<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
AMERIGON INCORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
AMERIGON INCORPORATED
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 16, 1997
------------------------
Dear Shareholder:
The Annual Meeting of Shareholders of Amerigon Incorporated, a California
corporation, will be held at the Company's headquarters at 404 E. Huntington
Drive, Monrovia, California 91016, on Monday, June 16, 1997, at 10:00 a.m.,
Pacific time, for the following purposes:
(1) To elect six directors to the Board of Directors to serve until the next
Annual Meeting of Shareholders and until their successors are elected and
qualified;
(2) To vote on a proposal to approve the Amerigon Incorporated 1997 Stock
Incentive Plan;
(3) To ratify the grant to six of the Company's directors of options to
purchase an aggregate of 220,000 shares of the Company's Class A Common
Stock; and
(4) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Your attention is directed to the accompanying proxy statement. Only
shareholders of record at the close of business on April 28, 1997 will be
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
All shareholders are requested to sign, date and complete the enclosed proxy
and return it promptly in the accompanying postage-prepaid, pre-addressed
envelope, whether or not they expect to attend the meeting, to assure that their
shares will be represented. Any shareholder giving a proxy has the right to
revoke it at any time before it is voted.
By Order of the Board of Directors,
/s/ Joshua M. Newman
SECRETARY
Monrovia, California
April 30, 1997
PLEASE SIGN AND DATE THE ENCLOSED FORM OF PROXY AND MAIL
IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE TO ENSURE
THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING
<PAGE>
AMERIGON INCORPORATED
404 E. HUNTINGTON DRIVE
MONROVIA, CALIFORNIA 91016
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 16, 1997
------------------------
PERSONS MAKING THE SOLICITATION
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Amerigon Incorporated, a California corporation (the
"Company"), of proxies for use at the Annual Meeting of Shareholders to be held
at the Company's headquarters at 404 E. Huntington Drive, Monrovia, California
91016, on Monday, June 16, 1997, at 10:00 a.m., Pacific time, and at any
adjournment thereof (the "Annual Meeting"). This proxy statement is first being
mailed to shareholders on or about May 7, 1997. Shareholders are requested to
sign, date and return the enclosed proxy card in order to ensure that their
shares are represented at the Annual Meeting.
The shares represented by each properly-executed, unrevoked proxy card will
be voted as directed by the shareholder executing the proxy. If no direction is
made, the shares represented by each properly-executed, unrevoked proxy will be
voted "FOR" the election of management's nominees for the Board of Directors,
"FOR" the proposal to approve the Amerigon Incorporated 1997 Stock Incentive
Plan (the "1997 Plan"), and "FOR" the proposal to ratify the grant of stock
options to certain directors of the Company. With respect to any other item of
business that may come before the Annual Meeting, the proxy confers upon the
proxy holders discretionary authority to vote the proxy in accordance with their
best judgment.
In addition to solicitation by mail, regular employees of the Company may
solicit proxies in person or by telephone without additional compensation. The
Company also will pay persons holding shares in their names or in the names of
their nominees, but not owning such shares beneficially, for the expenses of
forwarding soliciting materials to the beneficial owners of such shares. The
Company will bear all expenses incurred in soliciting its shareholders. Such
expenses are estimated not to exceed $10,000.
REVOCABILITY OF PROXY
Any proxy executed and given by a shareholder of the Company may be revoked
by the shareholder who executed it at any time before it is voted at the Annual
Meeting by delivering a written notice to the Secretary of the Company stating
that the proxy is revoked, by executing and delivering a subsequent proxy, or by
attending the Annual Meeting and voting in person. A proxy will also be deemed
to have been revoked if written notice of the death or incapacity of the maker
of such proxy is received by the Company before the vote with respect to which
such proxy is given.
RECORD DATE
Only holders of shares of Class A Common Stock of the Company ("Common
Stock") at the close of business on April 28, 1997 (the "Record Date") are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. On the Record Date, there were 12,542,500 shares of Common Stock issued
and outstanding.
1
<PAGE>
VOTING RIGHTS AND REQUIREMENTS
The presence in person or by proxy of the holders of a majority of the
shares of Common Stock outstanding on the Record Date is required to constitute
a quorum for the transaction of business at the Annual Meeting. Holders of the
Common Stock are entitled to one vote for each share held as of the Record Date
except as otherwise described below in the event that shareholders are entitled
to cumulate votes in the election of directors. Assuming the presence of a
quorum, the affirmative vote of a majority of the shares of Common Stock
represented and voting at the Annual Meeting (which shares voting affirmatively
also constitute at least a majority of the required quorum) is required for the
shareholders to take action at the Annual Meeting with respect to any matter
other than the election of directors. In the election of directors (whether or
not cumulative voting is invoked in the election), the candidates receiving the
highest number of votes, up to the number of directors to be elected, shall be
elected.
In the election of directors, a shareholder shall not be entitled to
cumulate votes (I.E., cast for any one or more candidates a number of votes
greater than the number of such shareholder's shares) unless the candidate's or
candidates' names have been placed in nomination prior to commencement of the
voting and a shareholder has given notice prior to commencement of the voting of
such shareholder's intention to cumulate votes. As of the date of this Proxy
Statement, the Company has not received any such notice from a shareholder. If
any shareholder timely gives such a notice, each shareholder will be entitled to
cast in the election of directors such number of votes as is equal to the number
of shares held multiplied by the number of directors to be elected. Such votes
may then be cast for a single candidate or may be distributed among two or more
candidates in such proportion as may be determined by the shareholder.
The accompanying proxy card grants the named proxies discretionary authority
to vote cumulatively, if cumulative voting applies. In such event, unless
otherwise instructed, the named proxies intend to vote equally "FOR" each of the
six candidates for director; provided, however, that if sufficient numbers of
Company shareholders exercise cumulative voting rights to elect one or more
candidates, the named proxies will determine the number of directors they are
entitled to elect, select such number from among the named candidates, cumulate
their votes, and cast their votes for each candidate among the number they are
entitled to elect. If voting is not conducted by cumulative voting, shareholders
holding a majority of the Common Stock will be able to elect all of the
directors, and the other shareholders will be unable to elect any director or
directors.
Votes cast by proxy or in person at the Annual Meeting will be counted by an
inspector of election appointed by the Board of Directors to act as election
inspector for the meeting. Shares represented by proxies that reflect
abstentions will be treated as present and entitled to vote for purposes of
determining the presence of a quorum. Abstentions, however, will not constitute
a vote "for" or "against" any matter, and thus will be disregarded in the
calculation of a plurality or of votes cast on any matter submitted to the
shareholders for a vote.
The inspector of election will treat shares referred to as "broker
non-votes" (i.e., shares held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
and as to which the broker has physically indicated on the proxy that the broker
or nominee does not have discretionary power to vote on a particular matter) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of any
matter as to which the broker has physically indicated on the proxy that it does
not have discretionary authority to vote, those shares will be treated as not
present and not entitled to vote with respect to that matter (even though those
shares are considered present for quorum purposes and may be entitled to vote on
other matters). Any unmarked proxies, including those submitted by brokers or
nominees, will be voted as indicated in the accompanying proxy card.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The table below sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 25, 1997 by (i) each person
who is known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock; (ii) each director and/or nominee for director; (iii)
each of the Company's executive officers identified in the compensation table
under "Executive Compensation" (the "Named Executive Officers"); and (iv) all
executive officers and directors of the Company as a group. The Company is not
aware of any person who is not a Company director, nominee for director or
executive officer who beneficially owns more than 5% of the outstanding Common
Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP CLASS
- ----------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Lon E. Bell (2)(3)(4).................................................. 3,451,938 27.5%
Joshua M. Newman (5)................................................... 21,787 *
R. John Hamman, Jr. (6)................................................ 6,771 *
Daniel R. Coker (7).................................................... 6,250 *
Roy A. Anderson (8)(9)................................................. 64,167 *
Roger E. Batzel (8)(9)................................................. 50,833 *
John W. Clark (9)...................................................... 29,167 *
A. Stephens Hutchcraft, Jr. (8)(9)..................................... 77,499 *
Michael R. Peevey (8)(9)............................................... 54,167 *
Norman R. Prouty, Jr. (8)(9)........................................... 59,167 *
Richard A. Weisbart (10)............................................... 0 *
All executive officers and directors as a group (10 persons)
(2)(3)(4)(5)(6)(7)(8)(9)(10)......................................... 3,759,138 29.3%
</TABLE>
- ------------------------
* Less than 1%.
(1) For all shareholders listed, the address is c/o Amerigon Incorporated, 404
E. Huntington Drive, Monrovia, California 91016.
(2) 2,592,903 of the shares are held in an escrow which was created in
connection with the Company's initial public offering. Dr. Bell has sole
voting power over such shares, but has an economic interest in such shares
only to the extent conditions for release from the escrow are satisfied. See
"Escrow Shares" below.
(3) Includes an aggregate of 79,998 shares which Dr. Bell has transferred to
three trusts created for the benefit of his children. Dr. Bell and his wife
are co-trustees of these trusts and share voting power and investment power
with respect to these shares.
(4) Dr. Bell has granted options to purchase an aggregate of 730,720 shares of
his Common Stock to certain directors, executive officers and employees of
the Company as follows: Mr. Newman, 267,148 shares; Mr. Hamman, 2,500
shares; Mr. Coker, 5,000 shares; other employees and consultants, 406,072
shares; and Messrs. Anderson, Batzel, Hutchcraft, Peevey, and Prouty, 10,000
shares each. Of these options, options to purchase 618,706 shares of Common
Stock relate to Dr. Bell's Escrow Shares and are exercisable only at such
time, if ever, as the Escrow Shares are released as Common Stock from
Escrow, and the remaining options do not relate to Escrow Shares. All of the
730,720 shares issuable upon the exercise of these options are reported in
the above table as being beneficially owned by Dr. Bell. With respect to the
other persons named in the table, the shares covered by these options are
reported as being beneficially owned by such persons only to the extent that
their respective options are exercisable on or before June 24, 1997. The
shares covered by options granted by Dr. Bell
(FOOTNOTES CONTINUED ON NEXT PAGE)
3
<PAGE>
have been tabulated only once for purposes of determining the beneficial
ownership of all directors and officers as a group.
(5) Includes 21,787 shares issuable upon exercise of options granted by Dr.
Bell, which have vested to date. Does not include 245,361 shares issuable
upon the exercise of options to purchase Dr. Bell's Escrow Shares, which
vest only at such time, if ever, as the Escrow Shares are released from
Escrow.
(6) Includes 4,271 shares of Common Stock which are subject to options granted
under the Company's 1993 Stock Option Plan and 2,500 shares which are
subject to options granted by Dr. Bell. Effective March 14, 1997, Mr. Hamman
resigned as the Company's Vice President of Finance and Chief Financial
Officer. Mr. Hamman's shares have been excluded from the calculation of
beneficial ownership of all directors and executive officers as a group.
(7) Includes 1,250 shares issuable upon exercise of options granted by Dr.
Bell, which have vested to date. Does not include 3,750 shares issuable upon
exercise of options to purchase Dr. Bell's Escrow Shares, which vest only at
such time, if ever, as the Escrow Shares are released from Escrow.
(8) Includes, as to each of Messrs. Anderson, Batzel, Hutchcraft, Peevey, 2,500
shares issuable upon the exercise of options granted by Dr. Bell. Does not
include, as to each such person, 7,500 shares issuable upon the exercise of
options to purchase Dr. Bell's Escrow Shares, which vest only at such time,
if ever, as the Escrow Shares are released from Escrow.
(9) Includes, as to each of Messrs. Anderson, Batzel, Clark, Hutchcraft,
Peevey, and Prouty, 61,667, 48,333, 16,667, 74,999, 51,667 and 56,667
shares, respectively, issuable upon exercise of options granted to such
directors under the Company's 1993 Stock Option Plan.
(10) Mr. Weisbart is expected to join the Company as a director and as President
and Chief Operating Officer on May 5, 1997. Number of shares excludes
150,000 shares covered by options which have been approved for issuance to
Mr. Weisbart under the Company's 1993 Stock Option Plan. Such options will
not be exercisable on or before June 24, 1997.
ESCROW SHARES
In order to incentivize management of the Company to achieve certain stock
price and income targets, and as a condition of the Company's Initial Public
Offering ("IPO") in June 1993, the Company's then existing shareholders (the
"Original Shareholders") placed 3,000,000 shares (the "Escrow Shares") of Common
Stock into escrow ("Escrow") pursuant to an agreement by and among the Original
Shareholders, the Company, and the escrow agent (the "Escrow Agreement"). The
Escrow Shares will automatically be released from Escrow to the Original
Shareholders upon satisfaction of certain conditions with respect to 1,000,000
shares, referred to as "Escrow Target I," and upon satisfaction of certain other
conditions with respect to an additional 2,000,000 shares, referred to as
"Escrow Target II." Escrow Targets I and II are subject to adjustment upon
certain issuances of Common Stock. The Escrow Agreement will terminate upon the
earlier of the release of all the Escrow Shares or April 30, 1999 (the "Escrow
Period"). During the Escrow Period, the Original Shareholders may vote, but may
not transfer, the Escrow Shares; PROVIDED, HOWEVER, options for Escrow Shares
may be granted. The conditions for release of the Escrow Shares are as follows:
(a) Escrow Target I: 1,000,000 of the Escrow Shares will be released in
the event that the Company's Minimum Pretax Income (as defined below) for
any of the fiscal years ending December 31, 1997 and December 31, 1998
equals or exceeds the following amounts, as adjusted to date (assuming (i)
none of the presently outstanding options or warrants are exercised and (ii)
all of such options or warrants (except outstanding warrants issued in
connection with the IPO and outstanding
4
<PAGE>
options granted under the 1993 Stock Option Plan (collectively, the
"Excluded Options and Warrants")) are exercised:
<TABLE>
<CAPTION>
IF NONE OF
THE IF ALL OF THE
OUTSTANDING OUTSTANDING
OPTIONS AND OPTIONS AND
WARRANTS HAVE WARRANTS HAVE
BEEN BEEN
FISCAL YEAR ENDING EXERCISED EXERCISED
- --------------------------------------------------------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
December 31, 1997.............................................. $ 15,280 $ 25,412
December 31, 1998.............................................. 20,373 33,883
</TABLE>
(b) Escrow Target II: The remaining 2,000,000 shares held in Escrow will
be released in the event that the Company's Minimum Pretax Income (as
defined below) for any of the fiscal years ending December 31, 1997 and
December 31, 1998 equals or exceeds the following amounts, as adjusted to
date (assuming (i) none of the presently outstanding options or warrants are
exercised and (ii) assuming all of such options (other than the Excluded
Options and Warrants) are exercised):
<TABLE>
<CAPTION>
IF NONE OF
THE IF ALL OF THE
OUTSTANDING OUTSTANDING
OPTIONS AND OPTIONS AND
WARRANTS HAVE WARRANTS HAVE
BEEN BEEN
FISCAL YEAR ENDING EXERCISED EXERCISED
- --------------------------------------------------------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
December 31, 1997.............................................. $ 24,448 $ 40,660
December 31, 1998.............................................. 30,560 50,825
</TABLE>
- ------------------------
"Minimum Pretax Income" means for any fiscal year the Company's net income
before provision for income taxes and exclusive of (i) any extraordinary items,
(ii) charges to income resulting from the release of the Escrow Shares or (iii)
charges to income resulting from options granted by Dr. Bell or of options
granted under the Company's 1993 Stock Option Plan, as reflected in the
Company's audited financial statements. The Escrow Agreement provides that the
minimum pretax income conditions in Escrow Target I and Escrow Target II be
adjusted for any issuance of Common Stock after the IPO other than stock issued
upon the exercise of the underwriter's over-allotment option granted in
connection with the IPO, the underwriter's warrants granted in connection with
the IPO or options under the 1993 Stock Option Plan.
The escrow targets set forth above were determined by negotiation between
the Company and the underwriter of the IPO and should not be construed to imply
or predict any future earnings by the Company or any increase in the market
price of its securities.
On April 30, 1999, all shares that have not been released from Escrow will
automatically be exchanged for shares of Class B Common Stock, which will then
be released from Escrow. The Class B Common Stock is neither transferable nor
convertible and its rights with respect to dividends and liquidation
distributions are inferior to those of the Class A Common Stock. Therefore, the
Class B Common Stock has limited economic value. Any money, securities, rights
or property distributed in respect of the Escrow Shares, including any property
distributed as dividends or pursuant to any stock split, merger,
recapitalization, dissolution, or total or partial liquidation of the Company,
shall be held in Escrow until release of the Escrow Shares. Any dividends or
other distributions made with respect to Escrow Shares for which the relevant
earnings levels have not been reached within the Escrow Period will be forfeited
and contributed to the capital of the Company on April 30, 1999.
