As filed with the Securities and Exchange Commission on May 31, 2002
Registration No. 333-68206
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HOMETOWN AUTO RETAILERS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 06-1501703
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
774 Straits Turnpike
Watertown, Connecticut 06795
(860) 945-6900
(Address, including zip code, and telephone number, including area code, of
registrant's executive offices)
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COREY SHAKER
President and Chief Executive Officer
774 Straits Turnpike
Watertown, Connecticut 06795
(860) 945-6900
(Name, address, including zip code, and telephone number, including area code
of agent for service)
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Copies to:
Stephen A. Zelnick, Esq.
Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, New York 10022
(212) 838-8040
(212) 838-9190 (Facsimile)
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or 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, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or 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(c)
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. |_|
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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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
PROSPECTUS
1,662,494 Shares
HOMETOWN AUTO RETAILERS, INC.
Class A Common Stock, $.001 Par Value Per Share
The selling stockholders named in this prospectus are offering to sell up
to an aggregate of 1,662,494 shares of our Class A common stock as follows:
487,498 shares which may be issued upon exercise of warrants, issued
as part of a private placement of units to accredited
investors on July 25, 2001, to buy shares of our Class A
common stock at a price of $1.20 per share;
974,996 shares issued as part of a private placement of units to
accredited investors on July 25, 2001; and
200,000 shares issued as part of a settlement of a potential claim by
the former owners of our Toyota of Newburgh dealership.
We will not receive any of the proceeds from the sale of these shares. The
shares are being registered for resale by the selling stockholder.
Shares of our Class A common stock are traded on the OTC Bulletin Board
under the symbol "HCAR.OB". On May , 2002, the closing price was $
per share.
Neither the Securities and Exchange Commission nor any state securities
commission or other regulatory body has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
See "Risk Factors" beginning on Page , for the factors you should
consider before buying shares of our Class A Common Stock.
The date of this prospectus is May , 2002
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational and reporting requirements of the
Securities Exchange Act of 1934, as amended, and, in accordance with that
statute, have filed various reports and other information with the Securities
and Exchange Commission. You may inspect these reports and other information at
the public reference facilities of the Securities and Exchange Commission at its
principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549. These
reports and other information can also be accessed from the web site maintained
by the Securities and Exchange Commission at http://www.sec.gov. The public may
obtain information on operations of the public reference room by calling the
Securities and Exchange Commission at (800) SEC-0330.
We filed a registration statement on Form S-3 with the Securities and
Exchange Commission under the Securities Act with respect to the shares offered
by this prospectus. This prospectus, which forms a part of that registration
statement, does not contain all of the information included in that registration
statement and its accompanying exhibits. Statements contained in this prospectus
regarding the contents of any document are not necessarily complete and are
qualified in their entirety by that reference. You should refer to the actual
document as filed with the Securities and Exchange Commission. You can get
copies of the registration statement and the accompanying exhibits from the
Securities and Exchange Commission upon payment of the required fees or it may
be inspected free of charge at the public reference facilities and regional
offices referred to above.
REPORTS TO SECURITY HOLDERS
We furnish our stockholders with annual reports containing audited
financial statements. In addition, we are required to file reports on Forms 8-K,
10-Q and 10-K with the Securities and Exchange Commission.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by us with the Securities and Exchange
Commission are incorporated in this prospectus by reference:
(1) Annual Report on Form 10-K for the year ended December 31, 2001;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31, 2002;
(3) Current Report on Form 8-K, filed April 22, 2002;
(4) Registration Statement on Form 8-A, filed July 22, 1998; and
(5) Each document filed after the date of this prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act but before this
offering terminates is incorporated in this prospectus by reference and is to be
treated as part of this prospectus from the date it was filed. Any statement
contained in a document incorporated or deemed to be incorporated in this
prospectus by reference is modified or superseded to the extent that a statement
contained in this prospectus or in any other subsequently filed document which
is incorporated in this prospectus by reference modifies or supersedes such
statement.
Upon written or oral request, we will provide, without charge, each person
to whom a copy of this prospectus is delivered, a copy of any document
incorporated by reference in this prospectus (other than
2
exhibits, unless such exhibits are specifically incorporated by reference in
such documents). Requests should be directed to Hometown Auto Retailers, Inc.,
774 Straits Turnpike, Watertown, Connecticut 06795, (860) 945-6900 Attention:
Corey Shaker, President and Chief Executive Officer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE OF SHARES OF OUR CLASS A COMMON
STOCK COVERED BY THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS
PROSPECTUS OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY CIRCUMSTANCES IN
WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.
