed or liquidated. We are marketing the foundry for
immediate sale. Our disposal plan anticipates a sale or closure of the facility
no later than December 31, 2000.
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 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
<PAGE> 6
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;
(xi) December 1999 - we decided to discontinue all operations at our
Csepel Iron Foundry Works in order to concentrate on our North
American based operations; and
(xii) June 2000 - we completed the funding of EPX which began
e-commerce business.
THE INDUSTRY
The brake parts segment of the automotive aftermarket is the segment of
that industry currently experiencing the most growth. United States brake
systems aftermarket manufacturers revenues totaled $2.23 billion in 1998. While
the overall market is growing at a rate of approximately 2% per year (following
the total growth in the number of vehicles), the brake portion of the industry
is currently enjoying growth of 4% to 5% 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.
<PAGE> 7
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 4% to 5% 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 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 70% 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 263,000 square foot 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 1999 to
better service our growing West Coast distribution.
<PAGE> 8
We conduct a wholesale "commodities" business 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. Our commodity business has grown steadily, with annual
revenues in excess of $5 million. Management determined that separating the core
brake parts business and the commodities business would allow each to focus
directly on its individual market and unlock the inherent value in each. In late
December 1999, we formed EPX. EPX has built and runs a business-to-business
e-commerce Internet platform (www.goepx.com) for worldwide buyers and sellers of
automotive aftermarket parts focusing on the commodity, surplus and
international trade segments. EPX offers an automotive specific, easy to use web
site where parts manufacturers, distributors and retailers can sell their parts
to each other and accrue significant economic advantages. Effective May 1, 2000,
we contributed our existing commodities business to EPX. We can make no
assurance that future market conditions will be favorable to EPX's wholesale
commodities business or that EPX will continue to generate sufficient revenues
or acceptable profit margins from such commodities business. For the years ended
December 31, 1997, 1998 and 1999, net sales from our wholesale commodities
operations accounted for approximately 8%, 9% and 10% of our total net sales
(excluding the Hungarian foundry), respectively, and 4%, 5% 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 from a 17,000 square foot facility, located in suburban
Toronto, Ontario. Today, as a result of the double digit growth in the sales of
friction products since we entered that market segment, North American Friction
now occupies an 80,000 square foot facility 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, hand- formed castings primarily for the European market. We
are marketing the foundry for sale and will discontinue operations at the
foundry once a sale is completed or discontinue and liquidate the foundry if a
sale is not consummated.
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.
<PAGE> 9
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:
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; and (iv) additional sales
penetration of current customers. 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.
In January 2000, a lawsuit was filed against us by the Plan
Administrator of the Estate for a bankrupt former customer (APS Holding
Corporation) seeking recovery of alleged preferences in excess of $2.2 million.
We believe that all payments received by us were in the ordinary course of
business and we are vigorously contesting the allegation. Potential damages, if
any, are not covered by insurance. Management believes that the ultimate
resolution of this matter will not have a material adverse effect on our
financial position or results of operations. There can be no assurances that we
will prevail.
BANK FINANCING
We have incurred significant indebtedness in connection with our
operations. As of December 31, 1999 and June 30, 2000, our total consolidated
indebtedness was approximately $23 million and $27
<PAGE> 10
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 September 29, 1999, we completed a renewal and restructuring of our
credit agreement with LaSalle Bank National Association or its subsidiaries
("LaSalle") for a revolving line of credit of up to $22,000,000, based on
eligible accounts receivable and inventory, and a term loan in the amount of
$3,779,194 secured by the Company's equipment and real estate. In connection
with the sale of our Chicago facility in October 1999, we paid down the term
loan at that time by $2,842,873. The credit agreement was amended in May 2000 to
increase the revolving line of credit to $26,000,000. Our revolving credit
facility, which is for an initial term ending May 1, 2002, bears interests 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, 2000, and bears interest at prime plus 0.75%
per annum.
On July 14, 1997, we sold a $4,500,000 subordinated debenture to Finova
Mezzanine Capital, Inc. (formerly Tandem Capital, Inc.) ("Finova"), calling for
payments of interest at 12.25% per annum through maturity on July 14, 2002.
Through August 15, 2000, we issued Finova warrants to purchase 1,350,000 shares
of our common stock at exercise prices ranging from $0.83 to $1.53, based on 80%
of the average closing bid price of our common stock for the 20 days preceding
the warrant issue date. Finova also will receive warrants to purchase an
additional 225,000 shares of common stock on August 14, 2001; except, however,
if we prepay the debenture before the next scheduled warrant issue date, then we
will not issue the remaining warrant. The exercise price of such warrant is 80%
of the average closing bid price of our common for the 20 days preceding the
warrant issue date. The Company received notification from Finova that they
elected to exercise a warrant to purchase 450,000 shares of the Company's common
stock at an exercise price of $0.83 per share. The warrants are more fully
described in Note 4 to our 1999 audited financial statements. Finova has elected
to use a "cashless" exercise provision whereby Finova will receive a net of
279,257 shares of common stock after surrendering 170,743 shares which have a
fair market value equal to the aggregate exercise price. Therefore, the Company
will receive no cash proceeds from this transaction when the shares are issued.