The Company expects that the release, if any, of the Escrow Shares will be
deemed compensatory and, accordingly, will result in substantial charges to
earnings equal to the fair market value of the Escrow Shares as of the date on
which they are released. Such charges could substantially increase the loss or
5
<PAGE>
reduce or eliminate the Company's net income for financial reporting purposes
for the periods in which the Escrow Shares are released or are probable of being
released. Although the amount of compensation expense recognized by the Company
will not affect total shareholders' equity, it may have a negative effect on the
market price of the Company's securities.
Pursuant to the terms of a shareholders agreement among the Original
Shareholders, if Class B Common Stock is issued at the end of the Escrow Period,
and if any such shareholder, or the beneficiary of the trust which is the
shareholder, is not or ceases to be an employee, director or consultant of the
Company, then all of his shares of Class B Common Stock will be forfeited and
contributed to the capital of the Company by the shareholder for no additional
consideration. Furthermore, the agreement provides that Class B Common Stock may
be forfeited by each shareholder in order to ensure that each shareholder will
hold no more than one share of Class B Common Stock for each share of Common
Stock held, by such shareholder, if only Escrow Target I has been met (after
giving effect to the release of one-third of the Escrow Shares to such
shareholder), or no more than three shares of Class B Common Stock for each
share of Common Stock held by such shareholder, if neither target is met.
The following sets forth the number of Escrow Shares owned by all
shareholders of the Company:
<TABLE>
<S> <C>
Dr. Bell......................................... 2,592,903
Allen Gillespie.................................. 218,100
Robert Diller.................................... 129,000
Trusts for the benefit of Dr. Bell's children.... 59,997
---------
3,000,000
---------
---------
</TABLE>
ITEM 1
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting to elect six directors to the
Board of Directors to serve until the next Annual Meeting of Shareholders and
until their successors are elected and qualified. Each of Roger E. Batzel,
Norman R. Prouty and Joshua M. Newman will not be standing for re-election to
the Board of Directors. The Board of Directors has adopted a resolution reducing
the size of the Board of Directors from nine directors to six, effective as of
the Annual Meeting.
It is intended that the proxies solicited by and received on behalf of the
Board of Directors will be voted "FOR" each of the nominees named below
(collectively, the "Nominees"), unless authority to so vote is withheld. If
voting for directors is conducted by cumulative voting, the proxies named on the
enclosed form of proxy will have discretionary authority (unless such authority
is withheld) to cumulate votes among the Nominees named herein in such
proportion as they see fit. If for any reason any Nominee should, prior to the
Annual Meeting, become unavailable for election as a director, an event not now
anticipated, the proxies will be voted for such substitute Nominee, if any, as
may be recommended by the Board of Directors. In no event, however, shall
proxies be voted for a greater number of persons than the number of Nominees
named herein.
The following biographies set forth information concerning the Nominees:
Lon E. Bell, 56, has been the Chairman of the Board and Chief Executive
Officer of the Company since its formation in April 1991. He also served as
President of the Company since its formation. Dr. Bell co-founded Technar
Incorporated ("Technar") with Dr. Allen Gillespie and Robert Diller, the
Company's Chief Engineer, in 1967, which developed and manufactured automotive
components. Dr. Bell served as Technar's Chairman and President until selling
majority ownership of it to TRW Inc. in 1986. Dr. Bell continued managing
Technar, then known as TRW Technar, as its President until 1991, when he left to
form the Company. Dr. Bell received a bachelor's degree in mathematics in 1962,
a master's degree in
6
<PAGE>
rocket propulsion in 1963, and a Ph.D. in mechanical engineering in 1968 from
the California Institute of Technology.
Roy A. Anderson, 76, has been a director of the Company since June 1993. Mr.
Anderson is Chairman Emeritus of Lockheed Corporation. He served as Chairman of
the Board and Chief Executive Officer of Lockheed from 1977 until his retirement
on December 31, 1985. He continued to serve as a director of Lockheed until
December 31, 1990 and also served as a consultant to that company until December
31, 1992. Mr. Anderson is a member of the boards of directors of the Los Angeles
Music Center, the Greater Los Angeles United Way and the Los Angeles World
Affairs Council. He is Chairman and Chief Executive Officer of the Weingart
Foundation and Co-Chairman of the Select Panel of Project California.
John W. Clark, 53, has been a director of the Company since July 1996. Since
May 1995, Mr. Clark has been a General Partner of Westar Capital Associates, a
private equity investment company. From 1990 to May 1995, he was a private
investor. Prior to 1990, Mr. Clark was President of Valentec International
Corporation, a producer of metal and electronic components for military and
commercial products.
A. Stephens Hutchcraft, Jr., 66, has been a director of the Company since
June 1993. From December 1992 through December 1993, Mr. Hutchcraft served as
Chairman and Chief Executive Officer of Kaiser Aluminum & Chemical Corporation,
and served as its President from 1982 to May 1993. He has been a director of
that company since 1982.
Michael R. Peevey, 59, has been a director of the Company since June 1993.
From October 1990 until he retired in March 1993, Mr. Peevey was President of
Southern California Edison and SCE Corporation. From January 1986 to October
1990, he was Executive Vice President of Southern California Edison and SCE
Corporation. Mr. Peevey has been President and Chief Executive Officer of New
Energy Ventures, Inc., a consulting firm specializing in the energy markets,
since March 1995. Mr. Peevey also serves as a director of Electro Rent
Corporation, a lessor or electronic equipment, Dames & Moore, Inc., a provider
of environmental, engineering and construction management services, and Ocal,
Inc., a manufacturer of specialty steel products.
Richard A. Weisbart, 51, will become a director of the Company effective on
May 5, 1997. On that same date, he will become President and Chief Operating
Officer of the Company, succeeding Dr. Bell in such capacities. Before joining
the Company, Mr. Weisbart served as Director, International Operations, for the
Ford Division of Lear Corporation since May 1996. Mr. Weisbart joined Lear
Corporation in February 1994 as General Manager of Lear Plastics Corporation, a
wholly-owned subsidiary of Lear Corporation. Prior to joining Lear Corporation.
Mr. Weisbart was employed for seven years by Smiths Industries, a company
specializing in advanced avionics, medical systems and specialized industrial
products, most recently as Senior Vice President, Operations.
RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED
The Board of Directors recommends that shareholders vote "FOR" the election
of each of the above-named Nominees. Each properly-executed, unrevoked proxy
will be voted "FOR" the election of each of the above-named Nominees unless the
shareholder executing such proxy indicates thereon that authority to vote for
all or any one of the Nominees is withheld. Assuming the presence of a quorum,
the director nominees receiving the highest number of affirmative votes cast, up
to the number of directors to be elected, will be elected as directors.
7
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held 17 meetings during the fiscal year ended
December 31, 1996. Each director attended at least 75% of the total number of
meetings of the Board of Directors and of each committee on which the director
served during such fiscal year.
The Board of Directors has an Audit Committee, a Nominating Committee, a
Compensation Committee and a Stock Option Committee. The Audit Committee
provides advice and assistance to the Board of Directors on accounting and
financial reporting practices of the Company. It also reviews the scope of audit
work and findings of the firm of independent public accountants who serve as
auditors of the Company and monitors the work of the Company's internal
auditors. The Audit Committee consists of Messrs. Anderson, Hutchcraft, Peevey,
and Roger E. Batzel (who is not standing for re-election as a director of the
Company). During 1996, Joseph F. Troy also served on the Audit Committee until
his resignation as a director on August 14, 1996. The Audit Committee met twice
in 1996.
The Nominating Committee considers potential candidates for director and
makes recommendations to the Board of Directors concerning director nominees.
The Nominating Committee, which was formed on April 8, 1997, consists of Dr.
Bell and Messrs. Peevey and Anderson. Decisions with respect to the Board's
nominees and the criteria to be applied in their selection are exclusively
within the discretion of the Nominating Committee. The Nominating Committee does
not intend to consider director nominees recommended by shareholders.
The Compensation Committee reviews and makes recommendations to the Board of
Directors concerning the compensation arrangements of the Company's executive
officers. The Compensation Committee consists of Dr. Bell and Messrs. Anderson,
Batzel, Hutchcraft, Peevey, Joshua M. Newman and Norman R. Prouty. Messrs.
Newman and Prouty are not standing for re-election as directors. Mr. Troy also
served on the Compensation Committee until his resignation as a director on
August 14, 1996. The Compensation Committee met once during 1996.
The Stock Option Committee administers the Company's 1993 Stock Option Plan
and determines awards to be made thereunder. The Stock Option Committee
consisted of Dr. Bell and Mr. Newman. The Stock Option Committee met once during
1996.
In addition to the committees described above, the Board of Directors formed
two ad hoc committees during 1996. Specifically, an Operations Committee was
formed to review and analyze the Company's business structure and operating
strategy and to make recommendations to the Board with respect thereto. The
Operations Committee met 10 times during the year and was discontinued effective
as of April 8, 1997. The Board also formed a Finance Committee during the year
for the purpose of analyzing potential financing alternatives for the Company
and making recommendations to the Board with respect thereto. The Finance
Committee was discontinued effective as of April 8, 1997.
DIRECTOR COMPENSATION
All directors are reimbursed for expenses incurred in attending Board of
Directors and committee meetings. In 1996, the Company's policy was to pay
directors who were not also officers of the Company (the "Non-Employee
Directors") $1,000 per meeting of the Board of Directors attended in person.
Non-Employee Directors who were members of committees of the Board of Directors
were also entitled to receive $1,000 per committee meeting attended, unless the
meeting was held immediately before or after a meeting of the Board of
Directors, in which event committee members were not entitled to receive any
additional compensation for attending such meeting. Dr. Bell and Mr. Newman, as
employees of the Company, received no additional compensation for attending
meetings of the Board of Directors or committees thereof.
Beginning in August 1996, and in light of the Company's lack of liquidity at
such time, each
Non-Employee Director agreed to suspend indefinitely payment of compensation for
attendance at
8
<PAGE>
meetings of the Board of Directors and/or committees thereof. On April 8, 1997,
following completion of a public offering of units consisting of the Company's
Common Stock and Class A Warrants, the Compensation Committee (including the
members of the Stock Option Committee) recommended, and the Board of Directors
approved, the grant to each of the Non-Employee Directors of options to purchase
Common Stock, which options are to be in lieu of the unpaid meeting fees and, in
some cases, additional compensation for the special contributions of such
director and time expenditures that were substantially greater than what is
customary in connection with meetings of the Board of Directors and/or
committees thereof. The number of options granted to each Non-Employee Director
was based on the number of meetings of the Board of Directors and one or more
committees thereof attended by such Non-Employee Director, as well as the
Compensation Committee's assessment of the level of participation of each
Non-Employee Director at or in connection with the work of the various
committees. Based on the foregoing factors, the Board of Directors approved the
grant to the Non-Employee Directors of options to purchase an aggregate of
330,000 shares of Common Stock (collectively, the "Non-Employee Director
Options").
A total of 110,000 of the Non-Employee Director Options (such options, the
"Plan Options") were granted under the Company's 1993 Stock Option Plan. Each of
the Plan Options is fully vested as of the date of grant and has an exercise
price equal to the closing bid price of the Common Stock on the date of grant,
or $3.375. The Plan Options granted to Non-Employee Directors who are re-elected
to the Board at the Annual Meeting (the "Continuing Directors") will expire five
years from the date of grant, subject to earlier termination in the event that
the optionee's service on the Board of Directors terminates prior to the
expiration of such period. If a Continuing Director terminates service on the
Board for any reason other than death, disability or retirement, the Plan
Options granted to such Continuing Director will be exercisable only for a
period of 30 days following such termination or until the stated expiration date
of such options, whichever is earlier. If a Continuing Director terminates
service on account of death or disability, prior to the stated expiration of his
Plan Options, then his Plan Options will be exercisable until the earlier of the
stated option term or one year from the date the director terminates service on
the Board. If a Continuing Director retires prior to the expiration of his Plan
Options, then his Plan Options will be exercisable only for a period of three
months from the date of such termination or the stated termination date in the
option grant, whichever is earlier. The Plan Options granted to each of Messrs.
Batzel and Prouty, who are not seeking re-election to the Board of Directors for
the coming year, and to any Non-Employee Director who is not re-elected at the
Annual Meeting (collectively, the "Outgoing Directors"), will expire three years
from the date of grant. Insofar as the Plan Options have been granted under the
1993 Stock Option Plan (which was previously approved by the Company's
shareholders), the Plan Options do not require shareholder approval.
The remaining 220,000 of the Non-Employee Director Options (the "Non-Plan
Options") have been approved for grant subject to ratification thereof by the
shareholders at the Annual Meeting. The material terms and conditions of the
Non-Plan Options are described under the heading, "Item 3--Proposal to Ratify
Non-Plan Options." If the Non-Plan Options are not ratified by the shareholders,
each
Non-Employee Director will be paid $.75 per option that is not ratified.
The table on the following page sets forth, for each of the Non-Employee
Directors, (i) the number of Plan Options granted to such director; (ii) the
number of Non-Plan Options approved for grant to such
9
<PAGE>
director (which options are subject to ratification by the Company's
shareholders), and (iii) the total number of Non-Employee Director Options
granted or approved for grant to such director.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF TOTAL NON-EMPLOYEE
NON-EMPLOYEE DIRECTOR PLAN OPTIONS NON-PLAN OPTIONS DIRECTOR OPTIONS
- ------------------------------------------------------------ ------------ ---------------- ------------------
<S> <C> <C> <C>
Roy A. Anderson............................................. 21,667 43,333 65,000
Roger E. Batzel............................................. 8,333 16,667 25,000
John W. Clark............................................... 16,667 33,333 50,000
A. Stephens Hutchcraft, Jr.................................. 34,999 70,001 105,000
Michael R. Peevey........................................... 11,667 23,333 35,000
Norman R. Prouty............................................ 16,667 33,333 50,000
------------ ------- -------
TOTALS:................................................... 110,000 220,000 330,000
------------ ------- -------
------------ ------- -------
</TABLE>
Subject to shareholder approval of the 1997 Stock Incentive Plan (the "1997
Plan") at the Annual Meeting, the Board of Directors has proposed, beginning in
1997, to eliminate the payment of meeting or retainer fees to Non-Employee
Directors. In lieu of such fees, the Compensation Committee has recommended, and
the Board has approved (subject to receipt of the requisite shareholder approval
of the 1997 Plan), the grant to each of the Non-Employee Directors of the
Company of options to purchase 5,000 shares of the Company's Common Stock, with
such grants to be made automatically under the 1997 Plan on the first business
day of each calendar year, commencing in 1998. The terms and conditions of these
grants are described under the heading, "Item 2--Proposal to Approve the 1997
Stock Incentive Plan-- Options to Non-Employee Directors."
ITEM 2
PROPOSAL TO APPROVE THE 1997 STOCK INCENTIVE PLAN
On April 24, 1997, the Board of Directors adopted the 1997 Plan, subject to
the receipt of shareholder approval of the 1997 Plan at the Annual Meeting. The
principal terms of the 1997 Plan are summarized below. The following summary is
qualified in its entirety by reference to the full text of the 1997 Plan, which
can be reviewed on the Securities and Exchange Commission's Web site at
http://www.sec.gov. A copy of the 1997 Plan may also be obtained, without
charge, upon request directed to the Company at 404 East Huntington Drive,
Monrovia, California 91016, Attention: Corporate Secretary. Capitalized terms
used herein not otherwise defined have the meanings given to them in the 1997
Plan.
SUMMARY DESCRIPTION OF THE 1997 PLAN
The purpose of the 1997 Plan is to promote the success of the Company by
providing an additional means through the grant of stock options to attract,
retain, motivate and reward key employees (including officers, whether or not
directors) of the Company and its related subsidiaries by providing incentives
related to equity interests in and the financial performance of the Company. In
addition, the 1997 Plan includes an automatic award feature to attract, motivate
and retain experienced and knowledgeable outside directors through the grant of
fixed nonqualified stock options to them.
ADMINISTRATION. The 1997 Plan will be administered by the Board of
Directors or a committee consisting of two or more directors (or such greater
number of directors as may be required under applicable law) who are (i) in
respect of any decision at any time when a Participant affected by the decision
may be subject to Section 162(m) of the Internal Revenue Code (the "Code") must
be "outside" directors within the meaning of the Code; and (ii) in respect of
any decision affecting a transaction at a time when the Participant involved in
the transaction may be subject to Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), must be "non-employee directors" within
the
10
<PAGE>
meaning of Rule 16b-3(b)(3) under the Exchange Act. (Hereinafter, the Board or
such committee is referred to as the "Committee".) The Committee will have the
authority to determine the specific terms and conditions of all options granted
under the 1997 Plan, including, without limitation, the number of shares subject
to each option, the price to be paid for the shares and any other vesting
criteria. The Committee will make all other determinations necessary or
advisable for the administration of the 1997 Plan. Notwithstanding the
foregoing, the award of options to Non-Employee Directors on the first business
day of each calendar year will be automatic and, to the maximum extent possible,
self-effectuating, and the discretion of the Committee will not extend to such
options in any manner that would be impermissible under Rule 16b-3 of the
Exchange Act.