HOMETOWN
Hometown sells new and used cars and light trucks, provides maintenance
and repair services, sells replacement parts and provides related financing,
insurance and service contracts through 10 franchised dealerships located in New
Jersey, New York, Connecticut, Massachusetts and Vermont. Hometown's dealerships
offer 12 American and Asian automotive brands including Chevrolet, Chrysler,
Daewoo, Dodge, Ford, Isuzu, Jeep, Lincoln, Mazda, Mercury, Oldsmobile, and
Toyota. Hometown's purpose is to consolidate and operate automobile dealerships
in the Northeast, primarily in New Jersey and New England.
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RISK FACTORS
You should carefully consider the risk factors described below, as well as
other information appearing in this prospectus or incorporated by reference,
before purchasing shares of our Class A common stock.
A Decrease In Consumer Demand For Our New Vehicle Lines Or The Failure Of Its
Manufacturer Could Adversely Affect The Results Of Our Operations.
Our business is significantly dependent upon the sale of new vehicles from
Ford Motors, Toyota Motors and Daimler Chrysler. For the year ended December 31,
2001, Toyota Motor, Ford Motor and Chrysler accounted for 45.9%, 35.1% and 9.8%
of our new vehicle sales, respectively. New vehicle sales generate the majority
of our gross revenue and lead to sales of higher-margin products and services
such as, used vehicle sales, finance and insurance products and repair and
maintenance services. In addition, the success of each of our franchises is also
dependent to a great extent on the success of the respective manufacturer,
including its financial condition, marketing, vehicle demand, production
capabilities and management. If one or more of these manufacturers were to
suffer from labor strikes, negative publicity, including safety recalls of a
particular vehicle model, or a decrease in consumer demand for its products, our
results of operations could be materially and adversely affected.
The Failure To Meet Manufacturers' Customer Satisfaction Requirements Could
Limit Our Ability To Acquire Additional Dealerships And Participate In
Manufacturers' Incentive Programs.
Many manufacturers attempt to measure customers' satisfaction with
automobile dealerships through a CSI, or customer satisfaction index, rating
system. These manufacturers may use a dealership's CSI scores as a factor in
evaluating applications for additional dealership acquisitions and participation
by a dealership in incentive programs. Additionally, from time to time, the
components of the various manufacturer CSI scores have been modified and there
is no assurance that such components will not be further modified or replaced by
different systems in the future, which will make it more difficult for our key
dealerships to meet such standards. If our dealerships fail to meet or exceed
their manufacturers' CSI standards, those manufacturers may prohibit us from
acquiring additional dealerships and or participating in incentive programs
which could have a material adverse effect on our business.
If Automobile Manufacturers Discontinue Incentive Programs, Our Sales Volume or
Profit Margin Could Be Materially and Adversely Affected.
We depend on manufacturers for certain sales incentives, warranties and
other programs that are intended to promote and support new vehicle sales.
Manufacturers often make many changes to their incentive programs during each
year. Some key incentive programs include:
o customer rebates on new vehicles;
o dealer incentives on new vehicles;
o special financing or leasing terms;
o warranties on new and used vehicles; and
o sponsorship of used vehicle sales by authorized new vehicle dealers.
o A reduction or discontinuation of our key manufacturers' incentive
programs may materially and adversely affect our revenues or
profitability.
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We May Not Be Able To Retain Key Existing Employees Or Attract And Retain
Qualified Employees.
Our success depends to a large extent upon the abilities and continued
efforts of its senior executive officers and key managers including Corey
Shaker, William C. Muller Jr., Joseph Shaker and Steven Shaker and on our
ability to attract and retain qualified employees to operate our dealerships. If
any of these persons becomes unavailable to continue in such capacity, or if
Hometown were unable to attract and retain other qualified employees, its
business or prospects could be adversely affected.
The Reporting Of Our Profitability Could Be Materially And Adversely Affected If
It Is Determined That The Book Value Of Goodwill Is Higher Than Fair Value.
Our balance sheet at December 31, 2001 includes an amount designated as
"goodwill" that represents 29.0% of assets and 86.4% of stockholders' equity.
