<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 Section240.14a-11(c) or
Section240.14a-12
AMERIGON INCORPORATED
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
AMERIGON INCORPORATED
5462 IRWINDALE AVENUE
IRWINDALE, CA 90041
------------------------
NOTICE OF ANNUAL MEETING
---------------------
Dear Shareholder:
On Wednesday, May 26, 1999, Amerigon Incorporated ("Amerigon") will hold its
1999 Annual Meeting of Shareholders at Amerigon's headquarters at 5462 Irwindale
Avenue, Irwindale, California 91706-2058. The meeting will begin at 10:00 a.m.
Only shareholders who owned stock at the close of business on April 9, 1999
can vote at this meeting or any adjournments that may take place. At the meeting
the shareholders will be asked to:
1. Elect five directors to the Board of Directors;
2. Approve a $9 million financing transaction as contemplated by the
Securities Purchase Agreement, dated as of March 29, 1999, including the
issuance to two investors of 9,000 shares of Amerigon Series A
Convertible Preferred Stock and contingent warrants to purchase
additional shares of Amerigon common stock and related matters;
3. Approve the exchange of Amerigon's shares of AEVT Incorporated (a
subsidiary of Amerigon formed to engage solely in electric vehicle
development) for the surrender of all shares of Amerigon's Class B Common
Stock held by Dr. Lon Bell, the Chairman of the Board of Directors and
Chief Executive Officer of Amerigon, pursuant to the Share Exchange
Agreement, dated as of March 29, 1999; and
4. Attend to other business properly presented at the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSALS
OUTLINED IN THIS PROXY STATEMENT.
A copy of Amerigon's Annual Report for 1998 is being mailed with this proxy
statement. The approximate date of mailing for this proxy statement and card(s)
is April 23, 1999.
We hope that you like the new format of our Proxy Statement. We welcome your
comments.
By order of the Board of Directors,
/s/ RICHARD A. WEISBART
President and Chief Operating Officer
April 21, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
QUESTIONS AND ANSWERS...................................................................................... 1
PROPOSALS YOU MAY VOTE ON.................................................................................. 4
1. ELECTION OF DIRECTORS................................................................................... 4
2. APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE SECURITIES PURCHASE AGREEMENT, INCLUDING (A) THE
ISSUANCE OF SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK AND CONTINGENT WARRANTS AND (B) THE
INVESTORS' RIGHTS AGREEMENT............................................................................. 4
3. APPROVAL OF THE EXCHANGE OF AMERIGON'S SHARES IN ITS ELECTRIC VEHICLE SUBSIDIARY FOR THE SHARES OF CLASS
B COMMON STOCK HELD BY DR. LON BELL PURSUANT TO THE SHARE EXCHANGE AGREEMENT............................ 5
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON................................................... 6
NOMINEES FOR THE BOARD OF DIRECTORS........................................................................ 7
APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE SECURITIES PURCHASE AGREEMENT, INCLUDING (A) THE ISSUANCE
OF SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK AND CONTINGENT WARRANTS AND (B) THE INVESTORS' RIGHTS
AGREEMENT................................................................................................ 9
Summary.................................................................................................... 9
General.................................................................................................... 10
Background to the Financing Transaction.................................................................... 10
Certain Rights, Privileges and Preferences of the Series A Convertible Preferred Stock..................... 11
Certain Terms of the Securities Purchase Agreement......................................................... 12
Certain Terms of the Investors' Rights Agreement........................................................... 14
Certain Rights and Privileges of the Contingent Warrants................................................... 16
Reasons for the Financing Transaction...................................................................... 16
Recommendation of the Board of Directors................................................................... 17
APPROVAL OF THE EXCHANGE OF AMERIGON'S SHARES IN ITS ELECTRIC VEHICLE SUBSIDIARY PURSUANT TO THE SHARE
EXCHANGE AGREEMNT
(Item 3 on the Proxy Card)............................................................................... 18
Summary.................................................................................................... 18
General.................................................................................................... 18
Background to the Exchange................................................................................. 19
Reasons for the Exchange................................................................................... 20
Recommendation of the Board of Directors................................................................... 22
STATEMENT ON CORPORATE GOVERNANCE.......................................................................... 22
DIRECTORS' COMPENSATION.................................................................................... 23
STOCK PERFORMANCE GRAPH.................................................................................... 23
OWNERSHIP OF AMERIGON STOCK BY DIRECTORS, OFFICERS, AND CERTAIN OTHERS..................................... 24
</TABLE>
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<TABLE>
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CHANGE OF CONTROL.......................................................................................... 25
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION............................................. 26
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION................................................ 28
EXECUTIVE COMPENSATION, PENSION PLANS & OTHER ARRANGEMENTS................................................. 28
OPTION GRANTS IN LAST FISCAL YEAR.......................................................................... 30
AGGREGATE OPTION EXERCISES AND YEAR-END VALUES............................................................. 30
CERTAIN TRANSACTIONS....................................................................................... 31
INDEPENDENT ACCOUNTANTS.................................................................................... 31
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.................................................... 31
OTHER MATTERS.............................................................................................. 32
WHERE YOU CAN FIND MORE INFORMATION........................................................................ 32
</TABLE>
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<PAGE>
QUESTIONS AND ANSWERS
<TABLE>
<CAPTION>
1. Q: WHAT MAY I VOTE ON?
<C> <S> <C>
A: You are being asked to vote on the following three matters:
(1) The election of nominees to serve on the Board of Directors.
(2) The approval of a $9 million financing transaction contemplated by the
Securities Purchase Agreement, dated as of March 29, 1999 (the "Financing
Transaction") among Amerigon, Westar Capital II LLC and Big Beaver Investments LLC
(collectively, the "Investors"), which will permit Amerigon to continue
operations. The Financing Transaction involves the issuance of 9,000 shares of
Series A Convertible Preferred Stock and contingent warrants to purchase
additional shares of common stock to the Investors.
(3) The approval of the exchange of Amerigon's shares of AEVT Incorporated (a
subsidiary of Amerigon formed to engage solely in electric vehicle development)
for all shares of Amerigon's Class B Common Stock which will be held by Dr. Lon
Bell, the Chairman of the Board of Directors and Chief Executive Officer of
Amerigon, pursuant to a Share Exchange Agreement, dated as of March 29, 1999,
between Amerigon and Dr. Bell.
These three matters are summarized beginning on page 4, below, and discussed more
fully beginning on page 7, below.
2. Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends a vote FOR each of the nominees, FOR the approval of the
Financing Transaction and FOR the approval of the exchange of the shares of AEVT
held by Amerigon for the shares of Class B Common Stock held by Dr. Bell.
3. Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on April 9, 1999 (the Record Date) are
entitled to vote at the Annual Meeting.
4. Q: HOW DO I VOTE?
A: Sign and date each proxy card you receive and return it in the prepaid envelope.
You have the right to revoke your proxy at any time before the meeting by:
(1) notifying the President of Amerigon in writing;
(2) voting in person; or
(3) returning a later-dated proxy card.
5. Q: WHO WILL COUNT THE VOTE?
A: Representatives of U.S. Stock Transfer Corporation will count the votes and act as
the inspector of election.
6. Q: IS MY VOTE CONFIDENTIAL?
A: Proxy cards, ballots and voting tabulations that identify individual shareholders
are mailed or returned directly to U.S. Stock Transfer Corporation, and handled in
a manner that protects your voting privacy. Your vote will not be disclosed
except: (1) as needed to permit U.S. Stock Transfer Corporation to tabulate and
certify the vote; (2) as required by law; or (3) in limited circumstances such as
a proxy contest in opposition to the Board.
7. Q: WHAT SHARES ARE INCLUDED ON THE PROXY CARD(S)?
A: The shares on your proxy card(s) represent ALL of your shares. If you do not
return your proxy card(s), your shares will not be voted.
</TABLE>
1
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<TABLE>
<C> <S> <C>
8. Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: If your shares are registered differently and are in more than one account, you
will receive more than one proxy card. Sign and return all proxy cards to ensure
that all your shares are voted. We encourage you to have all accounts registered
in the same name and address (whenever possible). You can accomplish this by
contacting our transfer agent, U.S. Stock Transfer Corporation, at 1745 Gardena
Avenue, Suite 200, Glendale, California 91204.
9. Q: HOW MANY SHARES CAN VOTE?
A: As of the Record Date, 2,510,088 shares of Class A Common Stock were issued and
outstanding. Every shareholder of Class A Common Stock is entitled to one vote for
each share held.
10. Q: WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares entitled to vote. They may be
present or represented by proxy. For the purposes of determining a quorum, shares
held by brokers or nominees will be treated as present even if the broker or
nominee does not have discretionary power to vote on a particular matter or if
instructions were never received from the beneficial owner. These shares are
called "broker non-votes." Abstentions will be counted as present for quorum
purposes.
11. Q: WHAT IS REQUIRED TO APPROVE EACH PROPOSAL?
A: (1) For the election of directors, once a quorum has been established, the five
candidates for director who receive the most votes will become directors of
Amerigon.
(2) To approve the Financing Transaction, once a quorum has been established, a
majority of the shares voting at the meeting, either in person or by proxy, must
be voted in favor of the transaction.
(3) To approve the exchange of shares of AEVT for the surrender of Amerigon's
Class B Shares, once a quorum has been established, a majority of the shares
voting at the meeting, either in person or by proxy, must be voted in favor of the
transaction. (Dr. Bell will not vote on this matter.)
If a broker indicates on its proxy that it does not have discretionary authority
to vote on a particular matter, the affected shares will be treated as not present
and entitled to vote with respect to that matter, even though the same shares may
be considered present for quorum purposes and may be entitled to vote on other
matters.
12. Q: CAN I CUMULATE MY VOTES FOR DIRECTORS?
A: You cannot cumulate votes (i.e., cast a number of votes greater than the number of
your shares) for directors unless (1) the nominee's or nominees' names were placed
in nomination prior to the election and (2) you gave us notice prior to the
commencement of voting of your intention to cumulate votes. As of the date of this
proxy statement, Amerigon has not received this notice from any shareholders. If
you decide to cumulate your votes, and you give us notice of your decision in
time, you will be entitled to cast a number of votes equal to the number of shares
you hold multiplied by five (the number of directors to be elected). You may then
decide to cast these votes for a single nominee or to distribute your votes among
two or more nominees. Your proxy will permit Richard A. Weisbart, the President
and Chief Operating Officer of Amerigon, and James L. Mertes, Vice President of
Quality and Operations, to cumulate votes if any shareholder decides to cumulate
votes.
</TABLE>
2
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<C> <S> <C>
13. Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: Although we do not know of any business to be considered at the 1999 Annual
Meeting other than the proposals described in this proxy statement, if any other
business is presented at the Annual Meeting, your signed proxy card gives
authority to Richard A. Weisbart, the President and Chief Operating Officer of
Amerigon, and James L. Mertes, Vice President of Quality and Operations, to vote
on such matters at their discretion.
14. Q: WHEN ARE SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING DUE?
A: All shareholder proposals to be considered for inclusion in next year's proxy
statement must be submitted IN WRITING to Richard A. Weisbart, President, Amerigon
Incorporated, 5462 Irwindale Avenue, Irwindale, California 91706 by December 24,
1999. Any proposal received after this date will be considered untimely. Until
further notice, a shareholder proposal (other than in respect of a nominee for
election to the Board of Directors) to be presented at the next annual meeting of
shareholders but not submitted for inclusion in the proxy statement pursuant to
Rule 14a-8 will be considered untimely under the SEC's proxy rules if received
after March 9, 2000. Each proposal must comply with the Securities and Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
15. Q: HOW MUCH DID THIS PROXY SOLICITATION COST?
A: U.S. Stock Transfer Corporation was hired to assist in the distribution of proxy
materials and solicitation of votes for $3,600, plus estimated out-of-pocket
expenses of $500. We also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to shareholders.
</TABLE>
3
<PAGE>
PROPOSALS YOU MAY VOTE ON
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS
<S> <C>
There are five nominees for election this year. (The size of the Board of Directors
was reduced to five following the death of Mr. A. Stephens Hutchcraft last year.)
Detailed information on each nominee is provided beginning on page 7, below.
All directors are elected annually and normally serve a one-year term until the next
Annual Meeting. However, if the Financing Transaction is consummated (see Proposal 2,
below), the size of the Board of Directors will be increased to seven, effective as of
the closing of these transactions, and all members of the Board of Directors,
including the nominees recommended by this proxy statement, other than John Clark, Lon
Bell and Richard Weisbart, will resign, effective as of the closing. The remaining
directors will appoint four individuals to fill the four open director positions. If
the Financing Transaction is not consummated, the elected directors will serve out
their one-year term. If any of the nominees become unavailable to stand for
re-election at the Annual Meeting, the Board will designate a substitute. Proxies
voting on the original nominee will be cast for the substitute.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THESE DIRECTORS.
2. APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE SECURITIES PURCHASE AGREEMENT,
INCLUDING (A) THE ISSUANCE OF SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK AND
CONTINGENT WARRANTS AND (B) THE INVESTORS' RIGHTS AGREEMENT.
Under the terms of the Securities Purchase Agreement, dated as of March 29, 1999,
among Amerigon and the Investors, following shareholder approval and the satisfaction
or waiver of other conditions to closing, the Financing Transaction will be
consummated by Amerigon issuing 4,500 shares of Series A Convertible Preferred Stock
to Westar Capital II LLC, 4,500 shares of Series A Convertible Preferred Stock to Big
Beaver Investments LLC (Westar and Big Beaver are called the "Investors"), and
contingent warrants enabling the Investors to purchase up to 579,692 shares of Class A
Common Stock under certain circumstances (the "Contingent Warrants") as described more
fully on page 12, below. In addition, at the closing, Amerigon and the Investors will
enter into the Investors' Rights Agreement granting the Investors preferential rights
to provide future financing to Amerigon and both demand and piggyback registration
rights. Gross proceeds of the Financing Transaction will be $9,001,000, which will be
reduced by the costs of the Financing Transaction (estimated at approximately
$900,000). The net proceeds of the Financing Transaction will be used to repay the
bridge loan provided by an affiliates of the Investors and to continue the operations
of Amerigon. The net proceeds will be sufficient to fund Amerigon's operations for
less than the next twelve months.
Descriptions of (1) the rights and privileges of the Series A Convertible Preferred
Stock, as set forth in the Certificate of Determination, (2) the Securities Purchase
Agreement, setting forth the conditions for the financing transaction, (3) the
Investors' Rights Agreement and (4) the Contingent Warrants, which will grant the
Investors certain rights to purchase shares of Class A Common Stock, are contained in
the Section called "APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE SECURITIES
PURCHASE AGREEMENT, INCLUDING (A) THE ISSUANCE OF SHARES OF SERIES A CONVERTIBLE
PREFERRED STOCK AND CONTINGENT WARRANTS AND (B) THE INVESTORS' RIGHTS AGREEMENT,"
beginning on page 9, below, and the full text of these documents are attached to this
proxy statement as appendices. IT IS IMPORTANT YOU READ BOTH THAT SECTION AND THE FULL
TEXT OF THESE DOCUMENTS.
</TABLE>
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<TABLE>
<S> <C>
JOHN W. CLARK, A DIRECTOR OF AMERIGON, IS A PRINCIPAL OF WESTAR CAPITAL II LLC. AS A
RESULT HE HAS ABSTAINED FROM VOTING ON THE FINANCING TRANSACTION. THE REMAINING
MEMBERS OF THE BOARD UNANIMOUSLY RECOMMEND A VOTE FOR THE APPROVAL OF THE FINANCING
TRANSACTION, INCLUDING THE TERMS OF THE INVESTORS' RIGHTS AGREEMENT, THE CONTINGENT
WARRANTS AND THE CERTIFICATE OF DETERMINATION.
3. APPROVAL OF THE EXCHANGE OF AMERIGON'S SHARES IN ITS ELECTRIC VEHICLE SUBSIDIARY FOR
THE SHARES OF CLASS B COMMON STOCK HELD BY DR. LON BELL PURSUANT TO THE SHARE EXCHANGE
AGREEMENT.
It is a condition to the Financing Transaction that Amerigon shall have entered into a
legally binding and enforceable agreement providing for the redemption of all
outstanding shares of Class B Common Stock. The Share Exchange Agreement was entered
into to satisfy this condition. You are being asked to vote upon a proposal to approve
the transfer by Amerigon to Dr. Lon Bell, Chairman of the Board and Chief Executive
Officer of Amerigon, of the 850 shares of AEVT Incorporated (a subsidiary of Amerigon
to which Amerigon contributed nearly all of its assets and obligations related to
development of electric vehicles) which Amerigon owns in exchange for Dr. Bell
surrendering to Amerigon all of the shares of Amerigon's Class B Common Stock which he
will, as of April 30, 1999, own or control. This transaction is called the "Exchange."
Amerigon currently owns 85% of the common stock of AEVT, with the remaining 15% being
held by a company controlled by Dr. Bell. If the Exchange is approved and the
Financing Transaction is consummated, Amerigon will no longer have an ownership
interest in AEVT, but it will retain most of the economic benefits of AEVT's India
joint venture through an agreement with AEVT.
If the shareholders (other than Dr. Bell, who will not vote on this matter) approve
the Exchange and the Financing Transaction is consummated, then the Class B Common
Stock will be redeemed, and Amerigon will transfer its shares of AEVT to Dr. Bell. If
the shareholders (other than Dr. Bell) do not approve the Exchange, then Dr. Bell will
be required, pursuant to the Share Exchange Agreement, to sell his shares of Class B
Common Stock to Amerigon for a price per share equal to 5% of the price of a share of
Class A Common Stock at that time (which would, if calculated on April 7, 1999, be a
total amount of approximately $25,900), and Amerigon will retain its 85% ownership of
AEVT and grant to Dr. Bell (1) the right to appoint a majority of the members of
AEVT's Board of Directors, (2) a right of "first refusal" to purchase any shares of
AEVT which Amerigon decides to sell from time to time, and (3) a right to "tag along"
and participate on a proportionate basis in any sale of shares of AEVT by Amerigon.
Amerigon ceased funding the electric vehicle program in March 1998, and cannot use its
current operating funds (which are the proceeds of a loan made by an affiliate of the
Investors) to fund any electric vehicle operations. The Board of Directors (other than
Dr. Bell, who abstained due to his interest in the transaction) supports the Exchange
because it believes the Exchange (1) will cause Dr. Bell to assume the obligation to
secure funding for the electric vehicle business and remove Amerigon from the general
obligations and liabilities associated with operating the electric vehicle business,
(2) will allow Amerigon to retain most of the economic benefits of the India joint
venture without financial risk, and (3) will permit Amerigon to redeem the Class B
Common Stock without using any cash. See "APPROVAL OF THE EXCHANGE OF AMERIGON'S
SHARES IN ITS ELECTRIC VEHICLE SUBSIDIARY PURSUANT TO THE SHARE EXCHANGE AGREEMENT"
beginning on page 18, below.
YOUR BOARD UNANIMOUSLY (WITH THE EXCEPTION OF DR. BELL, WHO ABSTAINED DUE TO HIS
INTEREST IN THE TRANSACTION) RECOMMENDS A VOTE FOR THE APPROVAL OF THE EXCHANGE.
</TABLE>
5
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INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
OWNERSHIP OF AMERIGON STOCK BY DIRECTORS AND OFFICERS. Certain officers and
directors of Amerigon own common stock of Amerigon. To that extent, their
interest in the transactions to be voted upon at the Annual Meeting may be
considered to be the same as those of other shareholders of Amerigon. For
information concerning such ownership, see "OWNERSHIP OF AMERIGON STOCK BY
DIRECTORS, OFFICERS, AND CERTAIN OTHERS" on page 24, below.
INTERESTS IN THE ISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK AND THE
WARRANTS. In considering the recommendation of the Board of Directors that you
approve the Financing Transaction, you should be aware that John W. Clark, a
member of the Board of Directors, is also a general partner of Westar Capital
Associates, an affiliate of one of the two Investors.
The options granted to the non-employee directors under the 1997 Stock
Option Plan will vest automatically upon consummation of the Financing
Transaction pursuant to the terms of the 1997 Stock Option Plan. Pursuant to the
terms of the 1997 Stock Option Plan, the options granted to employees of
Amerigon under the 1997 Stock Option Plan will also vest automatically upon
consummation of the Financing Transaction, unless prior to that time the
committee appointed by the Board of Directors to administer the 1997 Stock
Option Plan determines that there will be no acceleration.
INTERESTS IN THE EXCHANGE OF SHARES OF CLASS B COMMON STOCK FOR AEVT COMMON
STOCK. In considering the recommendation of the Board of Directors that the
Exchange be approved, you should be aware that some of Amerigon's officers,
directors and consultants have interests in the Exchange that are, or may be,
different from other Amerigon shareholders.
Under the terms of the Share Exchange Agreement, if the Exchange is approved
by the shareholders, all 850 shares of AEVT held by Amerigon will be transferred
to Dr. Lon Bell in exchange for the surrender of all shares of Class B Common
Stock held or controlled by Dr. Bell. Dr. Bell is the Chairman of the Board of
Amerigon and the Chief Executive Officer of Amerigon, and held both positions
during the period of time in which the Share Exchange Agreement was negotiated.
Dr. Bell is also a director and President of AEVT. The other officers and
directors of AEVT are Chetan Maini and Robert Marcellini, who have been
affiliated with Dr. Bell and with Amerigon and its electric vehicle business as
employees or consultants to Amerigon.
If the shareholders do not approve the Exchange, upon the closing of the
Financing Transaction, the shares of Class B Common Stock owned or controlled by
Dr. Bell will be redeemed for cash and Dr. Bell will be granted certain rights
with respect to AEVT. The Investors have indicated that they do not intend to
provide future funding for AEVT.
6
<PAGE>
NOMINEES FOR THE BOARD OF DIRECTORS
(Item 1 on the Proxy Card)
The following table sets forth certain information regarding the directors
who have been nominated for re-election to the Board of Directors for a one year
term or until the closing of the Securities Purchase Agreement, if shareholder
approval of the Financing Transaction is obtained and all other conditions to
closing are satisfied.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE LAST FIVE YEARS SINCE
- ------------------------ --- ----------------------------------------------------------------------- ---------
<S> <C> <C> <C>
Lon E. Bell............. 58 Chairman of the Board and Chief Executive Officer of Amerigon since its 1991
formation in April 1991. He also served as President of Amerigon since
its formation until May, 1997, when Richard A. Weisbart was appointed
as President and Chief Operating Officer. Dr. Bell co-founded Technar
Incorporated with Dr. Allen Gillespie and Robert Diller 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
Amerigon. Dr. Bell received a bachelor's degree in mathematics in 1962,
a master's degree in rocket propulsion in 1963, and a Ph.D. in
mechanical engineering in 1968 from the California Institute of
Technology.
Richard A. Weisbart..... 53 President and Chief Operating Officer of Amerigon since 1997, 1997
succeeding Dr. Bell in such capacities. Before joining Amerigon, 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.
John W. Clark........... 54 General Partner of Westar Capital Associates, a private equity 1996
investment company since 1995. 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.
Roy A. Anderson......... 78 Chairman Emeritus of Lockheed Corporation. He served as Chairman of the 1993
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.
</TABLE>
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<TABLE>
<CAPTION>
DIRECTOR
NAME AGE LAST FIVE YEARS SINCE
- ------------------------ --- ----------------------------------------------------------------------- ---------
<S> <C> <C> <C>
Michael R. Peevey....... 61 President and Chief Executive Officer of New Energy Ventures, Inc., a 1993
consulting firm specializing in the energy markets, since March 1995.
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 also serves
as a director of Electro Rent Corporation, a lessor of electronic
equipment, Dames & Moore, Inc., a provider of environmental,
engineering and construction management services, and Ocal, Inc., a
manufacturer of specialty steel products.
</TABLE>
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APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE SECURITIES
PURCHASE AGREEMENT, INCLUDING (A) THE ISSUANCE OF SHARES OF
SERIES A CONVERTIBLE PREFERRED STOCK AND CONTINGENT WARRANTS
AND (B) THE INVESTORS' RIGHTS AGREEMENT
(Item 2 on the Proxy Card)
This section of the proxy statement describes (1) the Financing Transaction
and (2) the material terms of the Securities Purchase Agreement, the Investors'
Rights Agreement and the Certificate of Determination (which will be filed with
the California Secretary of State and which will set forth the rights of the
holders of the Series A Convertible Preferred Stock). The descriptions of the
Securities Purchase Agreement, the Investors' Rights Agreement, and the
Certificate of Determination contained in this proxy statement are not complete
and are qualified in their entirety by reference to the Securities Purchase
Agreement, the Investors' Rights Agreement, the form of a Contingent Warrant,
and the Certificate of Determination, copies of which are attached to this proxy
statement as Appendix A, B, C and D. YOU ARE URGED TO CAREFULLY READ EACH OF
THESE DOCUMENTS IN THEIR ENTIRETY.
SUMMARY
You are being asked to vote upon a proposal to approve the Financing
Transaction contemplated by the Securities Purchase Agreement, dated as of March
29, 1999, among Amerigon and the Investors, including the terms of the
Investors' Rights Agreement. Under the terms of the Securities Purchase
Agreement, following shareholder approval and the satisfaction or waiver of
other conditions to closing, the Financing Transaction will be consummated by
Amerigon's issuance of 4,500 shares of Series A Convertible Preferred Stock to
Westar Capital II LLC, 4,500 shares of Series A Convertible Preferred Stock to
Big Beaver Investments LLC, and the Contingent Warrants. Pursuant to this
Financing Transaction:
- Amerigon will receive $9,001,000 in proceeds, which will be reduced by (1)
the amount of the bridge loan Amerigon has received from an affiliate of
the Investors as of the closing of the Financing Transaction (up to $1.2
million) and (2) the costs of the Financing Transaction (estimated at
approximately $900,000). Amerigon believes the net proceeds from the
financing will allow Amerigon to continue operations for less than twelve
months.