ELIGIBILITY. Any officer (whether or not a director) or key employee (an
"Eligible Employee") of the Company or its subsidiaries, as determined in the
sole discretion of the Committee, is eligible to be granted options under the
1997 Plan. The 1997 Plan also provides that each director who is not an officer
or employee of the Company or one of its subsidiaries (a "Non-Employee
Director") is automatically granted fixed Nonqualified Stock Options as
described below (see "Non-Employee Director Options").
SHARES AVAILABLE FOR AWARDS. The maximum aggregate number of shares of
Common Stock that may be issued upon the exercise of options awarded under the
1997 Plan is 750,000, subject to adjustment as described below.
Subject to the provisions of the 1997 Plan, the Committee determines the
number of shares subject to each option granted to an Eligible Employee and the
terms and conditions of such options, including the price to be paid for the
shares. Notwithstanding the foregoing, but subject to adjustments as described
below, no more than 600,000 shares may be delivered upon the exercise of
Incentive Stock Options granted under the 1997 Plan. The maximum number of
shares of Common Stock which may be delivered pursuant to the exercise of
options granted during any calendar year to any Eligible Employee may not exceed
100,000 shares. In addition, the maximum number of shares of Common Stock that
may be delivered to Non-Employee Directors pursuant to the exercise of fixed
awards may not exceed 150,000 shares.
The number and kind of shares available under the 1997 Plan are subject to
adjustment in the event of (i) certain reorganizations, mergers, combinations,
recapitalizations, stock splits, stock dividends, or other similar events which
change the number or kind of shares outstanding, and (ii) extraordinary
dividends or distributions of property to the shareholders. Shares relating to
options which are not exercised or which expire or are cancelled will again
become available for regrant and award purposes under the 1997 Plan to the
extent permitted by law. If an option is settled only in cash, it need not be
counted against any of the limits described in the paragraph immediately above.
It is anticipated that all executive officers and all Non-Employee Directors
of the Company who hold office or serve after the date of the Annual Meeting
will be among those eligible to receive options, subject to the discretion of
the Committee to determine the particular individuals who, from time to time,
will be selected to receive options. At present, there are five executive
officers and four Non-Employee Directors who are expected to be eligible to
receive awards under the 1997 Plan. The number of key employees of the Company
who will be eligible to receive options has not been determined at this time. In
addition, neither the individuals who are to receive options, nor the number of
options that will be granted to any individual or group of individuals, has been
determined at this time.
VESTING AND OPTION PERIODS. Except as may be provided in an applicable
Option Agreement, no option made under the 1997 Plan may be exercisable or may
vest until at least six months after the initial Option Date, and once
exercisable, an option will remain exercisable until the expiration or earlier
termination of the option. Each option made to an employee will expire on such
date as is determined by the Committee, but not later than 10 years after the
Option Date.
TRANSFERABILITY. The 1997 Plan provides, with limited exceptions, that
rights or benefits under any option are not assignable or transferable except by
will or the laws of descent and distribution, and that
11
<PAGE>
only the Participant (or, if the Participant has suffered a disability, his or
her legal representative) may exercise the option during the Participant's
lifetime.
OPTIONS GRANTS TO ELIGIBLE EMPLOYEES
An option is the right to purchase shares of Common Stock at a future date
at a specified price (the "Option Price"). The Option Price of any options
granted to Eligible Employees under the 1997 Plan will be determined by the
Committee at the time of the grant; provided, that the Option Price for
Incentive Stock Options granted under the plan may not be less than 100% (110%
in the case of an incentive stock option granted to a Participant who owns or is
deemed to own more than 10% of the total combined voting power of all classes of
stock of the Company) of the Fair Market Value of the Common Stock on the date
of grant.
An option granted to an Eligible Employee may either be an incentive stock
option, as defined in the Code, or a Nonqualified Stock Option. An incentive
stock option may not be granted to a person who owns more than 10% of the total
combined voting power of all classes of stock of the Company unless the Option
Price is at least 110% of the Fair Market Value of shares of Common Stock
subject to the option and such option by its terms is not exercisable after
expiration of five years from the date such option is granted. To the extent
that the aggregate fair market value (defined for this purpose as the fair
market value of the stock subject to the options as of the date of grant of the
options) of stock with respect to which Incentive Stock Options first become
exercisable in any calendar year exceeds $100,000 (taking into account stock
subject to Incentive Stock Options granted under the 1997 Plan or any other
plan), such options will be treated as Nonqualified Stock Options.
Full payment for shares purchased on the exercise of any option, except as
provided below, must be made at the time of such exercise (i) in cash or by
electronic funds transfer, (ii) by check payable to the order of the Company;
(iii) by notice and third party payment in such manner as may be authorized by
the Committee; or (iv) by the delivery of shares of Common Stock already owned
by the Participant, PROVIDED, HOWEVER, that the Committee may in its discretion
limit the Participant's ability to exercise an option by delivering such shares.
TERMINATION OF EMPLOYMENT. The Committee will establish in respect of each
option granted under the 1997 Plan to an Eligible Employee the effect of a
termination of employment on the rights and benefits thereunder and in so doing
may make distinctions based upon the cause of termination or otherwise.
OPTIONS TO NON-EMPLOYEE DIRECTORS
The 1997 Plan provides that each Non-Employee Director then in office will
automatically be granted, on the first business day of each calendar year during
the term of the 1997 Plan, commencing in 1998, a Nonqualified Stock Option to
purchase 5,000 shares of Common Stock. The purchase price per share of Common
Stock covered by each such option granted to a Non-Employee Director, payable in
cash or shares of Common Stock, will be the Fair Market Value of the Common
Stock on the Option Date. Any previously owned shares used in payment of the
exercise price must have been owned by the Non-Employee Director at least six
months prior to the date of exercise. Except as described below, the options
will become exercisable on the first anniversary of the Option Date and, unless
earlier terminated, will expire 10 years after the Option Date.
In the event that a Non-Employee Director's service as a member of the Board
of Directors is terminated for any reason other than the death, Total Disability
or retirement of such director, any portion of an Option granted to such
individual which is not then exercisable will terminate, and any portion of such
Option which is then exercisable will remain exercisable for two years after
such service terminates or until the expiration of the stated term of such
Option, whichever occurs first. If a Non-Employee Director's service as a member
of the Board is terminated by reason of the death or Total Disability of such
director, then all options granted to such director under the 1997 Plan (whether
or not vested at such time) will
12
<PAGE>
become immediately exercisable and may be exercised for a period of two years
after the effective date of such director's termination of service on the Board
or on the original expiration date of the options, whichever first occurs. In
the event that a Non-Employee Director retires on or after age 65 and after 10
years of service as a director, all options granted to such director will become
immediately exercisable and may be exercised for five years after the date of
retirement or until the expiration of the stated term of the option, whichever
first occurs.
OTHER PROVISIONS
ADJUSTMENTS; ACCELERATION. The 1997 Plan provides for certain adjustments
to options granted under the Plan upon the occurrence of certain specified
events. The number and kind of shares available under the 1997 Plan, as well as
the number, kind and price of shares subject to outstanding options, are subject
to adjustment in the event of a reorganization, merger, sale of assets,
recapitalization, stock split, stock dividend, exchange offer or similar event.
Adjustments to options granted to Non-Employee Directors may only be made to the
extent that such adjustments (i) are consistent with applicable law, (ii) are,
in the case of a Change in Control Event, effected pursuant to a plan of
reorganization approved by shareholders, and (iii) are consistent with
adjustments to options granted under the 1997 Plan held by persons other than
executive officers or directors of the Company.
The 1997 Plan also provides for full vesting and acceleration of options
(subject to certain limitations applicable to persons subject to Section 16 of
the Exchange Act) in the event of a Change in Control Event affecting the
Company. The Committee, however, prior to the Change in Control Event, may
determine that there will be no such acceleration of benefits. (A Change in
Control Event is generally defined to include liquidation of the Company, the
sale of substantially all of the Company's business or assets, an acquisition by
one person (or group of persons) of at least 20% of the ownership of the
Company, the replacement of the majority of the members of the incumbent Board
of Directors (excluding replacement directors nominated by the incumbent Board
of Directors), or mergers and similar transactions which result in a 50% change
in ownership, subject to certain exceptions.)
TAX WITHHOLDING. Upon exercise of any option, the Company shall have the
right at its option to (i) require the Participant to pay or provide for payment
of the amount of any taxes which the Company may be required to withhold with
respect to such option event or payment or (ii) deduct from any amount payable
in cash the amount of any taxes which the Company may be required to withhold
with respect to such cash payment. In any case where a tax is required to be
withheld in connection with the delivery of shares of Common Stock, the
Committee may in its sole discretion grant to the Participant the right to
elect, pursuant to such rules and subject to such conditions as the Committee
may establish, to have the Company reduce the number of shares to be delivered
by (or otherwise reacquire) the appropriate number of shares valued at their
then Fair Market Value to satisfy such withholding obligation.
TERMINATION OF OR CHANGES TO THE 1997 PLAN. The authority to grant new
options under the 1997 Plan will terminate on April 24, 2007, unless the 1997
Plan is terminated prior to that time by the Board of Directors. Such
termination typically will not affect rights of participants which accrue prior
to such termination. The Board of Directors may, without shareholder approval,
terminate, suspend or amend the 1997 Plan at any time. However, the Board of
Directors may not increase the maximum number of shares which may be delivered
pursuant to options granted under the 1997 Plan, materially increase the
benefits accruing to Participants under the 1997 Plan or materially change the
requirements as to eligibility to participate in the 1997 Plan. Amendment of the
1997 Plan will not, without the written consent of a Participant, adversely
affect such Participant's rights under an option previously granted.
AMENDMENTS TO OPTIONS. Subject to certain limitations, the Committee may
waive conditions of or limitations on options to Eligible Employees without the
consent of a Participant. In addition, the Committee may make other changes to
the terms and conditions of options that do not affect in any manner materially
adverse to the Participant, his or her rights and benefits under an option.
However, the
13
<PAGE>
Committee may not, without prior shareholder approval (except in the case of an
adjustment as provided under the 1997 Plan), (i) authorize the amendment of
outstanding options to reduce the exercise price, or (ii) cancel and replace
outstanding options with similar options having an exercise or base price that
is lower.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS UNDER THE 1997 PLAN
The federal income tax consequences of the 1997 Plan under current federal
law, which is subject to change, are summarized in the following discussion,
which deals with the general tax principles applicable to the 1997 Plan. State
and local tax consequences are beyond the scope of this summary.
NONQUALIFIED STOCK OPTIONS. No taxable income will be realized by an option
holder upon the grant of a Nonqualified Stock Option under the 1997 Plan. When
the holder exercises the Nonqualified Stock Option, however, he or she will
generally recognize ordinary income equal to the difference between the option
price and the fair market value of the shares at the time of exercise. The
Company is generally entitled to a corresponding deduction at the same time and
in the same amounts as the income recognized by the option holder. Upon a
subsequent disposition of the Common Stock, the option holder will realize
short-term or long-term capital gain or loss, depending on how long the Common
Stock is held. The Company will not be entitled to any further deduction at that
time.
INCENTIVE STOCK OPTIONS. An employee who is granted an Incentive Stock
Option under the 1997 Plan does not recognize taxable income either on the date
of its grant or on the date of its exercise, provided that, in general, the
exercise occurs during employment or within three months after termination of
employment. However, any appreciation in value of the Common Stock after the
date of the grant will be includable in the participant's federal alternative
minimum taxable income at the time of exercise in determining liability for the
alternative minimum tax. If Common Stock acquired pursuant to an Incentive Stock
Option is not sold or otherwise disposed of within two years from the date of
grant of the option nor within one year after the date of exercise, any gain or
loss resulting from disposition of the Common Stock will be treated as long-term
capital gain or loss. If stock acquired upon the exercise of an Incentive Stock
Option is disposed of prior to the expiration of such holding periods (a
"Disqualifying Disposition"), the participant generally will recognize ordinary
income at the time of such Disqualifying Disposition equal to the difference
between the exercise price and the fair market value of the Common Stock on the
date the Incentive Stock Option is exercised or, if less, the excess of the
amount realized on the Disqualifying Disposition over the exercise price. Any
remaining gain or net loss is treated as a short-term or long-term capital gain
or loss, depending upon how long the Common Stock is held. Unlike the case in
which a Nonqualified Stock Option is exercised, the Company is not entitled to a
tax deduction upon either the grant or exercise of an Incentive Stock Option or
upon disposition of the Common Stock acquired pursuant to such exercise, except
to the extent that the employee recognizes ordinary income in a Disqualifying
Disposition.
SPECIAL RULES GOVERNING PERSONS SUBJECT TO SECTION 16(B). Under the federal
tax law, special rules may apply to participants in the 1997 Plan who are
subject to the restrictions on resale of the Company's Common Stock under
Section 16(b) of the Exchange Act. These rules, which effectively take into
account the Section 16(b) restrictions, apply in limited circumstances and may
impact the timing or amount of income recognized by these persons with respect
to options under the 1997 Plan.
ACCELERATED PAYMENTS. If, as a result of certain changes in control of the
Company, a participant's options become immediately exercisable, the additional
economic value, if any, attributable to the acceleration may be deemed a
"parachute payment." The additional value generally will be deemed a parachute
payment if such value, when combined with the value of other payments which are
deemed to result from the change in control, equals or exceeds a threshold
amount equal to 300% of the participant's average annual taxable compensation
over the five calendar years preceding the year in which the change in control
occurs. In such case, the excess of the total parachute payments over such
participant's average
14
<PAGE>
annual taxable compensation will be subject to a 20% non-deductible excise tax
in addition to any income tax payable. The Company will not be entitled to a
deduction for that portion of any parachute payment which is subject to the
excise tax.
SECTION 162(m) LIMITS. Notwithstanding the foregoing discussion with
respect to the deductibility of compensation under the 1997 Plan by the Company,
Section 162(m) of the Code would render non-deductible to the Company certain
compensation to certain employees required to be named in the Summary
Compensation Table (i.e., the Named Executive Officers) in excess of $1,000,000
in any year unless such excess compensation is "performance-based" (as defined
in the Code) or is otherwise exempt from these new limits on deductibility. The
applicable conditions of an exemption for performance-based compensation plans
include, among others, a requirement that the shareholders approve the material
terms of the plan. The Company believes that options granted (to the extent
granted at a price not less than market price on the date of grant) are exempt
from such limits as performance-based compensation. However, in light of
uncertainties regarding its ultimate interpretation, no assurances can be given
that all compensation intended to so qualify will in fact be deductible, if the
nonqualifying amount should, together with other non-exempt compensation, paid
to a Named Executive Officer, exceed $1,000,000. As of the date of this Proxy
Statement, no Named Executive Officer of the Company has ever received
compensation in excess of $1,000,000 in any year.
SPECIFIC BENEFITS. Except for the fixed annual option grants to
Non-Employee Directors, the number of options to be granted to Participants
under the 1997 Plan is subject to the discretion of the Committee and is
therefore not determinable. In addition, the gains, if any, to be realized by
optionees upon exercise of any options granted under the 1997 Plan are dependent
on the future performance of the Common Stock and on overall market conditions
and cannot be determined or estimated at this time.
The number of options to be granted under the 1997 Plan to the Non-Employee
Directors as a group on January 2, 1998 (assuming that shareholders approve the
1997 Plan at the Annual Meeting and that the Non-Employee Directors standing for
election at the Annual Meeting are elected and are serving in office on such
date) is as follows:
NEW PLAN BENEFITS
AMERIGON INCORPORATED
1997 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
OPTIONS
-----------
<S> <C>
Non-Employee Directors as a Group (4 persons).................... 20,000
</TABLE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
Assuming the presence of a quorum at the Annual Meeting, approval of the
Plan requires the affirmative vote of a majority of the shares of Common Stock
represented and voting at the Annual Meeting (which shares voting affirmatively
also constitute at least a majority of the required quorum). THE BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED THE PLAN AND RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE PROPOSAL TO APPROVE THE PLAN. Properly-executed, unrevoked
proxies received by the Board will be so voted unless a contrary choice is
marked on the proxy. Shareholders should note that Dr. Bell and each of Messrs.
Anderson, Clark, Coker, Mertes, Newman, Hutchcraft, Peevey and Weisbart may
receive stock options pursuant to the 1997 Plan, and thus may have an interest
in the proposal and its approval by shareholders.