Goodwill arises when an acquirer pays more for a business than the fair value of
the tangible and separately measurable intangible net assets. Under a newly
issued accounting pronouncement, Statement of Financial Accounting Standards No.
142 "Goodwill and Other Intangible Assets", beginning in January 2002, the
amortization of goodwill has been replaced with an "impairment test" which
requires that we compare the fair value of goodwill to its book value at least
annually and more frequently if circumstances indicate a possible impairment. If
we determine that the book value of goodwill is higher than fair value then the
difference must be written-off, which could materially and adversely affect the
reporting of our profitability.
Hometown is currently evaluating the impact of SFAS 142 on its
consolidated financial statements and believes that, if the current market price
of the Company's common stock is indicative of fair value, the majority of its
goodwill may be impaired as of the initial adoption of this statement.
Continued Losses May Threaten The Viability Of Our Business.
We had a net loss of $2.1 million for the year ended December 31, 2001
compared to a net loss of $3.8 million for the year ended December 31, 2000, an
improvement of $1.7 million or 44.7%. If we continue to sustain significant
losses in the future, our business could be materially and adversely affected
and the value of our common stock will likely decline or become worthless.
Our Limited Cash And Working Capital Could Have An Adverse Affect On Our
Business.
At December 31, 2001, our total cash and cash equivalents was
approximately $4.4 million and our working capital was approximately $4.1
million. In addition, we are obligated to invest $1 million for real property
improvements at our Framingham, Massachusetts, dealership. If we sustain net
losses in 2002 or subsequent years, as we sustained in 2001, then we may have
insufficient working capital to maintain our current level of operations,
provide for unexpected contingencies or finance the real property improvements
required at our Framingham dealership. In such event, we will need to seek
additional capital from public or private equity or debt funding sources and we
may not be able to raise needed cash on terms acceptable to us or at all.
Financings may be on terms that are dilutive or potentially dilutive to our
stockholders. If sources of financing are required, but are insufficient or
unavailable, we will be required to modify our growth and operating plans to the
extent of available funding, which could have an adverse affect on our business.
The Cyclical Nature of Automobile Sales May Adversely Affect Our Profitability.
Sales of motor vehicles, particularly new vehicles, historically have been
subject to substantial cyclical variation characterized by oversupply and weak
demand. We believe that the industry is affected
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by many factors, including general economic conditions, consumer confidence, the
level of personal discretionary spending, interest rates and credit
availability. There can be no assurance that the industry will not experience
sustained periods of decline in vehicle sales, particularly new vehicle sales,
in the future. Any such decline could have a material adverse affect on our
business.
Governmental Restrictions On Imported Products Could Impair Our Ability To Sell
Foreign Vehicles Profitably.
A portion of our new vehicle business involves the sale of vehicles, parts
or vehicles composed of parts that are manufactured outside the United States.
As a result, our operations will be subject to customary risks of importing
merchandise, including fluctuations in the value of currencies, import duties,
exchange controls, trade restrictions, work stoppages and general political and
economic conditions in foreign countries. The United States or the countries
from which our products are imported may, from time to time, impose new quotas,
duties, tariffs or other restrictions, or adjust presently prevailing quotas,
duties or tariffs, which could affect our operations and our ability to purchase
imported vehicles and/or parts.
The Concentration of Voting Power Could Prevent Our Class A Common Stockholders
From Having Any Voice In Our Corporate Affairs.
The holders of our Class B common stock are entitled to ten votes for each
share held, while holders of our Class A common stock, are entitled to one vote
per share held. Consequently, the holders of the Class B common stock, who also
own approximately 44% of our outstanding common stock of all classes, will
control approximately 89% of the aggregate number of votes eligible to be cast
by stockholders for the election of directors and certain other stockholder
actions, and will be in a position to control our policies and operations. In
addition, the holders of the Class B common stock have entered into a
stockholders' agreement obligating them, for a five-year period, to vote for two
designees of each of the three founding dealership groups, as directors on our
Board of Directors. Those designees are now, Salvatore A. Vergopia, Joseph
Shaker, William C. Muller Jr., Corey Shaker, Edward A. Vergopia and H. Dennis
Lauzon. Our executive officers and directors control approximately 57% of the
aggregate number of votes eligible to be cast by stockholders for the election
of directors and certain other stockholder actions, and will be in a position to
control our policies and operations. Accordingly, absent a significant increase
in the number of shares of Class A common stock outstanding or conversion of
Class B common stock into Class A common stock, the holders of shares of Class B
common stock will be entitled, for the foreseeable future, to elect all members
of the Board of Directors and control all matters subject to stockholder
approval.