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.
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
<PAGE> 11
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 TO BE ISSUED IN CONNECTION WITH
THE EXERCISE OF WARRANTS
In connection with our agreement with EBI dated June 22, 2000, wherein
EBI agreed to provide us with certain consulting services, we agreed to issue
warrants (the "Warrants") to EBI to purchase a total of 200,000 shares of our
common stock (the "Shares"). We issued Warrants to purchase 100,000 Shares at
$2.75 per Share and 100,000 Shares at $2.50 per Share. The Warrants are
exercisable not less than 12 months from the date of this agreement and for a
period of 48 months thereafter. The Warrants possess anti-dilution provisions
for stock dividends, splits, mergers, sale of substantially all of our assets,
sale of our stock at below the then current exercise price of the Warrants and
for other events (other than employee benefit and stock option plans for our
employees and advisors and other than for all existing warrants or stock
options). We issued the Warrants in transactions exempt from the registration
requirements of the Securities Act of 1933, as amended, as a private offering.
As a result, none of the Warrants are freely transferable and there is no market
for the Warrants.
The holder of the Warrants may exercise its purchase rights, in whole
or in part, at any time, or from time to time, prior to the Warrant expiration
date. To make such exercise, the holder must notify us, in writing, at our
offices of its intention to exercise the Warrants and the number of Shares to be
purchased. The holder should also submit payment for the purchase price of the
Shares in the form of cash, certified or cashier's check or wire transfer. If
the holder does not exercise all of the Warrants, the holder will receive new
Warrants equal to the difference between the number of Shares subject to the
original Warrants and the number of Shares purchased pursuant to the Warrant
exercise.
RESALE SHARES TO BE OFFERED BY
THE SELLING SHAREHOLDER
We refer to EBI as the "Selling Shareholder" in connection with its
offer of the Resale Shares. In connection with our agreement with EBI dated May
6, 1999, wherein EBI agreed to provide us with certain consulting services, we
agreed to issue warrants (the "Additional Warrants") to EBI to purchase a total
of 200,000 additional shares of our common stock (the "Resale Shares"). We
issued the Additional Warrants to purchase 100,000 Resale Shares at $1.4375 per
Resale Share and 100,000 Resale Shares at $2.00 per Resale Share. The Additional
Warrants possess anti-dilution provisions for stock dividends, splits, mergers,
sale of substantially all of our assets, sale of our stock below the then
current exercise price of the Additional Warrants and for other events (other
than employee benefit and stock option plans for our employees and advisors and
other than for all existing warrants or stock options). We issued the Additional
Warrants in transactions exempt from the registration requirements of the
Securities Act of 1933, as amended, as a private offering. As a result, none of
the Additional Warrants are freely transferable and there is no market for the
Additional Warrants.
The holder of the Additional Warrants may exercise its purchase rights,
in whole or in part, at any time, or from time to time, prior to the Additional
Warrant expiration date. To make such exercise, the holder must notify us, in
writing, at our offices of its intention to exercise the Additional Warrants and
the number of Resale Shares to be purchased. The holder should also submit
payment for the purchase price of the Resale Shares in the form of cash,
certified or cashier's check or wire transfer. If the holder does not exercise
all of the Additional Warrants, the holder will receive new Additional Warrants
equal to the difference between the number of Resale Shares subject to the
original Additional Warrants and the number of Resale Shares purchased pursuant
to the Additional Warrant exercise.
EBI has not exercised any of the Additional Warrants. The Resale
Warrants will be issued in transactions exempt from the registration
requirements of the Securities Act as a private offering. The Prospectus will
allow EBI, or any other person who is a holder of the Additional Warrants, to
offer the Resale Shares for sale to the public. We will receive up to $243,750
upon exercise of the Additional Warrants; however, the Selling Shareholder will
receive all of the proceeds from the sale of any of the Resale Shares.
USE OF PROCEEDS
If all Warrants are exercised, we will receive proceeds of up to
$525,000, less expenses of this offering, which we estimate to be approximately
$13,000. 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.
<PAGE> 12
SELLING SHAREHOLDER
A total of 200,000 Resale Shares may be offered by the Selling
Shareholder. The following table sets forth certain information with respect to
the Selling Shareholder and the Resale Shares which it will beneficially own
after exercise of the Additional Warrants. See "Resale Shares to be Offered by
the Selling Shareholder." We will not receive any of the proceeds from the sale
of the Resale Shares.