- The Investors will receive 9,000 shares of Series A Convertible Preferred
Stock, each share of which is convertible into that number of shares of
Class A Common Stock equal to $1,000 divided by $1.675 per share (subject
to antidilution adjustment). The Series A Convertible Preferred Stock
generally votes on an "as-converted" basis with the Class A Common Stock
and will represent approximately 73.8% of the voting securities of
Amerigon immediately after the redemption of the Class B Common Stock. See
"APPROVAL OF THE EXCHANGE OF AMERIGON'S SHARES IN ITS ELECTRIC VEHICLE
SUBSIDIARY PURSUANT TO THE SHARE EXCHANGE AGREEMENT" beginning on page 18,
below.
- Each share of Series A Convertible Preferred Stock has a liquidation
preference of $1,000 which increases by $70 per year for the first four
years after issuance, plus accrued but unpaid dividends. On or after
January 1, 2003, if the closing price of the Class A Common Stock for the
past 60 days has been at least four times $1.675 per share (subject to
antidilution adjustment), Amerigon may redeem the Series A Convertible
Preferred Stock for the liquidation preference.
- As long as 40% of the Series A Convertible Preferred Stock remains
outstanding, the holders of the Series A Convertible Preferred Stock will
be entitled to elect 5 directors and the holders of the Class A Common
Stock will be entitled to elect 2 directors.
- The Investors will have a right of first refusal to provide future
financing to Amerigon pursuant to the Investors' Rights Agreement.
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- The Investors will be granted registration rights pursuant to the
Investors' Rights Agreement.
- Concurrently with the issuance of the Series A Convertible Preferred
Stock, the Investors will be granted the Contingent Warrants.
GENERAL
The affirmative vote of the holders of a majority of the outstanding shares
of Amerigon common stock voting at the Annual Meeting is required to approve the
Financing Transaction. Abstensions will not be considered as shares voted on the
Financing Transaction and broker non-votes are treated as shares as to which
voting power has been withheld by the beneficial owners thereof, and therefore
will not be counted for or against the financing transaction. While there may be
instances in which you wish to abstain, we encourage you to vote your shares in
your best judgment and to participate in the voting process to the fullest
extent possible.
The following paragraphs of this section of the proxy statement provide
further information about the principal terms of the Securities Purchase
Agreement, the Investors' Rights Agreement, the Contingent Warrants and the
rights and privileges of the Series A Convertible Preferred Stock. These
sections may not contain all information that is important to you, and you are
urged to read, in addition to the following paragraphs, the entire text of the
Securities Purchase Agreement, the Investors' Rights Agreement, the form of
Contingent Warrant covering the Class A Warrants and the Certificate of
Determination setting forth the rights and privileges of the Series A
Convertible Preferred Stock, which are attached as Appendices A, B, C and D.
BACKGROUND TO THE FINANCING TRANSACTION
Amerigon was formed in April 1991 to design and develop advanced automotive
technologies. Amerigon's principal products are its Climate Control Seat-TM-
("CCS") and radar product lines, and are still in the development or
pre-production stage. Amerigon's radar systems are in various stages of
prototype and pre-production development and will require the expenditure of
significant funds for further development and testing in order to commence
commercial sales. While the CCS products are in a more advanced stage of
development, Amerigon does not expect to generate significant revenues from the
sale of CCS or in-vehicle radar products for at least 12 months.
Amerigon has incurred substantial operating losses since its inception. At
December 31, 1998, Amerigon had accumulated deficits since inception of
$36,305,000. Amerigon's accumulated deficits are attributable to the costs of
developmental and other start-up activities, including the industrial design,
development and marketing of Amerigon's products and a significant loss incurred
on a major electric vehicle development contract. Amerigon has continued to
incur losses from continued expenses without significant offsetting revenues or
profits from the sale of products, and expects to incur significant losses for
the foreseeable future.
In the third quarter of 1998 Amerigon actively began searching for
financing. The company contacted Mr. Bud Marx of TMW (an affiliate of Big Beaver
Investments LLC, one of the Investors) and John Clark of Westar Capital II LLC
(the other Investor), as well as several automotive industry companies about
providing financing. On November 12, 1998, Amerigon engaged Spencer Trask
Securities Incorporated to assist it in finding financing for continued
operations or in selling the company. Spencer Trask Securities Incorporated
helped prepare an information memorandum which was distributed broadly to a
number of companies primarily in the automotive industry. During this time
Amerigon had direct discussions with a number of other companies with whom
members of management had relationships, and also explored the possibility of
licensing its proprietary technologies instead of undertaking an additional
financing.
By the end of the first quarter of 1999, it became clear that the Investors'
proposal was the most attractive in light of (1) the lack of alternative
proposals either for financing or acquisition, and
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(2) Amerigon's immediate financing needs. Amerigon's existing working capital
was insufficient to continue operating beyond the first quarter of 1999.
Throughout March 1999, Amerigon's executives and legal counsel engaged in
extensive arm's-length discussions with the Investors and the Investors' counsel
to negotiate the Securities Purchase Agreement, the Investor's Rights Agreement,
and a number of related documents. On March 23, 1999 a letter of intent from a
third party was received, but it lacked specific financial terms, offered no
bridge financing, specifically prohibited obtaining other financing and included
a 90-day "exclusive dealing" and "no-shop" covenant while this third party
performed a due diligence examination of Amerigon. Given Amerigon's immediate
need for financing, this was not an acceptable alternative. The Board of
Directors also concluded that a licensing strategy was highly uncertain because
it hinged upon licensees not yet under contract and reflected a significant
change in Amerigon's strategic direction. After extensive discussions, the Board
of Directors approved the Financing Transaction at a meeting held on March 23,
1999 and the Securities Purchase Agreement was executed on March 29, 1999,
concurrent with the signing and closing of a Credit Agreement with an affiliate
of the Investors to provide secured bridge financing of up to $1.2 million to
allow Amerigon to continue its operations.
CERTAIN RIGHTS, PRIVILEGES AND PREFERENCES OF THE SERIES A CONVERTIBLE PREFERRED
STOCK
THIS IS A SUMMARY AND NOT A COMPLETE DESCRIPTION OF THE RIGHTS, PRIVILEGES
AND PREFERENCES OF THE SERIES A CONVERTIBLE PREFERRED STOCK. A COPY OF THE
ENTIRE TEXT OF THE CERTIFICATE OF DETERMINATION SETTING FORTH THE RIGHTS,
PRIVILEGES AND PREFERENCES OF THE SERIES A CONVERTIBLE PREFERRED STOCK IS
ATTACHED TO THIS PROXY STATEMENT AS APPENDIX D AND YOU ARE ENCOURAGED TO READ IT
CAREFULLY.
DIVIDENDS. The Series A Convertible Preferred Stock will receive dividends
on an "as-converted" basis with the Class A Common Stock.
LIQUIDATION PREFERENCE. Upon the liquidation, dissolution or winding up
(including an acquisition or merger) of Amerigon, each share of Series A
Convertible Preferred Stock is entitled to a liquidation preference of $1,000
plus 7% of the original issue price ($1,000) annually for up to four years after
issuance plus any declared but unpaid dividends in priority to any distribution
to the Class A Common Stock, which will receive the remaining assets of
Amerigon.
REDEMPTION. On or after January 1, 2003, if the closing price of the Class
A Common Stock for the past 60 days has been at least four times the Conversion
Price (initially $1.675 per share), Amerigon may redeem the Series A Convertible
Preferred Stock for an amount equal to the liquidation preference.
CONVERSION. Each holder of Series A Convertible Preferred Stock may convert
each share of Series A Convertible Preferred Stock into that number of shares of
Class A Common Stock equal to the $1,000 divided by the Conversion Price. The
Conversion Price is $1.675, subject to proportional adjustment for certain
dilutive issuances, splits and combinations and other recapitalizations or
reorganizations. All the Series A Convertible Preferred Stock may be
automatically converted upon the written consent of holders of a majority of the
Series A Convertible Preferred Stock.
VOTING RIGHTS. Except with respect to the election of directors of
Amerigon, the holder of each share of Series A Convertible Preferred Stock will
have the right to one vote for each share of Class A Common Stock into which
such Series A Convertible Preferred Stock could then be converted.
BOARD OF DIRECTORS. So long as at least 40% of the authorized shares of
Series A Convertible Preferred Stock are outstanding, the holders of Series A
Convertible Preferred Stock voting as a class will have the right to elect five
directors and the holders of Common Stock shall have the right to elect two
directors. Further, so long as at least 40% of the authorized shares of Series A
Convertible Preferred Stock are outstanding, Amerigon may not change the
authorized numbers of directors of Amerigon.
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CERTAIN TERMS OF THE SECURITIES PURCHASE AGREEMENT
THIS IS A SUMMARY AND NOT A COMPLETE DESCRIPTION OF THE SECURITIES PURCHASE
AGREEMENT. A COPY OF THE ENTIRE TEXT OF THE SECURITIES PURCHASE AGREEMENT IS
ATTACHED TO THIS PROXY STATEMENT AS APPENDIX A AND YOU ARE ENCOURAGED TO READ IT
CAREFULLY.
EFFECTIVE TIME. Upon satisfaction of the conditions set forth in the
Securities Purchase Agreement (including the shareholder approval being sought
by this proxy statement), Amerigon will file a Certificate of Determination of
the Series A Convertible Preferred Stock with the California Secretary of State.
At the closing of the transactions contemplated by the Securities Purchase
Agreement (the "Closing"), the Investors will pay to Amerigon (1) $9,000,000 in
return for 9,000 shares of Series A Convertible Preferred Stock, and (2) $1,000
in return for the Contingent Warrants.
CONDITIONS TO THE FINANCING TRANSACTION. The issuance of the Series A
Convertible Preferred Stock and the Contingent Warrants is subject to the
satisfaction or waiver of a number of conditions. The following are some of the
Investors' conditions to Closing:
- Shareholder approval of the Financing Transaction;
- The execution and delivery of the Investors' Rights Agreement;
- The filing of the Certificate of Determination;
- Amerigon having entered into a legally binding and enforceable agreement
providing for the redemption of all outstanding shares of Class B Common
Stock (see "APPROVAL OF THE EXCHANGE OF AMERIGON'S SHARES IN ITS ELECTRIC
VEHICLE SUBSIDIARY PURSUANT TO THE SHARE EXCHANGE AGREEMENT" beginning on
page 18, below);
- The representations and warranties of Amerigon in the Securities Purchase
Agreement being true at the Closing;
- The Investors having received from Amerigon all information each Investor
has requested and believes reasonably necessary to enable it to make its
investment decision;
- There not having occurred a material adverse change in Amerigon's business
or prospects;
- There not having been any legal proceeding or litigation preventing the
Financing Transaction; and
- The Board of Directors shall have been increased to seven members as of
the Closing and all directors, except John Clark, Lon Bell and Richard
Weisbart, shall have tendered resignations effective as of the Closing.
The following are some of Amerigon's conditions to Closing:
- Shareholder approval of the Securities Purchase Agreement and the
Investors' Rights Agreement;
- Payment of the purchase price; and
- The representations and warranties of the Investors being true on and as
of the Closing.
REPRESENTATIONS AND WARRANTIES. As of the date of the Securities Purchase
Agreement and as of the Closing, both Amerigon and the Investors made a number
of representations and warranties. Amerigon made representations and warranties
as to its organization, good standing, capitalization, and subsidiaries, to the
authorization and valid issuance of the Series A Convertible Preferred Stock and
the Contingent Warrants, to litigation, to the existence of proprietary
information agreements, to compliance with other material contracts, to the
extent of related-party transactions, to its SEC documents and tax returns, to
permits, to environmental and safety laws, to the extent of existing
registration rights, title to property and assets, compliance with the Foreign
Corrupt Practices Act, extent of insurance, extent of employee benefit plans,
and its Year 2000 compliance and adequacy of computer and communication
infrastructure. The
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Investors made representations and warranties as to the authorization of the
purchase of the shares of Series A Convertible Preferred Stock and the
Contingent Warrants and their status as accredited investors.
ADDITIONAL AGREEMENTS. The Securities Purchase Agreement contains a number
of additional agreements, including:
CONDUCT OF BUSINESS: Without the prior written consent of the Investors,
Amerigon has agreed, among other things, not to make any issuance, redemption or
reclassification or combination of its securities, amend its organic documents,
make any capital expenditures greater than $50,000 in the aggregate, enter into
any new line of business, make any changes in accounting, make any changes in
employee benefits or salaries outside the ordinary course or required by law,
dispose of material assets, create or alter or terminate material contracts, or
borrow money in excess of $50,000.
OTHER DISCUSSIONS: Without the prior written consent of the Investors,
Amerigon shall not directly or indirectly, solicit, initiate, facilitate, or
encourage the submission of any other proposal for, enter into any agreement or
initiate or participate in any discussions regarding, or furnish to any person
any information or assistance with respect to, or take any other action to
facilitate the making of any proposal that constitutes or may reasonably be
expected to lead to, other business combinations or financing transactions
directly or indirectly involving Amerigon or its business operations, or the
acquisition, in any manner directly or indirectly, of all or any substantial
part of the business, assets, capital stock or other voting securities of, or
any other equity interest in, Amerigon or its business operations by any other
party. Notwithstanding the above, Amerigon may respond to unsolicited written
proposals or to information requests and furnish or disclose information in
response thereto if Amerigon's Board of Directors determines in good faith,
after consultation with legal counsel, that taking such action is necessary in
the exercise of its fiduciary obligations under applicable law. If Amerigon
receives any competing proposal (oral or written), Amerigon shall advise
Investors immediately of its terms and, if the competing proposal is in writing,
furnish Investors with a true and complete copy thereof.
BREAK UP ARRANGEMENT: If the Closing does not occur, other than because of
a material breach by the Investors and/or the decision by the Investors not to
proceed because of the occurrence of a Material Adverse Effect (as defined in
the Securities Purchase Agreement), and within 12 months a Trigger Event (as
defined below) occurs, then Amerigon must pay the Investors:
- all reasonable out-of-pocket expenses in connection with the Securities
Purchase Agreement up to a maximum of $150,000; and
- a fee equal to the greater of (A) 5% of the value of the transaction
constituting the Trigger Event accepted by the Board of Directors or (B)
$300,000.
A "Trigger Event" means the occurrence of any of the following events: (1)
any person, corporation, entity or "group" (as such term is used in section
13(d) of the Exchange Act) (other than the Investors or any of their affiliates)
(a "Person") shall have acquired or become the beneficial owner of more than 25%
of the outstanding Class A Common Stock, or shall have been granted any option
or right (conditional or otherwise), to acquire more than 25% of the outstanding
Class A Common Stock; (2) any Person shall have commenced a bona fide tender
offer or exchange offer for consideration the fair market value of which is in
excess of the initial Conversion Price (as provided in the Certificate of
Determination) per share for at least 25% of the outstanding Class A Common
Stock, (3) Amerigon (or its Board) shall have authorized, recommended, proposed
or publicly announced its intention to enter into any tender or exchange offer,
merger, consolidation, liquidation, dissolution, business combination,
recapitalization, acquisition, or disposition of a material amount of assets or
securities or any comparable transaction which has not been consented to in
writing by the Investors; or (4) the shareholders of Amerigon fail to approve
the Securities Purchase Agreement. THEREFORE, IF THE SHAREHOLDERS DO NOT APPROVE
THE FINANCING TRANSACTION, AMERIGON WILL OWE A MINIMUM OF $300,000 PLUS EXPENSES
OF THE INVESTORS.
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CERTAIN TERMS OF THE INVESTORS' RIGHTS AGREEMENT
THIS IS A SUMMARY AND NOT A COMPLETE DESCRIPTION OF THE INVESTORS' RIGHTS
AGREEMENT. A COPY OF THE ENTIRE TEXT OF INVESTORS' RIGHTS AGREEMENT IS ATTACHED
TO THIS PROXY STATEMENT AS APPENDIX B AND YOU ARE ENCOURAGED TO READ IT
CAREFULLY.
EFFECTIVE TIME. The execution and delivery of the Investors' Rights
Agreement is a condition to the Closing of the Securities Purchase Agreement and
it is anticipated that it will be delivered and executed concurrently with the
Closing.
RIGHT OF FIRST OFFER. At any time Amerigon proposes to offer shares of or
securities convertible into its capital stock, it must provide a notice setting
forth the terms of such proposed offering to each Major Investor (as defined
below) pursuant to which the Major Investor may elect to obtain the securities
on such terms in an amount equal to the proportion of shares of Class A Common
Stock converted from or convertible from the Series A Convertible Preferred
Stock then held by such Major Investor in relation to the total number of shares
of common stock of Amerigon (assuming fully conversion and exercise of all
convertible or exercisable securities). If any Major Investor chooses not to
purchase any or all of the shares or securities it is able to purchase pursuant
to this right, the other Major Investors may purchase such shares. Whatever
shares or securities are not so purchased pursuant to this right may be sold for
the next 30 days by Amerigon on the terms set forth in the notice provided to
the Major Investors.
A Major Investor means:
- Any investor who holds at least 30% of the original investment such
investor makes in Amerigon pursuant to the Securities Purchase Agreement;
and
- Any person who acquires at least 15% of the Series A Convertible Preferred
Stock (or the Class A Common Stock issuable upon conversion thereof)
issued pursuant to the Securities Purchase Agreement.
This right does not apply to:
- the issuance or sale of shares of common stock (or options therefor) to
employees for the purpose of soliciting or retaining their employment
pursuant to a stock option or stock purchase plan,
- the issuance of securities pursuant to the conversion or exercise of
convertible or exercisable securities,
- the issuance of securities in connection with a bona fide business
acquisition of or by Amerigon, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise, or
- the issuance of stock, warrants or other securities or rights to persons
or entities with which Amerigon has business relationships provided such
issuances are for other than primarily equity financing purposes and
provided that at the time of any such issuance, the aggregate of such
issuance and similar issuances in the preceding twelve month period do not
exceed 2% of the then outstanding Class A Common Stock of Amerigon
(assuming full conversion and exercise of all convertible and exercisable
securities).
REGISTRATION RIGHTS. The Investors' Rights Agreement grants the Investors a
variety of registration rights, as described below:
DEMAND REGISTRATION RIGHTS. Twice after the execution of the Investors'
Rights Agreement, the holders of a majority of the Registrable Securities
(defined as the Class A Common Stock issuable upon conversion of the
Series A Convertible Preferred Stock and the Class A Common Stock issuable
upon exercise of the Contingent Warrants, including all Class A Common
Stock issued as dividends or other distribution with respect to such
shares) may request that Amerigon file a
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registration statement under the Securities Act of 1933 covering at least
10% of the Registrable Securities.
PIGGYBACK REGISTRATION RIGHTS. For the five years following the execution
of the Investors' Rights Agreement, if Amerigon proposes to register any
of its stock under the Securities Act of 1933 in connection with a public
offering solely for cash (other than a registration relating to the sale
of securities pursuant to a stock plan, a registration on a form which
requires substantially different information than that which would be
required for the Registrable Securities or a registration of Common Stock
issuable upon conversion of debt securities which are also being
registered), it will give the holders the opportunity to also have their
Registrable Securities registered.
S-3 REGISTRATION RIGHTS. Up to four times after the execution of the
Investors' Rights Agreement, the holders of the Registrable Securities may
request that Amerigon file a Form S-3 for the resale of shares from time
to time in broker transactions. Amerigon shall not be obligated to do so
if:
- Form S-3 is not available to Amerigon;
- The registration is for Registrable Securities less than $300,000;
- Amerigon has filed two S-3s pursuant to this right in the past year; or
- Amerigon furnishes a certificate to the requesting holders stating that
it is the good faith judgment of the Board of Directors that it would
be seriously detrimental to Amerigon to file the S-3 at this time
(however, this may only defer the filing for up to 90 days and may not
be used more than once in a twelve month period).
OTHER PROVISIONS. Under all of these registration rights Amerigon bears
the costs of registration and the fees of one counsel for the selling
holders up to $15,000.
INDEMNIFICATION. The Investors' Rights Agreement contains customary
cross indemnities for claims alleging violations of the securities laws.
ASSIGNMENT. The registration rights are assignable.
LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. Without the prior consent
of the holders of a majority of the outstanding Registrable Securities,
Amerigon may not grant registration rights which would allow such holder
to include their securities in the registration statement filed pursuant
to the demand registration of the Investors' Rights Agreement if such
inclusion would reduce the amount of Registrable Securities by the
selling holder which is included or which would allow such holder to
make a demand registration resulting in a registration statement which
became effective at any time prior to 120 days of the effective date of
any registration effected pursuant to the Investors' Rights Agreement's
demand registration right.
MARKET "STAND-OFF" AGREEMENT. Each holder agrees that during the time
specified by Amerigon and an underwriter following the effective date of
a registration statement that they will enter into agreements not to
sell or dispose or grant options related to the Registrable Securities
for a period of up to 90 days as long all officers and directors of
Amerigon and all other persons with registration rights enter into
similar agreements.
TERMINATION. The rights of holders to request registration will cease
at the time when all shares of Registrable Securities may be immediately
sold under Rule 144 during any 90 day period.
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CERTAIN RIGHTS AND PRIVILEGES OF THE CONTINGENT WARRANTS
THIS IS A SUMMARY AND NOT A COMPLETE DESCRIPTION OF THE CONTINGENT WARRANTS.
A COPY OF THE ENTIRE TEXT OF THE CONTINGENT WARRANTS IS ATTACHED TO THIS PROXY
STATEMENT AS APPENDIX C AND YOU ARE ENCOURAGED TO READ IT CAREFULLY.
The Contingent Warrants to be issued to the Investors give each Investor the
ability to purchase a number of shares of Class A Common Stock equal to 36.9% of
the shares of Common Stock purchased by various third parties upon exercise of
outstanding warrants. Because Amerigon has issued different warrants with
various terms and conditions, a separate warrant is being issued to each
Investor for each set of outstanding warrants with separate terms and
conditions.
EXERCISABILITY. Each Contingent Warrant can only be exercised to purchase
that number of shares of Class A Common Stock equal to 36.9% of the shares of
Common Stock purchased by existing warrant holders upon exercise of currently
outstanding warrants. Shares purchasable pursuant to the Contingent Warrants may
be purchased by cash payment or on a "net issuance" basis by acceptance of fewer
shares of Class A Common Stock with the value of the shares not received being
applied to the purchase price of the shares actually purchased.
EXERCISE PRICE. Each Contingent Warrant has an exercise price equal to the
warrants upon which it is contingent. Because the vast majority of the
outstanding warrants have exercise prices of $25.00 per share or more, most of
the Contingent Warrants will not be exercised unless the Class A Common Stock
trades at or above that level (subject to adjustments from antidilution
provisions).
EXPIRATION DATE. Each Contingent Warrant expires 90 days after the last of
the warrants upon which it is contingent.
ANTIDILUTION PROVISIONS. Each Contingent Warrant has antidilution
provisions identical to the warrants upon which it is contingent.
REASONS FOR THE FINANCING TRANSACTION
The Board's decision to adopt and approve the Securities Purchase Agreement
and the Investors' Rights Agreement and to approve the Financing Transaction was
the product of a careful evaluation process. This process involved numerous
meetings at which members of the Board considered the proposals made by the
Investors and preliminary indications of interest from other parties, discussed
various possible responses and, with the assistance of its financial and legal
advisors, took and authorized various actions. See "--Background to the
Financing Transaction," on page 10, above.
In making our determination that the Financing Transaction is in the best
interests of Amerigon's stockholders, we considered a number of factors,
including, without limitation, the following significant items:
- Our familiarity with, and presentations by Amerigon's management
regarding, the business, operations, financial condition, competitive
position, business strategy and prospects of Amerigon, and current
industry, economic and market conditions, both on a historical and on a
prospective basis;
- Concerns regarding Amerigon's immediate need for capital;
- The strategic alternatives (or lack thereof) available to Amerigon,
including possible acquisition by strategic or financial buyers,
alternative financings, and licensing arrangements;
- Public disclosure by Amerigon of its retention of a strategic advisor on
November 12, 1998, and the effects of that disclosure;
- The recent market prices of Amerigon Class A Common Stock compared to the
proposed conversion price of the Series A Convertible Preferred Stock to
be issued as part of the Financing
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Transaction (the Conversion Price of $1.675 represents a 57% premium to
the closing bid price of the Class A Common Stock on the date the
Securities Purchase Agreement was executed);
- Comparison of the economic impact on the shareholders of the Financing
Transaction and possible alternative financings or licensing arrangements;
- The familiarity of the Investors with Amerigon and evidence of the
Investors' ability to finance and complete a transaction in a fairly short
time frame in comparison to other parties, all of whom submitted only
preliminary indications of interest and did not conduct due diligence or
submit any clear proposal;
- Our review of presentations by, and discussions of the terms of the
Securities Purchase Agreement, the Investors' Rights Agreement, the
Certificate of Determination, and several other documents with Amerigon
senior executives, as well as its legal counsel;
- The terms and conditions of the Securities Purchase Agreement and the
Investors' Rights Agreement, which were negotiated at arm's-length by
management of Amerigon with the assistance of Amerigon's legal advisors;
and
- Our belief, based in part upon discussions with our legal advisors, that
it was unlikely that potential conflicts of interests of a director based
on their involvement with one of the Investors, affected the negotiation
of the terms of the Securities Purchase Agreement and the Investors'
Rights Agreement (see "INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED
UPON" on page 6, above).
In view of the various factors we considered, including the material factors
listed above, we did not find it necessary or practicable to quantify or
otherwise attempt to assign relative importance to the specific factors
considered in making its determination, nor did we evaluate whether such factors
were of equal importance. Individual members of the Board may have given
different weights to different factors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
We have determined that the terms of the Financing Transaction are fair to,
and in the best interests of Amerigon and you, its shareholders, and have
unanimously adopted and approved the Securities Purchase Agreement, the
Certificate of Determination, the Contingent Warrants and the Investor's Rights
Agreement. ACCORDINGLY, THE BOARD OF DIRECTORS (WITH THE EXCEPTION OF JOHN
CLARK, WHO ABSTAINED DUE TO HIS INTEREST IN THE TRANSACTIONS) UNANIMOUSLY
RECOMMENDS A VOTE FOR APPROVAL OF THE FINANCING TRANSACTION.