Regulations Affecting Low Price Securities Could Impair The Liquidity Of Our
Class A Common Stock.
The Securities and Exchange Commission has adopted regulations which
generally define "penny stock" to be an equity security that has a market price,
as defined, of less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions, including an exception of an equity
security that is quoted on The Nasdaq Stock Market. Equity securities trading on
the NASD "OTC Bulletin Board" are subject to rules that impose additional sales
practice requirements on broker-dealers who sell our securities. For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchaser of such securities and have received
the purchaser's written consent to the transactions prior to the purchase.
Additionally, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prepared by the Securities and Exchange
Commission relating to the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered
underwriter, current quotations for the securities and,
6
if the broker-dealer is the sole market-maker, the broker-dealer must disclose
this fact and the broker-dealer's presumed control over the market. Finally
among other requirements, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Since February 2001 our Class A common stock has
been trading on the NASD OTC Bulletin Board, as a penny stock, and therefore is
subject to these additional rules. As such, these penny stock rules may restrict
the ability of stockholders to sell our Class A common stock. Consequently, the
liquidity of our Class A common stock could be impaired, not only in the number
of securities which could be bought and sold, but also through delays in the
timing of transactions, reduction in security analysts and new media coverage of
Hometown, and lower prices for our securities than might otherwise be obtained.
FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements based on current
expectations, assumptions, estimates and projections about us and the industry
in which we operate. We use words such as plan, believes, expects, future,
intends and similar expressions to identify forward-looking statements. These
forward-looking statements involve numerous risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of factors more fully described elsewhere in this
prospectus. We undertake no obligation to update any forward-looking statements
for any reason, even if new information becomes available or other events occur
in the future.
USE OF PROCEEDS
All shares of our Class A common stock offered by this prospectus are
being registered for the account of the selling stockholders. We will not
receive any of the proceeds from the sale of these shares. The shares offered by
this prospectus include 487,498 shares underlying warrants to purchase those
shares at a price of $1.20 per share. Assuming the exercise of all of the
warrants at $1.20 per share, we would receive proceeds of approximately
$584,997, which we would use for additional working capital.
7
SELLING SECURITY HOLDERS
The following table sets forth the information as to the beneficial
ownership of our common stock by the selling stockholders on May 10, 2002.
Unless otherwise indicated, it is assumed that each selling stockholder listed
below possesses sole voting and investment power with respect to the shares
owned as of such date by the selling stockholder, including those issuable upon
exercise of the warrants. In addition, unless otherwise indicated, none of the
selling stockholders has had a material relationship with us or any of our
predecessors or affiliates within the past three years.
A person is deemed to be a beneficial owner of securities that can be
acquired by such person within 60 days from the filing of this prospectus upon
the exercise of options and warrants or conversion of convertible securities.
Each Selling Stockholder's percentage ownership is determined by dividing the
number of shares beneficially owned by that person by the total number of shares
beneficially owned, increased to reflect the shares underlying the options,
warrants and convertible securities that are held by such person, but not held
by any other person.
o As of May 10, 2002, the total number of shares outstanding is
7,175,105, of which 3,563,605 shares are Class A common stock and
3,611,500 shares are Class B common stock.
The total number of votes are based on the combined total of Class A and
Class B common stock beneficially owned by the Selling Stockholder. The voting
power percentage of each Selling Stockholder is determined by dividing the
number of votes held by that person by the total number of votes outstanding,
increased to reflect the number of votes of the shares underlying the options,
warrants and convertible securities that are held by such person, but not held
by any other person.
o As of May 10, 2002, the total number of votes outstanding is
39,678,605, of which 3,563,605 votes are from Class A common stock
outstanding and 36,115,000 votes are from Class B common stock
outstanding;
o Class A common stock have one (1) vote per share; and
o Class B common stock have ten (10) votes per share.