15
<PAGE>
ITEM 3
PROPOSAL TO RATIFY NON-PLAN OPTIONS
At the Annual Meeting, shareholders will be asked to ratify the grant to the
Company's six Non-Employee Directors of the Non-Plan Options to purchase an
aggregate of 220,000 shares of Common Stock. The Non-Plan Options are intended
to be in lieu of meeting fees which were not paid to such directors in 1996 and,
in some cases, as compensation for the special contributions and time
expenditures of such directors in 1996 that were substantially greater than what
is customary in connection with meetings of the Board of Directors and/or
committees thereof. See "Director Compensation" above. The Non-Plan Options have
been approved by the Board of Directors, subject to ratification by shareholders
at the Annual Meeting.
The following summary of the terms and conditions of the Non-Plan Options is
qualified in its entirety by the full text of the forms of agreement providing
for such grants. The full text of such agreements can be reviewed on the
Securities and Exchange Commission's Web site at http://www.sec.gov and may be
obtained, without charge, upon request directed to the Company at 404 East
Huntington Drive, Monrovia, California 91016, Attention: Corporate Secretary.
Capitalized terms used herein not otherwise defined have the meanings given to
them in the respective forms of agreements providing for the Non-Plan Options.
GENERAL DESCRIPTION OF THE NON-PLAN OPTIONS
The following table sets forth the number of Non-Plan Options proposed to be
awarded to each Non-Employee Director:
BENEFITS UNDER
NON-PLAN OPTIONS
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
UNDERLYING
DIRECTOR OPTIONS
- ----------------------------------------------------------------- -----------------
<S> <C>
Roy A. Anderson.................................................. 43,333
Roger E. Batzel.................................................. 16,667
John W. Clark.................................................... 33,333
A. Stephens Hutchcraft, Jr....................................... 70,001
Michael R. Peevey................................................ 23,333
Norman R. Prouty, Jr............................................. 33,333
</TABLE>
16
<PAGE>
VESTING AND OPTION TERM. The Non-Plan Options approved for grant to each of
the Non-Employee Directors who is re-elected at the Annual Meeting (the
"Continuing Directors") will be fully vested and exercisable on April 8, 1997
(the "Option Date") and will remain exercisable until their expiration on the
day before the fifth anniversary of the Option Date, subject to earlier
termination if the director's service on the Board terminates prior to the
expiration of the option. If a Continuing Director's service on the Board of
Directors terminates prior to the expiration of his option for any reason other
than the death, disability or retirement of such director, then the option will
expire on the earlier of the stated expiration date of the option or 30 calendar
days from the date such director's service terminates. If a Continuing Director
terminates service on account of death or disability, then his Non-Plan Options
will be exercisable until the earlier of the stated expiration date of the
option or three years from the date his Board service terminates. If a
Continuing Director retires from the Board upon or after reaching age 65 and
after having served as a director for at least 10 years, then his Non-Plan
Options will be exercisable until the earlier of the stated expiration date of
the option or five years from the date of his retirement.
The Non-Plan Options approved for grant to Messrs. Batzel and Prouty, who
are not seeking re-election to the Board, and to any of the other current
Non-Employee Directors who are not re-elected to the Board at the Annual Meeting
(collectively, the "Outgoing Directors"), will be fully vested and exercisable
on the Option Date and will remain exercisable until their expiration on the day
before the third anniversary of the Option Date.
EXERCISE PRICE. All Non-Plan Options will have an exercise price of $3.375,
which represents the closing sale price of a share of the Common Stock on the
Option Date, subject to possible adjustment in the event of the occurrence of a
Change in Control Event.
METHOD OF EXERCISE. Subject to such further limitations and rules or
procedures as the Board of Directors may from time to time establish, the
exercise of all or any portion of the Non-Plan Options must be by means of a
written notice of exercise delivered to the Company, specifying the number of
whole shares with respect to which the option is being exercised. The purchase
price of any shares purchased on exercise of a Non-Plan Option must be paid in
full at the time of each purchase in one or a combination of the following
methods: (i) in cash or by electronic funds; (ii) by check payable to the order
of the Company; (iii) by notice and third party payment in such manner as may be
authorized by the Board of Directors; or (iv) subject to the receipt of
applicable regulatory approvals, by the delivery of shares of Common Stock
already owned by the Optionee; provided, however, that the Board of Directors
may in its discretion limit the Optionee's ability to exercise a Non-Plan
Option. Shares of Common Stock used to satisfy the exercise price of a Non-Plan
Option will be valued at their Fair Market Value on the date of exercise.
ADJUSTMENTS. All Non-Plan Options will be subject to adjustment as provided
in the 1997 Stock Incentive Plan (see "Item 2--Proposal to Approve the 1997
Stock Incentive Plan--Adjustments; Acceleration"), but only to the extent that
(i) such adjustments and the Board of Directors' actions in respect thereof
satisfy the requirements of applicable law; (ii) such adjustments in the case of
a Change in Control Event are effected pursuant to the terms of a reorganization
agreement approved by the shareholders of the Company; and (iii) if the 1997
Plan is approved by shareholders at the Annual Meeting, such adjustments are
consistent with adjustments to options granted under the 1997 Plan and held by
persons other than the executive officers or directors of the Company. Change in
Control Event is defined for this purpose in the same manner as under the 1997
Plan.
TRANSFERABILITY. All Non-Plan Options will be subject to restrictions on
transferability as provided in the 1997 Plan (see "Item 2--Proposal to Approve
1997 Stock Incentive Plan--Transferability"), the applicable provisions of which
are expressly made applicable to the Non-Plan Options. Notwithstanding the
foregoing, the Non-Plan Options will be subject to all applicable transfer
restrictions under the Code.
17
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE STOCK OPTION AGREEMENTS
No taxable income will be realized by any of the Non-Employee Directors upon
the grants to them of the Non-Plan Options. Upon the exercise of a Non-Plan
Option, the optionee will realize ordinary income in the amount of the excess of
the fair market value of the shares of the Common Stock on the date of exercise
over the option price. At that time, the Company will be entitled to a
corresponding deduction in the amount of the ordinary income recognized by the
optionee. Upon subsequent disposition of the shares of Common Stock, the
optionee will realize short-term or long-term capital gain or loss, depending on
the period of time that the shares of Common Stock are held and the selling
price. The Company will not be entitled to any further deduction at that time.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Assuming the presence of a quorum at the Annual Meeting, ratification of the
award of the Non-Plan Options requires the affirmative vote of a majority of the
shares of Common Stock represented and voting at the Annual Meeting (which
shares voting affirmatively also constitute at least a majority of the required
quorum). THE BOARD OF DIRECTORS HAS APPROVED THE AWARD OF THE NON-PLAN OPTIONS
AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO RATIFY SUCH AWARDS.
Properly-executed, unrevoked proxies received by the Board will be so voted
unless a contrary choice is marked on the proxy. Shareholders should note that
each of Messrs. Anderson, Batzel, Clark, Hutchcraft, Peevey and Prouty would
receive Non-Plan Options under this proposal, and thus each of such directors
has an interest in the proposal and its approval by shareholders. If the award
of the Non-Plan Options is not ratified by shareholders, then each of the
Non-Employee Directors will receive a cash payment from the Company of $0.75 per
each Non-Plan Option which is not awarded.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following sets forth certain biographical information with respect to
the Company's executive officers and significant employees:
<TABLE>
<CAPTION>
AGE
----
<S> <C>
EXECUTIVE OFFICERS:
Lon E. Bell........................... 56
Daniel R. Coker....................... 44
James L. Mertes....................... 44
Joshua M. Newman...................... 38
Richard A. Weisbart................... 51
SIGNIFICANT EMPLOYEES:
Robert W. Diller...................... 55
</TABLE>
The positions and biographical descriptions of Dr. Bell and Mr. Weisbart are
included under "Election of Directors."
Mr. Coker is Vice President of Sales and Marketing, a position he has held
since joining the Company in March 1996. Previously, he worked with Arvin, Inc.,
a tire pressure sensor manufacturer, from 1986 through 1995 as Vice President
and General Manager of North American Operations. Mr. Coker received his
bachelor's degree from Tennessee Technological University in 1974.
Mr. Mertes has served as Vice President of Quality and Operations since
1994. He joined the Company in December 1993 as Vice President of Quality.
Immediately prior to joining the Company, Mr. Mertes was Director of Quality at
TRW Sensor Operations, a unit of TRW Inc., for two years.
Mr. Newman joined the Company in March 1992 as Vice President of Corporate
Development and Planning, and became a Director in April 1993. On November 1,
1996, Mr. Newman became President of
18
<PAGE>
the Company's Advanced Technologies Division. Prior to joining the Company, Mr.
Newman worked as a management consultant, first for the Boston Consulting Group
from 1988 through December 1990, and then as an independent electric vehicle
consultant until joining the Company. Mr. Newman received his undergraduate
degree in history from the University of California at Davis in 1981 and an MBA
from Harvard University in 1988.
Mr. Diller has been Chief Engineer of the Company since July 1991. Mr.
Diller previously worked at Technar, which he co-founded with Dr. Bell in 1967,
and then at TRW Technar. At TRW Technar, Mr. Diller served most recently as
Program Manager for advanced electronic sensors. Mr. Diller received his
undergraduate degree in Physics from the California Institute of Technology in
1962, and a Masters degree in systems engineering from West Coast University in
1968.
EXECUTIVE COMPENSATION
The following table sets forth information on the compensation of the
Company's Chief Executive Officer and its three most highly compensated
executive officers earning at least $100,000 in 1996 (the "Named Executive
Officers")for each of the three most recent fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ------------
SECURITIES
---------------------- UNDERLYING
NAME/POSITION YEAR SALARY(3) BONUS OPTIONS(#)
- ---------------------------------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
Lon E. Bell(2) ......................... 1996 $ 140,071 $ 0 0
Chairman of the Board, Chief 1995 131,481 0 0
Executive Officer and President 1994 140,121 0 0
Joshua M. Newman ....................... 1996 $ 122,296 $ 65,903 0
V.P. of Corporate Development and 1995 113,758 21,114 0
Secretary of Amerigon Incorporated; 1994 106,319 31,000 0
President and CEO of Company's
Advanced Technologies Division
R. John Hamman, Jr.(4) ................. 1996 $ 102,663 $ 10,000 958 (5)
V.P. of Finance and Chief Financial 1995 39,409(6) 0 3,313 (5)
Officer 1994 0 0 0
Daniel R. Coker(7) ..................... 1996 $ 91,664 $ 21,538 5,000
V.P. of Sales and Marketing
</TABLE>
- ------------------------
(1) No individual listed in the table received aggregate other compensation
exceeding $50,000 or 10% of the compensation reported in the table for such
individual or group.
(2) Dr. Bell will be succeeded as President of the Company by Mr. Weisbart
effective May 5, 1997. Dr. Bell will retain his positions as Chairman of the
Board and Chief Executive Officer.
(3) Amounts shown for 1996 include deferred compensation paid by the Company in
February 1997 following the Company's receipt of the net proceeds from its
public offering of Common Stock and Class A Warrants.
(4) Effective March 14, 1997, Mr. Hamman resigned as the Company's Vice
President of Finance and Chief Financial Officer.
(5) Mr. Hamman's options to purchase an aggregate of 4,271 shares of Common
Stock will expire on June 14, 1997.
(FOOTNOTES CONTINUE ON NEXT PAGE)
19
<PAGE>
(6) Reflects compensation paid to Mr. Hamman beginning in August 1995, when he
joined the Company as Vice President of Finance.
(7) Mr. Coker joined the Company in March 1996.
The Company has no employment or severance agreements with any of its
executive officers.
OPTION GRANTS DURING THE YEAR ENDED DECEMBER 31, 1996
The following table sets forth certain information with respect to options
granted to the Named Executive Officers during the last completed fiscal year:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES PERCENT OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED TO OPTION TERM (3)
OPTIONS EMPLOYEES IN FISCAL EXERCISE OR EXPIRATION --------------------
NAME/POSITION GRANTED YEAR BASE PRICE DATE 5% 10%
- ---------------------------------------- ------------- ------------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
R. John Hamman, Jr.(1) ................. 958 2.7% $10.44/share 6/14/97(2) $ 3,142 $ 6,584
V.P. of Finance and Chief Financial
Officer
Daniel R. Coker ........................ 5,000 14.3% $10.38/share 3/30/01 16,701 34,365
V.P. of Sales and Marketing
</TABLE>
- ------------------------
(1) Effective March 14, 1997, Mr. Hamman resigned as the Company's Vice
President of Finance and Chief Financial Officer.
(2) Due to his resignation from the Company, Mr. Hamman's options expire on June
14, 1997.
(3) The amounts in these columns are based upon assumed rates of appreciation
over the option term which are prescribed by applicable Securities and
Exchange Commission ("SEC") regulations. Actual gains, if any, on stock
option exercises are dependent upon the future performance of the Common
Stock, overall market conditions and other factors.
The options granted to Mr. Hamman and to Mr. Coker during 1996 were
incentive stock options as defined in the Code. Mr. Hamman's options (the
"Hamman options") were exercisable beginning on January 1, 1996 (the date of
grant), and Mr. Coker's options (the "Coker options") were exercisable beginning
March 11, 1997 (one year after the grant date). The exercise prices of the
Hamman options and the Coker options represent the fair market value, as defined
in the 1993 Stock Option Plan, of the Company's Common Stock on the respective
grant dates of such options. The Coker options expire on the date indicated in
the table above, subject to earlier termination in the event Mr. Coker's
employment with the Company terminates prior to such date. If, prior to the
expiration of the Coker options, Mr. Coker's employment with the Company were to
terminate for any reason other than his death, disability or retirement, then
the Coker options would only be exercisable for 90 days following the effective
date of such termination of employment or until the stated expiration of the
options, whichever first occurs. If Mr. Coker dies or becomes disabled prior to
the expiration date of the Coker options, such options would be exercisable for
a period of one year from the effective date of the termination of his
employment for such reason or until the stated expiration date of the options,
whichever first occurs. If Mr. Coker retires prior to the expiration of the
Coker options, then such options will become exercisable for a period of three
months from the effective date of his retirement or until the stated expiration
date of the options, whichever first occurs. The exercise price of the Hamman
options and the Coker options is subject to adjustment at the discretion of the
1993 Stock Option Committee in the event of changes in the number of shares of
outstanding Common Stock due to stock dividends, split-ups, consolidations,
recapitalizations, reorganizations, or like events.
20
<PAGE>
AGGREGATE OPTION EXERCISES IN THE YEAR ENDED DECEMBER 31, 1996 AND YEAR-END
VALUES
During 1996, none of the Named Executive Officers exercised any options
granted to them by the Company ("Company Options"), and none held "in the money"
Company Options as of December 31, 1996. The following table sets forth
information concerning the number of unexercised Company Options held by the
Named Executive Officers on December 31, 1996.
FISCAL YEAR-END OPTION HOLDINGS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS
AT DECEMBER 31, 1996(#)(1)
-----------------------------
NAME EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------------------- -----------------------------
<S> <C>
Lon E. Bell ................................................... 0/0
Chairman and Chief Executive Officer
Joshua M. Newman .............................................. 0/0
V.P. of Corporate Development and Secretary; President and
CEO of Advanced Technology Division
R. John Hamman, Jr.(2) ........................................ 4,271/0
V.P. of Finance and Chief Financial Officer
Daniel R. Coker ............................................... 0/5,000
V.P. of Sales and Marketing
</TABLE>
- ------------------------
(1) Does not include any options granted to a Named Executive Officer by Dr.
Bell, the Company's Chairman and Chief Executive Officer.
(2) Mr. Hamman resigned from the Company effective on March 14, 1997. All of his
unexercised options will expire on June 14, 1997.
21
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1996, all eight members of the
Board of Directors and Joseph Troy (until his resignation as a director on
August 14, 1996) comprised the Compensation Committee, of which two, Dr. Bell
and Mr. Newman, were also officers of the Company. Dr. Bell is the Company's
Chairman of the Board, Chief Executive Officer and President, and Mr. Newman is
Vice President of Corporate Development and Secretary and President and Chief
Executive Officer of the Company's Advanced Technologies Division. Affiliates of
Dr. Bell and/or Mr. Peevey are parties to certain business contracts and
arrangements with the Company, as discussed below.
Dr. Bell co-founded CALSTART (a non-profit consortium of companies engaged
in the development and manufacture of products that benefit the environment) in
1992, served as its interim President, and for the last three years has served
on its Board of Directors and has been a member of its Executive Committee. In
addition, Mr. Peevey serves as Chairman of the Board of Directors of CALSTART.
The Company leased space from CALSTART from June 1992 until April 1994 at no
charge, at which time the Company moved to its current facility. On April 1,
1996, the Company signed a lease with CALSTART for a 24,000 square foot
manufacturing and office facility located in Alameda, California for a term
beginning November 15, 1995 and ending December 31, 1996 for an advance payment
of $450,000 and approximately $11,500 per month. The Company presently leases
approximately less than half of such space on a month to month basis for
approximately $3,300 per month. The Company believes that the terms of the lease
are at least as favorable to the Company as those that could have been obtained
from unaffiliated third parties.