The officers and directors of Amerigon own shares of Amerigon and, to that
extent, their interest in the Financing Transaction is the same as yours.
However, some members of the Board and management of Amerigon have other
interests that are different from yours that could have influenced their
decision to recommend approval of the Financing Transaction. These interests are
described under "INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON" on
page 6, above. Each of the Directors was aware of these interests and considered
them in recommending and approving the Financing Transaction.
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APPROVAL OF THE EXCHANGE OF AMERIGON'S SHARES IN ITS ELECTRIC
VEHICLE SUBSIDIARY PURSUANT TO THE SHARE EXCHANGE AGREEMENT
(Item 3 on the Proxy Card)
This section of the proxy statement describes (1) the proposed exchange of
Amerigon's shares in AEVT Incorporated, a newly-created subsidiary of Amerigon
which conducts substantially all of Amerigon's business in the field of electric
vehicles and to which all of Amerigon's electric vehicle assets were
contributed, and (2) the material terms of the Share Exchange Agreement. The
description of the Exchange and the Share Exchange Agreement contained in this
proxy statement is not complete and is qualified in its entirety by reference to
the Share Exchange Agreement, a copy of which is attached to this proxy
statement as Appendix E, and which is incorporated by reference. YOU ARE URGED
TO READ THE ENTIRE SHARE EXCHANGE AGREEMENT CAREFULLY.
SUMMARY
You are being asked to vote upon a proposal to approve the Exchange,
consisting of the sale of 850 shares of AEVT to Dr. Lon Bell, the Chairman of
the Board and Amerigon's Chief Executive Officer, pursuant to the Share Exchange
Agreement, dated as of March 29, 1999, between Amerigon and Dr. Bell in
consideration for Dr. Bell surrendering to Amerigon all of the shares of
Amerigon's Class B Common Stock which he will, as of April 30, 1999, own or
control. Certain important provisions of the Exchange and the Share Exchange
Agreement are listed below:
- The Share Exchange Agreement provides for the transfer of 850 shares of
AEVT common stock to Dr. Bell in exchange for the surrender for
cancellation of all shares of Class B Common Stock held or controlled by
Dr. Bell when the following conditions are satisfied: (1) the Financing
Transaction closes, (2) Amerigon has the legal capacity to redeem the
Class B Common Stock under California law, and (3) the shareholders of
Amerigon approve the Exchange.
- If the shareholders (other than Dr. Bell) do not approve the Exchange at
the Annual Meeting and the Financing Transaction is consummated, then Dr.
Bell is required to sell his shares of Class B Common Stock to Amerigon
for a price per share equal to 5% of the price of a share of Class A
Common Stock (which would be approximately $25,900 for all of the shares
of Class B Common Stock, if calculated on April 7, 1999). In return,
Amerigon will grant to Dr. Bell (1) the right to appoint a majority of the
members of AEVT's Board of Directors, (2) a right of "first refusal" to
purchase any shares of AEVT which Amerigon decides to sell from time to
time, and (3) a right to "tag along" and participate on a proportionate
basis in any sale of shares of AEVT by Amerigon.
- The Board of Directors (other than Dr. Bell, who has abstained from voting
on the Exchange) supports the Exchange because they feel it will (1) shift
the obligation to secure funding of the electric vehicle project to AEVT's
new owners, (2) transfer the obligations and liabilities associated with
the electric vehicle operations to AEVT and its new owners, (3) allow
Amerigon to retain most of the economic benefits of the India joint
venture without further investment or risk, and (4) allow Amerigon to
redeem the Class B Common Stock without using its cash.
GENERAL
The affirmative vote of the holders of a majority of the outstanding shares
of Amerigon common stock represented at the Annual Meeting (with Dr. Bell
abstaining from the vote) is required to approve the Exchange. Broker non-votes
are treated as shares as to which voting power has been withheld by the
beneficial owners thereof, and therefore, neither broker non-votes nor
abstentions will be counted as voting for or against the Exchange. While there
may be instances in which you wish to abstain, the Board encourages you to vote
your shares in your best judgment and to participate in the voting process to
the fullest extent possible.
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The following paragraphs of this section of the proxy statement provide
further information about the material terms of the Share Exchange Agreement and
the consequences of the Exchange. This section may not contain all information
that is important to you. A copy of the entire text of the Share Exchange
Agreement is contained in Appendix E. You are urged to read the following
paragraphs and the Share Exchange Agreement in their entirety.
BACKGROUND TO THE EXCHANGE
ELECTRIC VEHICLE RESEARCH AND DEVELOPMENT INITIATIVES. Amerigon was founded
to design and develop advanced automotive technologies, and, as part of its
mission, has spent many years developing and conducting research on electric
vehicles. By both developing its own products and managing third party programs
related to electric vehicles (such as the Showcase Electric Vehicle Program and
the Running Chassis Program), Amerigon has developed a base of knowledge and
expertise concerning electric vehicles. Amerigon's experience has included the
ground-up design of electric vehicles as well as the testing and integration of
state-of-the-art components for electric vehicles manufactured by other
companies. In addition, Amerigon has been developing an "Energy Management
System," which is a proprietary, computer-based system for electric vehicles
which (1) optimizes battery charging and use based on the age and condition of a
battery, thereby maximizing vehicle range and extending battery life, (2)
automatically controls and adjusts the operation of the systems of an electric
vehicle to improve performance, and (3) predicts the available range for typical
freeway, city or mountain driving and decides whether specific trips are
possible, given the limited distance possible (approximately 60 to 120 miles)
between charges. Amerigon has completed initial research and development of
prototype Energy Management Systems and has installed them in a few test
vehicles.
LOSSES GENERATED BY THE ELECTRIC VEHICLE DIVISION. During 1995 and 1996,
the majority of Amerigon's revenues were from electric vehicle operations.
During this period, Amerigon was the recipient of a number of federal and state
government grants relating to the development of electric vehicles, and it
entered into a number of electric vehicle research and development contracts
with private-sector companies. Amerigon, however, incurred substantial losses
from these activities, including significant cost overruns on an electric
vehicle development contract.
By 1997, Amerigon had substantially reduced its expenditures for electric
vehicle activities, but it maintained certain key personnel in an attempt to
find a joint venture partner or some other means of deriving value from its
electric vehicle technologies, in each case without success. During 1997, the
Board of Directors determined to focus Amerigon's activities primarily on
Climate Control Seat-TM- ("CCS") and in-vehicle radar products, and by December
31, 1997 substantially all work had been completed on Amerigon's electric
vehicle contracts. As a result, in 1998 the Board of Directors decided to
suspend funding the electric vehicle program (effective as of August 1998)
because it was generating continuing losses and consuming resources which the
Board felt would be better utilized in the development of CCS and in-vehicle
radar products.
EFFORTS TO SELL ELECTRIC VEHICLE BUSINESS AND TO BRING IN NEW
INVESTORS. While the Board as a whole decided to cease funding electric vehicle
research and development, Dr. Bell believed--and believes--that electric
vehicles still have the potential to become a viable commercial opportunity. In
1998, Dr. Bell and Amerigon agreed that Dr. Bell would, from August 1, 1998,
personally provide all funds required for research, development, production, and
other activities relating to the electric vehicle business for a limited period
of time in return for a 15% interest in a subsidiary into which the electric
vehicle assets and liabilities would be placed.
Since at least 1996, Amerigon had also been seeking to form a joint venture
to manufacture, sell and service a small electric car in India. In December
1998, Amerigon entered into a letter agreement with a group of companies
controlled by Sudarshan K. Maini (the "Maini Group") to produce and market
electric vehicles in India and certain other countries. Under the terms of that
letter agreement, Amerigon
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<PAGE>
will receive a minority equity position in the Indian company which will produce
the electric vehicles and royalties on sales of electric vehicles by the Indian
company, in exchange for the contribution and license of certain assets and
technology to the Indian company.
On March 22, 1999, Amerigon formed AEVT Incorporated, with Dr. Bell and two
other people affiliated with Amerigon, Chetan Maini and Robert Marcellini, as
the initial directors and officers, and contributed substantially all of the
assets and liabilities associated with the electric vehicle business to AEVT
(including the obligation to form a joint venture with the Maini Group) in
exchange for all 1000 shares of AEVT's outstanding common stock. Amerigon
retained the right to receive 85% of all royalties which the Indian joint
venture company pays to AEVT, however. On March 30, 1999, Amerigon transferred
150 shares of AEVT to a company controlled by Dr. Bell in exchange for the
payment of $88,000 (representing all accrued research, development, and
production costs which Amerigon had incurred in connection with the electric
vehicle business since August 1, 1998). Amerigon has not provided any funds to
AEVT since March 29, 1999, and does not intend to provide any funds in the
future. (In addition, the terms of the bridge loan entered into by Amerigon and
affiliates of the Investors prohibit any loan proceeds from being used for
electric vehicle operations).
If the Exchange is approved by the shareholders and the Financing
Transaction is consummated, then Amerigon will transfer the remaining 850 shares
of AEVT to Dr. Bell in exchange for the surrender of all shares of Amerigon's
Class B Common Stock then owned or controlled by Dr. Bell. Upon the exchange of
the AEVT shares for the shares of Class B Common Stock, Amerigon will no longer
have any significant interest in the electric vehicle business (other than the
right to receive 85% of the royalties received by AEVT from the Indian joint
venture). In addition, most liabilities associated with the electric vehicle
business, including the obligation to enter into the joint venture in India with
the Maini Group, have been assumed by AEVT, and Amerigon expects to enter into a
novation with the Maini Group that releases it from its obligations with respect
to the joint venture. If the Exchange is effected, Amerigon will have no
interest in AEVT or its future earnings, growth or prospects (whether positive
or negative); Amerigon will, however, continue to license certain CCS technology
to AEVT, which AEVT may provide to the Indian joint venture company for the
production of electric vehicles.
REASONS FOR THE EXCHANGE
The Investors require as a condition to the completion of the Financing
Transaction (see "APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE SECURITIES
PURCHASE AGREEMENT AND THE INVESTORS' RIGHTS AGREEMENT, INCLUDING (A) THE
ISSUANCE OF SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK AND CONTINGENT
WARRANTS AND (B) THE INVESTORS' RIGHTS AGREEMENT--Certain Terms of the
Securities Purchase Agreement--CONDITIONS TO THE FINANCING TRANSACTION" on page
12, above) that Amerigon enter into a binding agreement with Dr. Bell to redeem
the outstanding shares of Class B Common Stock. The Share Exchange Agreement was
entered into to satisfy this condition.
We feel that the Exchange is in the best interests of Amerigon and you, the
shareholders, and provides a number of benefits to Amerigon, including the
following:
- SHIFTING THE FUTURE FUNDING OF THE ELECTRIC VEHICLE OPERATIONS. In 1998,
Amerigon stopped funding the electric vehicle operations, and the bridge
loan extended by the Investors prohibits Amerigon from directing any
portion of the loan proceeds to the electric vehicle operations. However,
the mere ownership of the assets, and the retention of certain employees,
related to the electric vehicle operations will require the allocation of
some money, as would any effort to generate revenues from these assets.
The Exchange allows Amerigon to shift the responsibility for raising funds
to meet the fixed and variable costs associated with developing the
electric vehicle assets, to the new owners of AEVT.
- TRANSFERRING THE LIABILITIES ASSOCIATED WITH THE ELECTRIC VEHICLE
OPERATIONS. Even though Amerigon has stopped funding the electric vehicle
operations, it still has a number of outstanding obligations
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<PAGE>
related to the development of electric vehicles, including the obligation
to participate in a joint venture in India to develop and manufacture
electric vehicles. AEVT has already assumed Amerigon's liabilities and
obligations related to the electric vehicle program, and the Exchange will
provide Amerigon with an opportunity to (1) transfer the ownership of AEVT
(including these assumed liabilities) to a new owner, and (2) enter into a
novation agreement with the Indian joint venture partner and be formally
released from nearly all obligations related to the joint venture.
- RETAINING MOST OF THE BENEFITS OF THE INDIA JOINT VENTURE. Although
Amerigon has assigned its right to become the minority equity owner in the
Indian joint venture company to AEVT, even after the Exchange Amerigon
will retain the right to receive 85% of the royalties payable by the
Indian joint venture to AEVT. We feel that these royalties constitute a
large portion of the benefits of being associated with the Indian joint
venture.
- AVOIDING HAVING TO USE AMERIGON'S CASH TO REDEEM THE CLASS B COMMON STOCK.
The Share Exchange Agreement requires that Amerigon redeem the Class B
Shares by either exchanging them for Amerigon's shares of AEVT common
stock, or by purchasing the outstanding shares from Dr. Bell for a price
which is calculated according to a set formula. On April 8, 1999, the
purchase price would have been approximately $25,900. The Exchange will
allow Amerigon to redeem the Class B Common Stock without expending this
sum.
In making our determinations that the Exchange and the Share Exchange
Agreement are in the best interests of Amerigon and Amerigon's shareholders, we
considered a number of factors, including the following:
- our familiarity with, and presentations by Amerigon's management on, the
prospects of the electric vehicle business;
- the consideration of various strategic alternatives available to Amerigon,
and the results of our efforts over the past three years to identify
strategic partners in the electric vehicle business and to obtain value
from the electric vehicle assets;
- our review of presentations by, and discussions of the terms and
conditions of the Share Exchange Agreement with, senior executives of
Amerigon and representatives of Amerigon's legal counsel;
- the terms and conditions of the Share Exchange Agreement, which were
negotiated at arm's length with Dr. Bell by the Investors and management
of Amerigon with the assistance of Amerigon's legal advisors; and
- our belief, based in part upon discussions with our legal and financial
advisors, that it was unlikely that potential conflicts of interest of
some of the directors and members of management based on their involvement
with the electric vehicle business, the Indian joint venture, or Dr. Bell,
affected the negotiation of the terms of the Share Exchange Agreement in
any material respect (see "INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE
ACTED UPON" on page 6, above).
We also considered the impact of the proposed Exchange on those employees
who will leave Amerigon and become employees of AEVT. For additional information
regarding our consideration of the Exchange, see "--Background to the Exchange,"
beginning on page 19, above, and "-- Reasons for the Exchange," beginning on
page 20, above.
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<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
We have unanimously (with the exception of Dr. Bell, who abstained due to
his interest in the transaction) determined that the Share Exchange Agreement
and the Exchange are fair to and in the best interests of Amerigon and you, its
shareholders, and have adopted and approved the Share Exchange Agreement and the
Exchange. ACCORDINGLY, WE UNANIMOUSLY (WITH THE EXCEPTION OF DR. BELL, WHO
ABSTAINED DUE TO HIS INTEREST IN THE TRANSACTION) RECOMMEND A VOTE FOR APPROVAL
OF THE PRINCIPAL TERMS OF THE SHARE EXCHANGE AGREEMENT AND THE EXCHANGE.
The officers and directors of Amerigon own shares of Amerigon and, to that
extent, their interest in the Exchange is the same as yours. However, some
members of the Board and management of Amerigon have other interests that are
different from yours that could have influenced their decision to recommend
approval of the Exchange. These interests are described under "INTERESTS OF
CERTAIN PERSONS IN THE EXCHANGE" on page 6, above. Each of the Directors was
aware of these interests and considered them in recommending and approving the
Exchange and the terms of the Share Exchange Agreement.
STATEMENT ON CORPORATE GOVERNANCE
BOARD OPERATIONS AND MEETINGS
The Board held seven meetings during 1998, and all of the directors attended
at least 75% of the Board meetings, except for Messrs. Anderson and Peevey, who
each attended 71% of the meetings of the Board, and Mr. Hutchcraft, who attended
67% of the meetings held prior to the date of his death. All of the directors
attended at least 75% of the committee meetings of which they were members,
except for Mr. Peevey, who did not attend the one meeting of the Audit
Committee.
COMMITTEE STRUCTURE
Although the full Board considers all major decisions of Amerigon, the Board
has established two standing committees to more fully address certain areas of
importance to Amerigon. The Board has established the following two committees,
each of which is comprised only of non-employee Directors:
- AUDIT COMMITTEE: The Audit Committee provides advice and assistance to the
Board of Directors on accounting and financial reporting practices of
Amerigon. It also reviews the scope of audit work and findings of the firm
of independent public accountants who serve as auditors of Amerigon and
monitors the work of Amerigon's internal auditors. The Audit Committee
consists of Messrs. Anderson, Clark, and Peevey. A. Stephens Hutchcraft,
Jr. served on the Audit Committee until his death on November 25, 1998.
The Audit Committee held one meeting in 1998.
- COMPENSATION COMMITTEE: The Compensation Committee reviews and makes
recommendations to the Board of Directors concerning the compensation
arrangements of Amerigon's executive officers and administers Amerigon's
1997 Stock Option Plan and determines awards to be made thereunder. The
Compensation Committee consists of Messrs. Anderson, Clark, and Peevey. A.
Stephens Hutchcraft, Jr. served on the Compensation Committee until his
death on November 25, 1998. The Compensation Committee held no meetings in
1998.
BOARD COMMITTEE MEMBERSHIP ROSTER
(as of April 23, 1999)
<TABLE>
<CAPTION>
NAME AUDIT COMPENSATION
- ---------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Lon E. Bell...............................................
Richard A. Weisbart.......................................
Roy A. Anderson........................................... X X
Michael R. Peevey......................................... X X
John W. Clark............................................. X X
</TABLE>
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<PAGE>
DIRECTORS' COMPENSATION
No retainer, consulting, or other fees (other than reimbursement for
expenses incurred in attending Board of Directors and committee meetings) are
paid to Directors as consideration for their service to Amerigon in their
capacity as Directors, except for the options described below.
Pursuant to the 1997 Stock Option Plan, each Non-Employee Director of
Amerigon is automatically granted options to purchase 1,000 shares of Amerigon's
Common Stock on the first business day of each calendar year. The exercise price
of these options is the fair market value of shares of Amerigon Class A Common
Stock on the date of the grant and the option has a term of ten years (subject
to reduction under certain circumstances).
STOCK PERFORMANCE GRAPH
The graph below compares the performance of Amerigon's Class A Common Stock
to that of the Nasdaq Stock Market--US Companies Index and the Nasdaq
Non-Financial Index for the period commencing January 1, 1994 and ending
December 31, 1998. During this period, Amerigon has been in the development
stage.
The indexes assume that the value of the investment in Amerigon's common
stock and in each index was $100 on January 1, 1994. The total shareholder
returns depicted in the graph are not necessarily indicative of future
performance.
COMPARISON OF CUMULTIVE TOTAL RETURN OF COMPANY, PEER GROUP AND BROAD MARKET
Among Amerigon, Inc., Nasdaq Market Index and Peer Group (Nasdaq
Non-Financial) Index
<TABLE>
<CAPTION>
COMPANY/INDEX/MARKET 1993 1994 1995 1996 1997 1998
- ----------------------------------- --------- --------- --------- --------- --------- ---------
(DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Amerigon, Inc...................... 100.00 120.00 107.50 58.75 25.00 3.44
Nasdaq Market Index--U.S. Cos...... 100.00 97.75 138.26 170.01 208.58 293.21
Nasdaq Non-Financial Index......... 100.00 96.16 134.03 162.84 191.05 279.82
</TABLE>
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OWNERSHIP OF AMERIGON STOCK BY DIRECTORS, OFFICERS, AND CERTAIN OTHERS
AMERIGON'S CLASS A COMMON STOCK
The table below sets forth certain information regarding the beneficial
ownership of Amerigon's Common Stock as of April 9, 1999 by (1) each person who
is known by Amerigon to own beneficially more than 5% of the outstanding shares
of Common Stock; (2) each director and/or nominee for director; (3) each of
Amerigon's executive officers identified in the compensation table under
"Executive Compensation" (the "Named Executive Officers"); and (4) all executive
officers and directors of Amerigon as a group. Other than the Investors, by
virtue of their rights under the Securities Purchase Agreement, Amerigon is not
aware of any person who is not a Amerigon director, nominee for director or
executive officer who beneficially owns more than 5% of the outstanding Class A
Common Stock.
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY OWNED AND
NAME AND ADDRESS OF NATURE OF BENEFICIAL
BENEFICIAL OWNER (1) OWNERSHIP (10) PERCENT OF CLASS
- ------------------------------------------------------------------ ----------------------------- -----------------
<S> <C> <C>
Lon E. Bell (2)(3)(4)............................................. 713,644 28.4%
Richard A. Weisbart (5)........................................... 20,698 *
James L. Mertes (9)............................................... 2,887 *
Scott O. Davis (6)................................................ 10,267 *
Daniel R. Coker (7)............................................... 5,566 *
Roy A. Anderson (8)............................................... 14,000 *
John W. Clark (8)................................................. 13,500 *
Michael R. Peevey (8)............................................. 8,000 *
All executive officers and directors as a group
(8 persons) (2)(3)(4)(5)(6)(7)(8)(9)............................. 788,562 31.4%
</TABLE>
- ------------------------
* Holdings represent less than 1% of all shares outstanding.
NOTES TO STOCK OWNERSHIP TABLE:
(1) For all shareholders listed, the address is c/o Amerigon Incorporated, 5462
Irwindale Avenue, Irwindale, California 91706.
(2) 518,580 of the shares are held in an escrow which was created in connection
with Amerigon'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. These shares are
expected to convert to shares of Class B Common Shares on April 30, 1999.
See "--Amerigon's Class B Common Stock" below.
(3) Includes an aggregate of 16,000 escrowed 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. These shares are expected to
convert to shares of Class B Common Shares on April 30, 1999. See
"--Amerigon's Class B Common Stock" below.
(4) Dr. Bell has granted options to purchase an aggregate of 175,932 shares of
his common stock to certain employees, former employees and consultants. Of
these options, 129,223 are options to purchase escrowed shares, and these
shares are expected to convert to shares of Class B Common Shares on April
30, 1999. See "-- Amerigon's Class B Common Stock" below. The shares of
common stock covered by options granted by Dr. Bell have been tabulated only
once for purposes of determining the beneficial ownership of all directors
and officers as a group.
(5) Included in amounts are shares have vested or will vest within sixty (60)
days of the record date and are included in 46,000 shares issuable upon
exercise of options granted to such executive officer under Amerigon's 1993
and 1997 Stock Option Plans.
(6) Included in amounts are shares that have vested or will vest within sixty
(60) days of the record date and are included in 8,000 shares issuable upon
exercise of options granted to such executive officer under Amerigon's 1993
and 1997 Stock Option Plans.
(7) Included in amounts are shares that have vested or will vest within sixty
(60) days of the record date and are included in 14,900 shares issuable upon
exercise of options granted to such executive officer under Amerigon's 1993
and 1997 Stock Option Plans.
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<PAGE>
(8) Includes, as to each of Messrs. Anderson, Clark, and Peevey, 4,333, 3,333
and 2,333 shares, respectively, issuable upon exercise of options granted to
such directors under Amerigon's 1993 Stock Option Plan and 1,000, 1,000, and
1,000, respectively, issuable upon exercise of options granted to such
directors under Amerigon's 1997 Stock Option Plan and 8,677, 6,667 and
4,667, respectively issuable upon exercise of options granted to such
directors outside of plans.
(9) These shares have vested or will vest within sixty (60) days of the record
date and are included in 10,221 issuable upon exercise of Options granted to
such executive officer under Amerigon's 1993 and 1997 Stock Option Plans.
(10) Adjusted to reflect the 1-for-5 reverse stock split that became effective
on January 26, 1999, upon the filing of an amendment to the Articles of
Incorporation of Amerigon. Amerigon's Class A Common Stock began trading on
the adjusted basis on the Nasdaq SmallCap Market on January 28, 1999.
AMERIGON'S CLASS B COMMON STOCK
In order to provide an incentive to Amerigon's management to achieve certain
stock price and income targets, and as a condition of Amerigon's initial public
offering in June 1993, Amerigon's original shareholders placed 600,000 shares
(the "Escrow Shares") of Amerigon's Class A Common Stock into escrow pursuant to
an escrow agreement by and among the original shareholders, Amerigon, and the
escrow agent. The Escrow Shares were to have automatically been released from
Escrow to the original Shareholders if Amerigon met or exceeded certain
performance thresholds, and on April 30, 1999, all remaining Escrow Shares would
convert into shares of Class B Common Stock and be released to each original
shareholder who was an employee, director or consultant of Amerigon on April 30,
1999.
The performance thresholds have not been not met, and on April 30, 1999
shares of Class B Common Stock will be released to Dr. Bell, and trusts for the
benefit of Dr. Bell's children which Dr. Bell controls, because Dr. Bell is the
only original shareholder who is still affiliated with Amerigon. Dr. Bell owns
or controls 518,580 shares of escrowed common stock, but the shareholders'
agreement contains a provision which limits the number of shares of escrowed
Class A Common Stock which may be converted into Class B Common Stock to an
amount which is three times the number of unescrowed shares of Class A Common
Stock held by each original shareholder. Therefore, if, as of April 30, 1999,
Dr. Bell holds or controls less than 172,860 shares, the number of shares of
Class B Common Stock he receives will be reduced, with the forfeited shares
reverting to Amerigon.
While the Class B Common Stock has voting rights per share equivalent to the
Class A Common Stock, 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.
Pursuant to the Share Exchange Agreement, if the Financing Transaction is
consummated, the Class B Common Stock will be redeemed and cancelled. See
"APPROVAL OF THE EXCHANGE OF AMERIGON'S SHARES IN ITS ELECTRIC VEHICLE
SUBSIDIARY PURSUANT TO THE SHARE EXCHANGE AGREEMENT-- Summary" on page 18,
above.