Shares Beneficially Shares Beneficially Percentage After the Offering
Owned Before Owned After the of Combined
the Offering Class A Offering Class A and Class B
Selling Shares Voting
Stockholder Class A Class B Offered Class A Class B Equity Power
- ----------- ------- ------- ------- ------- ------- ------ -----
Corey Shaker 193,310 265,080 107,142 86,168 265,080 4.90% 6.90%
President, CEO
and a Director (1)(2)
Joseph Shaker 184,326 321,812 107,142 77,184 321,812 5.56% 8.30%
Director and
formerly President
and COO (1)(5)
Steven Shaker 135,142 206,424 107,142 28,000 206,424 3.27% 5.27%
Regional VP (1)(4)
Janet Shaker (1)(8) 117,142 227,668 107,142 10,000 227,668 3.31% 5.76%
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Shares Beneficially Shares Beneficially Percentage After the Offering
Owned Before Owned After the of Combined
the Offering Class A Offering Class A and Class B
Selling Shares Voting
Stockholder Class A Class B Offered Class A Class B Equity Power
- ----------- ------- ------- ------- ------- ------- ------ -----
Edward D. Shaker 117,142 206,612 107,142 10,000 206,612 3.02% 5.23%
(1)(9)
Edward Shaker (1) 107,142 175,404 107,142 0 175,404 2.44% 4.42%
Richard Shaker (1) 107,142 175,404 107,142 0 175,404 2.44% 4.42%
William Muller, 334,250 453,034 300,000 34,250 453,034 6.79% 11.50%
Jr. Regional VP
and a Director (3)(6)
William Muller, 300,000 308,786 300,000 0 308,786 4.30% 7.78%
Sr. (6)
Paul Yamin (7) 112,250 0 112,250 0 0 0.00% 0.00%
Autos of 200,000 0 200,000 0 0 0.00% 0.00%
Newburgh, Inc.
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(1) Including 71,428 shares of Class A common stock and 35,714 shares of Class
A common stock issuable upon exercise of warrants at a price of $1.20 per
share .
(2) Including (i) 265,080 shares of Class B common stock, of which 15,980
shares are held by the Edward Shaker Family Trust of which he is the
Trustee and a beneficiary, (ii) 13,000 shares of Class A common stock,
(iii) a currently exercisable option to purchase 36,500 shares of Class A
common stock, exercisable at $9.00 per share; (iv) an option to purchase
20,000 shares of Class A common stock, exercisable within the next 60 days
at $3.00 per share; (v) an option to purchase 8,334 shares of Class A
common stock, exercisable within the next 60 days at $2.25 per share; and
(vi) an option to purchase 8,334 shares of Class A common stock,
exercisable within the next 60 days at $1.25 per share.
(3) Including (i) 453,034 shares of Class B common stock; (ii) 4,250 shares of
Class A common stock; (iii) a currently exercisable option to purchase
20,000 shares of Class A common stock, exercisable at $9.00 per share;
(iv) an option to purchase 5,000 shares of Class A common stock,
exercisable within the next 60 days at $2.25 per share; and (v) an option
to purchase 5,000 shares of Class A common stock, exercisable within the
next 60 days at $1.25 per share.
(4) Including (i) 206,424 shares of Class B common stock; (ii) 79,428 shares
of Class A common stock; (iii) a currently exercisable option to purchase
10,000 shares of Class A common stock, exercisable at $9.00 per share;
(iv) an option to purchase 5,000 shares of Class A common stock,
exercisable within the next 60 days at $2.25 per share; and (v) an option
to purchase 5,000 shares of Class A common stock, exercisable within the
next 60 days at $1.25 per share.
(5) Including (i) 321,812 shares of Class B common stock, of which 15,980
shares are held by the Richard Shaker Family Trust of which Mr. Shaker is
the Trustee and a beneficiary, and 40,000 shares are held by the Shaker
Irrevocable Trust of which Mr. Shaker is Trustee, (ii) 40,684 shares of
Class A common stock, and (iii) a currently exercisable option to purchase
36,500 shares of Class A common stock, exercisable at $9.00 per share.
(6) Including 200,000 shares of Class A common stock and 100,000 shares of
Class A common stock issuable upon exercise of warrants at a price of
$1.20 per share.
(7) Including 74,750 shares of Class A common stock and 37,500 shares of Class
A common stock issuable upon exercise of warrants at a price of $1.20 per
share.