The Company managed the Showcase Program, co-managed the Neighborhood
Electric Vehicle Program, and currently manages two other electric vehicle
programs for CALSTART, for which the Company recognized revenues of $679,000
from CALSTART in 1992, $1,649,000 in 1993, $802,000 in 1994, $2,198,000 in 1995,
and $792,798 in 1996. Such amounts represent reimbursement of expenses incurred
by the Company in managing the Showcase Program in 1992, for four programs in
1993, for three programs in 1994, for four programs in 1995, and for two
programs in 1996.
In September 1996, Dr. Bell extended a $200,000 working capital loan to the
Company at an interest rate of 8% per annum due on demand. In January 1997 and
February 1997, Dr. Bell extended additional working capital loans of $100,000
and $150,000, respectively, to the Company, each bearing interest at 10% per
annum. The Company has repaid these loans using a portion of the net proceeds of
the public offering completed in March, 1997.
The Company periodically engages Adaptrans, an entity owned by Dr. David
Bell, Dr. Bell's son, for engineering design services. Such services primarily
involve assistance in the development and refinement of the Energy Management
System technology of the Company. Adaptrans is engaged only on an "as needed"
basis and the Company pays approximately $8,000 per month for such services.
Through December 31, 1996, the Company had paid Adaptrans a total of $159,000
for such services. The Company believes the terms of its engagement of Adaptrans
are at least as favorable to the Company as those that could have been obtained
from unaffiliated third parties.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND PERFORMANCE GRAPH
INCLUDED IN THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES THE REPORT OR THE PERFORMANCE GRAPH BY
REFERENCE THEREIN, AND SHALL NOT BE DEEMED SOLICITING MATERIAL OR OTHERWISE
DEEMED FILED UNDER EITHER OF SUCH ACTS.
22
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
During the fiscal year ended December 31, 1996, the Company had a
Compensation Committee (the "Committee") of the Board of Directors, which
consisted of the eight current directors. Joseph Troy also served on the
Committee until his resignation from the Board of Directors on August 14, 1996.
The Committee determines the compensation of the directors and executive
officers of the Company, other than compensation in the form of stock options
under the Company's 1993 Stock Option Plan, which is administered by a committee
consisting of Dr. Bell and Mr. Newman (the "1993 Plan Committee").
The Company's executive compensation programs are designed to provide
competitive levels of compensation in order to attract, retain and motivate
highly qualified employees; tie individual total compensation to individual
performance; and align the interests of directors and executive officers with
those of the Company's shareholders. The Company's executive compensation
consists of three components: base salary, bonus and stock options.
BASE SALARIES. In determining salaries for executive officers, the
Committee reviews base salary ranges for competitive positions in the market.
The Committee generally attempts to set base salary at or near the midpoint of
prevailing salaries for comparable positions at comparable companies. In
determining annual increases in base salary, the Committee considers (in
addition to competitive factors) the recommendations of the Company's Chief
Executive Officer and, in some instances, other members of senior management,
although no officer makes recommendations or participates in decisions with
respect to his or her own compensation. Management's recommendations and the
Committee's determinations are based on a subjective assessment of the relative
contributions made by the executive officer to the success of the Company in
achieving its strategic objectives. Such contributions are measured on the basis
of various subjective and objective criteria which are appropriate for the
officer's position and responsibilities within the Company. Examples of such
criteria include leadership, division or department performance relative to the
Company's budget and strategic plan for the year, achievement of certain project
milestones, and improvements in customer satisfaction.
During 1996, Dr. Bell, the Company's Chief Executive Officer, received a
base salary of $140,071, representing a 6.5% increase over the salary paid to
him in 1995. The determination of Dr. Bell's salary was made on the basis of the
factors described above and, in particular, the Committee's subjective
assessment of his leadership and contribution to the Company's overall
performance in achieving its strategic objectives. Such objectives are not
detailed herein because they are believed to constitute proprietary business
information, the disclosure of which would adversely affect the competitive
position of the Company.
BONUSES. The Committee may, in its discretion, award cash bonuses to
executive officers as an additional performance incentive and to recognize
extraordinary contributions to the Company's performance relative to its
strategic plan. Such bonuses are subjectively determined by the Committee using
substantially the same processes and factors as are described above for
determining salary increases, but without regard to competitive factors. Given
that the Company continued to incur operating losses in 1996, the Committee
determined not to award a bonus to Dr. Bell with respect to such year.
STOCK OPTIONS. Options to purchase the Company's Common Stock may be
granted to executive officers (other than Dr. Bell and Mr. Newman) under the
1993 Stock Option Plan in the discretion of the 1993 Plan Committee. In
addition, if the 1997 Plan is approved by shareholders at the Annual Meeting,
stock options may be granted to executive officers of the Company under that
plan in the discretion of the Board of Directors (or any committee thereof
appointed by the Board to administer the 1997 Plan). The Committee believes that
such option grants link the interests of management and shareholders by
incentivizing management to build shareholder value.
Stock options are typically granted to an executive officer as an inducement
to commence employment with the Company. Thereafter, additional grants of stock
options may be made to such executive
23
<PAGE>
officer in the discretion of the 1993 Plan Committee to reward the performance
of such officer or for other reasons. In determining option grants, the 1993
Plan Committee considers a number of factors (including the officer's
performance, his or her position within the Company, and the number of shares or
options currently held by the officer), although the 1993 Plan Committee does
not attach greater weight to any one factor over the others.
INTERNAL REVENUE CODE SECTION162(M). Given the current compensation levels
of the Company's executive officers and the Company's reported losses for
federal income tax purposes, the Committee does not presently anticipate that
the limitation contained in Section162(m) of the Internal Revenue Code will
affect the deductibility of compensation paid by the Company to its executive
officers.
CONTRACTUAL RESTRICTION ON INCREASES IN EXECUTIVE COMPENSATION. In
connection with the Company's public offering completed in March, 1997, the
Company agreed with the underwriter for the public offering that the Company
would not, until after March 18, 1998, increase the compensation of any of its
executive officers above the amounts paid to such officers as of October 8,
1996.
Compensation Committee
Lon E. Bell
Joshua M. Newman
Roy A. Anderson
Roger E. Batzel
John W. Clark
A. Stephens Hutchcraft, Jr.
Michael R. Peevey
Norman R. Prouty, Jr.
24
<PAGE>
PERFORMANCE GRAPH
The graph below compares the performance of the Company's Common Stock to
that of the Nasdaq Stock Market--US Index and the Nasdaq Non-financial Index for
the period commencing June 10, 1993 (the date of the Company's initial public
offering) and ending December 31, 1996 During the period from June 10, 1993
through December 31, 1996 the Company has been in the development stage.
The indexes assume that the value of the investment in the Common Stock and
each index was $100 on June 10, 1993. The total shareholder returns depicted in
the graph are not necessarily indicative of future performance.
<TABLE>
<CAPTION>
JUNE 10, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1993 1993 1994 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Amerigon Incorporated....................... 100.0 162.5 200.0 179.2 97.9
Nasdaq Stock Market--US Index............... 100.0 110.6 108.1 152.7 188.2
Nasdaq Non-Financial Index.................. 100.0 111.1 106.5 146.4 180.6
</TABLE>
25
<PAGE>
CERTAIN TRANSACTIONS
Affiliates of Dr. Bell and/or Mr. Peevey are parties to certain business
contracts and arrangements with the Company. See "Compensation Committee
Interlocks and Insider Participation" above.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP served as the Company's independent accountants for the
fiscal year ended December 31, 1996, and is expected to continue to serve in
such capacity for the current year. A representative of Price Waterhouse LLP
will be present at the Annual Meeting and will have the opportunity to make a
statement if they so choose. They will also be available to respond to
appropriate questions at such time.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company undertakes, on written request, to provide, without charge, each
person from whom the accompanying proxy is solicited, with a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996, as filed with the SEC, including the financial statements and schedules.
Requests should be addressed to Amerigon Incorporated, 404 E. Huntington Drive,
Monrovia, California 91016, Attention: Corporate Secretary.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of relevant forms and written representations
furnished to the Company, there were four reports required by Section 16(a) of
the Exchange Act that were not timely filed during the fiscal year ended
December 31, 1996 and prior fiscal years. A Form 3--Initial Statement of
Beneficial Ownership--for Mr. Coker was not timely filed in connection with his
election as an officer of the Company in March, 1996. The Form 3 for Mr. Coker
was filed with the SEC on or about February 14, 1997. A Form 5--Annual Statement
of Changes in Beneficial Ownership--for Dr. Bell was not timely filed. The Form
5 was filed with the SEC on or about March 6, 1997. Mr. Clark failed to timely
file a Form 3 following his election to the Board of Directors in July, 1996.
Mr. Clark's Form 3 was filed with the SEC on or about March 3, 1997. Finally,
Mr. Mertes filed a Form 3 on or about February 14, 1997 to report his status as
a Company officer as of December 1993.
OTHER MATTERS
Management is not aware of any matters other than those described in this
proxy statement which will be presented for action at the Annual Meeting. If any
matters not referred to in this proxy statement should properly come before the
meeting, the persons named in the proxies will vote the shares represented
thereby in accordance with their judgment, and discretionary authority to vote
under such circumstances is included in the proxy. Matters incident to the
conduct of the meeting may also be voted upon pursuant to the proxies.
26
<PAGE>
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal that a shareholder intends to present at the next Annual
Meeting of Shareholders to be held in June, 1998 must be received at the
principal executive offices of the Company by January 10, 1998 if such proposal
is to be considered for inclusion in the Company's proxy statement and form of
proxy relating to that meeting.
By Order of the Board of Directors,
/s/ JOSHUA M. NEWMAN
JOSHUA M. NEWMAN
SECRETARY
April 30, 1997
27
<PAGE>
AMERIGON INCORPORATED
1997 STOCK INCENTIVE PLAN
(The following copy of the Amerigon Incorporated 1997 Stock Incentive Plan is
filed as an appendix to the proxy materials filed with the Securities and
Exchange Commission pursuant to Instruction 3 to Item 10 of Schedule 14A, but
is not part of the proxy statement and does not otherwise constitute
soliciting material.)
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. THE PLAN.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE. . . . . 1
1.3 PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 SHARES AVAILABLE FOR OPTIONS; SHARE LIMITS . . . . . . . . . . 3
1.5 GRANT OF OPTION. . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 OPTION PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 LIMITATIONS ON EXERCISE AND VESTING OF OPTIONS . . . . . . . . 4
1.8 NO TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . . . 5
2. EMPLOYEE OPTIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 GRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 OPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS. . . 6
2.4 LIMITS ON 10% HOLDERS. . . . . . . . . . . . . . . . . . . . . 7
2.5 CANCELLATION AND REGRANT/WAIVER OF RESTRICTIONS. . . . . . . . 7
3. NON-EMPLOYEE DIRECTOR OPTIONS. . . . . . . . . . . . . . . . . . . . 7
3.1 PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 ANNUAL OPTION GRANTS . . . . . . . . . . . . . . . . . . . . . 8
3.3 OPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 OPTION PERIOD AND EXERCISABILITY . . . . . . . . . . . . . . . 8
3.5 TERMINATION OF DIRECTORSHIP. . . . . . . . . . . . . . . . . . 8
3.6 ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 ACCELERATION UPON A CHANGE IN CONTROL EVENT. . . . . . . . . . 9
3.8 LIMITATION ON AMENDMENTS . . . . . . . . . . . . . . . . . . . 9
4. OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES . 9
4.2 ADJUSTMENTS; ACCELERATION. . . . . . . . . . . . . . . . . . . 10
4.3 EFFECT OF TERMINATION OF EMPLOYMENT. . . . . . . . . . . . . . 12
4.4 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . 12
4.5 TAX WITHHOLDING. . . . . . . . . . . . . . . . . . . . . . . . 12
4.6 PLAN AMENDMENT, TERMINATION AND SUSPENSION . . . . . . . . . . 13
4.7 PRIVILEGES OF STOCK OWNERSHIP. . . . . . . . . . . . . . . . . 14
4.8 EFFECTIVE DATE OF THE PLAN . . . . . . . . . . . . . . . . . . 14
4.9 TERM OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . 14
4.10 GOVERNING LAW/CONSTRUCTION/SEVERABILITY. . . . . . . . . . . . 14
4.11 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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4.12 EFFECT OF CHANGE OF SUBSIDIARY STATUS . . . . . . . . . . . 15
4.13 NON-EXCLUSIVITY OF PLAN . . . . . . . . . . . . . . . . . . 15
5. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 15
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AMERIGON INCORPORATED
1997 STOCK INCENTIVE PLAN
1. THE PLAN.
1.1 PURPOSE.
The purpose of this Plan is to promote the success of the Company by
providing an additional means through the grant of Options to attract, motivate,
retain and reward key employees, including officers, whether or not directors,
of the Company with awards and incentives for high levels of individual
performance and improved financial performance of the Company and to attract,
motivate and retain experienced and knowledgeable independent directors through
the benefits provided under Article 3. "CORPORATION" means Amerigon
Incorporated and "COMPANY" means the Corporation and its Subsidiaries,
collectively. These terms and other capitalized terms are defined in Article 5.
1.2 ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE.
(a) COMMITTEE. This Plan shall be administered by and all Options to
Eligible Employees shall be authorized by the Committee. Action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or by written consent of its members.
(b) PLAN AWARDS; INTERPRETATION; POWERS OF COMMITTEE. Subject to the
express provisions of this Plan, the Committee shall have the authority:
(i) to determine from among those persons eligible the
particular Eligible Employees who will receive any Options;
(ii) to grant Options to Eligible Employees, determine the price
at which securities will be offered and the amount of securities to be
offered to any of such persons, and determine the other specific terms
and conditions of such Options consistent with the express limits of
this Plan, and establish the installments (if any) in which such
Options shall become exercisable or shall vest, or determine that no
delayed exercisability or vesting is required, and establish the
events of termination of such Options;
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(iii) to approve the forms of Option Agreements (which need not
be identical either as to type of award or among Participants);
(iv) to construe and interpret this Plan and any agreements
defining the rights and obligations of the Company and Participants
who are granted Options under Article 2 of this Plan, further define
the terms used in this Plan, and prescribe, amend and rescind rules
and regulations relating to the administration of this Plan;
(v) to cancel, modify, or waive the Corporation's rights with
respect to, or modify, discontinue, suspend, or terminate any or all
outstanding Options held by Eligible Employees, subject to any
required consent under Section 4.6;
(vi) to accelerate or extend the exercisability or extend the
term of any or all such outstanding Options within the maximum
ten-year term of Options under Section 1.6; and
(vii) to make all other determinations and take such other
action as contemplated by this Plan or as may be necessary or
advisable for the administration of this Plan and the effectuation of
its purposes.
Notwithstanding the foregoing, the provisions of Article 3 relating to
Non-Employee Director Options shall be automatic and, to the maximum extent
possible, self-effectuating, and the discretion of the Committee shall not
extend to such Options in any manner that would be impermissible under Rule
16b-3.
(c) BINDING DETERMINATIONS. Any action taken by, or inaction of, the
Corporation, any Subsidiary, the Board or the Committee relating or
pursuant to this Plan shall be within the absolute discretion of that
entity or body and shall be conclusive and binding upon all persons. No
member of the Board or Committee, or officer of the Corporation or any
Subsidiary, shall be liable for any such action or inaction of the entity
or body, of another person or, except in circumstances involving bad faith,
of himself or herself. Subject only to compliance with the express
provisions hereof, the Board and Committee may act in their absolute
discretion in matters within their authority related to this Plan.
(d) RELIANCE ON EXPERTS. In making any determination or in taking
or not taking any action under this Plan, the Committee or the Board, as
the case may be, may obtain and may rely upon the advice of experts,
including professional advisors to the Corporation. No director,
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officer or agent of the Company shall be liable for any such action or
determination taken or made or omitted in good faith.
(e) DELEGATION. The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers or employees of
the Company.
1.3 PARTICIPATION.
Options may be granted by the Committee only to those persons that the
Committee determines to be Eligible Employees. An Eligible Employee who has
been granted an Option may, if otherwise eligible, be granted additional Options
if the Committee shall so determine. Non-Employee Directors shall only be
eligible to receive Nonqualified Stock Options granted automatically without
action of the Committee under the provisions of Article 3.
1.4 SHARES AVAILABLE FOR OPTIONS; SHARE LIMITS.
(a) SHARES AVAILABLE. Subject to the provisions of Section 4.2, the
capital stock that may be delivered under this Plan shall be shares of the
Corporation's authorized but unissued Common Stock and any shares of its
Common Stock held as treasury shares. The shares may be delivered for any
lawful consideration.