CHANGE OF CONTROL
The Financing Transaction, if consummated, will result in the Investors
gaining voting control of Amerigon. The Investors will have shares constituting
approximately 74% of the voting shares of Amerigon, and will have the right to
elect five of the seven members of the Board of Directors.
If the Financing Transaction is approved by the shareholders, upon the
Closing the Board of Directors will adopt a resolution to change the number of
directors to seven, and all members of the Board of Directors, other than John
Clark, Dr. Bell, and Richard Weisbart, will resign effective as of the Closing.
The options granted to the non-employee directors under the 1997 Stock
Option Plan will vest automatically upon consummation of the Financing
Transaction pursuant to the terms of the 1997 Stock Option Plan. Pursuant to the
terms of the 1997 Stock Option Plan, the options granted to employees of
Amerigon under the 1997 Stock Option Plan will also vest automatically upon
consummation of the
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<PAGE>
Financing Transaction, unless prior to that time the committee appointed by the
Board of Directors to administer the 1997 Stock Option Plan determines that
there will be no acceleration.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
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 AMERIGON
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.
The directors comprising the Compensation Committee are Messrs Anderson,
Clark, and Peevey. The Committee determines the compensation of the directors
and executive officers of Amerigon, including the compensation in the form of
stock options under Amerigon's 1997 Stock Option Plan.
Amerigon'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 and
Amerigon performance; and align the interests of directors and executive
officers with those of Amerigon's shareholders. Amerigon'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 Amerigon'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 Amerigon 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 Amerigon. Examples of such
criteria include leadership, division or department performance relative to
Amerigon's budget and strategic plan for the year, achievement of certain
project milestones, and improvements in customer satisfaction.
During 1998, Dr. Bell, Amerigon's Chief Executive Officer, received a base
salary of $144,070, and was awarded a bonus of $57,705, which remains an accrued
and unpaid obligation of Amerigon to Dr. Bell.
BONUSES. The Committee may, in its discretion, award cash bonuses to
executive officers as an additional performance incentive and to recognize
extraordinary contributions to Amerigon'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 Amerigon continued to incur operating losses in 1998, the Committee
determined not to award a bonus to Dr. Bell with respect to such year. The
Committee also favors performance-based bonuses relating to achievement of
milestone objectives.
CCS INCENTIVE BONUS PLAN. At its June 16, 1998 meeting, Amerigon's Board of
Directors adopted a "Project CCS Incentive Bonus Plan" to provide incentives for
all employees to contribute to the success of the CCS project. All full-time
employees of Amerigon on or after January 1, 1998 are eligible participants in
the Plan. Bonuses under the Plan are awarded and calculated based on whether
certain sales and production goals for Climate Control Seats are achieved, with
five different "tiers" of job classifications
26
<PAGE>
being eligible for bonuses of varying percentages of annual salary. These
percentages increase proportionally with the degree of involvement in the
development of CCS products of the employees in that classification. The
production goals are: (1) receiving a supply contract for the installation of a
fixed number of CCS units on model year 2000 vehicles, (2) receiving final
authorization of product specifications and an authorization to ship products by
April 1, 1999, and (3) completion of the first 90 days of production in
substantial compliance with customer specifications and timetables. The largest
bonus payable under the Plan would be awarded to "Tier I" employees (i.e., the
Chief Executive Officer and the Chief Operating Officer) if all three goals were
met, and would be equal to one year's salary.
The Board concluded that the first goal was substantially met in 1998 and
awarded and paid bonuses under the program to all eligible employees, with the
exception of Messrs. Bell, Weisbart and Davis, who were awarded the appropriate
bonuses but who have had their payments deferred due to Amerigon's liquidity
situation.
STOCK OPTIONS. Options to purchase Amerigon's Common Stock may be granted
to executive officers under the 1997 Stock Option Plan in the discretion of the
Compensation Committee. The Committee believes that such option grants link the
interests of management and shareholders by incentifying management to build
shareholder value.
Stock options are typically granted to an executive officer as an inducement
to commence employment with Amerigon. Thereafter, additional grants of stock
options may be made to such executive officer in the discretion of the
Compensation Committee to reward the performance of such officer or for other
reasons. In determining option grants, the Compensation Committee considers a
number of factors (including the officer's performance, his or her position
within Amerigon, and the number of shares or options currently held by the
officer), although the Compensation Committee does not attach greater weight to
any one factor over the others.
INTERNAL REVENUE CODE SECTION 162(M). Given the current compensation levels
of Amerigon's executive officers and Amerigon's reported losses for federal
income tax purposes, the Committee does not presently anticipate that the
limitation contained in Section 162(m) of the Internal Revenue Code will affect
the deductibility of compensation paid by Amerigon to its executive officers.
CONTRACTUAL RESTRICTION ON INCREASES IN EXECUTIVE COMPENSATION. In
connection with Amerigon's public offering completed in March, 1997, Amerigon
agreed with the underwriter for the public offering that Amerigon 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.
Roy A. Anderson
Michael R. Peevey
John W. Clark
27
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1998, Roy A. Anderson, Michael R.
Peevey and John W. Clark comprised the Compensation Committee.
Dr. Bell and Mr. Clark have interests in matters submitted to the
shareholders. See "INTERESTS OF CERTAIN PERSONS IN CERTAIN MATTERS TO BE ACTED
UPON" on page 6, above.
EXECUTIVE COMPENSATION, PENSION PLANS & OTHER ARRANGEMENTS
EXECUTIVE BIOGRAPHIES
The positions and biographical descriptions of DR. BELL and MR. WEISBART are
included under "NOMINEES FOR THE BOARD OF DIRECTORS."
MR. COKER, 45, is Vice President of Sales and Marketing, a position he has
held since joining Amerigon 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, 45, has served as Vice President of Quality and Operations since
1994. He joined Amerigon in December 1993 as Vice President of Quality.
Immediately prior to joining Amerigon, Mr. Mertes was Director of Quality at TRW
Sensor Operations, a unit of TRW Inc., for two years.
MR. DAVIS, 52, served as Amerigon's Chief Financial Officer, a position he
had held since joining Amerigon in June 1997. Previously, he was Chief Financial
Officer for Broadcom Corporation from 1995 through 1997 and Chief Financial
Officer for PairGain Technologies from 1991 through 1994. Mr. Davis received his
bachelor's degree from the University of California at Santa Barbara in 1968 and
a master's degree in business administration from the University of California
at Los Angeles in 1974. Mr. Davis resigned from Amerigon as of April 2, 1999.
28
<PAGE>
SUMMARY EXECUTIVE COMPENSATION TABLE
The following table sets forth information on the compensation of Amerigon's
Chief Executive Officer and its three most highly compensated executive officers
earning at least $100,000 in 1998 (the "Named Executive Officers") for each of
the three most recent fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-----------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING
NAME/POSITION YEAR SALARY BONUS OPTIONS(#)(3)
- -------------------------------------------------- ---- -------- ----------- -----------------
Lon E. Bell....................................... 1998 $144,070 $ 57,705(1) 8000
<S> <C> <C> <C> <C>
Chairman of the Board and 1997 $134,784 $ 0 0
Chief Executive Officer 1996 $140,071 $ 0 0
Richard A. Weisbart............................... 1998 $190,337 $ 79,205(1) 16,000
President and Chief Operating Officer 1997 $120,692 $ 45,000(2) 30,000
Daniel R. Coker................................... 1998 $150,722 $ 42,669 14,000
Vice President of Sales and Marketing 1997 $138,170 $ 36,667 900
1996 $ 91,664 $ 21,528 1,000
James L. Mertes................................... 1998 $104,942 $ 41,401 8,000
Vice President of Quality and Operations 1997 $105,234 $ 20,500 2,221
1996 $ 81,920 $ 9,500 0
Scott O. Davis.................................... 1998 $117,895 $ 9,787(1) 0
Chief Financial Officer 1997 $ 61,302 $ 8,000 8,000
</TABLE>
- ------------------------
(1) Bonus was awarded in 1998, but has not yet been paid.
(2) Bonus was awarded in 1997, but was paid in 1998.
(3) The number of stock options have been adjusted to reflect the 1-for-5
reverse stock split that became effective on January 26, 1999.
29
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table presents additional information concerning the stock
options shown in the Summary Compensation Table and granted to the named
executive officers for fiscal year 1998:
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES FOR OPTION TERM
OPTION IN FISCAL EXERCISE OR EXPIRATION ---------------------
NAME/POSITION GRANTED YEAR BASE PRICE DATE 5% 10%
- ---------------------------------------- ----------- ----------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lon E. Bell............................. 8,000 6.6% $ 3.45 6/14/2008 $ 17,357 $ 43,987
Chairman of the Board and
Chief Executive Officer
Richard A. Weisbart..................... 16,000 13.2% $ 3.45 6/14/2008 $ 34,715 $ 87,975
President and Chief Operating Officer
Daniel R. Coker......................... 6,000 5.0% $ 3.45 6/14/2008 $ 13,018 $ 32,990
Vice President of Marketing 8,000 6.6% $ 11.40 1/26/2008 $ 57,335 $ 145,228
and Sales
Scott Davis............................. 0 0% n/a n/a n/a n/a
James L. Mertes......................... 6,000 5.0% $ 3.45 6/14/2008 $ 13,018 $ 32,990
Vice President of Quality 2,000 1.7% $ 11.40 1/26/2008 $ 14,334 $ 36,322
and Operations
</TABLE>
- ------------------------
Note: The number of stock options have been adjusted to reflect the 1-for-5
reverse stock split that became effective on January 26, 1999.
AGGREGATE OPTION EXERCISES AND YEAR-END VALUES
None of the Named Executive Officers exercised any options during 1998, or
held "in the money" options as of December 31, 1998, which were granted to them
by Amerigon. The following table sets forth information concerning the number of
unexercised stock options held by the named executive officers on December 31,
1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT DECEMBER 31, 1998
----------------------------
NAME EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Lon E. Bell.................................................... 0 8,000
Richard A. Weisbart............................................ 9,999 36,001
Scott O. Davis................................................. 2,667 5,333
Daniel R. Coker................................................ 900 14,000
James L. Mertes................................................ 1,688 8,533
</TABLE>
- ------------------------
Note: The number of stock options have been adjusted to reflect the 1-for-5
reverse stock split that became effective on January 26, 1999.
30
<PAGE>
CERTAIN TRANSACTIONS
Dr. Bell, Mr. Clark and certain affiliates of Dr. Bell are parties to
certain business contracts and arrangements of Amerigon. In addition to
reviewing the following paragraphs, please refer to "INTERESTS OF CERTAIN
PERSONS IN MATTERS TO BE ACTED UPON" on page 6, above.
Concurrent with the execution of the Securities Purchase Agreement, an
affiliate of the Investors provided a secured credit facility (the "Bridge
Loan") to the Company for up to $1.2 million which bears interest at 10% per
annum and matures on the earlier of September 30, 1999 or the completion of the
Financing Transaction. As additional consideration for the Bridge Loan, the
Company issued detachable five year warrants to purchase 300,000 shares of Class
A Common Stock at $1.03 per share, subject to adjustment. The bridge warrants
will be cancelled upon the completion of the Financing Transaction. The Bridge
Loan is secured by a lien on virtually all of the Company's assets and there are
numerous conditions to making each borrowing under the Bridge Loan. The Bridge
Loan is necessary to allow the Company to continue operations pending the
closing of the Financing Transaction.
Prior to the formation of AEVT Incorporated, Dr. Bell and Amerigon agreed
that Dr. Bell would personally reimburse Amerigon for the funds expended by
Amerigon since August 1, 1998 relating to the operation of the electric vehicle
program in exchange for a 15% interest in the company that would eventually be
formed to hold Amerigon's electric vehicle assets. Dr. Bell's obligation to make
payments to reimburse Amerigon then started to accrue, and eventually totaled
approximately $88,000. This obligation was satisfied on March 30, 1999, when Dr.
Bell made an $88,000 payment to Amerigon, and received 15% of the common stock
of AEVT.
Amerigon leases its current facilities from Dillingham Partners, an entity
that is 60% controlled by Dr. Bell. Amerigon has determined that the lease is on
terms no less favorable to Amerigon than those which could be obtained from
unaffiliated parties.
Dr. Bell, Chairman of the Board and the principal shareholder of Amerigon,
co-founded CALSTART in 1992, served as its interim President, and for the last
five years has served on CALSTART's Board of Directors and is a member of its
Executive Committee. Included in accounts receivable at December 31, 1997 and
1998 was a receivable owed to Amerigon from CALSTART of $153,000 and $41,000,
respectively, relating primarily to amounts withheld from payments made by
CALSTART under several grant programs.
Dr. David Bell, Dr. Lon Bell's son, is employed as a full time
director-level employee in Amerigon's electric vehicle and radar divisions. Dr.
David Bell was hired on terms and conditions and with compensation and
responsibilities, standard and consistent with employees in similar positions.
INDEPENDENT ACCOUNTANTS
PriceWaterhouseCoopers LLP served as Amerigon's independent accountants for
the fiscal year ended December 31, 1998, and is expected to continue to serve in
such capacity for the current year. A representative of PriceWaterhouseCoopers
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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of the relevant forms and written representations
furnished to Amerigon, there were five reports required by Section 16(a) of the
Exchange Act that were not timely filed during the fiscal year ended December
31, 1998. Each of Messrs. Bell, Clark, Peevey, and Hutchcraft reported
transactions on a Form 5, Annual Statement of Changes in Beneficial Ownership,
which was not timely filed; Mr. Coker failed to report a change of beneficial
ownership by timely filing a Form 5; and Messrs. Bell and Hutchcraft reported
transactions on a Form 4, Statement of Changes of Beneficial Ownership, which
was not timely filed.
31
<PAGE>
OTHER MATTERS
If any matters not referred to in this proxy statement should properly come
before the meeting, your "proxy" will vote your shares represented by the proxy
in accordance with his or her judgment. We are not aware of any such matters
which may be presented for action at the meeting. Your proxy may also vote your
shares on matters regarding the conduct of the meeting.
WHERE YOU CAN FIND MORE INFORMATION
As required by law, Amerigon files reports, proxy statements and other
information with the Securities and Exchange Commission. These reports, proxy
statements and other information contain additional information about Amerigon.
You can inspect and copy these materials at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the following Regional Offices of the
Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7
World Trade Center, Suite 1300, New York, New York 10048. For further
information concerning the Commission's public reference rooms, you may call the
Commission at 1-800-SEC-0330. Some of this information may also be accessed on
the World Wide Web through the Commission's Internet address at
"http://www.sec.gov."
The Commission allows Amerigon to "incorporate by reference" information
into this proxy statement, which means that Amerigon can disclose important
information by referring you to another document filed separately with the
Commission. Information incorporated by reference is considered part of this
proxy statement, except to the extent that the information is superseded by
information in this proxy statement. This proxy statement incorporates by
reference the information contained in the following document previously filed
by Amerigon with the Commission (Commission file number 0-21810):
Amerigon's Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
If you are a stockholder of Amerigon and would like to receive a copy of any
document incorporated by reference into this proxy statement (which will not
include any of the exhibits to the document other than those exhibits that are
themselves specifically incorporated by reference into this proxy statement),
you should write to Amerigon Incorporated, 5462 Irwindale Avenue, Irwindale,
California 91706. In order to ensure timely delivery of the documents you
request, you should make your request by May 10, 1999.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN (OR INCORPORATED BY
REFERENCE INTO) THIS PROXY STATEMENT. AMERIGON HAS NOT AUTHORIZED ANYONE TO GIVE
ANY INFORMATION DIFFERENT FROM THE INFORMATION CONTAINED IN (OR INCORPORATED BY
REFERENCE INTO) THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED APRIL 21,
1999. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT IS ACCURATE AS OF ANY LATER DATE, AND THE MAILING OF THIS PROXY
STATEMENT TO STOCKHOLDERS SHALL NOT CREATE ANY IMPLICATION TO THE CONTRARY.
By Order of the Board of Directors,
/s/ RICHARD A. WEISBART
President and Chief Operating Officer
32
<PAGE>
APPENDIX A
AMERIGON INCORPORATED
SECURITIES PURCHASE AGREEMENT
MARCH 29, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<C> <S> <C>
ARTICLE I. PURCHASE AND SALE OF STOCK AND WARRANTS......................................................... A-1
1.1 Sale and Issuance of Series A Preferred Stock and Warrants...................................... A-1
1.2 Closing......................................................................................... A-1
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................... A-1
2.1 Organization, Good Standing and Qualification................................................... A-2
2.2 Capitalization and Voting Rights................................................................ A-2
2.3 Subsidiaries.................................................................................... A-2
2.4 Authorization................................................................................... A-3
2.5 Valid Issuance of Preferred and Class A Common Stock............................................ A-3
2.6 Consents........................................................................................ A-3
2.7 Offering........................................................................................ A-3
2.8 Litigation...................................................................................... A-4
2.9 Proprietary Information Agreements.............................................................. A-4
2.10 Patents and Trademarks.......................................................................... A-4
2.11 Compliance with Other Instruments............................................................... A-4
2.12 Agreements; Action. Except as set forth on the Disclosure Schedules:............................ A-5
2.13 Related-Party Transactions...................................................................... A-5
2.14 SEC Documents and Financial Statements.......................................................... A-6
2.15 Changes......................................................................................... A-6
2.16 Tax Returns..................................................................................... A-6
2.17 Permits......................................................................................... A-7
2.18 Environmental and Safety Laws................................................................... A-7
2.19 Disclosure...................................................................................... A-7
2.20 Registration Rights............................................................................. A-7
2.21 Current Public Information...................................................................... A-7
2.22 No General Solicitation......................................................................... A-7
2.23 No Integrated Offering.......................................................................... A-7
2.24 Corporate Documents............................................................................. A-8
2.25 Title to Property and Assets.................................................................... A-8
2.26 Foreign Corrupt Practices....................................................................... A-8
2.27 Insurance....................................................................................... A-8
2.28 Employee Benefit Plans.......................................................................... A-8
2.29 Labor Agreements and Actions.................................................................... A-8
2.30 Year 2000 Compliance............................................................................ A-8
2.31 Computer and Communication Infrastructure....................................................... A-9
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS............................................... A-9
3.1 Authorization................................................................................... A-9
3.2 Purchase Entirely for Own Account............................................................... A-9
3.3 Accredited Investor............................................................................. A-9
3.4 Restricted Securities........................................................................... A-9
3.5 Legends......................................................................................... A-9
ARTICLE IV. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING................................................ A-10
4.1 Representations and Warranties.................................................................. A-10
4.2 Performance..................................................................................... A-10
4.3 Compliance Certificate.......................................................................... A-10
4.4 Qualifications.................................................................................. A-10
</TABLE>
i
<PAGE>
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
PAGE
---------
<C> <S> <C>
4.5 Shareholder Approval............................................................................ A-10
4.6 Certificate of Determination.................................................................... A-10
4.7 Due Diligence................................................................................... A-10
4.8 Proceedings and Documents....................................................................... A-10
4.9 No Material Adverse Effect...................................................................... A-10
4.10 Proceeding or Litigation........................................................................ A-10
4.11 Opinion of Company Counsel...................................................................... A-10
4.12 Redemption...................................................................................... A-11
4.13 Investors' Rights Agreement..................................................................... A-11
4.14 Board of Directors.............................................................................. A-11
4.15 Loan Documents.................................................................................. A-11
ARTICLE V. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.............................................. A-11
5.1 Representations and Warranties.................................................................. A-11
5.2 Payment of Purchase Price....................................................................... A-11
5.3 Qualifications.................................................................................. A-11
5.4 Shareholder Approval............................................................................ A-11
5.5 Investment Representation....................................................................... A-11
5.6 Credit Agreement................................................................................ A-11
ARTICLE VI. OTHER AGREEMENTS............................................................................ A-12
6.1 Conduct of Business............................................................................. A-12
6.2 Access to Information........................................................................... A-13
6.3 Other Discussions; Break Up Arrangement......................................................... A-13
6.4 Proxy Statement................................................................................. A-14
6.5 Shareholders' Meeting........................................................................... A-14
6.6 Public Disclosure............................................................................... A-14
6.7 Reasonable Efforts.............................................................................. A-14
6.8 Board of Directors.............................................................................. A-14
6.9 Bridge Loan..................................................................................... A-14
6.10 Notification of Certain Matters................................................................. A-14
6.11 Indemnification................................................................................. A-15
ARTICLE VII. MISCELLANEOUS................................................................................. A-15
7.1 Survival........................................................................................ A-15
7.2 Successors and Assigns.......................................................................... A-15
7.3 Governing Law................................................................................... A-15
7.4 Titles and Subtitles............................................................................ A-15
7.5 Notices......................................................................................... A-15
7.6 Finder's Fee.................................................................................... A-15
7.7 Expenses........................................................................................ A-16
7.8 Amendments and Waivers.......................................................................... A-16
7.9 Severability.................................................................................... A-16
7.10 Termination..................................................................................... A-16
7.11 Aggregation of Stock............................................................................ A-16
7.12 Entire Agreement................................................................................ A-16
7.13 Counterparts.................................................................................... A-16
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<S> <C>
SCHEDULE A Schedule of Investors
SCHEDULE B Disclosure Schedules
EXHIBIT A Certificate of Determination
EXHIBIT B Contingent Common Stock Purchase Warrants
EXHIBIT C Investors' Rights Agreement
EXHIBIT D Opinion of Counsel for the Company
EXHIBIT E Share Exchange Agreement
EXHIBIT F Credit Agreement
EXHIBIT G Articles of Incorporation
EXHIBIT H Bylaws
</TABLE>
iii
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is made on the 29th day of March, 1999,
by and among Amerigon Incorporated, a California corporation (the "Company"),
and the investors listed on SCHEDULE A hereto (each, an "Investor" and
collectively, the "Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE I.
PURCHASE AND SALE OF STOCK AND WARRANTS
1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK AND WARRANTS.
(a) The Company shall adopt and file with the Secretary of State of
California on or before the Closing (as defined below) the Certificate of
Determination of Rights, Preferences and Privileges of the Series A
Preferred Stock in the form attached hereto as EXHIBIT A (the "Certificate
of Determination").
(b) Subject to the terms and conditions of this Agreement, each Investor
agrees, severally, to purchase at the Closing and the Company agrees to sell
and issue to each Investor at the Closing, (i) that number of shares of
Company's Series A Preferred Stock, no par value ("Series A Preferred
Stock"), which is convertible into the Company's Class A Common Stock, no
par value ("Class A Common Stock") and (ii) Warrants (the "Warrants") to
purchase that number of shares Class A Common Stock (the "Warrant Shares")
set forth opposite each Investor's name on SCHEDULE A hereto for the
purchase price set forth thereon. The Warrants will be subject to the terms
and conditions set forth in the form of Contingent Common Stock Purchase
Warrants attached hereto as EXHIBIT B (the "Stock Purchase Warrants"). The
Series A Preferred Stock being purchased hereunder, the Class A Common Stock
issuable upon conversion of such Series A Preferred Stock, the Warrants and
the Warrant Shares are collectively referred to herein as the "Securities."
1.2 CLOSING.
The purchase and sale of the Series A Preferred Stock and the Warrants being
purchased hereunder shall take place at the offices of O'Melveny & Myers LLP,
400 South Hope Street, Los Angeles, California 90071, at 10:00 A.M., on June 2,
1999, or at such other time and place as the Company and the Investors mutually
agree upon orally or in writing (which time and place are designated as the
"Closing"). At the Closing, the Company shall deliver to each Investor a
certificate representing the Series A Preferred Stock and duly executed Stock
Purchase Warrants representing the Warrants that such Investor is purchasing
against payment of the purchase price therefor by bank cashier's check, wire
transfer, cancellation of indebtedness or any combination thereof. In the event
that payment by an Investor is made, in whole or in part, by cancellation of
indebtedness, then such Investor shall surrender to the Company for cancellation
at the Closing any evidence of such indebtedness or shall execute an instrument
of cancellation in form and substance acceptable to the Company. In addition, at
the Closing the Company shall deliver to any Investor choosing to pay any part
of the purchase price of the Series A Preferred Stock and Warrants by
cancellation of indebtedness, a check in the amount of any interest accrued on
such indebtedness through the Closing.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedules to this Agreement (the
"Disclosure Schedules"), each such schedule being numbered to correspond to the
section of this Agreement to which it applies, the Company hereby represents and
warrants to each Investor that:
A-1
<PAGE>
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has the requisite corporate power to own its
properties and carry on its business as presently conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which it has employees, maintains offices, leases or owns real property or is
otherwise required to be so qualified, except where the failure to be so
qualified would not have a Material Adverse Effect (as defined below). For
purposes of this Agreement, "Material Adverse Effect" shall mean any event,
circumstance or condition pertaining to the Company's business, assets,
liabilities or operations that, individually or in the aggregate, is, or could
reasonably be expected to be, materially adverse to the business, operations,
assets or liabilities (including without limitation contingent liabilities),
employee relationships, customer or supplier relationships, prospects, projected
results of operations or cash flow for the years ending December 31, 1999, 2000
or 2001, or the condition (financial or otherwise) of the Company.
2.2 CAPITALIZATION AND VOTING RIGHTS. The authorized capital of the
Company consists, or will consist immediately prior to the Closing, of:
(a) PREFERRED STOCK. 5,000,000 shares of Preferred Stock, no par value
(the "Preferred Stock"), of which 9,000 shares have been designated Series A
Preferred Stock and up to all of which will be sold pursuant to this
Agreement. The rights, privileges and preferences of the Series A Preferred
Stock will be as stated in the Company's Certificate of Determination. No
other series of Preferred Stock has been designated and, except for the
shares of Series A Preferred Stock being sold pursuant to this Agreement, no
shares of Preferred Stock are, or will be at the Closing, outstanding.