<TABLE>
<CAPTION>
Resale Shares to be
Beneficially Owned After
Owned Prior to Offering Offering (1)
----------------------- Resale Shares Being ------------
Selling Shareholder Number Percent Offered Number Percent
------------------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
EBI Securities less than
Corporation 200,000 1% 200,000 0 0
</TABLE>
(1) Assumes the sale of all Resale Shares offered pursuant to this Prospectus.
However, since the Resale Shares offered pursuant to this Prospectus are
not being underwritten, no estimate can be given as to the exact number of
Resale Shares that will be held by the Selling Shareholder after the
offering.
See "Shares to be Issued in Connection with the Exercise of the Warrant" and
"Resale Shares to be Offered by the Selling Shareholder," above.
Under the Securities Exchange Act of 1934, as amended, (the "Exchange
Act") and the regulations thereunder, any person engaged in a distribution of
any Resale Shares offered by this Prospectus may not simultaneously engage in
market-making activities with respect to any Resale Shares during the applicable
"cooling off" period prior to the commencement of such distribution. In
addition, and without limiting the foregoing, the Selling Shareholder will be
subject to applicable provisions of the Securities Act, the Exchange Act and the
rules and regulations thereunder, including, without limitation, Regulation M
under the Exchange Act, in connection with transactions in the Resale Shares,
which provisions may limit the timing of purchases and sales of Resale Shares by
the Selling Shareholder.
PLAN OF DISTRIBUTION
This Prospectus, as appropriately amended or as supplemented, may be
used from time to time by the Selling Shareholder, or its transferees, to offer
and sell the Resale Shares in transactions in which the Selling Shareholder and
any broker-dealer through whom any of the Resale Shares are sold may be deemed
to be underwriters within the meaning of the Securities Act. We will receive
none of the proceeds from any such sales. There presently are no other
arrangements or understandings, formal or informal, pertaining to the
distribution of the Resale Shares.
We anticipate that resales of the Resale Shares by the Selling
Shareholder will be effected form time to time on the open market in ordinary
brokerage transactions on the Nasdaq SmallCap Market ("Nasdaq SmallCap"), on
which the Shares are included for quotation, in the over-the-counter market or
in private transactions. The Resale Shares will be offered for sale at market
prices prevailing at the time of sale or at negotiated prices and on terms to be
determined when the agreement to sell is made or at the time of sale, as the
case may be. The Resale Shares may be offered directly by the Selling
Shareholder or through brokers or dealers. A member firm of the National
Association of Securities Dealers, Inc. ("NASD") may be engaged to act as the
Selling Shareholder's agent in the sale of the Resale Shares by the Selling
Shareholder and/or may acquire Resale Shares as principal. Member firms
participating in such transactions as agent may receive commissions from the
Selling Shareholder (and, if they act as agent for the purchaser of the Resale
Shares, from such purchaser), such commissions computed, in appropriate cases,
in accordance with the applicable rates of the NASD, which commissions may be
negotiated rates where permissible. Sales of the Resale Shares by the member
firm may be made on the Nasdaq SmallCap from time to time at prices related to
prices then prevailing.
<PAGE> 13
Participating broker-dealers may agree with the Selling Shareholder to
sell a specified number of Resale Shares at a stipulated price per Share and, to
the extent such broker dealer is unable to do so acting as agent for the Selling
Shareholder, to purchase as principal any unsold Resale Shares at the price
required to fulfill the broker-dealer's commitment to the Selling Shareholder.
Broker-dealers who acquire Resale Shares as a principal may thereafter resell
such Resale Shares from time to time in transactions on the Nasdaq SmallCap, in
negotiated transactions, or otherwise, at market prices prevailing at the time
of sale or at negotiated prices.
Upon our notification by the Selling Shareholder that a particular
offer to sell the Resale Shares is made and a material arrangement has been
entered into with a broker-dealer for the sale of Resale Shares, a supplement to
this Prospectus will be delivered together with this Prospectus and filed
pursuant to Rule 424(b) under the Securities Act setting forth with respect to
such offer or trade the terms of the offer or trade; including: (i) the number
of Resale Shares involved; (ii) the price at which the Resale Shares were sold;
(iii) any participating brokers, dealers, agents or member firm involved; (iv)
any discounts, commissions and other items paid as compensation from, and the
resulting net proceeds to, the Selling Shareholder; and (v) other facts material
to the transaction.
Resale Shares may be sold directly by the Selling Shareholder or
through agents designated by the Selling Shareholder from time to time. Unless
otherwise indicated in any supplement to this Prospectus, any such agent will be
acting on a best efforts basis for the period of its appointment.
The Selling Shareholder and any brokers, dealers, agents, member firm
or others that participate with the Selling Shareholder in the distribution of
the Resale Shares may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions or fees received by such persons and any
profit on the resale of the Resale Shares purchased by such person may be deemed
to be underwriting commissions or discounts under the Securities Act.