(b) SHARE LIMITS. The maximum number of shares of Common Stock that
may be delivered pursuant to all Options (including both Nonqualified Stock
Options and Incentive Stock Options) granted under this Plan shall not
exceed 750,000 shares (the "SHARE LIMIT"). The maximum number of shares of
Common Stock that may be delivered pursuant to options qualified as
Incentive Stock Options granted under this Plan is 600,000 shares. The
maximum number of shares of Common Stock that may be delivered to
Non-Employee Directors under the provisions of Article 3 shall not exceed
150,000 shares. The maximum number of shares subject to those options that
are granted during any calendar year to any Eligible Employee shall be
limited to 100,000. Each of the four foregoing numerical limits shall be
subject to adjustment as contemplated by this Section 1.4 and Section 4.2.
(c) SHARE RESERVATION; REPLENISHMENT AND REISSUE OF UNVESTED OPTIONS.
No Option may be granted under this Plan unless, on the date of grant, the
sum of (i) the maximum number of shares issuable at any time pursuant to
such Option, plus (ii) the number of shares that have previously been
issued pursuant to Options granted under this Plan, other than reacquired
shares available for reissue consistent with any applicable limitations,
plus (iii) the maximum number of shares that may be issued at any time
after such date of grant pursuant to Options that are outstanding
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on such date, does not exceed the Share Limit. Shares that are subject to
or underlie Options which expire or for any reason are cancelled or
terminated, are forfeited, fail to vest, or for any other reason are not
paid or delivered under this Plan, as well as reacquired shares, shall
again, except to the extent prohibited by law, be available for subsequent
Options under this Plan. Except as limited by law, if an Option is settled
only in cash, such Option need not be counted against any of the limits
under this Section 1.4.
1.5 GRANT OF OPTION.
Subject to the express provisions of this Plan, the Committee shall
determine the number of shares of Common Stock subject to each Option and the
price to be paid for the shares. Each Option shall be evidenced by an Option
Agreement signed by the Corporation and, if required by the Committee, by the
Participant.
1.6 OPTION PERIOD.
Each Option and all executory rights or obligations under the related
Option Agreement shall expire on such date (if any) as shall be determined by
the Committee, but not later than ten (10) years after the Option Date.
1.7 LIMITATIONS ON EXERCISE AND VESTING OF OPTIONS.
(a) PROVISIONS FOR EXERCISE. Unless the Committee otherwise
expressly provides, no Option shall be exercisable or shall vest until at
least six months after the initial Option Date, and once exercisable an
Option shall remain exercisable until the expiration or earlier termination
of the Option.
(b) PROCEDURE. Any exercisable Option shall be deemed to be
exercised when the Secretary of the Corporation receives written notice of
such exercise from the Participant, together with any required payment made
in accordance with Section 2.2(a) or 3.3, as the case may be.
(c) FRACTIONAL SHARES/MINIMUM ISSUE. Fractional share interests
shall be disregarded, but may be accumulated. The Committee, however, may
determine in the case of Eligible Employees that cash, other securities, or
other property will be paid or transferred in lieu of any fractional share
interests. No fewer than 100 shares may be purchased on exercise of any
Option at one time unless the number purchased is the total number at the
time available for purchase under the Option.
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1.8 NO TRANSFERABILITY.
(a) LIMIT ON EXERCISE AND TRANSFER. Unless otherwise expressly
provided in (or pursuant to) this Section 1.8, by applicable law and by the
Option Agreement, as the same may be amended, (i) all Options are
non-transferable and shall not be subject in any manner to sale, transfer,
anticipation, alienation, assignment, pledge, encumbrance or charge; (ii)
Options shall be exercised only by the Participant; and (iii) amounts
payable or shares issuable pursuant to an Option shall be delivered only to
(or for the account of) the Participant.
(b) EXCEPTIONS. The Committee may permit Options to be exercised by
and paid to certain persons or entities related to the Participant pursuant
to such conditions and procedures as the Committee may establish. Any
permitted transfer shall be subject to the condition that the Committee
receive evidence satisfactory to it that the transfer is being made for
estate and/or tax planning purposes or a gratuitous or donative basis and
without consideration (other than nominal consideration). Notwithstanding
the foregoing, Incentive Stock Options shall be subject to any and all
applicable transfer restrictions under the Code.
(c) FURTHER EXCEPTIONS TO LIMITS ON TRANSFER. The exercise and
transfer restrictions in Section 1.8(a) shall not apply to:
(i) transfers to the Corporation,
(ii) the designation of a beneficiary to receive benefits in
the event of the Participant's death or, if the Participant has died,
transfers to or exercise by the Participant's beneficiary, or, in the
absence of a validly designated beneficiary, transfers by will or the
laws of descent and distribution,
(iii) transfers pursuant to a QDRO order,
(iv) if the Participant has suffered a disability, permitted
transfers or exercises on behalf of the Participant by his or her
legal representative, or
(v) the authorization by the Committee of "cashless exercise"
procedures with third parties who provide financing for the purpose of
(or who otherwise facilitate) the exercise of Awards consistent with
applicable laws and the express authorization of the Committee.
Notwithstanding the foregoing, Incentive Stock Options shall be subject to
all applicable transfer restrictions under the Code.
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2. EMPLOYEE OPTIONS.
2.1 GRANTS.
One or more Options may be granted under this Article to any Eligible
Employee. Each Option granted may be either an Option intended to be an
Incentive Stock Option, or not so intended, and such intent shall be indicated
in the applicable Option Agreement.
2.2 OPTION PRICE.
(a) PRICING LIMITS. The purchase price per share of the Common Stock
covered by each Option shall be determined by the Committee at the time of
the grant, but in the case of Incentive Stock Options shall not be less
than 100% (110% in the case of a Participant who owns or is deemed to own
under Section 424(d) of the Code more than 10% of the total combined voting
power of all classes of stock of the Corporation) of the Fair Market Value
of the Common Stock on the date of grant.
(b) PAYMENT PROVISIONS. The purchase price of any shares purchased
on exercise of an Option granted under this Article shall be paid in full
at the time of each purchase in one or a combination of the following
methods: (i) in cash or by electronic funds transfer; (ii) by check
payable to the order of the Corporation; (iii) by notice and third party
payment in such manner as may be authorized by the Committee; or (iv) by
the delivery of shares of Common Stock of the Corporation already owned by
the Participant, PROVIDED, HOWEVER, that the Committee may in its absolute
discretion limit the Participant's ability to exercise an Option by
delivering such shares. Shares of Common Stock used to satisfy the
exercise price of an Option shall be valued at their Fair Market Value on
the date of exercise.
2.3 LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS.
(a) $100,000 LIMIT. To the extent that the aggregate "fair market
value" of stock with respect to which incentive stock options first become
exercisable by a Participant in any calendar year exceeds $100,000, taking
into account both Common Stock subject to Incentive Stock Options under
this Plan and stock subject to incentive stock options under all other
plans of the Company or any parent corporation, such options shall be
treated as nonqualified stock options. For this purpose, the "fair market
value" of the stock subject to options shall be determined as of the date
the options were awarded. In reducing the number of options treated as
incentive stock options to meet the $100,000 limit, the most recently
granted options shall be reduced first. To the extent a reduction of
simultaneously granted
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options is necessary to meet the $100,000 limit, the Committee may, in the
manner and to the extent permitted by law, designate which shares of Common
Stock are to be treated as shares acquired pursuant to the exercise of an
Incentive Stock Option.
(b) OPTION PERIOD. Each Option and all rights thereunder shall
expire no later than ten years after the Option Date.
(c) OTHER CODE LIMITS. There shall be imposed in any Option
Agreement relating to Incentive Stock Options such terms and conditions as
from time to time are required in order that the Option be an "incentive
stock option" as that term is defined in Section 422 of the Code.
2.4 LIMITS ON 10% HOLDERS.
No Incentive Stock Option may be granted to any person who, at the
time the Option is granted, owns (or is deemed to own under Section 424(d) of
the Code) shares of outstanding Common Stock possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation, unless
the exercise price of such Option is at least 110% of the Fair Market Value of
the stock subject to the Option and such Option by its terms is not exercisable
after the expiration of five years from the date such Option is granted.
2.5 CANCELLATION AND REGRANT/WAIVER OF RESTRICTIONS.
Subject to Section 1.4 and Section 4.6 and the specific limitations on
Options contained in this Plan, the Committee from time to time may authorize,
generally or in specific cases only, for the benefit of any Eligible Employee
any adjustment in the number of shares subject to, the restrictions upon or the
term of, an Option granted under this Article by cancellation of an outstanding
Option and a subsequent regranting of an Option, by amendment, by substitution
of an outstanding Option, by waiver or by other legally valid means. Such
amendment or other action may provide for a greater or lesser number of shares
subject to the Option, or provide for a longer or shorter vesting or exercise
period.
3. NON-EMPLOYEE DIRECTOR OPTIONS.
3.1 PARTICIPATION.
Options under this Article 3 shall be made only to Non-Employee
Directors and shall be evidenced by Option Agreements substantially in the form
of Exhibit A hereto.
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3.2 ANNUAL OPTION GRANTS.
(a) ANNUAL OPTIONS. On the first business day of each calendar year
during the term of this Plan, commencing with the first business day
occurring in 1998, there shall be granted automatically (without any action
by the Committee or the Board) a Nonqualified Stock Option (the Option Date
of which shall be such date) to each Non-Employee Director then in office
to purchase 5,000 shares of Common Stock.
(b) MAXIMUM NUMBER OF SHARES. Annual grants that would otherwise
exceed the maximum number of shares under Section 1.4(a) shall be prorated
within such limitation. A Non-Employee Director shall not receive more
than one Nonqualified Stock Option under this Section 3.2 in any calendar
year.
3.3 OPTION PRICE.
The purchase price per share of the Common Stock covered by each
Option granted pursuant to Section 3.2 hereof shall be 100 percent of the Fair
Market Value of the Common Stock on the Option Date. The exercise price of any
Option granted under this Article shall be paid in full at the time of each
purchase in cash or by check or in shares of Common Stock valued at their Fair
Market Value on the date of exercise of the Option, or partly in such shares and
partly in cash, PROVIDED THAT any such shares used in payment shall have been
owned by the Participant at least six months prior to the date of exercise.
3.4 OPTION PERIOD AND EXERCISABILITY.
Each Option granted under this Article 3 and all rights or
obligations thereunder shall expire ten years after the Option Date and shall
be subject to earlier termination as provided below. Subject to section 3.5
below, each Option granted under Section 3.2 shall become exercisable on the
first anniversary of the Option Date.
3.5 TERMINATION OF DIRECTORSHIP.
If a Non-Employee Director's services as a member of the Board of
Directors terminate for any reason other than Total Disability, death or
retirement, any portion of an Option granted pursuant to this Article which is
not then exercisable shall terminate and any portion of such Option which is
then exercisable may be exercised for two years after the date of such
termination or until the expiration of the stated term, whichever first occurs.
If a Non-Employee Director's services as a member of the Board of Directors
terminate because of Total Disability or death, then all Options granted
pursuant to this Article shall become immediately exercisable and may be
exercised for two years after the effective date of the termination of service
or until the expiration of the stated term, whichever first occurs. If a
Non-Employee Director retires
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on or after age 65 and after ten years of service as a Director, all
Options granted pursuant to this Article shall become immediately exercisable
and may be exercised for five years after the date of retirement or until the
expiration of the stated term, whichever first occurs.
3.6 ADJUSTMENTS.
Options granted under this Article 3 shall be subject to adjustment as
provided in Section 4.2, but only to the extent that (a) such adjustment and the
Committee's actions in respect thereof satisfy the requirements of all
applicable law, (b) such adjustment in the case of a Change in Control Event is
effected pursuant to the terms of a reorganization agreement approved by
shareholders of the Corporation, and (c) such adjustment is consistent with
adjustments to Options held by persons other than executive officers or
directors of the Corporation.
3.7 ACCELERATION UPON A CHANGE IN CONTROL EVENT.
Upon the occurrence of a Change in Control Event, each Option granted
under Section 3.2 hereof shall become immediately exercisable in full; provided,
however, that none of the Options granted under Section 3.2 shall be accelerated
to a date less than six months after the Award Date of such Option. To the
extent that any Option granted under this Article 3 is not exercised prior to
(i) a dissolution of the Corporation or (ii) a merger or other corporate event
that the Corporation does not survive, and no provision is (or consistent with
the provisions of Section 3.7 can be) made for the assumption, conversion,
substitution or exchange of the Option, the Option shall terminate upon the
occurrence of such event.
3.8 LIMITATION ON AMENDMENTS.
The provisions of this Article 3 shall not be amended more than once
every six months (other than as may be necessary to conform to any applicable
changes in the Code or the rules thereunder).
4. OTHER PROVISIONS.
4.1 RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES.
(a) EMPLOYMENT STATUS. Status as an Eligible Employee shall not be
construed as a commitment that any Option will be made under this Plan to
an Eligible Employee or to Eligible Employees generally.
(b) NO EMPLOYMENT CONTRACT. Nothing contained in this Plan (or in
any other documents related to this Plan or to any Option) shall confer
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upon any Eligible Employee or other Participant any right to continue in
the employ or other service of the Company or constitute any contract or
agreement of employment or other service, nor shall interfere in any way
with the right of the Company to change such person's compensation or other
benefits or to terminate the employment of such person, with or without
cause, but nothing contained in this Plan or any document related hereto
shall adversely affect any independent contractual right of such person
without his or her consent thereto.
(c) PLAN NOT FUNDED. Awards payable under this Plan shall be payable
in shares or from the general assets of the Corporation, and (except as
provided in Section 1.4(c)) no special or separate reserve, fund or deposit
shall be made to assure payment of such Awards. No Participant,
Beneficiary or other person shall have any right, title or interest in any
fund or in any specific asset (including shares of Common Stock, except as
expressly otherwise provided) of the Company by reason of any Option
hereunder. Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor any action taken
pursuant to the provisions of this Plan shall create, or be construed to
create, a trust of any kind or a fiduciary relationship between the Company
and any Participant, Beneficiary or other person. To the extent that a
Participant, Beneficiary or other person acquires a right to receive
payment pursuant to any Option hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Company.
4.2 ADJUSTMENTS; ACCELERATION.
(a) ADJUSTMENTS. If there shall occur any extraordinary dividend or
other extraordinary distribution in respect of the Common Stock (whether in
the form of cash, Common Stock, other securities, or other property), or
any recapitalization, stock split (including a stock split in the form of a
stock dividend), reverse stock split, reorganization, merger, combination,
consolidation, split-up, spin-off, repurchase, or exchange of Common Stock
or other securities of the Corporation, or there shall occur any other like
corporate transaction or event in respect of the Common Stock or a sale of
substantially all the assets of the Corporation as an entirety, then the
Committee shall, in such manner and to such extent (if any) as it deems
appropriate and equitable (i) proportionately adjust any or all of (a) the
number and type of shares of Common Stock (or other securities) which
thereafter may be made the subject of Options (including the specific
numbers of shares set forth elsewhere in this Plan), (b) the number, amount
and type of shares of Common Stock (or other securities or property)
subject to any or all outstanding Options, (c) the exercise price of any or
all outstanding Options, or (d) the securities, cash or other property
deliverable upon exercise of any outstanding Options, or (ii) in the case
of an extraordinary dividend or other distribution, merger,
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reorganization, consolidation, combination, sale of assets, split up,
exchange, or spin off, make provision for a cash payment or for the
substitution or exchange of any or all outstanding Options or the cash,
securities or property deliverable to the holder of any or all outstanding
Options based upon the distribution or consideration payable to holders of
the Common Stock of the Corporation upon or in respect of such event;
PROVIDED, HOWEVER, in each case, that with respect to Incentive Stock
Options, no such adjustment shall be made which would cause this Plan to
violate Section 424(a) of the Code or any successor provisions thereto
without the written consent of holders materially adversely affected
thereby. In any of such events, the Committee may take such action
sufficiently prior to such event if necessary to permit the Participant to
realize the benefits intended to be conveyed with respect to the underlying
shares in the same manner as is available to shareholders generally.
(b) ACCELERATION OF OPTIONS UPON CHANGE IN CONTROL. As to any
Participant who has been granted an Option pursuant to Article 2, unless
prior to a Change in Control Event the Committee determines that, upon its
occurrence, there shall be no acceleration of benefits under Options or
determines that only certain or limited benefits under Options shall be
accelerated and the extent to which they shall be accelerated, and/or
establishes a different time in respect of such Change in Control Event for
such acceleration, then upon the occurrence of a Change in Control Event
each Option shall become immediately exercisable; provided, however, that
in no event shall any Option be accelerated as to any Section 16 Person to
a date less than six months after the Option Date of such Award. The
Committee may override the limitations on acceleration in this Section
4.2(b) by express provision in the Option Agreement and may accord any
Eligible Employee a right to refuse any acceleration, whether pursuant to
the Option Agreement or otherwise, in such circumstances as the Committee
may approve. Any acceleration of Options shall comply with applicable
regulatory requirements, including without limitation Section 422 of the
Code.