(b) COMMON STOCK. 20,000,000 shares of Class A Common Stock, of which
2,510,088 shares are issued and outstanding, and 600,000 shares of Class B
Common Stock, no par value ("Class B Common Stock"), none of which are
issued and outstanding as of the date hereof. The Class A Common Stock and
Class B Common Stock are together referred to herein as "Common Stock." The
holders of the Class B Common Stock and the number of shares held by such
shareholders are set forth on the Disclosure Schedules.
(c) The outstanding shares of Common Stock are all duly and validly
authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable state and federal laws concerning the
issuance of securities.
(d) Except for (i) the conversion privileges of the Series A Preferred
Stock to be issued under this Agreement, (ii) the rights provided in the
Investors' Rights Agreement, (iii) currently outstanding options to purchase
210,169 shares of Class A Common Stock granted to consultants or employees
pursuant to the Company's Stock Option Plans (the "Option Plans") listed on
the Disclosure Schedules, and (iv) the options, warrants or rights set forth
on the Disclosure Schedules, there are not outstanding any options,
warrants, rights (including conversion or preemptive rights) or agreements
for the purchase or acquisition from the Company of any shares of its
capital stock or securities convertible into or exercisable for shares of
capital stock. In addition to the aforementioned options, the Company has
reserved an additional 52,848 shares of its Class A Common Stock for
purchase upon exercise of options to be granted in the future under the
Option Plans. All such shares of capital stock issuable pursuant to the
rights or agreements set forth in this Section 2.2(d) will be, upon
issuance, duly and validly issued, fully paid and nonassessable. The Company
is not a party or subject to any agreement or understanding, and, to the
Company's knowledge, there is no agreement or understanding between any
persons and/or entities, which affects or relates to the voting or giving of
written consents with respect to any security or by a director of the
Company.
2.3 SUBSIDIARIES. Except as set forth on the Disclosure Schedules, the
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, association, or other business entity. Except as set
forth on the Disclosure Schedules, the Company is not a participant in any joint
venture, partnership, or similar arrangement.
A-2
<PAGE>
2.4 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the Stock Purchase Warrants, and the Investors'
Rights Agreement (attached hereto as Exhibit C), the performance of all
obligations of the Company hereunder and thereunder, and the authorization (or
reservation for issuance), sale and issuance of the Series A Preferred Stock and
the Warrants being sold hereunder, the Class A Common Stock issuable upon
conversion of the Series A Preferred Stock and the Warrant Shares has been taken
or will be taken prior to the Closing. This Agreement, the Stock Purchase
Warrants, and the Investors' Rights Agreement constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
2.5 VALID ISSUANCE OF PREFERRED AND CLASS A COMMON STOCK. The Series A
Preferred Stock that is being purchased by the Investors hereunder is duly
authorized and, when issued, sold and delivered in accordance with the terms of
this Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and will be free of liens, claims, and
encumbrances of the Company and of restrictions on transfer, other than
restrictions on transfer under applicable state and federal securities laws. The
Class A Common Stock issuable upon conversion of the Series A Preferred Stock
purchased under this Agreement is duly authorized and reserved for issuance and,
upon issuance in accordance with the terms of the Certificate of Determination,
will be duly and validly issued, fully paid and nonassessable and will be free
of liens, claims and encumbrances of the Company and of restrictions on
transfer, other than restrictions on transfer under applicable state and federal
securities laws. The Warrants are duly authorized and, upon issuance in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable, and will be free of liens, claims and encumbrances of the
Company and of restrictions on transfer, other than restrictions on transfer
under applicable state and federal securities laws. The Warrant Shares are duly
authorized and reserved for issuance, and, upon exercise of the Warrants in
accordance with the terms thereof, will be validly issued, fully paid and
nonassessable, and will be free of liens, claims, and encumbrances of the
Company and of restrictions on transfer, other than restrictions on transfer
under applicable state and federal securities laws.
2.6 CONSENTS. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for: (i) the filing of a Notice of Transaction pursuant
to Section 25102(f) of the California Corporate Securities Law of 1968, as
amended, and the rules thereunder, which filing will be effected within the time
prescribed by law; (ii) the filing of a Form D pursuant to Regulation D under
the Securities Act of 1933, as amended (the "Securities Act"), which filing will
be effected within the required statutory period; (iii) the filing and
distribution of a proxy statement pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") with respect to
the special meeting of shareholders to be held to approve this Agreement and the
transactions and agreements contemplated hereby; (iv) such other filings
required pursuant to applicable federal and state securities laws and blue sky
laws, which filings will be effected within the required statutory period; (v)
the approval of this Agreement and the transactions and agreements contemplated
hereby by the requisite vote of the Company's shareholders; (vi) the consents
set forth on the Disclosure Schedules; and (vii) the filing of an Application
for the Listing of Additional Shares with Nasdaq.
2.7 OFFERING. Subject to the truth and accuracy of each Investor's
representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Series A Preferred Stock and the Warrants as contemplated by
this Agreement are exempt from the registration requirements of the Securities
Act , and the qualification or registration requirements of applicable state
securities laws. Neither the Company
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nor any authorized agent acting on its behalf will take any action hereafter
that would cause the loss of such exemptions.
2.8 LITIGATION. There is no action, suit, proceeding or investigation
pending, or to the Company's knowledge, currently threatened against the
Company, except as which individually or in the aggregate would not have a
Material Adverse Effect. The Company is not a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. Except as set forth on the Disclosure Schedules,
there is no material action, suit, proceeding or investigation by the Company
currently pending or that the Company intends to initiate.
2.9 PROPRIETARY INFORMATION AGREEMENTS. Each employee, officer and
consultant of the Company has executed a proprietary information and inventions
agreement in the form set forth on the Disclosure Schedules. The Company, after
reasonable investigation, is not aware that any of its employees, officers or
consultants is in violation thereof, and the Company will use its best efforts
to prevent any such violation.
2.10 PATENTS AND TRADEMARKS. The Company owns or licenses from another
person all inventions, patents, patent rights, computer software, trademarks,
trademark rights, service marks, service mark rights, trade names, trade name
rights and copyrights (collectively, the "Intellectual Property") necessary for
its business as presently conducted without any conflict with or infringement of
the valid rights of others and the lack of which could materially and adversely
affect the operations or condition, financial or otherwise, of the Company, and
the Company has not received any notice of infringement upon or conflict with
the asserted rights of others. The Disclosure Schedules contain a complete list
of all such patents, patent rights, registered trademarks, registered service
marks, registered copyrights, all agreements related to the foregoing, and all
agreements pursuant to which the Company licenses Intellectual Property from or
to a third party (excluding "shrink wrap" license agreements relating solely to
off the shelf software which is not material to the Company's business). All
Intellectual Property owned by the Company is owned free and clear of all liens,
adverse claims, encumbrances, or restrictions, except for restrictions contained
in the terms of the licenses listed in the Disclosure Schedules. All
Intellectual Property licensed by the Company is the subject of a license
agreement which is legal, valid, binding and enforceable and in full force and
effect. The consummation of the transactions contemplated hereby will not result
in the termination or impairment of the Company's ownership of, or right to use,
any Intellectual Property. The Company has a valuable body of trade secrets,
including know-how, concepts, business plans, and other technical data (the
"Proprietary Information") for the development, manufacture and sale of its
products. The Company has the right to use the Proprietary Information free and
clear of any rights, liens, encumbrances or claims of others. The Company is not
aware, after reasonable investigation, that any of its employees is obligated
under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the Company or that would conflict with the
Company's business.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of this Agreement, the Investors' Rights Agreement, and the Stock
Purchase Warrants by the Company, the performance by the Company of its
obligations under the Certificate of Determination, and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance, as applicable, of the
Series A Preferred Stock being sold pursuant hereto, the Class A Common Stock
issuable upon the conversion of such Series A Preferred Stock, the Warrants and
the Warrant Shares) will not (i) result in a violation of the Company's Articles
of Incorporation or Bylaws, or (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its properties is subject, or result in a violation of any
material law, rule, regulation, order, judgment or decree (including U.S.
federal and state securities laws and regulations) applicable to the Company or
by which any property or asset of the Company is bound or affected. The Company
is not in violation of its
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Articles of Incorporation, Bylaws or other organizational documents, or of any
judgment, order, writ, decree, law, rule or regulation to which the Company or
its properties is subject. The Company is not in default (and no event has
occurred which, with notice or lapse of time or both, would put the Company in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company is a party or any of its properties is subject. The Company is not in
violation of the listing requirements of the Nasdaq Small Cap market ("NASDAQ")
and does not reasonably anticipate that the Class A Common Stock will be
delisted by NASDAQ for the foreseeable future.
2.12 AGREEMENTS; ACTION. Except as set forth on the Disclosure Schedules:
(a) there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, affiliates or any
affiliate thereof, other than the agreements explicitly contemplated hereby.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the
Company is a party or by which it is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company, in excess of
$50,000, other than obligations of, or payments to, the Company arising from
purchase or sale agreements entered into in the ordinary course of business,
(ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company, other than licenses arising from the purchase
of "off the shelf" or other standard products, or (iii) provisions
restricting the development, manufacture or distribution of the Company's
products or services.
(c) Since the date of the most recent audited balance sheet provided to
the Investors by the Company, the Company has not (i) declared or paid any
dividends or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for
money borrowed or any other liabilities individually in excess of $50,000,
(iii) made any loans or advances to any person, other than ordinary advances
for travel expenses, or guaranteed the obligations of any person, or (iv)
sold, exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its inventory in the ordinary course of business.
(d) There are no other agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to
which the Company is a party or by which it is bound that are material to
the conduct of the Company's business.
(e) For the purposes of subsections (b) and (c) above, all indebtedness,
liabilities, agreements, understandings, instruments, contracts and proposed
transactions involving the same person or entity (including persons or
entities the Company has reason to believe are affiliated therewith) shall
be aggregated for the purpose of meeting the individual minimum dollar
amounts of such subsections.
2.13 RELATED-PARTY TRANSACTIONS. Except as set forth in the Disclosure
Schedules, no employee, officer or director of the Company or member of his or
her immediate family is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any of them. To the
best of the Company's knowledge, none of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees, officers or
directors of the Company and members of their immediate families may own less
than 5% of the outstanding stock of one or more publicly traded companies that
may compete with the Company. Except as set forth on the Disclosure Schedules,
no employee, officer or director of the Company or member of his or her
immediate family is directly or indirectly interested in any material contract
with the Company.
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2.14 SEC DOCUMENTS AND FINANCIAL STATEMENTS. Since January 1, 1997, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein, with amendments read together with underlying
documents, are referred to herein as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
U.S. generally accepted accounting principles, consistently applied, during the
periods involved and fairly and accurately present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
most recent audited balance sheet provided to the Investors by the Company, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of such
financial statements and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in such financial statements,
which, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. Except as disclosed in such
financial statements, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
2.15 CHANGES. Except as set forth on the Disclosure Schedules, since
December 31, 1998 there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Company's
financial statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties,
financial condition, operating results or business of the Company;
(c) any waiver by the Company of a valuable right or of a material debt
owed to it;
(d) any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the assets, properties, financial
condition, operating results or business of the Company;
(e) any amendment to or termination of a material contract or
arrangement by which the Company or any of its assets or properties is bound
or subject;
(f) any material change in any compensation arrangement or agreement
with any employee; or
(g) any agreement or commitment by the Company to do any of the things
described in this Section 2.15.
2.16 TAX RETURNS. The Company has timely filed all tax returns (federal,
state and local) required to be filed by it and such tax returns are true and
correct in all material respects. In addition, (i) the Company has not requested
any extension of time within which to file any tax returns in respect of any
fiscal year
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which have not since been filed and no request for waivers of the time to assess
any taxes are pending or outstanding, (ii) no claim for taxes has become a lien
against the property of the Company or is being asserted against the Company
other than liens for taxes not yet due and payable, (iii) no audit of any tax
return of the Company is being conducted by a tax authority, (iv) no extension
of the statute of limitations on the assessment of any taxes has been granted
to, by or applied for by, the Company and is currently in effect, and (v) there
is no agreement, contract or arrangement to which the Company is a party that
may result in the payment of any amount that would not be deductible by reason
of Sections 280G, 162 or 404 of the Internal Revenue Code.
2.17 PERMITS. The Company has all material franchises, permits, licenses
and any similar authority necessary for the conduct of its business ("Permits").
The Company is not in default under any of such Permits. The Disclosure
Schedules set forth an accurate and complete list of all such Permits.
2.18 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in violation of any
applicable material statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
2.19 DISCLOSURE. The Company has fully provided each Investor with all the
information that such Investor has requested for deciding whether to purchase
the Series A Preferred Stock and Warrants and all information that the Company
believes is reasonably necessary to enable such Investor to make such decision.
This Agreement (including all the Exhibits and Schedules hereto read together
with the SEC documents) does not contain any untrue statement of a material fact
or omit a material fact necessary to make the statements herein or therein not
misleading in light of the circumstances under which they were made.
2.20 REGISTRATION RIGHTS. Except as set forth on the Disclosure Schedules
and the rights granted pursuant to the Investors' Rights Agreement, the Company
has not granted or agreed to grant any registration rights, including piggyback
rights, to any person or entity.
2.21 CURRENT PUBLIC INFORMATION. The Company is currently eligible to
register the resale of its Class A Common Stock on a registration statement on
Form S-3 under the Securities Act.
2.22 NO GENERAL SOLICITATION. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any "general solicitation," as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.
2.23 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offerers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act.
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2.24 CORPORATE DOCUMENTS. Except for amendments necessary to satisfy
representations and warranties or conditions contained herein (the form of which
amendments has been approved by the Investors), the Articles of Incorporation
and Bylaws of the Company are in the form attached hereto as EXHIBIT G and
EXHIBIT H, respectively.
2.25 TITLE TO PROPERTY AND ASSETS. The property and assets the Company
owns are owned by the Company free and clear of all mortgages, liens, loans and
encumbrances, except (i) as reflected in the Company's financial statements
included in the SEC Documents, (ii) for mechanic's, workmen's, repairmen's,
warehousemen's, carrier's or similar liens arising or incurred in the ordinary
course of business and which, individually or in the aggregate, are not
material, and (iii) for statutory liens for the payment of current taxes that
are not yet delinquent. With respect to the property and assets it leases, the
Company is in compliance with such leases and holds a valid leasehold interest
free of any liens, claims or encumbrances, subject to clauses (i), (ii) and
(iii) above.
2.26 FOREIGN CORRUPT PRACTICES. Neither the Company nor any director,
officer, agent, employee or other person acting on behalf of the Company has, in
the course of his actions for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
2.27 INSURANCE. The Disclosure Schedules set forth a complete and accurate
list of all insurance policies maintained by the Company and a summary of the
coverage provided by such policies.
2.28 EMPLOYEE BENEFIT PLANS. The Disclosure Schedules set forth a complete
and accurate list of all employment contracts, deferred compensation agreements,
bonus plans, incentive plans, profit sharing plans, retirement agreements or
other agreements, plans or arrangements relating to compensation or benefits
provided to the Company's employees. The Company has complied in all material
respects with all applicable state and federal equal employment opportunity and
other laws related to employment and the agreements, plans and arrangements set
forth on the Disclosure Schedules. The Disclosure Schedules contain a complete
and accurate list of all of the Company's employees, their current rates of
compensation, date of hire, and job title.
2.29 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or subject
to (and none of its assets or properties is bound by or subject to) any written
or oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the Company's knowledge, has
sought to represent any of the employees, representatives or agents of the
Company. There is no strike or other labor dispute involving the Company
pending, or to the Company's knowledge, threatened, that could have a material
adverse effect on the assets, properties, financial condition, operating results
or business of the Company, nor is the Company aware of any labor organization
activity involving its employees. The Company is not aware that any officer or
key employee, or that any group of key employees, intends to terminate their
employment with the Company nor does the Company have a present intention to
terminate the employment of any of the foregoing. The employment of each officer
and employee of the Company is terminable at the will of the Company.
2.30 YEAR 2000 COMPLIANCE. All of the Company's products currently being
sold and under development and all computer software and hardware (including
microcode, firmware, system and application programs, files, databases, computer
services and microcontrollers), including those embedded in computer and
noncomputer equipment contained in the Company's products currently being sold
and under development are Year 2000 Compliant, except to the extent that they
may be used or interfaced with other software, data or operating systems that
are not Year 2000 Compliant. All of the Company's internal computer systems are
Year 2000 Compliant, except that the Company makes no such representation with
respect to off-the-shelf software that is used in the Company's internal
computer systems the failure or
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malfunctioning of which would not have a material adverse effect on the Company.
To its knowledge, the Company is not relying on the products or services of any
third party whose systems are not Year 2000 Compliant. For purposes of this
Agreement, "Year 2000 Compliant" shall mean that such products and data and
information systems and any such data, information or other files or software it
uses, individually and in combination, completely and accurately record, store,
process, calculate and present data involving dates before, on or after January
1, 2000; specifically: (i) no value for a current date will cause any
interruption in operation; (ii) date-based functionality will behave
consistently when dealing with dates before, on or after January 1, 2000; (iii)
no abnormal endings or incorrect results will be produced when working with
dates before, on or after January 1, 2000; (iv) in all interfaces and data
storage, the century will be specified explicitly and will be unambiguously
derived; and (v) year 2000 will be recognized as a leap year.
2.31 COMPUTER AND COMMUNICATION INFRASTRUCTURE. The Company's computer and
communication infrastructure is adequate to conduct its business as a supplier
of automobile parts. The Company is in compliance with QS9000.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents, warrants and covenants that:
3.1 AUTHORIZATION. Such Investor has full power and authority to enter
into this Agreement and the Investors' Rights Agreement, and each such agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with such
Investor in reliance upon such Investor's representation to the Company, which
by such Investor's execution of this Agreement such Investor hereby confirms,
that the Securities will be acquired for investment for such Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Investor has no present
intention of selling, granting any participation in or otherwise distributing
the same; provided, however, that such Investor may make distributions of any
such Securities to such Investor's affiliates.
3.3 ACCREDITED INVESTOR. Such Investor is an "accredited investor" within
the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
3.4 RESTRICTED SECURITIES. Such Investor understands that the Securities
it is purchasing under this Agreement are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such Securities may be resold
without registration under the Securities Act only in certain limited
circumstances. Each Investor understands that such Investor is acquiring certain
registration rights pursuant to the Investors' Rights Agreement with respect to
the registration for resale of the Class A Common Stock issuable upon conversion
of the Series A Preferred Stock and the Class A Common Stock issuable upon
exercise of the Warrants.
3.5 LEGENDS. Such Investor understands that the certificates evidencing
the Securities may bear a legend in substantially the following form:
"These securities have not been registered under the Securities Act of
1933, as amended (the "Act"). They may not be sold, offered for sale,
pledged or hypothecated unless (i) a registration statement is in effect
with respect to the securities or (ii) an exemption from registration is
available under the Act."
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ARTICLE IV.
CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING
The obligations of each Investor under subsection 1.1(b) of this Agreement
are subject to the fulfillment on or before the Closing of each of the following
conditions, any or all of which may be waived with respect to an Investor by
such Investor's written consent thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of such Closing.
4.2 PERFORMANCE. The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall deliver to
each Investor at the Closing a certificate stating that the conditions specified
in Sections 4.1 and 4.2 have been fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
4.5 SHAREHOLDER APPROVAL. The Company shall have obtained the requisite
approval of this Agreement and the transactions contemplated hereby, including
but not limited to the Investors' Rights Agreement, by its shareholders.
4.6 CERTIFICATE OF DETERMINATION. The Company shall have filed the
Certificate of Determination with the California Secretary of State and shall
have provided evidence satisfactory to the Investors that such filing has been
made.
4.7 DUE DILIGENCE. Each of the Investors shall have received from the
Company all the information that such Investor has theretofore requested and
which such Investor believes is reasonably necessary to enable it to make the
investment decision contemplated by this Agreement.
4.8 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors and their counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
4.9 NO MATERIAL ADVERSE EFFECT. No event, circumstance or condition shall
have occurred which has, or could reasonably be expected to have, a Material
Adverse Effect.
4.10 PROCEEDING OR LITIGATION. No restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing
the consummation of the transactions contemplated hereby shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to
this Agreement or the transactions contemplated hereby which makes the
consummation of such transactions illegal or which otherwise prohibits the
consummation of such transactions. In the event an injunction or other order
shall have been issued, each party agrees to use its reasonable diligent efforts
to have such injunction or other order lifted.
4.11 OPINION OF COMPANY COUNSEL. Each Investor shall have received from
O'Melveny & Myers, LLP, counsel for the Company, an opinion, dated as of the
Closing, in the form attached hereto as EXHIBIT D.
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4.12 REDEMPTION. The Company shall have entered into a legally binding and
enforceable agreement providing for the redemption of all outstanding Class B
Common Stock into which Class A Common Stock currently held in escrow is
converted or convertible, subject only to the prior closing of the transaction
contemplated by this Agreement, either in accordance with the terms of the Share
Exchange Agreement attached hereto as EXHIBIT E, or, otherwise, on terms and
conditions satisfactory to the Investors, in their sole discretion.
4.13 INVESTORS' RIGHTS AGREEMENT. The Company shall have executed and
delivered to the Investors the Investors' Rights Agreement in the form attached
hereto as EXHIBIT C.
4.14 BOARD OF DIRECTORS. Resolutions shall have been adopted by the Board
of Directors to increase the authorized number of directors of the Company to
seven (7) effective as of the Closing, and all of the Company's directors,
except John Clark, Lon Bell and Richard Weisbart, shall have tendered their
resignations to be effective as of the Closing.
4.15 LOAN DOCUMENTS. No Event of Default, as that term is defined in the
Credit Agreement attached hereto as EXHIBIT F ("Credit Agreement"), shall have
occurred and remain uncured at the time of the Closing.
ARTICLE V.
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company to each Investor under this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions by the Company or that Investor, as the case may be, any or all of
which may be waived by the Company's written consent thereto:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Investor contained in Section 3 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the Closing.
5.2 PAYMENT OF PURCHASE PRICE. Each Investor shall have delivered the
purchase price specified in Section 1.2.
5.3 QUALIFICATIONS. All material authorizations, approvals or permits of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement and which are set forth in this Agreement
or on the Disclosure Schedules shall be duly obtained and effective as of the
Closing.
5.4 SHAREHOLDER APPROVAL. The Company shall have obtained the requisite
approval of this Agreement and the transactions contemplated hereby, including
but not limited to the Investors' Rights Agreement, by its shareholders.
5.5 INVESTMENT REPRESENTATION. The Company shall have obtained from each
Investor a representation that such Investor has received from the Company all
the information that such Investor has requested for deciding whether to
purchase the Series A Preferred Stock and the Warrants and all information that
such Investor believes is reasonably necessary to enable such Investor to make
such decision.
5.6 CREDIT AGREEMENT. The Lender shall have performed in all material
respects the agreements and obligations to be performed by it under the Credit
Agreement which are required to be performed prior to the Closing.
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<PAGE>
ARTICLE VI.
OTHER AGREEMENTS
6.1 CONDUCT OF BUSINESS. During the period from the date of this Agreement
and continuing until the Closing, except as expressly contemplated or permitted
by this Agreement or with the prior written consent of Investors, which shall
not be unreasonably withheld or delayed, the Company shall carry on its business
in the ordinary course consistent with past practice. Without limiting the
generality of the foregoing, except as expressly contemplated or permitted by
this Agreement, the Company shall not without the prior written consent of
Investors:
(a) declare or pay any dividends on, or make other distributions in
respect of, any of the Company's capital stock;
(b) (i) repurchase, redeem or otherwise acquire any shares of its
capital stock, or any securities convertible into or exercisable for any
shares of its capital stock, (ii) split, combine or reclassify any shares of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with
respect to any of the foregoing;
(c) amend its Articles of Incorporation, Bylaws or other similar
governing documents;
(d) make any capital expenditures other than those which (i) are made in
the ordinary course of business or are necessary to maintain existing assets
in good repair and (ii) do not exceed $50,000 in the aggregate;
(e) enter into any new line of business;
(f) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire any assets, which would be material, individually or in
the aggregate, to the Company;
(g) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue, or in any of the conditions to the
Closing not being satisfied;
(h) change its methods of accounting in effect at December 31, 1998,
except as required by changes in GAAP or as concurred with by the Company's
independent auditors;
(i) (i) except as required by applicable law or as required to maintain
qualification pursuant to the Internal Revenue Code, adopt, amend, or
terminate any employee benefit plan or any agreement, arrangement, plan or
policy between the Company and one or more of its current or former
directors, officers or employees, or (ii) except for normal increases in the
ordinary course of business consistent with past practice or except as
required by applicable law, increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any agreement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock appreciation
rights, restricted stock, restricted stock units or performance units or
shares);
(j) other than activities in the ordinary course of business consistent
with past practice, sell, lease, encumber, assign or otherwise dispose of,
or agree to sell, lease, encumber, assign or otherwise dispose of, any of
its material assets, properties or other rights or agreements;
(k) other than in the ordinary course of business consistent with past
practice and not in excess of $50,000 (individually or in the aggregate),
incur any indebtedness for borrowed money or assume,
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<PAGE>
guarantee, endorse or otherwise as an accommodation become responsible for
the obligations of any other individual, corporation or other entity;
(l) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract, agreement or
lease for goods, services or office space to which the Company is a party or
by which the Company or its properties are bound, other than the renewal in
the ordinary course of business of any lease the term of which expires prior
to the Closing; or
(m) agree to do any of the foregoing.
6.2 ACCESS TO INFORMATION. The Company will give Investors and their
accountants, legal counsel and other representatives full access, during normal
business hours throughout the period prior to the Closing, to all of the
properties, books, contracts, commitments and records relating to its capital
stock, business, assets and liabilities. The Company will make available to
Investors and their accountants, legal counsel and other representatives during
such period copies of all documents and all such information concerning its
affairs as Investors may reasonably request.