The Selling Shareholder will be subject to the applicable provisions of
the Securities Act and the Exchange Act and the rules and regulations
thereunder, including without limitation Regulation M under the Exchange Act,
which provisions may limit the timing of purchases and sales of any of the
Resale Shares by the Selling Shareholder. All of the foregoing may affect the
marketability of the Resale Shares.
We will pay substantially all the expenses incident to this offering of
the Resale Shares by the Selling Shareholder to the public other than brokerage
fees, commissions and discounts of underwriters, dealers or agents.
In order to comply with certain states' securities laws, if applicable,
the Resale Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the Resale Shares
may not be sold unless the Resale Shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is
available and we or the Selling Shareholder comply with the applicable
requirements.
<PAGE> 14
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 6,951,810 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 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
<PAGE> 15
Our financial statements as of and for the years ended December 31,
1999, 1998 and 1997 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 are available for inspection 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. The Commission maintains a Web site on the Internet that
contains reports, proxy and information statements and other information
regarding registrants (including the Company) that file electronically with the
Commission via EDGAR. The address of such Web site is http://www.sec.gov. Our
common stock and the Warrants are included for quotation on the Nasdaq SmallCap
Market and listed on The Chicago 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
Chicago 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).
<PAGE> 16
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 AUTHORIZED
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 CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
OUR AFFAIRS OR THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
PAGE
----
DOCUMENTS INCORPORATED BY
REFERENCE............................................................... 2
THE COMPANY............................................................... 3
THE INDUSTRY.............................................................. 5
PRODUCTS.................................................................. 6
MARKETING AND DISTRIBUTION................................................ 6
MANUFACTURING............................................................. 7
RISK FACTORS.............................................................. 8
SHARES TO BE ISSUED IN CONNECTION
WITH THE EXERCISE OF WARRANTS............................................ 10
RESALE SHARES TO BE OFFERED BY THE SELLING SHAREHOLDER.................... 10
USE OF PROCEEDS........................................................... 11
SELLING SHAREHOLDER....................................................... 11
PLAN OF DISTRIBUTION...................................................... 11
DESCRIPTION OF SECURITIES
REGISTERED.............................................................. 13
LIMITATION OF DIRECTOR LIABILITY.......................................... 13
LEGAL MATTERS............................................................. 13
EXPERTS................................................................... 13
AVAILABLE INFORMATION..................................................... 14
400,000 SHARES OF COMMON STOCK
UNIVERSAL AUTOMOTIVE
INDUSTRIES, INC.
PROSPECTUS
September __, 2000
<PAGE> 17
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
us in connection with the issuance and sale of the securities being registered
hereby.
Registration Fee........................................ $ 138.60
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................................................... $13,138.60*
==========
*Estimated
----------------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes
indemnification of our directors, officers, employees and agents, 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.
Our Certificate of Incorporation provides for indemnification of our
officers and directors to the fullest extent permitted by Section 145 of the
Delaware General Corporation Law. We maintain directors and officers insurance
covering our 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. Our Certificate of Incorporation
limits the liability of our directors and officers to us or our 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 us and our stockholders.
ITEM 16. EXHIBITS
EXHIBIT NO.
----------
4.1 Consulting Agreement between Universal Automotive Industries,
Inc. and EBI Securities Corporation dated May 6, 1999.*
4.2 Consulting Agreement between Universal Automotive Industries,
Inc. and EBI Securities Corporation dated June 22, 2000.*
5 Opinion of Shefsky & Froelich Ltd. regarding legality.*
23.1 Consent of Altschuler Melvoin and Glasser LLP.
<PAGE> 18
23.2 Consent of Shefsky & Froelich Ltd. (included in Exhibit 5
above).*
-------------------------
* Previously filed.
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
registration 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.
(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
<PAGE> 19
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.
<PAGE> 20
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 September 19, 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 Sept. 19, 2000
Arvin Scott Director (Principal Executive Officer)
/s/ Jerome Hiss
---------------------------------------- Chief Financial Officer (Principal Sept. 19, 2000
Jerome Hiss Financial Officer and Principal
Accounting Officer)
/s/ Yehuda Tzur
---------------------------------------- Director Sept. 19, 2000
Yehuda Tzur
/s/ Dennis Kessler
---------------------------------------- Director Sept. 19, 2000
Dennis Kessler
/s/ Sami Israel
---------------------------------------- Director Sept. 19, 2000
Sami Israel
/s/ Sheldon Robinson
---------------------------------------- Director Sept. 19, 2000
Sheldon Robinson
/s/ Sol Weiner
---------------------------------------- Director Sept. 19, 2000
Sol Weiner
</TABLE>