(c) POSSIBLE EARLY TERMINATION OF ACCELERATED AWARDS. If any Option
under this Plan (other than an Option granted under Article 3) has been
fully accelerated as permitted by Section 4.2(b) but is not exercised prior
to (i) a dissolution of the Corporation, or (ii) a reorganization event
described in Section 4.2(a) that the Corporation does not survive, or (iii)
the consummation of reorganization event described in Section 4.2(a) that
results in a Change in Control Event approved by the Board, and no
provision has been made for the survival, substitution, exchange or other
settlement of such Option, such Option shall thereupon terminate.
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4.3 EFFECT OF TERMINATION OF EMPLOYMENT.
The Committee shall establish in respect of each Option granted to an
Eligible Employee the effect of a termination of employment on the rights and
benefits thereunder and in so doing may make distinctions based upon the cause
of termination or otherwise.
4.4 COMPLIANCE WITH LAWS.
This Plan, the granting and vesting of Options under this Plan and the
issuance and delivery of shares of Common Stock and/or the payment of money
under this Plan or under Options granted hereunder are subject to compliance
with all applicable federal and state laws, rules and regulations (including but
not limited to state and federal securities law and federal margin requirements)
and to such approvals by any listing, regulatory or governmental authority as
may, in the opinion of counsel for the Corporation, be necessary or advisable in
connection therewith. Any securities delivered under this Plan shall be subject
to such restrictions, and the person acquiring such securities shall, if
requested by the Corporation, provide such assurances and representations to the
Corporation as the Corporation may deem necessary or desirable to assure
compliance with all applicable legal requirements.
4.5 TAX WITHHOLDING.
(a) CASH OR SHARES. Upon any exercise of any Option or upon the
disposition of shares of Common Stock acquired pursuant to the exercise of
an Incentive Stock Option prior to satisfaction of the holding period
requirements of Section 422 of the Code, the Company shall have the right
at its option to (i) require the Participant (or Personal Representative or
Beneficiary, as the case may be) to pay or provide for payment of the
amount of any taxes which the Company may be required to withhold with
respect to such Option event or payment or (ii) deduct from any amount
payable in cash the amount of any taxes which the Company may be required
to withhold with respect to such cash payment. In any case where a tax is
required to be withheld in connection with the delivery of shares of Common
Stock under this Plan, the Committee may in its sole discretion grant
(either at the time of the Option or thereafter) to the Participant the
right to elect, pursuant to such rules and subject to such conditions as
the Committee may establish, to have the Corporation reduce the number of
shares to be delivered by (or otherwise reacquire) the appropriate number
of shares valued at their then Fair Market Value, to satisfy such
withholding obligation.
(b) TAX LOANS. The Company may, in its discretion, authorize a loan
to an Eligible Employee in the amount of any taxes which the Company may be
required to withhold with respect to shares of Common
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Stock received (or disposed of, as the case may be) pursuant to a
transaction described in subsection (a) above. Such a loan shall be for a
term, at a rate of interest and pursuant to such other terms and conditions
as the Company, under applicable law may establish.
4.6 PLAN AMENDMENT, TERMINATION AND SUSPENSION.
(a) BOARD AUTHORIZATION. The Board may, at any time, terminate or,
from time to time, amend, modify or suspend this Plan, in whole or in part.
No Options may be granted during any suspension of this Plan or after
termination of this Plan, but the Committee shall retain jurisdiction as to
Options then outstanding in accordance with the terms of this Plan.
(b) SHAREHOLDER APPROVAL. Any amendment that would (i) materially
increase the benefits accruing to Participants under this Plan, (ii)
materially increase the aggregate number of securities that may be issued
under this Plan, or (iii) materially modify the requirements as to
eligibility for participation in this Plan, shall be subject to shareholder
approval only to the extent then required by Section 422 of the Code or
applicable law, or deemed necessary or advisable by the Board.
(c) AMENDMENTS TO OPTIONS. Without limiting any other express
authority of the Committee under but subject to the express limits of this
Plan, the Committee by agreement or resolution may waive conditions of or
limitations on Options to Eligible Employees that the Committee in the
prior exercise of its discretion has imposed, without the consent of a
Participant, and may make other changes to the terms and conditions of
Options that do not affect in any manner materially adverse to the
Participant, his or her rights and benefits under an Option.
Notwithstanding anything else contained herein to the contrary, the
Committee shall not, without prior shareholder approval (i) authorize the
amendment of outstanding Options to reduce the exercise price, as
applicable, except as contemplated by Section 4.2, or (ii) cancel and
replace outstanding Options with similar Options having an exercise or base
price which is lower, except as contemplated by Section 4.2.
(d) LIMITATIONS ON AMENDMENTS TO PLAN AND OPTIONS. No amendment,
suspension or termination of this Plan or change of or affecting any
outstanding Option shall, without written consent of the Participant,
affect in any manner materially adverse to the Participant any rights or
benefits of the Participant or obligations of the Corporation under any
Option granted under this Plan prior to the effective date of such change.
Changes contemplated by Section 4.2 shall not be deemed to constitute
changes or amendments for purposes of this Section 4.6.
13
<PAGE>
4.7 PRIVILEGES OF STOCK OWNERSHIP.
Except as otherwise expressly authorized by the Committee or this
Plan, a Participant shall not be entitled to any privilege of stock ownership as
to any shares of Common Stock not actually delivered to and held of record by
him or her. No adjustment will be made for dividends or other rights as a
shareholder for which a record date is prior to such date of delivery.
4.8 EFFECTIVE DATE OF THE PLAN.
This Plan shall be effective as of April 24, 1997, the date of Board
approval, subject to shareholder approval within 12 months thereafter.
4.9 TERM OF THE PLAN.
No Option shall be granted more than ten years after the effective
date of this Plan (the "TERMINATION DATE"). Unless otherwise expressly provided
in this Plan or in an applicable Option Agreement, any Option theretofore
granted may extend beyond such date, and all authority of the Committee with
respect to Options hereunder shall continue during any suspension of this Plan
and in respect of outstanding Options on such Termination Date.
4.10 GOVERNING LAW/CONSTRUCTION/SEVERABILITY.
(a) CHOICE OF LAW. This Plan, the Options, all documents evidencing
Options and all other related documents shall be governed by, and construed
in accordance with the laws of the State of California.
(b) SEVERABILITY. If any provision shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
(c) PLAN CONSTRUCTION.
(1) RULE 16b-3. It is the intent of the Corporation that
transactions in and affecting Options in the case of Participants who
are or may be subject to Section 16 of the Exchange Act satisfy any
then applicable requirements of Rule 16b-3 so that such persons
(unless they otherwise agree) will be entitled to the benefits of Rule
16b-3 or other exemptive rules under Section 16 of the Exchange Act in
respect of these transactions and will not be subjected to avoidable
liability thereunder. If any provision of this Plan or of any Option
would otherwise frustrate or conflict with the intent expressed above,
that provision to the extent possible shall be interpreted so as to
avoid such conflict. If the conflict remains irreconcilable, the
Committee may disregard the provision if it
14
<PAGE>
concludes that to do so furthers the interest of the Corporation and
is consistent with the purposes of this Plan as to such persons in the
circumstances.
(2) SECTION 162(m). It is the further intent of the Company
that Options with an exercise price not less than Fair Market Value on
the date of grant shall qualify as performance-based compensation
under Section 162(m) of the Code, and this Plan shall be interpreted
consistent with such intent.
4.11 CAPTIONS.
Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.
4.12 EFFECT OF CHANGE OF SUBSIDIARY STATUS.
For purposes of this Plan and any Option hereunder, if an entity
ceases to be a Subsidiary a termination of employment shall be deemed to have
occurred with respect to each employee of such Subsidiary who does not continue
as an employee of another entity within the Company.
4.13 NON-EXCLUSIVITY OF PLAN.
Nothing in this Plan shall limit or be deemed to limit the authority
of the Board or the Committee to grant awards or authorize any other
compensation, with or without reference to the Common Stock, under any other
plan or authority.
5. DEFINITIONS.
5.1 DEFINITIONS.
(a) "BENEFICIARY" shall mean the person, persons, trust or trusts
designated by a Participant or, in the absence of a designation, entitled
by will or the laws of descent and distribution, to receive the benefits
specified in the Option Agreement and under this Plan in the event of a
Participant's death, and shall mean the Participant's executor or
administrator if no other Beneficiary is designated and able to act under
the circumstances.
(b) "BOARD" shall mean the Board of Directors of the Corporation.
15
<PAGE>
(c) "CHANGE IN CONTROL EVENT" shall mean any of the following:
(i) Approval by the shareholders of the Corporation of the
dissolution or liquidation of the Corporation;
(ii) Approval by the shareholders of the Corporation of an
agreement to merge or consolidate, or otherwise reorganize, with or
into one or more entities that are not wholly owned by the
Corporation, as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity immediately
after the reorganization are, or will be, owned by shareholders of the
Corporation immediately before such reorganization (assuming for
purposes of such determination that there is no change in the record
ownership of the Corporation's securities from the record date for
such approval until such reorganization and that such record owners
hold no securities of the other parties to such reorganization);
(iii) Approval by the shareholders of the Corporation of the
sale of substantially all of the Corporation's business and/or assets
to a person or entity which is not wholly owned by the Corporation;
(iv) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act but excluding any person described in and
satisfying the conditions of Rule 13d-1(b)(1) thereunder), becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
more than 20% of the combined voting power of the Corporation's then
outstanding securities entitled to then vote generally in the election
of directors of the Corporation; or
(v) A majority of the Board not being composed of Continuing
Directors.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "COMMISSION" shall mean the Securities and Exchange Commission.
(f) "COMMITTEE" shall mean the Board or a committee appointed by the
Board to administer this Plan, which committee shall be comprised only of
two or more directors or such greater number of directors as may be
required under applicable law, each of whom, (i) in respect of any decision
at a time when the Participant affected by the decision may be subject to
Section 162(m) of the Code, shall be an "outside" director within the
meaning of Section 162(m) of the Code, and (ii) in respect of any
16
<PAGE>
decision affecting a transaction at a time when the Participant involved in
the transaction may be subject to Section 16 of the Exchange Act, shall be
a "non-employee director" within the meaning of Rule 16b-3(b)(3)
promulgated under the Exchange Act.
(g) "COMMON STOCK" shall mean the Common Stock of the Corporation and
such other securities or property as may become the subject of Options, or
become subject to Options, pursuant to an adjustment made under Section 4.2
of this Plan.
(h) "COMPANY" shall mean, collectively, the Corporation and its
Subsidiaries.
(i) "CONTINUING DIRECTORS" shall mean persons who were members of the
Board on June 17, 1997 or nominated for election or elected to the Board
with the affirmative vote of at least three-fourths of the directors who
were Continuing Directors at the time of such nomination or election.
(j) "CORPORATION" shall mean Amerigon Incorporated, a California
corporation and its successors.
(k) "DISINTERESTED" shall mean disinterested within the meaning of
any applicable regulatory requirements, including Rule 16b-3.
(l) "ELIGIBLE EMPLOYEE" shall mean an officer (whether or not a
director) or other key employee of the Company.
(m) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(n) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(o) "FAIR MARKET VALUE" shall mean (i) if the stock is listed or
admitted to trade on a national securities exchange, the closing price of
the stock on the Composite Tape, as published in the Western Edition of The
Wall Street Journal, of the principal national securities exchange on which
the stock is so listed or admitted to trade, on such date, or, if there is
no trading of the stock on such date, then the closing price of the stock
as quoted on such Composite Tape on the next preceding date on which there
was trading in such shares; (ii) if the stock is not listed or admitted to
trade on a national securities exchange, the last price for the stock on
such date, as furnished by the National Association of Securities Dealers,
Inc. ("NASD") through the NASDAQ National Market Reporting System or a
similar organization if the NASD is no longer reporting such information;
17
<PAGE>
(iii) if the stock is not listed or admitted to trade on a national
securities exchange and is not reported on the National Market Reporting
System, the mean between the bid and asked price for the stock on such
date, as furnished by the NASD or a similar organization; or (iv) if the
stock is not listed or admitted to trade on a national securities exchange,
is not reported on the National Market Reporting System and if bid and
asked prices for the stock are not furnished by the NASD or a similar
organization, the value as established by the Committee at such time for
purposes of this Plan.
(p) "INCENTIVE STOCK OPTION" shall mean an Option which is designated
as an incentive stock option within the meaning of Section 422 of the Code,
the award of which contains such provisions (including but not limited to
the receipt of shareholder approval of this Plan, if the award is made
prior to such approval) and is made under such circumstances and to such
persons as may be necessary to comply with that section.
(r) "NONQUALIFIED STOCK OPTION" shall mean an Option that is
designated as a Nonqualified Stock Option and shall include any Option
intended as an Incentive Stock Option that fails to meet the applicable
legal requirements thereof. Any Option granted hereunder that is not
designated as an incentive stock option shall be deemed to be designated a
nonqualified stock option under this Plan and not an incentive stock option
under the Code.
(s) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board of
Directors of the Corporation who is not an officer or employee of the
Company.
(t) "OPTION" shall mean an option to purchase Common Stock granted
under this Plan. The Committee shall designate any Option granted to an
Eligible Employee as a Nonqualified Stock Option or an Incentive Stock
Option. Options granted under Article 3 shall be Nonqualified Stock
Options.
(u) "OPTION AGREEMENT" shall mean any writing setting forth the terms
of an Option that has been authorized by the Committee.
(v) "OPTION DATE" shall mean the date upon which the Committee took
the action granting an Option or such later date as the Committee
designates as the Option Date at the time of the Option or, in the case of
Options under Article 3, the applicable dates set forth therein.
(w) "OPTION PERIOD" shall mean the period beginning on an Option Date
and ending on the expiration date of such Option.
18
<PAGE>
(x) "PARTICIPANT" shall mean an Eligible Employee who has been
granted an Option under this Plan and a Non-Employee Director who has been
granted an Option under Article 3 of this Plan.
(y) "PERSONAL REPRESENTATIVE" shall mean the person or persons who,
upon the disability or incompetence of a Participant, shall have acquired
on behalf of the Participant, by legal proceeding or otherwise, the power
to exercise the rights or receive benefits under this Plan and who shall
have become the legal representative of the Participant.
(z) "PLAN" shall mean this 1997 Stock Incentive Plan.
(aa) "QDRO" shall mean a qualified domestic relations order as defined
in Section 414(p) of the Code or Title I, Section 206(d)(3) of ERISA (to
the same extent as if this Plan were subject thereto), or the applicable
rules thereunder.
(bb) "RULE 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission pursuant to the Exchange Act, as amended from time to time.
(cc) "SECTION 16 PERSON" shall mean a person subject to Section 16(a)
of the Exchange Act.
(dd) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time.
(ee) "SUBSIDIARY" shall mean any corporation or other entity a
majority of whose outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Corporation.
(ff) "TOTAL DISABILITY" shall mean a "permanent and total disability"
within the meaning of Section 22(e)(3) of the Code and (except in the case
of a Non-Employee Director) such other disabilities, infirmities,
afflictions or conditions as the Committee by rule may include.
19
<PAGE>
EXHIBIT A
AMERIGON INCORPORATED
ELIGIBLE DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the _____ day of _____________, 19__, by
and between Amerigon Incorporated, a California corporation (the "CORPORATION"),
and ________________ (the "DIRECTOR").
W I T N E S S E T H
WHEREAS, the Corporation has adopted and the shareholders of the
Corporation have approved the Amerigon Incorporated 1997 Stock Incentive Plan
(the "PLAN"); and
WHEREAS, pursuant to Article 3 of the Plan, the Corporation has
granted an option (the "OPTION") to the Director upon the terms and conditions
evidenced hereby, as required by the Plan, which Option is not intended as and
shall not be deemed to be an incentive stock option within the meaning of
Section 422 of the Code;
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by the Director, the Corporation and the Director agree to the terms
and conditions set forth herein as required by the terms of the Plan.
1. OPTION GRANT. This Agreement evidences the grant to the
Director, as of ___________, 19__ (the "OPTION DATE"), of an Option to purchase
an aggregate of _____ shares of Common Stock, par value [$____] per share, under
Article 3 of the Plan, subject to the terms and conditions and to adjustment as
set forth herein or pursuant to the Plan.
2. EXERCISE PRICE. The Option entitles the Director to purchase
(subject to the terms of Sections 3 through 5 below) all or any part of the
Option shares at a price per share of $_______, which amount represents the Fair
Market Value of a share on the Option Date.
3. OPTION EXERCISABILITY AND TERM. The Option will become and
remain exercisable on ______________, 19__, subject to acceleration under
Section 3.7 of the Plan. The Option shall terminate on ____________, 19__,*
- ---------------------
* Insert day before the tenth anniversary of the Option Date.
A-1
<PAGE>
unless earlier terminated in accordance with the terms of Section 3.4, 3.5, or
3.7 of the Plan.