6.3 OTHER DISCUSSIONS; BREAK UP ARRANGEMENT.
(a) From the date hereof until the Closing, unless Investors have given
their prior written approval, none of the Company nor any of its affiliates
or representatives shall directly or indirectly, solicit, initiate,
facilitate, or encourage the submission of any other proposal for, enter
into any agreement or initiate or participate in any discussions regarding,
or furnish to any person any information or assistance with respect to, or
take any other action to facilitate the making of any proposal that
constitutes or may reasonably be expected to lead to, other business
combinations or financing transactions directly or indirectly involving the
Company or its business operations, or the acquisition, in any manner
directly or indirectly, of all or any substantial part of the business,
assets, capital stock or other voting securities of, or any other equity
interest in, the Company or its business operations by any other party.
Notwithstanding the above, the Company may respond to unsolicited written
proposals or to information requests and furnish or disclose information in
response thereto if the Company's Board of Directors determines in good
faith, after consultation with legal counsel, that taking such action is
necessary in the exercise of its fiduciary obligations under applicable law.
If the Company receives any competing proposal (oral or written), the
Company shall advise Investors immediately of its terms and, if the
competing proposal is in writing, furnish Investors with a true and complete
copy thereof.
(b) If (1) the Closing does not occur (other than as a result of a
material breach of this Agreement by the Investors or the determination by
the Investors not to proceed with this transaction for failure of the
condition specified in Section 4.9 hereof) and (2) a Trigger Event (as
defined below) has occurred within twelve months from the date hereof, then
the Company shall:
(i) immediately reimburse the Investors for all reasonable
out-of-pocket expenses incurred in connection with the preparation,
negotiation and performance of this Agreement up to a maximum of $150,000
(including legal, accounting, consulting and any third party financing
fees and any costs of collection), and
(ii) immediately pay a failed transaction fee (the "Fee") to the
Investors in an amount equal to the greater of (A) 5% of the value of the
transaction constituting the Trigger Event accepted by the Board or (B)
$300,000.
(c) A "Trigger Event" means occurrence of any of the following events:
(i) any person, corporation, entity or "group" (as such term is used in
section 13(d) of the Exchange Act) (other than the Investors or any of their
affiliates) (a "Person") shall have acquired or become the beneficial owner
of more than 25% of the outstanding Class A Common Stock, or shall have been
granted any option or right (conditional or otherwise), to acquire more than
25% of the outstanding Class A
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<PAGE>
Common Stock; (ii) any Person shall have commenced a bona fide tender offer
or exchange offer for consideration the fair market value of which is in
excess of the initial Conversion Price (as provided in the Certificate of
Determination) per share for at least 25% of the outstanding Class A Common
Stock, (iii) the Company (or its Board) shall have authorized, recommended,
proposed or publicly announced its intention to enter into any tender or
exchange offer, merger, consolidation, liquidation, dissolution, business
combination, recapitalization, acquisition, or disposition of a material
amount of assets or securities or any comparable transaction which has not
been consented to in writing by the Investors; or (iv) the shareholders of
the Company fail to approve the Agreement.
6.4 PROXY STATEMENT. As promptly as practicable after the execution of
this Agreement, the Company shall prepare and file with the SEC a proxy
statement (together with all amendments thereto "Proxy Statement") for use in
connection with the Annual Meeting (as defined below). The Company shall prepare
the Proxy Statement in compliance with applicable federal and state securities
laws and with the applicable provisions of the California General Corporations
Law. As promptly as practicable after the preparation of the Proxy Statement and
the completion of the SEC's review, if any, of such Proxy Statement, the Proxy
Statement shall be mailed to the shareholders of the Company. None of the
information supplied by any party hereto for inclusion in the Proxy Statement
shall, at the date it or any amendments or supplements thereto are mailed to the
shareholders in connection with the Annual Meeting, at the time of the Annual
Meeting, or at the Closing, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
6.5 SHAREHOLDERS' MEETING. As promptly as practicable after the date
hereof, the Company shall call and hold its annual meeting of its shareholders
for the purpose of approving this Agreement and the transactions contemplated
hereby (the "Annual Meeting"). The Company shall use its best efforts to solicit
from its shareholders proxies in favor of the approval of this Agreement and the
transactions contemplated hereby pursuant to the Proxy Statement.
6.6 PUBLIC DISCLOSURE. Each party shall consult with the others before
issuing any press release or otherwise making any public statement or making any
other public (or non-confidential) disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement and the transactions contemplated
hereby, and shall provide to the others for review and approval a copy of such
contemplated disclosure. No party shall issue any such press release or make any
such statement or disclosure before such review and approval by the other
parties, except as such party is advised by legal counsel is required by law.
6.7 REASONABLE EFFORTS. Each party will use its commercially reasonable
efforts to cause all conditions to the Closing to be satisfied, including,
without limitation, obtaining any of its consents necessary or desirable in
connection with the consummation of the transactions contemplated by this
Agreement.
6.8 BOARD OF DIRECTORS. The parties understand that pursuant to the
Certificate of Determination, the authorized number of directors of the Company
shall be seven, the holders of Common Stock shall be entitled to elect two
directors, and the holders of Series A Preferred Stock shall be entitled to
elect five directors. At or prior to the Closing, all of the Company's
directors, except John Clark, Lon Bell and Richard Weisbart, shall have
resigned. The remaining directors shall fill the vacancies created by such
resignations and appoint directors who are acceptable to the Investors.
6.9 BRIDGE LOAN. Concurrently, with the execution of this Agreement, the
parties shall enter into the Credit Agreement, together with the related
security agreements and documents referred to therein, pursuant to which the
Investors shall loan funds to the Company (the "Bridge Loan") subject to the
terms and on the conditions set forth in such Credit Agreement.
6.10 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice
to Investors, and Investors shall give prompt notice to the Company, of (a) the
occurrence or nonoccurrence of any event
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<PAGE>
the occurrence or nonoccurrence of which would likely to cause any
representation or warranty of the notifying party contained in this Agreement to
become materially untrue or inaccurate, or (b) any failure of the notifying
party to materially comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder.
6.11 INDEMNIFICATION. In the event any third party brings an action, suit
or proceeding (including, without limitation, any derivative proceeding) against
any Investor arising out of any allegation that this Agreement or the agreements
and transactions contemplated hereby violate or interfere with an agreement or
arrangement between such third party and the Company, then the Company agrees to
indemnify the Investors from and against the entirety of any loss, damage,
claim, cost or expense (including reasonable attorneys' fees) the Investors may
suffer through and after the date of the claim for indemnification resulting
from, arising out of, relating to, in the nature of, or caused by the third
party action, suit or proceeding referenced above.
ARTICLE VII.
MISCELLANEOUS
7.1 SURVIVAL. The warranties, representations and covenants of the Company
and Investors contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Investors or the Company prior to the Closing. The warranties, representations,
and covenants of the Company shall terminate upon the Closing and shall be of no
further force or effect after such date.
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of any Securities). Nothing in this Agreement, express or implied, is intended
to confer upon any party, other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
7.3 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
7.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
7.5 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the address
as set forth on the signature page hereof or at such other address as such party
may designate by ten days advance written notice to the other parties hereto.
7.6 FINDER'S FEE. Except as set forth on the Disclosure Schedules, each
party represents that it neither is nor will be obligated for any finders' fee
or commission in connection with this transaction. Each Investor agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which such Investor
or any of its officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending
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<PAGE>
against such liability or asserted liability) for which the Company or any of
its officers, employees or representatives is responsible.
7.7 EXPENSES. The Company shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement, the agreements related hereto, and the agreements related to the
Bridge Loan. Upon the execution of this Agreement, the Company shall reimburse
the Investors for their actual costs (including reasonable legal fees) incurred
in connection with the Bridge Loan, but not in excess of $50,000. If the Closing
is effected, the Company shall, at the Closing, reimburse the actual costs
(including reasonable legal fees) of the Investors in connection with the
negotiation, execution, delivery, and performance of this Agreement and the
transactions and agreements contemplated hereby (in addition to the costs
associated with the Bridge Loan as previously reimbursed) not to exceed
$150,000. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the Investors' Rights Agreement, or the Certificate
of Determination, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
7.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and each Investor.
7.9 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.10 TERMINATION. If the closing has not occurred on or before June 30,
1999, either party may terminate this Agreement by providing written notice to
the other party; provided, however, if the SEC reviews the Company's Proxy
Statement, the date on which termination pursuant to this Section 7.10 shall
first be permitted will be July 30, 1999. Notwithstanding, the termination of
this Agreement pursuant to this Section 7.10, the Company shall be liable for
the payments described in Section 6.3 if a Trigger event subsequently occurs
within the time period set forth in that section.
7.11 AGGREGATION OF STOCK. All shares of the Series A Preferred Stock or
Common Stock issued upon conversion thereof held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
7.12 ENTIRE AGREEMENT. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
7.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
<TABLE>
<S> <C>
THE COMPANY: AMERIGON INCORPORATED
By: /s/ LON E. BELL
----------------------------------------
Its:
----------------------------------------
Address: ----------------------------------------
----------------------------------------
----------------------------------------
INVESTORS: WESTAR CAPITAL II LLC
By: /s/ JOHN W. CLARK
----------------------------------------
Its:
----------------------------------------
Address: ----------------------------------------
----------------------------------------
----------------------------------------
BIG BEAVER INVESTMENTS LLC
By: /s/ OSCAR B. MARX III
----------------------------------------
Its: President
----------------------------------------
Address: ----------------------------------------
----------------------------------------
----------------------------------------
</TABLE>
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<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
INVESTOR SERIES A PREFERRED STOCK PURCHASE PRICE
- -------------------------------- ------------------------- --------------
<S> <C> <C>
Westar Capital II LLC 4,500 $ 4,500,000
Big Beaver Investments LLC 4,500 $ 4,500,000
</TABLE>
<TABLE>
<CAPTION>
INVESTOR WARRANT PURCHASE PRICE
- -------------------------------- ---------------------------------------------------------------- -----------------
<S> <C> <C>
Westar Capital II LLC Warrants to purchase that number of shares of Class A Common $ 500
Stock equal to 36.9% of the aggregate shares subject to (i)
currently outstanding warrants (excluding the Bridge Loan
Warrants) plus (ii) warrants that are issuable at the Closing to
Spencer Trask Securities Incorporated on the terms and
conditions set forth in the Contingent Common Stock Purchase
Warrants attached hereto as Exhibit B.
Big Beaver Investments LLC Warrants to purchase that number of shares of Class A Common $ 500
Stock equal to 36.9% of the aggregate shares subject to (i)
currently outstanding warrants (excluding the Bridge Loan
Warrants) plus (ii) warrants that are issuable at the Closing to
Spencer Trask Securities Incorporated on the terms and
conditions set forth in the Contingent Common Stock Purchase
Warrants attached hereto as Exhibit B.
</TABLE>
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<PAGE>
APPENDIX B
------------------------
INVESTORS' RIGHTS AGREEMENT
----------------
, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<C> <S> <C> <C>
1. Registration Rights...................................................................................... B-1
1.1 Definitions................................................................................... B-1
1.2 Request for Registration...................................................................... B-2
1.3 Company Registration.......................................................................... B-2
1.4 Obligations of the Company.................................................................... B-3
1.5 Furnish Information........................................................................... B-4
1.6 Expenses of Demand Registration............................................................... B-4
1.7 Expenses of Company Registration.............................................................. B-4
1.8 Underwriting Requirements..................................................................... B-5
1.9 Delay of Registration......................................................................... B-5
1.10 Indemnification............................................................................... B-5
1.11 Reports Under Securities Exchange Act of 1934................................................. B-7
1.12 Form S-3 Registration......................................................................... B-8
1.13 Assignment of Registration Rights............................................................. B-8
1.14 Limitations on Subsequent Registration Rights................................................. B-9
1.15 "Market Stand-Off" Agreement.................................................................. B-9
1.16 Termination of Registration Rights............................................................ B-9
2. Right of First Offer..................................................................................... B-9
3. Miscellaneous............................................................................................ B-10
3.1 Successors and Assigns........................................................................ B-10
3.2 Governing Law................................................................................. B-11
3.3 Counterparts.................................................................................. B-11
3.4 Titles and Subtitles.......................................................................... B-11
3.5 Notices....................................................................................... B-11
3.6 Expenses...................................................................................... B-11
3.7 Amendments and Waivers........................................................................ B-11
3.8 Severability.................................................................................. B-11
3.9 Aggregation of Stock.......................................................................... B-11
3.10 Entire Agreement; Amendment; Waiver........................................................... B-11
</TABLE>
i
<PAGE>
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT is made as of the day of ,
1999, by and between Amerigon Incorporated, a California corporation (the
"Company"), and the investors listed on the signature page hereof, each of which
is herein referred to as an "Investor."
RECITALS
WHEREAS, the Company and the Investors are parties to the Securities
Purchase Agreement dated March , 1999 (the "Securities Purchase Agreement")
pursuant to which the Investors are acquiring Series A Preferred Stock of the
Company and warrants to purchase Class A Common Stock of the Company (the
"Warrants");
WHEREAS, in order to induce the Company to enter into the Securities
Purchase Agreement and to induce the Investors to invest funds in the Company
pursuant to the Securities Purchase Agreement, the Investors and the Company
hereby agree that this Agreement shall govern the rights of the Investors to
cause the Company to register shares of Common Stock issuable to the Investors
and certain other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Common Stock" means the Class A Common Stock, no par
value, of the Company.
(c) The term "Form S-3" means such form under the Act as in effect on
the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the
Company with the SEC.
(d) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.13 hereof.
(e) The term "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(f) The term "register", "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(g) The term "Registrable Securities" means (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, (ii)
the Common Stock issued or issuable upon the exercise of the Warrants,
(iii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of the shares referenced in (i) and (ii)
above, excluding in all cases, however, any Registrable Securities sold
by a person in a transaction in which his rights under this Section 1 are
not assigned.
(h) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding
which are, and the number of shares of Common Stock issuable pursuant to
then exercisable or convertible securities which are, Registrable
Securities.
(i) The term "SEC" means the Securities and Exchange Commission.
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<PAGE>
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after the date of this
Agreement, a written request from the Holders of a majority of the
Registrable Securities then outstanding that the Company file a
registration statement under the Act covering the registration of at
least ten percent (10%) of the Registrable Securities then outstanding,
then the Company shall:
(i) within ten (10) days of the receipt thereof, give written
notice of such request to all Holders; and
(ii) as soon as practicable, and in any event within 45 days of
the receipt of such request, file a registration statement under the
Act covering all Registrable Securities which the Holders request to
be registered, subject to the limitations of subsection 1.2(b),
within twenty (20) days of the mailing of such notice by the Company
in accordance with Section 3.5.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to subsection
1.2(a) and the Company shall include such information in the written
notice referred to in subsection 1.2(a). The underwriter will be selected
by the Company and shall be reasonably acceptable to a majority in
interest of the Initiating Holders. In such event, the right of any
Holder to include his Registrable Securities in such registration shall
be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All
Holders proposing to distribute their securities through such
underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten,
then the Initiating Holders shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the
amount of Registrable Securities of the Company owned by each Holder;
provided, however, that the number of shares of Registrable Securities to
be included in such underwriting shall not be reduced unless all other
securities are first entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 1.2,
a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration statement,
the Company shall have the right to defer taking action with respect to
such filing for a period of not more than 90 days after receipt of the
request of the Initiating Holders; provided, however, that the Company
may not utilize this right more than once in any twelve-month period.
(d) The Company shall be obligated to effect only two such
registrations pursuant to this Section 1.2. Registrations effected on
Form S-3 pursuant to Section 1.12, however, shall not be counted as
demands pursuant to this Section 2.
1.3 COMPANY REGISTRATION. At any time within five years after the date
of this Agreement, if (but without any obligation to do so) the Company
proposes to register (including for this purpose a
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<PAGE>
registration effected by the Company for shareholders other than the
Holders) any of its stock or other securities under the Act in connection
with the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities which are also being
registered), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up
to one hundred twenty (120) days or until the distribution contemplated
in the Registration Statement has been completed; provided, however, that
(i) such 120-day period shall be extended for a period of time equal to
the period the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or
other securities) of the Company; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to
be offered on a continuous or delayed basis, such 120-day period shall be
extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, provided that Rule 415,
or any successor rule under the Act, permits an offering on a continuous
or delayed basis, and provided further that applicable rules under the
Act governing the obligation to file a post-effective amendment permit,
in lieu of filing a post-effective amendment which (I) includes any
prospectus required by Section 10(a)(3) of the Act or (II) reflects facts
or events representing a material or fundamental change in the
information set forth in the registration statement, the incorporation by
reference of information required to be included in (I) and (II) above to
be contained in periodic reports filed pursuant to Section 13 or 15(d) of
the 1934 Act in the registration statement.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements
of the Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned by
them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holders; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Act.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter
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of such offering. Each Holder participating in such underwriting shall
also enter into and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to
this Section 1, if such securities are being sold through underwriters,
or, if such securities are not being sold through underwriters, on the
date that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a
letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and
to the Holders requesting registration of Registrable Securities.
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
1.6 EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements (not to exceed $15,000)
of one counsel for the selling Holders (as selected by the Holders of a
majority of the Registrable Securities to be registered) shall be borne by
the Company; provided, however, that the Company shall not be required to
pay for any expenses of any registration proceeding begun pursuant to
Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such
expenses), unless the Holders of a majority of the Registrable Securities
agree to forfeit their right to one demand registration pursuant to Section
1.2; provided further, however, that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition,
business, or prospects of the Company from that known to the Holders at the
time of their request and have withdrawn the request with reasonable
promptness following disclosure by the Company of such material adverse
change, then the Holders shall not be required to pay any of such expenses
and shall retain their rights pursuant to Section 1.2.
1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as
provided in Section 1.13), including (without limitation) all registration,
filing, and qualification fees, printers and
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accounting fees relating or apportionable thereto and the fees and
disbursements (not to exceed $15,000) of one counsel for the selling Holders
(as selected by the Holders of a majority of the Registrable Securities to
be registered), but excluding underwriting discounts and commissions
relating to Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters
selected by it (or by other persons entitled to select the underwriters),
and then only in such quantity as the underwriters determine in their sole
discretion will not jeopardize the success of the offering by the Company.
If the total amount of securities, including Registrable Securities,
requested by shareholders to be included in such offering exceeds the amount
of securities sold other than by the Company that the underwriters determine
in their sole discretion is compatible with the success of the offering,
then the Company shall be required to include in the offering only that
number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned pro
rata among the selling shareholders according to the total amount of
securities entitled to be included therein owned by each selling shareholder
or in such other proportions as shall mutually be agreed to by such selling
shareholders) but in no event shall (i) the amount of securities of the
selling Holders included in the offering be reduced below twenty percent
(20%) of the total amount of securities included in such offering, or (ii)
notwithstanding (i) above, any shares being sold by a shareholder exercising
a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling shareholder which is a holder of
Registrable Securities and which is a partnership or corporation, the
partners, retired partners and shareholders of such holder, or the estates
and family members of any such partners and retired partners and any trusts
for the benefit of any of the foregoing persons shall be deemed to be a
single "selling shareholder", and any pro-rata reduction with respect to
such "selling shareholder" shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder", as defined in this sentence.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration
as the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for
such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934 Act, against any
losses, claims, damages, or liabilities (joint or several) to which they
may become subject under the Act, the 1934 Act or other federal or state
securities law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act,
any rule or regulation promulgated under the Act or the 1934 Act, or any
other federal or state securities law; and the Company will pay to each
such Holder, underwriter or controlling person any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage,
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liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability, or action to
the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Act, any
underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other
Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under
the Act, the 1934 Act or other federal or state securities law, insofar
as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration; and
each such Holder will pay any legal or other expenses reasonably incurred
by any person intended to be indemnified pursuant to this subsection
1.10(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.10(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this subsection 1.10(b) exceed the
gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
1.10, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the
fees and expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented
by such counsel in such proceeding. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified
party under this Section 1.10, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this
Section 1.10.
(d) If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying
such indemnified party hereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or
omissions that resulted in
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such loss, liability, claim, damage, or expense as well as any other
relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in
the underwriting agreement shall control.
(f) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and
otherwise.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees
to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company
that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act
(at any time after it has become subject to such reporting requirements),
or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any
rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.
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1.12 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 for the resale of shares from time to time in
broker transactions (and not in connection with an underwritten offering),
and any related qualification or compliance with respect to all or a part of
the Registrable Securities owned by such Holder or Holders, the Company
will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities
of any other Holder or Holders joining in such request as are specified
in a written request given within 15 days after receipt of such written
notice from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance,
pursuant to this section 1.12: (1) if Form S-3 is not available for such
offering by the Holders; (2) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $300,000; (3) if the
Company shall furnish to the Holders a certificate signed by the
President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to
the Company and its shareholders for such Form S-3 Registration to be
effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of
not more than 90 days after receipt of the request of the Holder or
Holders under this Section 1.12; provided, however, that the Company
shall not utilize this right more than once in any twelve month period;
(4) if the Company has, within the twelve (12) month period preceding the
date of such request, already effected two registrations on Form S-3 for
the Holders pursuant to this Section 1.12; (5) the Company has previously
effected four registrations on Form S-3 for the Holders pursuant to this
Section 1.12, or (6) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so
requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection
with a registration requested pursuant to Section 1.12, including
(without limitation) all registration, filing, qualification, printer's
and accounting fees, and the fees and disbursements (not to exceed
$15,000) of one counsel for the selling Holder (as selected by the
Holders of a majority of the Registrable Securities to be registered) and
counsel for the Company, shall be borne by the Company. Registrations
effected pursuant to this Section 1.12 shall not be counted as demands
for registration or registrations effected pursuant to Sections 1.2 or
1.3, respectively.
1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee
or assignee of such securities, provided: (a) the Company is, within a
reasonable time after such transfer, furnished with written notice of the
name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the
terms and conditions of this Agreement, including without limitation the
provisions of Section 1.15 below; and (c) such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act.
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1.14 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written
consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder
of any securities of the Company which would allow such holder or
prospective holder (a) to include such securities in any registration filed
under Section 1.2 hereof, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of his securities will
not reduce the amount of the Registrable Securities of the Holders which is
included or (b) to make a demand registration which could result in such
registration statement being declared effective prior to the earlier of
either of the dates set forth in subsection 1.2(a) or within one hundred
twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2.
1.15 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that,
during the period of duration specified by the Company and an underwriter of
common stock or other securities of the Company, following the effective
date of a registration statement of the Company filed under the Act in
connection with an underwritten offering, it shall not, to the extent
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except common stock
included in such registration; provided, however, that:
(a) all officers and directors of the Company and all other persons
with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements; and
(b) such market stand-off time period shall not exceed 90 days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of
each Investor (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this Section
1.15 shall not apply to a registration relating solely to employee benefit
plans on Form S-l or Form S-8 or similar forms which may be promulgated in
the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-14 or Form S-15 or similar forms which may be
promulgated in the future.
1.16 TERMINATION OF REGISTRATION RIGHTS. The right of any Holder to
request registration or inclusion in any registration pursuant to this
Agreement shall terminate if all shares of Registrable Securities held or
entitled to be held upon conversion by such Holder may immediately be sold
under Rule 144 during any 90-day period.
2. RIGHT OF FIRST OFFER.
Subject to the terms and conditions specified in this Section 2, the Company
hereby grants to each Major Investor (as hereinafter defined) a right of first
offer with respect to future sales by the Company of its Shares (as hereinafter
defined). For purposes of this Section 2, a Major Investor shall mean (i) any
Investor who holds at least 30% of the original investment such Investor makes
in the Company pursuant to the Securities Purchase Agreement and (ii) any person
who acquires at least 15% of the Series A Preferred Stock (or the common stock
issued upon conversion thereof) issued pursuant to the Securities Purchase
Agreement. For purposes of this Section 2, Investor includes any general
partners and affiliates of an Investor. An Investor shall be entitled to
apportion the right of first offer hereby granted it among itself and its
partners and affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Shares"), the Company shall first make an offering of such Shares to
each Major Investor in accordance with the following provisions:
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(a) The Company shall deliver a notice by certified mail ("Notice")
to the Major Investors stating (i) its bona fide intention to offer such
Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.
(b) By written notification received by the Company, within 20
calendar days after giving of the Notice, the Major Investor may elect to
purchase or obtain, at the price and on the terms specified in the
Notice, up to that portion of such Shares which equals the proportion
that the number of shares of common stock issued and held, or issuable
upon conversion of the Series A Preferred Stock then held, by such Major
Investor bears to the total number of shares of common stock of the
Company then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities). The Company shall promptly, in
writing, inform each Major Investor which purchases all the shares
available to it ("Fully-Exercising Investor") of any other Major
Investor's failure to do likewise. During the ten-day period commencing
after such information is given, each Fully-Exercising Investor shall be
entitled to obtain that portion of the Shares for which Major Investors
were entitled to subscribe but which were not subscribed for by the Major
Investors which is equal to the proportion that the number of shares of
common stock issued and held, or issuable upon conversion of Series A
Preferred Stock then held, by such Fully-Exercising Investor bears to the
total number of shares of common stock issued and held, or issuable upon
conversion of the Series A Preferred Stock then held, by all
Fully-Exercising Investors who wish to purchase some of the unsubscribed
shares.
(c) If all Shares which Investors are entitled to obtain pursuant to
(b) are not elected to be obtained as provided in (b) hereof, the Company
may, during the 30-day period following the expiration of the period
provided in (b) hereof, offer the remaining unsubscribed portion of such
Shares to any person or persons at a price not less than, and upon terms
no more favorable to the offeree than those specified in the Notice. If
the Company does not enter into an agreement for the sale of the Shares
within such period, or if such agreement is not consummated within 30
days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such Shares shall not be offered unless first
reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this Section 2 shall not be
applicable (i) to the issuance or sale of shares of common stock (or
options therefor) to employees for the primary purpose of soliciting or
retaining their employment pursuant to a stock option or stock purchase
plan, (ii) the issuance of securities pursuant to the conversion or
exercise of convertible or exercisable securities, (iii) the issuance of
securities in connection with a bona fide business acquisition of or by
the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise or (iv) the issuance of stock, warrants or
other securities or rights to persons or entities with which the Company
has business relationships provided such issuances are for other than
primarily equity financing purposes and provided that at the time of any
such issuance, the aggregate of such issuance and similar issuances in
the preceding twelve month period do not exceed 2% of the then
outstanding Common Stock of the Company (assuming full conversion and
exercise of all convertible and exercisable securities).