(8) Including (i) 227,668 shares of Class B common stock; and (ii) a currently
exercisable option to purchase 10,000 shares of Class A common stock,
exercisable at $9.00 per share.
(9) Including (i) 206,612 shares of Class B common stock; and (ii) a currently
exercisable option to purchase 10,000 shares of Class A common stock,
exercisable at $9.00 per share.
9
PLAN OF DISTRIBUTION
Sales of the shares of our Class A common stock covered by this prospectus
may be effected from time to time in transactions (which may include block
transactions) on the OTC Bulletin Board (or other markets on which shares of our
Class A common stock are then traded), in negotiated transactions, through put
or call option transactions relating to the shares, through short sales of
shares, or a combination of such methods of sale, at fixed prices which may be
changed, at market prices prevailing at the time of sale, or at negotiated
prices. None of the selling stockholders has entered into agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their shares. The selling stockholders may effect transactions by
selling their shares directly to purchasers or through broker-dealers, who may
act as agents or principals. Such broker-dealers may receive compensation in the
form of discounts, concessions, or commissions from the selling stockholders
and/or the purchasers of the shares for whom such broker-dealers may act as
agents, or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
selling stockholders and any broker-dealers who act in connection with the sale
of the shares might be deemed to be underwriters within the meaning of Section
2(11) of the Securities Act of 1933 and any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. We have agreed to indemnify each selling stockholder
against a number of liabilities, including liabilities arising under the
Securities Act. The selling stockholders may agree to indemnify any agent,
dealer or broker-dealer who participates in transactions involving sales of the
securities against the liabilities, including liabilities arising under the
Securities Act. As used herein, "selling stockholders" includes donees and
pledgees selling shares received from a named selling stockholder after the date
of this prospectus.
Selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided that they meet the criteria and conform to the requirements of such
Rule.
We have agreed to keep the registration statement, of which this
prospectus is a part, effective until all the shares covered by this prospectus
are sold or can be sold freely under an appropriate exemption from the
securities laws of the United States and the states, without limitation.
In order to comply with the applicable state securities laws, the shares
covered by this prospectus will be offered or sold through registered or
licensed brokers or dealers in those states. In addition, in a number of states
the shares may not be offered or sold unless they have been registered or
qualified for sale in such states, or an exemption from such registration or
qualification requirement is available and such offering or sale is in
compliance therewith.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the shares may not simultaneously engage in market
making activities with respect to such securities for a period beginning when
such person becomes a distribution participant and ending upon such person's
completion of participation in a distribution, including stabilization
activities in the offered securities to effect syndicate covering transactions,
to impose penalty bids or to effect passive market making bids. In addition, the
selling stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including, without limitation,
Rule 10b-5 and, insofar as the selling stockholders are distribution
participants, Regulation M and Rules 100, 101, 102, 103, 104 and 105 thereof,
all of which may affect the marketability of the shares covered by this
prospectus.
We will pay all of the expenses relating to the registration of the shares
covered by this prospectus except for selling commissions. These expenses are
estimated at $30,000.
10
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION LIMITING THE
RIGHTS OF OUR STOCKHOLDERS TO RECOVER MONETARY DAMAGES
AGAINST A DIRECTOR FOR BREACH OF THE FIDUCIARY DUTY OF CARE
Limitation of Director Liability; Indemnification
As authorized by the Delaware General Corporation Law, our Certificate of
Incorporation provides that none of our directors shall be personally liable to
us or to our stockholders for monetary damages for breach of the fiduciary duty
of care as a director, except for:
o for breach of his or her duty of loyalty to us or to our
stockholders,
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
o under Section 174 of the Delaware General Corporation Law (relating
to unlawful payments or dividends or unlawful stock repurchases or
redemptions), or
o for any transaction from which he or she derived an improper
personal benefit.
This provision limits our rights and the rights of our stockholders to
recover monetary damages against a director for breach of the fiduciary duty of
care except in the situations described above. This provision does not limit our
rights or the rights of any stockholder to seek injunctive relief or rescission
if a director breaches his duty of care.
Our certificate of incorporation further provides for the indemnification
of any and all persons who serve as our director, officer, employee or agent, to
the fullest extent permitted under the Delaware General Corporation Law.