4. SERVICE AND EFFECT OF TERMINATION OF SERVICE. The Director
agrees to serve as a director in accordance with the provisions of the
Corporation's Articles of Incorporation, bylaws and applicable law. If the
Director's services as a member of the Board shall terminate, this Option shall
terminate at the times and to the extent set forth in Section 3.5 of the Plan.
5. GENERAL TERMS. The Option and this Agreement are subject to, and
the Corporation and the Director agree to be bound by, the provisions of the
Plan that apply to the Option. Such provisions are incorporated herein by this
reference. The Director acknowledges receiving a copy of the Plan and reading
its applicable provisions. Capitalized terms not otherwise defined herein shall
have the meaning assigned to such terms in the Plan.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AMERIGON INCORPORATED
(a California corporation)
By
---------------------------
Title
------------------------
DIRECTOR
-----------------------------
(Signature)
-----------------------------
(Print Name)
-----------------------------
(Address)
-----------------------------
(City, State, Zip Code)
A-2
<PAGE>
CONSENT OF SPOUSE
In consideration of the execution of the foregoing Nonqualified Stock
Option Agreement by Amerigon Incorporated, I, _______________________, the
spouse of the Director therein named, do hereby agree to be bound by all of the
terms and provisions thereof and of the Plan.
DATED: , 19 .
-------------- --
---------------------------
Signature of Spouse
A-3
<PAGE>
(The following copy of the form of Nonstatutory Stock Option Agreement is
filed as an appendix to the proxy materials filed with the Securities and
Exchange Commission pursuant to Instruction 3 to Item 10 of Schedule 14A, but
is not part of the proxy statement and does not otherwise constitute
soliciting material.)
[Form of Non-Plan Option
Grant to Continuing Directors]
AMERIGON INCORPORATED
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of the ___ day of _____,
1997, by and between Amerigon Incorporated, a California corporation (the
"Company"), and _______________ (the "Optionee").
W I T N E S S E T H
WHEREAS, effective as of April 8, 1997 (the "Option Date"), the
Company's Board of Directors granted to the Optionee, a nonstatutory option (the
"Option") to purchase all or any part of an aggregate of __________ shares of
the Company's Class A Common Stock, no par value ("Common Stock"), upon the
terms and conditions set forth herein, the grant of which options are contingent
upon the ratification by the Company's shareholders of such grant.
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
1. DEFINED TERMS. The Option hereunder is not being issued pursuant
to the Company's 1993 Stock Option Plan, as amended, nor pursuant to the
Company's 1997 Stock Incentive Plan (the "1997 Plan"). However, for ease of
reference, capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the 1997 Plan.
2. OPTION GRANT. Subject to the terms and conditions contained
herein, the Company hereby grants to the Optionee the option and right to
purchase all or any part of an aggregate of _______________ shares of Common
Stock at a price of $3.375 per share, subject to adjustment as provided in
Section 6 hereof.
3. OPTION EXERCISABILITY AND TERM. The Option granted hereunder may
be exercised in whole or in part (but for a whole number of shares) at any time
and from time to time on or after the Option Date and prior to the day before
the fifth anniversary of the Option Date (such day being referred to herein as
the "Expiration Date"). Unless earlier terminated in accordance with Section 5
hereof, the Option shall expire on the Expiration Date.
<PAGE>
4. METHOD OF EXERCISE OF OPTION AND PAYMENT OF PURCHASE PRICE.
Subject to such further limitations and rules or procedures as the Board of
Directors may from time to time establish, the exercise of all or any portion of
the Option shall be by means of written notice of exercise delivered to the
Company, specifying the number of whole shares with respect to which the Option
is being exercised, together with any written statements required by Section 12
of this Agreement.
The purchase price of any shares purchased on exercise of the Option
shall be paid in full at the time of each purchase in one or a combination of
the following methods: (i) in cash or by electronic funds; (ii) by check
payable to the order of the Company; (iii) by notice and third party payment in
such manner as may be authorized by the Board of Directors; or (iv) subject to
the receipt of applicable regulatory approvals, by the delivery of shares of
Common Stock already owned by Optionee; PROVIDED, HOWEVER, that the Board of
Directors may in its absolute discretion limit the Optionee's ability to
exercise an Option by delivering such shares. Shares of Common Stock used to
satisfy the exercise price of the Option shall be valued at their Fair Market
Value on the date of exercise.
5. SERVICE AND EFFECT OF TERMINATION OF SERVICE. If the
Optionee's service as a director of the Company shall terminate prior to the
expiration of the Option, then the Option shall expire on the date which is
the earlier of the Expiration Date or thirty (30) calendar days from the date
upon which the Optionee terminates service as a director (the "Service
Termination Date"); provided, however, that (i) if the Optionee's service as
a director of the Company terminates due to death or disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended), then the Option shall expire on the date which is the earlier of
the Expiration Date or three (3) years from the Service Termination Date; and
(ii) if the Optionee retires from the Board of Directors upon or after
reaching age 65 and after having served as a director for at least 10 years,
then the Option shall expire on the date which is the earlier of the
Expiration Date or five years after the Service Termination Date.
6. ADJUSTMENTS. Section 4.2 of the 1997 Plan is incorporated herein
by reference. The Option shall be subject to adjustment as provided in Section
4.2 of the 1997 Plan, but only to the extent that (a) such adjustment and the
Board of Directors' actions in respect thereof satisfy the requirements of all
applicable law, (b) such adjustment in the case of a Change of Control Event is
effected pursuant to the terms of a reorganization agreement approved by
shareholders of the Company, and (c) such adjustment is consistent with
adjustments to options granted under the 1997 Plan and held by persons other
than executive officers or directors of the Company.
7. NO TRANSFERABILITY. Section 1.8 of the 1997 Plan is incorporated
herein by reference. Unless otherwise expressly provided in (or pursuant to)
Section 1.8 of the 1997 Plan or by applicable law, (i) the Option is
nontransferable and shall not be subject in any manner to sale, transfer,
anticipation, alienation, assignment, pledge, encumbrance
2
<PAGE>
or charge; (ii) the Option shall be exercised only by the Participant; and (iii)
amounts payable or shares issuable pursuant to the Option shall be delivered
only to (or for the account of) the Optionee.
Notwithstanding the foregoing, the Option shall be subject to all
applicable transfer restrictions under the Code.
8. NOTICES. Any notice to be given under the terms of this
Agreement shall be in writing and addressed to the Secretary of the Company at
its principal office, and any notice to be given to the Optionee shall be
addressed to him or her at the address given beneath the Optionee's signature
hereto or at such other address as either party may hereafter designate in
writing to the other party. Any such notice shall be deemed to have been duly
given when enclosed in a properly sealed envelope addressed as aforesaid,
registered or certified, and deposited (postage and registry or certification
fee prepaid) in a post office or branch post office regularly maintained by the
United States Government.
9. SHAREHOLDER APPROVAL. The Option and all rights of Optionee
thereunder are contingent upon and subject to ratification by the shareholders
of the Company by the vote required under the Company's bylaws. If the
Company's shareholders do not ratify the grant of the Option hereunder, this
Agreement shall be of no force or effect and no grant of the Option shall be
made hereunder.
10. OPTION IS A PLAN. To the extent that Common Stock is issued
under this Agreement, this Agreement shall be regarded as a stock option plan
adopted by the Company.
11. TAX WITHHOLDING. Section 3.5 of the 1997 Plan is incorporated
herein by reference, and the provisions therein relating to tax withholding
shall govern for the same purposes here.
12. COMPLIANCE WITH LAWS. The granting and vesting of the Option
under this Agreement and the offer, issuance and delivery of Common Stock
pursuant to the Option are subject to compliance with all applicable federal and
state laws, rules and regulations (including, but not limited to, state and
federal securities laws (including, but not limited to, registration and
qualification requirements thereunder) and federal margin requirements) and to
such approvals by any listing, regulatory or governmental authority as may, in
the opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Agreement shall be subject to
such restrictions, and the Optionee shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Optionee has
hereunto set his or her hand as of the day and year first above written.
AMERIGON INCORPORATED
By:________________________________
Title:______________________________
OPTIONEE
___________________________________
(Signature)
___________________________________
(Print Name)
___________________________________
(Address)
___________________________________
(City, State, Zip Code)
___________________________________
(Social Security Number)
4
<PAGE>
CONSENT OF SPOUSE
In consideration of the execution of the foregoing Nonstatutory Stock
Option Agreement by Amerigon Incorporated, I, _________________ the spouse of
the Optionee herein named, do hereby join with my spouse in executing the
foregoing Nonstatutory Stock Option Agreement and do hereby agree to be bound by
all of the terms and provisions thereof.
Date: _________________ ________________________________
Signature of Spouse
5
<PAGE>
(The following copy of the form of Nonstatutory Stock Option Agreement is
filed as an appendix to the proxy materials filed with the Securities and
Exchange Commission pursuant to Instruction 3 to Item 10 of Schedule 14A, but
is not part of the proxy statement and does not otherwise constitute
soliciting material.)
[Form of Non-Plan Option
Grant to Outgoing Directors]
AMERIGON INCORPORATED
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of the ___ day of _____,
1997, by and between Amerigon Incorporated, a California corporation (the
"Company"), and _______________________ (the "Optionee").
W I T N E S S E T H
-------------------
WHEREAS, effective as of April 8, 1997 (the "Option Date"), the
Company's Board of Directors granted to the Optionee, a nonstatutory option
(the "Option") to purchase all or any part of an aggregate of _________
shares of the Company's Class A Common Stock, no par value ("Common Stock"),
upon the terms and conditions set forth herein, the grant of which options
are contingent upon the ratification by the Company's shareholders of such
grant.
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
1. DEFINED TERMS. The Option hereunder is not being issued
pursuant to the Company's 1993 Stock Option Plan, as amended, nor pursuant to
the Company's 1997 Stock Incentive Plan (the "1997 Plan"). However, for ease
of reference, capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the 1997 Plan.
2. OPTION GRANT. Subject to the terms and conditions contained
herein, the Company grants to the Optionee the option and right to purchase
all or any part of an aggregate of _____________shares of Common Stock at a
price of $3.375 per share, subject to adjustment as provided in Section 5
hereof.
3. OPTION EXERCISABILITY AND TERM. The Option granted hereunder
may be exercised in whole or in part (but for a whole number of shares) at
any time and from time to time on or after the Option Date and prior to the
day before the third anniversary of the Option Date (such day being referred
to herein as the "Expiration Date"). The Option shall expire on the
Expiration Date.
4. METHOD OF EXERCISE OF OPTION AND PAYMENT OF PURCHASE PRICE.
Subject to such further limitations and rules or procedures as the Board of
Directors may from
<PAGE>
time to time establish, the exercise of all or any portion of the Option shall
be by means of written notice of exercise delivered to the Company, specifying
the number of whole shares with respect to which the Option is being exercised,
together with any written statements required by Section 12 of this Agreement.
The purchase price of any shares purchased on exercise of the Option
shall be paid in full at the time of each purchase in one or a combination of
the following methods: (i) in cash or by electronic funds; (ii) by check
payable to the order of the Company; (iii) by notice and third party payment
in such manner as may be authorized by the Board of Directors; or (iv)
subject to the receipt of applicable regulatory approvals, by the delivery of
shares of Common Stock already owned by Optionee; PROVIDED, HOWEVER, that the
Board of Directors may in its absolute discretion limit the Optionee's
ability to exercise an Option by delivering such shares. Shares of Common
Stock used to satisfy the exercise price of the Option shall be valued at
their Fair Market Value on the date of exercise.
5. ADJUSTMENTS. Section 4.2 of the 1997 Plan is incorporated herein
by reference. The Option shall be subject to adjustment as provided in Section
4.2 of the 1997 Plan, but only to the extent that (a) such adjustment and the
Board of Directors' actions in respect thereof satisfy the requirements of all
applicable law, (b) such adjustment in the case of a Change of Control Event is
effected pursuant to the terms of a reorganization agreement approved by
shareholders of the Company, and (c) such adjustment is consistent with
adjustments to options granted under the 1997 Plan and held by persons other
than executive officers or directors of the Company.
6. NO TRANSFERABILITY. Section 1.8 of the 1997 Plan is incorporated
herein by reference. Unless otherwise expressly provided in (or pursuant to)
Section 1.8 of the 1997 Plan or by applicable law, (i) the Option is
nontransferable and shall not be subject in any manner to sale, transfer,
anticipation, alienation, assignment, pledge, encumbrance or charge; (ii) the
Option shall be exercised only by the Participant; and (iii) amounts payable or
shares issuable pursuant to the Option shall be delivered only to (or for the
account of) the Optionee.
Notwithstanding the foregoing, the Option shall be subject to all
applicable transfer restrictions under the Code.
7. NOTICES. Any notice to be given under the terms of this
Agreement shall be in writing and addressed to the Secretary of the Company at
its principal office, and any notice to be given to the Optionee shall be
addressed to him or her at the address given beneath the Optionee's signature
hereto or at such other address as either party may hereafter designate in
writing to the other party. Any such notice shall be deemed to have been duly
given when enclosed in a properly sealed envelope addressed as aforesaid,
registered or certified, and deposited (postage and registry or certification
fee prepaid) in a post office or branch post office regularly maintained by the
United States Government.
2
<PAGE>
8. SHAREHOLDER APPROVAL. The Option and all rights of Optionee
thereunder are contingent upon and subject to ratification by the
shareholders of the Company by the vote required under the Company's bylaws.
If the Company's shareholders do not ratify the grant of the Option
hereunder, this Agreement shall be of no force or effect and no grant of the
Optioin shall be made hereunder.
9. OPTION IS A PLAN. To the extent that Common Stock is issued under
this Agreement, this Agreement shall be regarded as a stock option plan adopted
by the Company.
10. TAX WITHHOLDING. Section 3.5 of the 1997 Plan is incorporated
herein by reference, and the provisions therein relating to tax withholding
shall govern for the same purposes here.
11. COMPLIANCE WITH LAWS. The granting and vesting of the Option
under this Agreement and the offer, issuance and delivery of Common Stock
pursuant to the Option are subject to compliance with all applicable federal and
state laws, rules and regulations (including, but not limited to, state and
federal securities laws (including, but not limited to, registration and
qualification requirements thereunder) and federal margin requirements) and to
such approvals by any listing, regulatory or governmental authority as may, in
the opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Agreement shall be subject to
such restrictions, and the Optionee shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Optionee has
hereunto set his or her hand as of the day and year first above written.
AMERIGON INCORPORATED
By:________________________________
Title:______________________________
OPTIONEE
___________________________________
(Signature)
___________________________________
(Print Name)
___________________________________
(Address)
___________________________________
(City, State, Zip Code)
___________________________________
(Social Security Number)
4
<PAGE>
CONSENT OF SPOUSE
-----------------
In consideration of the execution of the foregoing Nonstatutory Stock
Option Agreement by Amerigon Incorporated, I, _________________ the spouse of
the Optionee herein named, do hereby join with my spouse in executing the
foregoing Nonstatutory Stock Option Agreement and do hereby agree to be bound by
all of the terms and provisions thereof.
Date: _________________ ________________________________
Signature of Spouse
5
<PAGE>
P R O X Y AMERIGON INCORPORATED
404 E. HUNTINGTON DRIVE
MONROVIA, CALIFORNIA 91016-3600
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Lon E. Bell and
Richard A. Weisbart as proxies, each with the power to appoint his substitute,
and hereby authorizes each of them to represent and to vote, as designated
below, all the shares of Class A Common Stock of Amerigon Incorporated held of
record by the undersigned on April 28, 1997 at the Annual Meeting of
Shareholders to be held on June 16, 1997 or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
/X/ Please mark you votes as in this example.
Proposal (1): The election of directors for Amerigon Incorporated
NOMINEES:
<TABLE>
<S> <C> <C>
Roy A. Anderson John W. Clark Michael R. Peevey
Lon E. Bell, Ph.D. A. Stephens Hutchcraft, Jr. Richard A. Weisbart
</TABLE>
/ / FOR / / WITHHELD / / FOR ALL EXCEPT*
<TABLE>
<S> <C> <C>
*Nominee Exception(s) (print name(s))
</TABLE>
(This proxy grants the named proxies discretionary authority to vote
cumulatively as described in the accompanying proxy statement if
cumumlative voting applies in the election of directors).
Proposal (2): Approval of the Amerigon Incorporated 1997 Stock Incentive
Plan.
/ / FOR / / AGAINST / / ABSTAIN
Proposal (3): Ratification of the grant to six of the Company's directors
of options to purchase an aggregate of 220,000 shares of
Amerigon Incorporated Class A Common Stock.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business that may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THIS CARD, FOR PROPOSAL (2)
AND FOR PROPOSAL (3).
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Dated: _________________, 1997
Signature_____________________
______________________________
Signature if held jointly
Please sign exactly as your
name appears. When shares are
held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporation name, by
President or other authorized
officer. If a partnership,
please sign in partnership
name, by authorized person.