(e) The right of first refusal set forth in this Section 2 may not be
assigned or transferred, except that (i) such right is assignable by each
Holder to any wholly owned subsidiary or parent of, or to any corporation
or entity that is, within the meaning of the Act, controlling, controlled
by or under common control with, any such Holder, and (ii) such right is
assignable between and among any of the Holders.
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns
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of the parties (including transferees of any shares of Registrable
Securities). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.
3.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
3.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice
to the other parties.
3.6 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
3.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders
of a majority of the Registrable Securities then outstanding. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon
each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities, and the Company.
3.8 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance
with its terms.
3.9 AGGREGATION OF STOCK. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for
the purpose of determining the availability of any rights under this
Agreement.
3.10 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including
the exhibits hereto, if any) constitutes the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof.
B-11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Investors' Rights
Agreement as of the date first above written.
AMERIGON INCORPORATED,
a California corporation
By:
--------------------------------------
, President
Address:
-------------------------------------------------------------------------------
--------------------------------------
INVESTORS:
WESTAR CAPITAL II LLC
By:
--------------------------------------
Address:
-------------------------------------------------------------------------------
--------------------------------------
BIG BEAVER INVESTMENTS LLC
By:
--------------------------------------
Address:
-------------------------------------------------------------------------------
--------------------------------------
B-12
<PAGE>
APPENDIX C
CONTINGENT COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, (the "Holder")
is entitled to subscribe for and purchase up to 9225 shares (subject to
adjustment from time to time pursuant to the provisions of Section 5 hereof) of
fully paid and nonassessable Class A Common Stock of Amerigon Incorporated, a
California corporation (the "Company"), at the price specified in Section 2
hereof, as such price may be adjusted from time to time pursuant to Section 5
hereof (the "Warrant Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
As used herein, the term "Class A Common Stock" shall mean the Company's
presently authorized Class A Common Stock, no par value, and any stock into or
for which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT; CONTINGENT EXERCISE.
(a) TERM. Subject to Section 1(b) hereof, the purchase right
represented by this Warrant is exercisable, in whole or in part, at any time
during a period beginning on [Closing Date] and ending ninety days after the
latest of the end of the terms of the warrants as respectively set forth in
Section 1(a) of the Common Stock Purchase Warrant dated December 21, 1998
from the Company to Spencer Trask Securities, Inc., Section 1(a) of the
Common Stock Purchase Warrant dated December 21, 1998 from the Company to
Adam K. Stern and Section 1(a) of the Common Stock Purchase Warrant dated
December 21, 1998 from the Company to Roger K. Baumberger and Section 1(a)
of the Common Stock Purchase Warrant dated March 24, 1999 from the Company
to Matthew Schilowitz (the "Trask Warrants").
(b) CONTINGENT EXERCISE. The number of shares that may be purchased
pursuant to the exercise of this Warrant is limited to a number of shares
equal to 36.9% multiplied by the number of shares purchased pursuant to the
exercise of the Trask Warrants after the date hereof. To the extent that
this would result in the right to purchase a fractional number of shares,
the number of shares permitted to be purchased will be rounded down to the
lowest whole share; PROVIDED, however, that the number of shares with
respect to which this Warrant shall not then have been exercised will
appropriately reflect such adjustment.
2. WARRANT PRICE.
The Warrant Price is $5.30 per share, subject to adjustment from time to
time pursuant to the provisions of Section 5 hereof.
C-1
<PAGE>
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder, in whole or in
part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company and by the payment to the Company, by cashier's check or wire
transfer, of an amount equal to the then applicable Warrant Price per share
multiplied by the number of shares then being purchased. The Company agrees
that the shares so purchased shall be deemed to be issued to the Holder as
the record owner of such shares as of the close of business on the date on
which this Warrant shall have been surrendered and payment made for such
shares as aforesaid. In the event of any exercise of this Warrant,
certificates for the shares of stock so purchased shall be delivered to the
Holder within 15 business days thereafter and, unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
shares, if any, with respect to which this Warrant shall not then have been
exercised, shall also be issued to the Holder within such 15 business day
period.
(b) CONVERSION. Subject to Section 1 hereof, the Holder may convert
this Warrant (the "Conversion Right"), in whole or in part, into the number
of shares (less the number of shares which have been previously exercised or
as to which the Conversion Right has been previously exercised) calculated
pursuant to the following formula by surrendering this Warrant (with the
notice of exercise form attached hereto as EXHIBIT 1 duly executed) at the
principal office of the Company specifying the number of shares the rights
to purchase which the Holder desires to convert:
<TABLE>
<CAPTION>
<S> <C> <C>
Y(A - B)
X = ---------
A
</TABLE>
<TABLE>
<S> <C> <C> <C>
where: X = the number of shares of Class A Common Stock to be issued to the
Holder;
Y = the number of shares of Class A Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the Market Price of the Common Stock (as defined below) as of the
trading day immediately preceding the date of exercise of this
Warrant; and
B = the Warrant Price
</TABLE>
For purposes hereof, the "Market Price of the Common Stock" shall be the
closing price per share of the Class A Common Stock of the Company on
the principal national securities exchange on which the Class A Common
Stock of the Company is then listed or admitted to trading or, if not
then listed or traded on any such exchange, on the NASDAQ National
Market System, or if then not listed or traded on such system, the
closing bid price per share on NASDAQ or other over-the-counter trading
market. If at any time such quotations are not available, the market
price of a share of Class A Common Stock shall be the highest price per
share which the Company could obtain from a willing buyer (not a current
employee or director) for shares of Class A Common Stock sold by the
Company, from authorized but unissued shares, as determined in good
faith by the Board of Directors of the Company, unless the Company shall
become subject to a merger, acquisition or other consolidation pursuant
to which the Company is not the surviving party, in which case the
market price of a share of Class A Common Stock shall be deemed to be
the value received by the holders of the Company's Class A Common Stock
for each share of Class A Common Stock pursuant to the Company's
acquisition.
C-2
<PAGE>
The Company agrees that the shares so converted shall be deemed issued
to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered
as aforesaid. In the event of any conversion of this Warrant,
certificates for the shares of stock so converted shall be delivered to
the holder hereof within 15 business days thereafter and, unless this
Warrant has been fully converted or expired, a new Warrant representing
the portion of the shares, if any, with respect to which this Warrant
shall not then have been converted, shall also be issued to the holder
hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Class A Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all United States taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Class A Common Stock to provide for the exercise of the rights represented by
this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The exercise price and number of shares purchasable on exercise of this
Warrant shall adjust identically with any adjustments made pursuant to the Trask
Warrants and the provisions of Section 5 of the Trask Warrants and the
definitions of the different terms therein are hereby incorporated by reference.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5 hereof,
the Company shall prepare a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
the Warrant Price after giving effect to such adjustment and the number of
shares then purchasable upon exercise of this Warrant, and shall cause copies of
such certificate to be mailed (by first class mail, postage prepaid) to the
Holder of this Warrant at the address specified in Section 10(c) hereof, or at
such other address as may be provided to the Company in writing by the Holder of
this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Class A Common Stock will be issued in conjunction
with any exercise hereunder, but in lieu of such fractional shares the Company
shall make a cash payment therefore on the basis of the Warrant Price then in
effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this Warrant
and the shares of Class A Common Stock to be issued on exercise hereof are being
acquired for investment and that it will not offer, sell or otherwise dispose of
this Warrant or any shares of Class A Common Stock to be issued upon exercise
hereof except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act"). This Warrant and all shares of
Class A Common Stock issued upon exercise of this Warrant (unless registered
under the Act) shall be stamped and imprinted with a legend substantially in the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS
C-3
<PAGE>
IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS
FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT AND
THE APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
9. NOTICE OF EXERCISE OF CLASS A WARRANTS.
Whenever any Trask Warrants shall be exercised, within 30 days after such
exercise the Company shall notify the Holder (by first class mail, postage
prepaid) at the address specified in Section 10(c) hereof, or at such other
address as may be provided to the Company in writing by the Holder of this
Warrant.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not be
entitled to vote or receive dividends or be deemed the Holder of Class A
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder of this Warrant, as
such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders
at any meeting thereof, or to give or withhold consent to any corporate
action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise) or to receive notice
of meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised and the shares purchasable upon
the exercise hereof shall have become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of mutilation, on surrender and cancellation of this Warrant,
the Company, at the Holder's expense, will execute and deliver, in lieu of
this Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant shall
be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the
mailing thereof in the U.S. mail if sent registered mail with postage
prepaid, addressed to the Company at its principal executive offices and to
the Holder at its address set forth in the Company's books and records or at
such other address as the Holder may have provided to the Company in
writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed under
the laws of the State of California.
C-4
<PAGE>
This Warrant is executed as of this day of , 1999.
AMERIGON INCORPORATED
By:
--------------------------------------
Name:
- --------------------------------------------------------------------------------
Title:
--------------------------------------
C-5
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase shares of Class A
Common Stock of AMERIGON INCORPORATED pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares
in full.
/ / The undersigned hereby elects to convert the attached warrant
into shares of Class A Common Stock of AMERIGON INCORPORATED pursuant
to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares
of Class A Common Stock in the name of the undersigned or in such other name
as is specified below:
- ----------------------------------------
(Name)
- ----------------------------------------
- ----------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares of Class A
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
--------------------------------------
Signature
C-6
<PAGE>
CONTINGENT COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, (the "Holder") is
entitled to subscribe for and purchase up to 558,659 shares (subject to
adjustment from time to time pursuant to the provisions of Section 5 hereof) of
fully paid and nonassessable Class A Common Stock of Amerigon Incorporated, a
California corporation (the "Company"), at the price specified in Section 2
hereof, as such price may be adjusted from time to time pursuant to Section 5
hereof (the "Warrant Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
As used herein, the term "Class A Common Stock" shall mean the Company's
presently authorized Class A Common Stock, no par value, and any stock into or
for which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT; CONTINGENT EXERCISE.
(a) TERM. Subject to Section 1(b) hereof, the purchase right
represented by this Warrant is exercisable, in whole or in part, at any time
during a period beginning on [Closing Date] and ending ninety days after the
Warrant Expiration Date as such term is defined in the Warrant Agreement
dated February 12, 1997, by and among the Company, U.S. Stock Transfer
Corporation, as Warrant Agent, and D.H. Blair Investment Banking Corp. (the
"1997 Warrant Agreement").
(b) CONTINGENT EXERCISE. The number of shares that may be purchased
pursuant to the exercise of this Warrant is limited to a number of shares
equal to 36.9% multiplied by the number of shares purchased pursuant to the
exercise of Class A Warrants of the Company after the date hereof. To the
extent that this would result in the right to purchase a fractional number
of shares, the number of shares permitted to be purchased will be rounded
down to the lowest whole share; PROVIDED, however, that the number of shares
with respect to which this Warrant shall not then have been exercised will
appropriately reflect such adjustment.
2. WARRANT PRICE.
The Warrant Price is $25.00 per share, subject to adjustment from time to
time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder, in whole or in
part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company and by the payment to the Company, by cashier's check or wire
transfer, of an amount equal to the then applicable Warrant Price per share
multiplied by the number of shares then being purchased. The Company agrees
that the shares so purchased shall be deemed to be issued to the Holder as
the record owner of such shares as of the close of business on the date on
which this Warrant shall have
C-7
<PAGE>
been surrendered and payment made for such shares as aforesaid. In the event
of any exercise of this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder within 15 business days
thereafter and, unless this Warrant has been fully exercised or expired, a
new Warrant representing the portion of the shares, if any, with respect to
which this Warrant shall not then have been exercised, shall also be issued
to the Holder within such 15 business day period.
(b) CONVERSION. Subject to Section 1 hereof, the Holder may convert
this Warrant (the "Conversion Right"), in whole or in part, into the number
of shares (less the number of shares which have been previously exercised or
as to which the Conversion Right has been previously exercised) calculated
pursuant to the following formula by surrendering this Warrant (with the
notice of exercise form attached hereto as EXHIBIT 1 duly executed) at the
principal office of the Company specifying the number of shares the rights
to purchase which the Holder desires to convert:
<TABLE>
<CAPTION>
<S> <C> <C>
Y (A - B)
X = ---------
A
</TABLE>
<TABLE>
<S> <C> <C> <C>
where: X = the number of shares of Class A Common Stock to be issued to
the Holder;
Y = the number of shares of Class A Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the Market Price of the Common Stock (as defined below) as of
the trading day immediately preceding the date of exercise of
this Warrant; and
B = the Warrant Price
</TABLE>
For purposes hereof, the "Market Price of the Common Stock" shall be the
closing price per share of the Class A Common Stock of the Company on
the principal national securities exchange on which the Class A Common
Stock of the Company is then listed or admitted to trading or, if not
then listed or traded on any such exchange, on the NASDAQ National
Market System, or if then not listed or traded on such system, the
closing bid price per share on NASDAQ or other over-the-counter trading
market. If at any time such quotations are not available, the market
price of a share of Class A Common Stock shall be the highest price per
share which the Company could obtain from a willing buyer (not a current
employee or director) for shares of Class A Common Stock sold by the
Company, from authorized but unissued shares, as determined in good
faith by the Board of Directors of the Company, unless the Company shall
become subject to a merger, acquisition or other consolidation pursuant
to which the Company is not the surviving party, in which case the
market price of a share of Class A Common Stock shall be deemed to be
the value received by the holders of the Company's Class A Common Stock
for each share of Class A Common Stock pursuant to the Company's
acquisition.
The Company agrees that the shares so converted shall be deemed issued
to the Holder as the record owner of such shares as of the close of business
on the date on which this Warrant shall have been surrendered as aforesaid.
In the event of any conversion of this Warrant, certificates for the shares
of stock so converted shall be delivered to the holder hereof within 15
business days thereafter and, unless this Warrant has been fully converted
or expired, a new Warrant representing the portion of the shares, if any,
with respect to which this Warrant shall not then have been converted, shall
also be issued to the holder hereof within such 15-day period.
C-8
<PAGE>
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Class A Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all United States taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Class A Common Stock to provide for the exercise of the rights represented by
this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The exercise price and number of shares purchasable on exercise of this
Warrant shall adjust identically with any adjustments made pursuant to the 1997
Warrant Agreement and the provisions of Section 9 of the 1997 Warrant Agreement
and the definitions of the different terms therein are hereby incorporated by
reference.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5 hereof,
the Company shall prepare a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
the Warrant Price after giving effect to such adjustment and the number of
shares then purchasable upon exercise of this Warrant, and shall cause copies of
such certificate to be mailed (by first class mail, postage prepaid) to the
Holder of this Warrant at the address specified in Section 10(c) hereof, or at
such other address as may be provided to the Company in writing by the Holder of
this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Class A Common Stock will be issued in conjunction
with any exercise hereunder, but in lieu of such fractional shares the Company
shall make a cash payment therefore on the basis of the Warrant Price then in
effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this Warrant
and the shares of Class A Common Stock to be issued on exercise hereof are being
acquired for investment and that it will not offer, sell or otherwise dispose of
this Warrant or any shares of Class A Common Stock to be issued upon exercise
hereof except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act"). This Warrant and all shares of
Class A Common Stock issued upon exercise of this Warrant (unless registered
under the Act) shall be stamped and imprinted with a legend substantially in the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND
(2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED."
C-9
<PAGE>
9. NOTICE OF EXERCISE OF CLASS A WARRANTS.
Whenever any Class A Warrant shall be exercised, within 30 days after such
exercise the Company shall notify the Holder (by first class mail, postage
prepaid) at the address specified in Section 10(c) hereof, or at such other
address as may be provided to the Company in writing by the Holder of this
Warrant.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not be
entitled to vote or receive dividends or be deemed the Holder of Class A
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder of this Warrant, as
such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders
at any meeting thereof, or to give or withhold consent to any corporate
action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise) or to receive notice
of meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised and the shares purchasable upon
the exercise hereof shall have become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of mutilation, on surrender and cancellation of this Warrant,
the Company, at the Holder's expense, will execute and deliver, in lieu of
this Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant shall
be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the
mailing thereof in the U.S. mail if sent registered mail with postage
prepaid, addressed to the Company at its principal executive offices and to
the Holder at its address set forth in the Company's books and records or at
such other address as the Holder may have provided to the Company in
writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed under
the laws of the State of California.
C-10
<PAGE>
This Warrant is executed as of this day of , 1999.
AMERIGON INCORPORATED
By:
--------------------------------------
Name:
- --------------------------------------------------------------------------------
Title:
--------------------------------------
C-11
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase shares of Class A
Common Stock of AMERIGON INCORPORATED pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares
in full.
/ / The undersigned hereby elects to convert the attached warrant into
shares of Class A Common Stock of AMERIGON INCORPORATED pursuant to
the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares
of Class A Common Stock in the name of the undersigned or in such other name
as is specified below:
- ----------------------------------------
(Name)
- ----------------------------------------
- ----------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares of Class A
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
--------------------------------------
Signature
C-12
<PAGE>
CONTINGENT COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, (the "Holder")
is entitled to subscribe for and purchase up to 4428 shares (subject to
adjustment from time to time pursuant to the provisions of Section 5 hereof) of
fully paid and nonassessable Class A Common Stock of Amerigon Incorporated, a
California corporation (the "Company"), at the price specified in Section 2
hereof, as such price may be adjusted from time to time pursuant to Section 5
hereof (the "Warrant Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
As used herein, the term "Class A Common Stock" shall mean the Company's
presently authorized Class A Common Stock, no par value, and any stock into or
for which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT; CONTINGENT EXERCISE.
(a) TERM. Subject to Section 1(b) hereof, the purchase right represented
by this Warrant is exercisable, in whole or in part, at any time during a period
beginning on [Closing Date] and ending ninety days after the later of the two
"Warrant Expiration Dates" as defined in the Warrant to Purchase Class A Common
Stock dated December 29, 1995 from the Company to Sutro & Co. and the Warrant to
Purchase Class A Common Stock dated December 29, 1995 from the Company to Lido
Consulting, Inc. (the "1995 Private Placement Warrants").
(b) CONTINGENT EXERCISE. The number of shares that may be purchased
pursuant to the exercise of this Warrant is limited to a number of shares equal
to 36.9% multiplied by the number of shares purchased pursuant to the exercise
of the 1995 Private Placement Warrants after the date hereof. To the extent that
this would result in the right to purchase a fractional number of shares, the
number of shares permitted to be purchased will be rounded down to the lowest
whole share; PROVIDED, however, that the number of shares with respect to which
this Warrant shall not then have been exercised will appropriately reflect such
adjustment.
2. WARRANT PRICE.
The Warrant Price is $51.25 per share, subject to adjustment from time to
time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right represented
by this Warrant may be exercised by the Holder, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
EXHIBIT 1 duly executed) at the principal office of the Company and by the
payment to the Company, by cashier's check or wire transfer, of an amount equal
to the then applicable Warrant Price per share multiplied by the number of
shares then being purchased. The Company agrees that the shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares
C-13
<PAGE>
as of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of any
exercise of this Warrant, certificates for the shares of stock so purchased
shall be delivered to the Holder within 15 business days thereafter and, unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder within such 15 business
day period.
(b) CONVERSION. Subject to Section 1 hereof, the Holder may convert this
Warrant (the "Conversion Right"), in whole or in part, into the number of shares
(less the number of shares which have been previously exercised or as to which
the Conversion Right has been previously exercised) calculated pursuant to the
following formula by surrendering this Warrant (with the notice of exercise form
attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company specifying the number of shares the rights to purchase which the Holder
desires to convert:
<TABLE>
<S> <C> <C>
Y (A - B)
X = --------
A
</TABLE>
where: X = the number of shares of Class A Common Stock to be issued to
the Holder;
Y = the number of shares of Class A Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the Market Price of the Common Stock (as defined below) as
of the trading day immediately preceding the date of
exercise of this Warrant; and
B = the Warrant Price
For purposes hereof, the "Market Price of the Common Stock" shall be the
closing price per share of the Class A Common Stock of the Company on the
principal national securities exchange on which the Class A Common Stock of
the Company is then listed or admitted to trading or, if not then listed or
traded on any such exchange, on the NASDAQ National Market System, or if
then not listed or traded on such system, the closing bid price per share on
NASDAQ or other over-the-counter trading market. If at any time such
quotations are not available, the market price of a share of Class A Common
Stock shall be the highest price per share which the Company could obtain
from a willing buyer (not a current employee or director) for shares of
Class A Common Stock sold by the Company, from authorized but unissued
shares, as determined in good faith by the Board of Directors of the
Company, unless the Company shall become subject to a merger, acquisition or
other consolidation pursuant to which the Company is not the surviving
party, in which case the market price of a share of Class A Common Stock
shall be deemed to be the value received by the holders of the Company's
Class A Common Stock for each share of Class A Common Stock pursuant to the
Company's acquisition.
The Company agrees that the shares so converted shall be deemed issued to
the Holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered as aforesaid. In
the event of any conversion of this Warrant, certificates for the shares of
stock so converted shall be delivered to the holder hereof within 15
business days thereafter and, unless this Warrant has been fully converted
or expired, a new Warrant representing the portion of the shares, if any,
with respect to which this Warrant shall not then have been converted, shall
also be issued to the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Class A Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all United States taxes, liens
C-14
<PAGE>
and charges with respect to the issue thereof. During the period within which
the rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issuance upon
exercise of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Class A Common Stock to provide for the exercise of the rights
represented by this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The exercise price and number of shares purchasable on exercise of this
Warrant shall adjust identically with any adjustments made pursuant to the 1995
Private Placement Warrants and the provisions of Section 7 of the 1995 Private
Placement Warrants or other adjustment provisions set forth in the 1995 Private
Placement Warrants and the definitions of the different terms therein are hereby
incorporated by reference.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5 hereof,
the Company shall prepare a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
the Warrant Price after giving effect to such adjustment and the number of
shares then purchasable upon exercise of this Warrant, and shall cause copies of
such certificate to be mailed (by first class mail, postage prepaid) to the
Holder of this Warrant at the address specified in Section 10(c) hereof, or at
such other address as may be provided to the Company in writing by the Holder of
this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Class A Common Stock will be issued in conjunction
with any exercise hereunder, but in lieu of such fractional shares the Company
shall make a cash payment therefore on the basis of the Warrant Price then in
effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this Warrant
and the shares of Class A Common Stock to be issued on exercise hereof are being
acquired for investment and that it will not offer, sell or otherwise dispose of
this Warrant or any shares of Class A Common Stock to be issued upon exercise
hereof except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act"). This Warrant and all shares of
Class A Common Stock issued upon exercise of this Warrant (unless registered
under the Act) shall be stamped and imprinted with a legend substantially in the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND
(2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED."
9. NOTICE OF EXERCISE OF CLASS A WARRANTS.
Whenever any 1995 Private Placement Warrants shall be exercised, within 30
days after such exercise the Company shall notify the Holder (by first class
mail, postage prepaid) at the address specified in Section 10(c) hereof, or at
such other address as may be provided to the Company in writing by the Holder of
this Warrant.
C-15
<PAGE>
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not be
entitled to vote or receive dividends or be deemed the Holder of Class A Common
Stock or any other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant shall have been exercised and
the shares purchasable upon the exercise hereof shall have become deliverable,
as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at the Holder's expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant shall be
in writing, and any notice hereunder shall be deemed to have been given upon the
earlier of delivery thereof by hand delivery, by courier, or by standard form of
telecommunication or three (3) business days after the mailing thereof in the
U.S. mail if sent registered mail with postage prepaid, addressed to the Company
at its principal executive offices and to the Holder at its address set forth in
the Company's books and records or at such other address as the Holder may have
provided to the Company in writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed under the
laws of the State of California.
[Remainder of page intentionally left blank]
C-16
<PAGE>
This Warrant is executed as of this day of , 1999.
AMERIGON INCORPORATED
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
C-17
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase shares of
Class A Common Stock of AMERIGON INCORPORATED pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full.
/ / The undersigned hereby elects to convert the attached warrant
into shares of Class A Common Stock of AMERIGON INCORPORATED
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares
of Class A Common Stock in the name of the undersigned or in such other name
as is specified below:
--------------------------------------
(Name)
--------------------------------------
--------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares of Class A
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
--------------------------------------
Signature
C-18
<PAGE>
CONTINGENT COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, (the "Holder")
is entitled to subscribe for and purchase up to 7380 shares (subject to
adjustment from time to time pursuant to the provisions of Section 5 hereof) of
fully paid and nonassessable Class A Common Stock of Amerigon Incorporated, a
California corporation (the "Company"), at the price specified in Section 2
hereof, as such price may be adjusted from time to time pursuant to Section 5
hereof (the "Warrant Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
As used herein, the term "Class A Common Stock" shall mean the Company's
presently authorized Class A Common Stock, no par value, and any stock into or
for which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT; CONTINGENT EXERCISE.
(a) TERM. Subject to Section 1(b) hereof, the purchase right represented
by this Warrant is exercisable, in whole or in part, at any time during a period
beginning on [Closing Date] and ending ninety days after the latest of the end
of the terms of the warrants as respectively set forth in Section 1(a) of the
Common Stock Purchase Warrant dated [Issue Date] from the Company to Spencer
Trask Securities Incorporated (the "Trask Warrant").