We have obtained a policy of insurance under which our directors and
officers will be insured, subject to the limits of the policy, against certain
losses arising from claims made against our directors and officers by reason of
any acts or omissions covered under this policy in their capacities as directors
or officers, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities Exchange Commission ("SEC") such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment of expenses incurred or paid by our
directors, officers or controlling persons 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, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
11
LEGAL MATTERS
Morse, Zelnick, Rose & Lander, LLP, 450 Park Avenue, New York, New York
10022 delivered an opinion that the issuance of the shares covered by this
prospectus has been approved by our Board of Directors and that such shares,
when issued, will be fully paid and non-assessable under Delaware law. Members
of Morse, Zelnick, Rose & Lander, LLP own, in the aggregate 95,000 shares of our
Class A common stock and options to purchase 5,000 additional shares. Stephen A.
Zelnick, Esq., a member of Morse, Zelnick, Rose & Lander, LLP, serves as a
director of Hometown.
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm in giving said report.
12
- --------------------------------------------------------------------------------
1,662,494 Shares
Class A
Common Stock
par value $.001 per share
HOMETOWN AUTO RETAILERS, INC.
PROSPECTUS
May , 2002
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The fees and expenses we incurred in connection with the offering are
payable by us and, other than registration, filing and listing fees, are
estimated as follows:
SEC registration fee ................................................. $ 368
Accounting fees and expenses ......................................... 10,000
Legal fees and expenses .............................................. 15,000
Miscellaneous expenses ............................................... *
-------
Total .......................................................... $30,000
=======
- ----------
* To be provided by amendment.
Item 16. Exhibits
Exhibit No. Description
- ----------- -----------
4.1 Form of Class A Common Stock Certificate
4.2 Form of Class B Common Stock Certificate
4.3 Form of Warrant Agreement between the Company and Paulson
Investment Company and related Warrant
4.4 Stock Option Plan of the Company
(2)4.5 Form of 3-year warrant issued in the Private Placement of
units on July 25, 2001
(2)4.7 Copy of the Settlement Agreement, dated June 28, 2001, between
Hometown and Autos of Newburgh, Inc.
(1)5.1 Opinion of Morse, Zelnick, Rose & Lander, LLP
(1)23.1 Consent of Arthur Andersen LLP
(1)23.2 Consent of Morse, Zelnick, Rose & Lander, LLP (included in
Exhibit 5.1)
(1)24.1 Power of Attorney (included in signature page)
- ----------
Notes to exhibits
-----------------
Unless otherwise indicated all exhibits were previously filed as an exhibit to
Hometown's Registration Statement on Form S-1 (File No 333-52763), and
incorporated herein by reference.
(1) Filed herewith
(2) Filed as an exhibit to Hometown's Form 10-K for the period ending December
31, 2001, and incorporated herein by reference.
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Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a) (3) of
the Securities Act;
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and
(iii) 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;
(2) That, for determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement relating to
the securities then being offered, and the offering of such securities at
that time shall be deemed to be the initial bonafide offering of such
securities.
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
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.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report,
to security holders that is incorporated by reference in the prospectus
and furnished pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Watertown, State of Connecticut on May 31, 2002.
Hometown Auto Retailers, Inc.
By: /s/ Corey Shaker
------------------------------------
Corey Shaker, President
POWER OF ATTORNEY
ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Corey Shaker and Stephen A. Zelnick, or any one of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all pre- or post-effective amendments to
this Registration Statement, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any one of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities indicated on May 31, 2002.
Signature Title
--------- -----
/s/ Corey Shaker
------------------------------ President and Chief Executive Officer
Corey Shaker and Director
/s/ Charles Schwartz Chief Financial Officer
------------------------------
Charles Schwartz
/s/ William Muller, Jr.*
------------------------------ Director
William Muller, Jr.
/s/ Joseph Shaker*
------------------------------ Director
Joseph Shaker
------------------------------ Director
Salvatore A. Vergopia
------------------------------ Director
Edward A. Vergopia
/s/ H. Dennis Lauzon
------------------------------ Director
H. Dennis Lauzon
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/s/ Timothy C. Moynahan
------------------------------ Director
Timothy C. Moynahan
/s/ Steven A. Fournier
------------------------------ Director
Steven A. Fournier
* By: /s/ Stephen A. Zelnick
---------------------------
Stephen A. Zelnick
Attorney-in-Fact
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