(b) CONTINGENT EXERCISE. The number of shares that may be purchased
pursuant to the exercise of this Warrant is limited to a number of shares equal
to 36.9% multiplied by the number of shares purchased pursuant to the exercise
of the Trask Warrant after the date hereof. To the extent that this would result
in the right to purchase a fractional number of shares, the number of shares
permitted to be purchased will be rounded down to the lowest whole share;
PROVIDED, however, that the number of shares with respect to which this Warrant
shall not then have been exercised will appropriately reflect such adjustment.
2. WARRANT PRICE.
The Warrant Price is $[Trask Warrant issue price], subject to adjustment
from time to time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right represented
by this Warrant may be exercised by the Holder, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
EXHIBIT 1 duly executed) at the principal office of the Company and by the
payment to the Company, by cashier's check or wire transfer, of an amount equal
to the then applicable Warrant Price per share multiplied by the number of
shares then being purchased. The Company agrees that the shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of any
exercise of this Warrant, certificates for the shares of
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<PAGE>
stock so purchased shall be delivered to the Holder within 15 business days
thereafter and, unless this Warrant has been fully exercised or expired, a new
Warrant representing the portion of the shares, if any, with respect to which
this Warrant shall not then have been exercised, shall also be issued to the
Holder within such 15 business day period.
(b) CONVERSION. Subject to Section 1 hereof, the Holder may convert this
Warrant (the "Conversion Right"), in whole or in part, into the number of shares
(less the number of shares which have been previously exercised or as to which
the Conversion Right has been previously exercised) calculated pursuant to the
following formula by surrendering this Warrant (with the notice of exercise form
attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company specifying the number of shares the rights to purchase which the Holder
desires to convert:
<TABLE>
<S> <C> <C>
Y (A - B)
X = --------
A
</TABLE>
where: X = the number of shares of Class A Common Stock to be issued to
the Holder;
Y = the number of shares of Class A Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the Market Price of the Common Stock (as defined below) as
of the trading day immediately preceding the date of
exercise of this Warrant; and
B = the Warrant Price
For purposes hereof, the "Market Price of the Common Stock" shall be the
closing price per share of the Class A Common Stock of the Company on the
principal national securities exchange on which the Class A Common Stock
of the Company is then listed or admitted to trading or, if not then
listed or traded on any such exchange, on the NASDAQ National Market
System, or if then not listed or traded on such system, the closing bid
price per share on NASDAQ or other over-the-counter trading market. If at
any time such quotations are not available, the market price of a share
of Class A Common Stock shall be the highest price per share which the
Company could obtain from a willing buyer (not a current employee or
director) for shares of Class A Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by the Board
of Directors of the Company, unless the Company shall become subject to a
merger, acquisition or other consolidation pursuant to which the Company
is not the surviving party, in which case the market price of a share of
Class A Common Stock shall be deemed to be the value received by the
holders of the Company's Class A Common Stock for each share of Class A
Common Stock pursuant to the Company's acquisition.
The Company agrees that the shares so converted shall be deemed issued to
the Holder as the record owner of such shares as of the close of business
on the date on which this Warrant shall have been surrendered as
aforesaid. In the event of any conversion of this Warrant, certificates
for the shares of stock so converted shall be delivered to the holder
hereof within 15 business days thereafter and, unless this Warrant has
been fully converted or expired, a new Warrant representing the portion
of the shares, if any, with respect to which this Warrant shall not then
have been converted, shall also be issued to the holder hereof within
such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Class A Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all United States taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of
C-20
<PAGE>
the issuance upon exercise of the purchase rights evidenced by this Warrant, a
sufficient number of shares of its Class A Common Stock to provide for the
exercise of the rights represented by this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The exercise price and number of shares purchasable on exercise of this
Warrant shall adjust identically with any adjustments made pursuant to the Trask
Warrant and the provisions of Section 5 of the Trask Warrant and the definitions
of the different terms therein are hereby incorporated by reference.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5 hereof,
the Company shall prepare a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
the Warrant Price after giving effect to such adjustment and the number of
shares then purchasable upon exercise of this Warrant, and shall cause copies of
such certificate to be mailed (by first class mail, postage prepaid) to the
Holder of this Warrant at the address specified in Section 10(c) hereof, or at
such other address as may be provided to the Company in writing by the Holder of
this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Class A Common Stock will be issued in conjunction
with any exercise hereunder, but in lieu of such fractional shares the Company
shall make a cash payment therefore on the basis of the Warrant Price then in
effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this Warrant
and the shares of Class A Common Stock to be issued on exercise hereof are being
acquired for investment and that it will not offer, sell or otherwise dispose of
this Warrant or any shares of Class A Common Stock to be issued upon exercise
hereof except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act"). This Warrant and all shares of
Class A Common Stock issued upon exercise of this Warrant (unless registered
under the Act) shall be stamped and imprinted with a legend substantially in the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND
(2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.".
9. NOTICE OF EXERCISE OF CLASS A WARRANTS.
Whenever any Trask Warrant shall be exercised, within 30 days after such
exercise the Company shall notify the Holder (by first class mail, postage
prepaid) at the address specified in Section 10(c) hereof, or at such other
address as may be provided to the Company in writing by the Holder of this
Warrant.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not be
entitled to vote or receive dividends or be deemed the Holder of Class A Common
Stock or any other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose, nor shall anything contained herein be
C-21
<PAGE>
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant shall have been exercised and
the shares purchasable upon the exercise hereof shall have become deliverable,
as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at the Holder's expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant shall be
in writing, and any notice hereunder shall be deemed to have been given upon the
earlier of delivery thereof by hand delivery, by courier, or by standard form of
telecommunication or three (3) business days after the mailing thereof in the
U.S. mail if sent registered mail with postage prepaid, addressed to the Company
at its principal executive offices and to the Holder at its address set forth in
the Company's books and records or at such other address as the Holder may have
provided to the Company in writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed under the
laws of the State of California.
[Remainder of page intentionally left blank]
C-22
<PAGE>
This Warrant is executed as of this day of , 1999.
AMERIGON INCORPORATED
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
C-23
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase shares of
Class A Common Stock of AMERIGON INCORPORATED pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full.
/ / The undersigned hereby elects to convert the attached warrant
into shares of Class A Common Stock of AMERIGON INCORPORATED
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares
of Class A Common Stock in the name of the undersigned or in such other name
as is specified below:
--------------------------------------
(Name)
--------------------------------------
--------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares of Class A
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
--------------------------------------
Signature
C-24
<PAGE>
APPENDIX D
CERTIFICATE OF DETERMINATION
OF RIGHTS, PREFERENCES AND PRIVILEGES
THE SERIES A PREFERRED STOCK
AMERIGON INCORPORATED
------------------------
Pursuant to the Provisions of Section 401 of the
General Corporation Law of the State of California
The undersigned and , the President and
Secretary, respectively, of Amerigon Incorporated, a California corporation (the
"Corporation"), do hereby certify as follows:
A. That the following resolution designates nine thousand shares of Series A
Preferred Stock, and that as of the date hereof, no shares of Series A Preferred
Stock have been issued or are outstanding.
B. That the Board of Directors of the Corporation, pursuant to the
authority so vested in it by the Articles of Incorporation of the Corporation
and in accordance with the provisions of Section 401 of the General Corporation
Law of the State of California, adopted the following resolution creating a
series of Preferred Stock designated as "Series A Preferred Stock":
WHEREAS, the Articles of Incorporation of this Corporation authorize the
issuance of one or more series of preferred stock ("Preferred Stock") of the
Corporation and authorize the Board of Directors to determine the rights,
preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares of
such series;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority expressly
granted to and vested in the board of directors of the corporation pursuant
to the Articles of Incorporation, there is hereby created one series of
preferred stock, without par value, of the Corporation which shall be
designated "SERIES A PREFERRED STOCK." The number of shares of Series A
Preferred Stock authorized for issuance is nine thousand. In addition to
those set forth in the Articles of Incorporation of the Corporation, the
Series A Preferred Stock shall have the powers and preferences, the
relative, participating, optional or other rights, and the qualifications,
limitations or restrictions set forth below:
1. DIVIDEND PROVISIONS. Subject to the rights of series of Preferred Stock
which may from time to time come into existence, the holders of shares of Series
A Preferred Stock shall be entitled to receive dividends, out of any assets
legally available therefor, in an amount equal to the dividends that would be
paid on the outstanding Class A Common Stock of the corporation into which the
Series A Preferred Stock is convertible on an as converted basis, payable when,
as and if declared by the Board of Directors.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of this
corporation, either voluntary or involuntary, subject to the rights of series of
Preferred Stock that may from time to time come into existence, the holders of
Series A Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets of this corporation to the holders of
Common Stock by reason of their ownership thereof, an amount per share equal to
the sum of (i) $1,000 for each outstanding share of Series A Preferred Stock
(the "Original Series A Issue Price"), (ii) an amount equal to 7% of the
Original Series A Issue Price annually, but only until the fourth anniversary of
the issuance of the Series A Preferred Stock, and (iii) an amount equal to any
declared but unpaid dividends on such share (the amounts in (ii) and (iii) being
referred to herein as the "Premium"). If upon the occurrence of such event, the
assets and funds thus distributed among the holders of the Series A Preferred
Stock shall be
D-1
<PAGE>
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of series of Preferred Stock
that may from time to time come into existence, the entire assets and funds of
the corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock in proportion to the amount of
such stock owned by each such holder.
(b) Upon the completion of the distribution required by subparagraph (a) of
this Section 2 and any other distribution that may be required with respect to
series of Preferred Stock that may from time to time come into existence, if
assets remain in this corporation, the holders of the Common Stock of this
corporation, shall receive all of the remaining assets of the corporation.
(c) (i) For purposes of this Section 2, a liquidation, dissolution or
winding up of this corporation shall be deemed to be occasioned by, or to
include, (A) the acquisition of the corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation but, excluding any
merger effected exclusively for the purpose of changing the domicile of the
corporation); or (B) a sale of all or substantially all of the assets of the
corporation; UNLESS the corporation's shareholders of record as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
corporation's acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration received by the
corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or other similar
restrictions on free marketability:
(1) If traded on a securities exchange or on the NASDAQ National
Market, the value shall be deemed to be the average of the closing
prices of the securities on such exchange over the thirty-day period
ending three (3) days prior to the closing;
(2) If actively traded over-the-counter or on NASDAQ (other than
on the National Market), the value shall be deemed to be the average
of the closing bid or sale prices (whichever is applicable) over the
thirty-day period ending three (3) days prior to the closing; and
(3) If there is no active public market, the value shall be the
fair market value thereof, as determined in good faith by the Board
of Directors of the corporation.
(B) The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an
affiliate or former affiliate) shall be to make an appropriate discount
from the market value determined as above in (A) (1), (2) or (3) to
reflect the approximate fair market value thereof, as determined in good
faith by the Board of Directors of the corporation.
(iii) In the event the requirements of this subsection 2(c) are not
complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such time as the
requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights, preferences
and privileges of the holders of the Series A Preferred Stock shall
revert to and be the same as such rights, preferences and privileges
existing immediately prior to the date of the first notice referred to in
subsection 2(c)(iv) hereof.
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(iv) The corporation shall give each holder of record of Series A
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to (A) the date of the shareholders' meeting called
to approve such transaction, (B) the effective date of a written consent of
the shareholders to approve the transaction, or (C) the closing of such
transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the impending
transaction and the provisions of this Section 2, and the corporation shall
thereafter give such holders prompt notice of any material changes relating
to the transaction. The transaction shall in no event take place sooner than
twenty (20) days after the corporation has given the first notice provided
for herein or sooner than ten (10) days after the corporation has given
notice of any material changes provided for herein; provided, however, that
such periods may be shortened upon the written consent of the holders of
Preferred Stock that are entitled to such notice rights or similar notice
rights and that represent at least a majority of the voting power of all
then outstanding shares of such Preferred Stock.
3. REDEMPTION.
(a) Subject to the rights of series of Preferred Stock which may from time
to time come into existence, on or at any time after January 1, 2003, this
corporation may at any time it may lawfully do so, at the option of the Board of
Directors, redeem in whole or in part the Series A Preferred Stock (such date of
redemption is referred to herein as the "Series A Redemption Date") by paying in
cash therefor a sum equal to the Original Series A Issue Price plus the Premium,
as adjusted for any stock dividends, combinations or splits with respect to such
shares (the "Series A Redemption Price"); provided, however, that this
corporation may only redeem shares of Series A Preferred Stock hereunder if the
average of the closing prices of the Class A Common Stock as reported by Nasdaq
(or such other exchange or market on which the shares are then traded) for the
sixty trading days preceeding the date the notice of redemption is given in
accordance with subsection (b) is at least 4 times greater than the then
applicable Conversion Price (as defined in Section 4(a) below) Any redemption
effected pursuant to this subsection (3)(a) shall be made on a pro rata basis
among the holders of the Series A Preferred Stock in proportion to the number of
shares of Series A Preferred Stock then held by them.
(b) As used herein and in subsection (3)(c) and (d) below, the term
"Redemption Date" shall refer to each "Series A Redemption Date" and the term
"Redemption Price" shall refer to each "Series A Redemption Price." Subject to
the rights of series of Preferred Stock which may from time to time come into
existence, at least fifteen (15) but no more than thirty (30) days prior to each
Redemption Date, written notice shall be mailed, first class postage prepaid, to
each holder of record (at the close of business on the business day next
preceding the day on which notice is given) of the Series A Preferred Stock to
be redeemed, at the address last shown on the records of this corporation for
such holder, notifying such holder of the redemption to be effected, specifying
the number of shares to be redeemed from such holder, the Redemption Date, the
Redemption Price, the place at which payment may be obtained and calling upon
such holder to surrender to this corporation, in the manner and at the place
designated, his, her or its certificate or certificates representing the shares
to be redeemed (the "Redemption Notice"). Except as provided in subsection
(3)(c) on or after the Redemption Date, each holder of Series A Preferred Stock
to be redeemed shall surrender to this corporation the certificate or
certificates representing such shares, in the manner and at the place designated
in the Redemption Notice, and thereupon the Redemption Price of such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(c) From and after the Redemption Date, unless there shall have been a
default in payment of the Redemption Price, all rights of the holders of shares
of Series A Preferred Stock designated for redemption in the Redemption Notice
as holders of Series A Preferred Stock (except the right to receive the
Redemption Price without interest upon surrender of their certificate or
certificates) shall cease with
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respect to such shares, and such shares shall not thereafter be transferred on
the books of this corporation or be deemed to be outstanding for any purpose
whatsoever. Subject to the rights of series of Preferred Stock which may from
time to time come into existence, if the funds of the corporation legally
available for redemption of shares of Series A Preferred Stock on any Redemption
Date are insufficient to redeem the total number of shares of Series A Preferred
Stock to be redeemed on such date, those funds which are legally available will
be used to redeem the maximum possible number of such shares ratably among the
holders of such shares to be redeemed based upon their holdings of Series A
Preferred Stock. The shares of Series A Preferred Stock not redeemed shall
remain outstanding and entitled to all the rights and preferences provided
herein. Subject to the rights of series of Preferred Stock which may from time
to time come into existence, at any time thereafter when additional funds of the
corporation are legally available for the redemption of shares of Series A
Preferred Stock, such funds will immediately be used to redeem the balance of
the shares which the corporation has become obliged to redeem on any Redemption
Date but which it has not redeemed.
(d) On or prior to each Redemption Date, this corporation shall deposit the
Redemption Price of all shares of Series A Preferred Stock designated for
redemption in the Redemption Notice, and not yet redeemed or converted, with a
bank or trust corporation having aggregate capital and surplus in excess of
$100,000,000 as a trust fund for the benefit of the respective holders of the
shares designated for redemption and not yet redeemed, with irrevocable
instructions and authority to the bank or trust corporation to publish the
notice of redemption thereof and pay the Redemption Price for such shares to
their respective holders on or after the Redemption Date, upon receipt of
notification from the corporation that such holder has surrendered his, her or
its share certificate to the corporation pursuant to subsection (3)(b) above. As
of the date of such deposit (even if prior to the Redemption Date), the deposit
shall constitute full payment of the shares to their holders, and from and after
the date of the deposit the shares so called for redemption shall be redeemed
and shall be deemed to be no longer outstanding, and the holders thereof shall
cease to be shareholders with respect to such shares and shall have no rights
with respect thereto except the rights to receive from the bank or trust
corporation payment of the Redemption Price of the shares, without interest,
upon surrender of their certificates therefor, and the right to convert such
shares as provided in Section 4 hereof. Such instructions shall also provide
that any moneys deposited by the corporation pursuant to this subsection (3)(d)
for the redemption of shares thereafter converted into shares of the
corporation's Common Stock pursuant to Section 4 hereof prior to the Redemption
Date shall be returned to the Corporation forthwith upon such conversion. The
balance of any moneys deposited by this corporation pursuant to this subsection
(3)(d) remaining unclaimed at the expiration of two (2) years following the
Redemption Date shall thereafter be returned to this corporation upon its
request expressed in a resolution of its Board of Directors.
4. CONVERSION. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share and on or prior to the fifth day prior to the Redemption
Date, if any, as may have been fixed in any Redemption Notice with respect to
the Series A Preferred Stock, at the office of this corporation or any transfer
agent for such stock, into such number of fully paid and nonassessable shares of
Class A Common Stock as is determined by dividing the Original Series A Issue
Price by the conversion price ("Conversion Price") applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share for shares of
Series A Preferred Stock shall be $1.675; provided, however, that the Conversion
Price for the Series A Preferred Stock shall be subject to adjustment as set
forth in subsection 4(d).
(b) AUTOMATIC CONVERSION. Each share of Series A Preferred Stock shall
automatically be converted into shares of Class A Common Stock at the Conversion
Price at the time in effect for such Series A
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Preferred Stock immediately upon the date specified by written consent or
agreement of the holders of a majority of the then outstanding shares of Series
A Preferred Stock.
(c) MECHANICS OF CONVERSION. Before any holder of Series A Preferred Stock
shall be entitled to convert the same into shares of Class A Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of this corporation or of any transfer agent for the Series A Preferred
Stock, and shall give written notice to this corporation at its principal
corporate office, of the election to convert the same and shall state therein
the name or names in which the certificate or certificates for shares of Class A
Common Stock are to be issued. This corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Class A Common Stock to which such
holder shall be entitled as aforesaid. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Series A Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Class A Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Class A Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Series A Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Class A Common Stock upon conversion of the Series A Preferred Stock shall not
be deemed to have converted such Series A Preferred Stock until immediately
prior to the closing of such sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR CERTAIN DILUTIVE
ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of the Series A
Preferred Stock shall be subject to adjustment from time to time as follows:
(i) In the event the corporation should at any time or from time to time
after the date upon which any shares of Series A Preferred Stock were first
issued (the "Purchase Date" with respect to such series) fix a record date
for the effectuation of a split or subdivision of the outstanding shares of
Class A Common Stock or the determination of holders of Class A Common Stock
entitled to receive a dividend or other distribution payable in additional
shares of Class A Common Stock without payment of any consideration by such
holder for the additional shares of Class A Common Stock, then, as of such
record date (or the date of such dividend distribution, split or subdivision
if no record date is fixed), the Conversion Price of the Series A Preferred
Stock shall be appropriately decreased so that the number of shares of Class
A Common Stock issuable on conversion of each share of such series shall be
increased in proportion to such increase of the aggregate of shares of Class
A Common Stock outstanding. In the event the corporation shall declare or
pay, without consideration, any dividend on the Class A Common Stock payable
in any right to acquire Class A Common Stock for no consideration, then the
corporation shall be deemed to have made a dividend payable in Class A
Common Stock in an amount of shares equal to the maximum number of shares
issuable upon exercise of such rights to acquire Class A Common Stock.
(ii) If the number of shares of Class A Common Stock outstanding at any
time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A Preferred Stock shall be
appropriately increased so that the number of shares of Class A Common Stock
issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares.
(iii) All adjustments to the Conversion Price will be calculated to the
nearest cent of a dollar. No adjustment in the Conversion Price will be
required unless such adjustment would require an increase or decrease of at
least one cent per dollar; PROVIDED, HOWEVER, that any adjustments which by
reason of
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this Section 4(d)(iii) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All adjustments to the
Conversion Price shall be made successively.
(e) OTHER DISTRIBUTIONS. In the event this corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in subsection 4(d), then, in each such case
for the purpose of this subsection 4(e), the holders of the Series A Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Class A Common Stock of
the corporation into which their shares of Series A Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Class A Common Stock of the corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS AND REORGANIZATIONS. If the Class A Common Stock
issuable upon conversion of the Series A Preferred Stock shall be changed into
or exchanged for a different class or classes of capital stock, or other
securities or property whether by reorganization, recapitalization or otherwise
(other than a subdivision, combination or merger or sale of assets transaction
provided for elsewhere in this Section 4 or Section 2) provision shall be made
so that the holders of the Series A Preferred Stock shall thereafter be entitled
to receive upon conversion of the Series A Preferred Stock the number of shares
of stock or other securities or property, to which a holder of Class A Common
Stock deliverable upon conversion would have been entitled on such
recapitalization or reorganization. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 4 with
respect to the rights of the holders of the Series A Preferred Stock after the
recapitalization or reorganization to the end that the provisions of this
Section 4 (including adjustment of the Conversion Price then in effect and the
number of shares purchasable upon conversion of the Series A Preferred Stock)
shall be applicable after that event as nearly equivalent as may be practicable.
(g) NO IMPAIRMENT. This corporation will not, by amendment of its Articles
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by this corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
(i) No fractional shares shall be issued upon the conversion of any
share or shares of the Series A Preferred Stock, and the number of shares of
Class A Common Stock to be issued shall be rounded to the nearest whole
share. Whether or not fractional shares are issuable upon such conversion
shall be determined on the basis of the total number of shares of Series A
Preferred Stock the holder is at the time converting into Class A Common
Stock and the number of shares of Class A Common Stock issuable upon such
aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of the
Conversion Price of Series A Preferred Stock pursuant to this Section 4,
this corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series A Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This corporation shall, upon the
written request at any time of any holder of Series A Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting
forth (A) such adjustment and readjustment, (B) the Conversion Price for
such series of Preferred Stock at the time in effect, and (C) the number of
shares of Class A Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of a share of Series
A Preferred Stock.
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(i) NOTICES OF RECORD DATE. In the event of any taking by this corporation
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right (except the right to
vote), this corporation shall mail to each holder of Series A Preferred Stock,
at least 20 days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Class A Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Class A Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock;
and if at any time the number of authorized but unissued shares of Class A
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, in addition to such other
remedies as shall be available to the holder of such Series A Preferred Stock,
this corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Class A
Common Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to these articles.
(k) NOTICES. Any notice required by the provisions of this Section 4 to be
given to the holders of shares of Series A Preferred Stock shall be deemed given
if deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of this corporation.
5. VOTING RIGHTS. The holder of each share of Series A Preferred Stock
shall have the right to one vote for each share of Class A Common Stock into
which such Series A Preferred Stock could then be converted, and with respect to
such vote, such holder shall have full voting rights and powers equal to the
voting rights and powers of the holders of Class A Common Stock, and shall be
entitled, notwithstanding any provision hereof, to notice of any shareholders'
meeting in accordance with the bylaws of this corporation, and, except with
respect to the election of directors as provided in Section 6 hereof, shall be
entitled to vote, together with holders of Class A Common Stock, with respect to
any question upon which holders of Class A Common Stock have the right to vote.
Fractional votes shall not, however, be permitted and any fractional voting
rights available on an as-converted basis (after aggregating all shares into
which shares of Series A Preferred Stock held by each holder could be converted)
shall be rounded to the nearest whole number (with one-half being rounded
upward).
6. BOARD OF DIRECTORS. So long as at least 40% of the authorized shares of
Series A Preferred Stock are outstanding, the holders of Series A Preferred
Stock, voting as a class, shall be entitled to elect five directors and the
holders of Common Stock, voting as a class, shall be entitled to elect two
directors. So long as at least 40% of the authorized shares of Series A
Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series A
Preferred Stock, change the authorized number of directors of the corporation.
7. STATUS OF CONVERTED OR REDEEMED STOCK. In the event any shares of
Series A Preferred Stock shall be redeemed or converted pursuant to Section 3 or
Section 4 hereof, the shares so converted or redeemed shall be cancelled and
shall not be issuable by the corporation. The Articles of Incorporation of this
corporation shall be appropriately amended to effect the corresponding reduction
in the corporation's authorized capital stock.
8. REPURCHASE OF SHARES. In connection with repurchases by this
corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
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IN WITNESS WHEREOF, this Certificate is signed by ,
President, and , Secretary, as of this day of
, 1999.
--------------------------------------
, President
--------------------------------------
, Secretary
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.
--------------------------------------
, President
--------------------------------------
, Secretary
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APPENDIX E
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT (this "Agreement") is entered into as of March
29, 1999 by and between AMERIGON INCORPORATED, a California corporation, whose
address is 5462 Irwindale Avenue, Irwindale, California 91706 (hereafter
referred to as "Company") and Lon E. Bell, an officer of Company, whose address
is 1819 North Grand Oaks, Altadena, California 91001 (hereafter referred to as
"Bell").
RECITALS
WHEREAS, Company has caused AEVT Incorporated ("Subsidiary"), a California
corporation, to be created, with the Company as the sole initial shareholder of
Subsidiary;
WHEREAS, as partial consideration for the issuance of Subsidiary's shares to
Company, Company has contributed substantially all of its assets relating to the
manufacture and sale of electric vehicles to Subsidiary;
WHEREAS, subsequent to the incorporation of Subsidiary, Company transferred
to Bell 150 shares of common stock of Subsidiary, representing 15% of
Subsidiary's outstanding common stock, and Company now holds 85% of Subsidiary's
outstanding common stock; and
WHEREAS, Company desires to redeem and cancel all shares of Company's Class
B Common Stock held or controlled by Bell or his affiliates or related persons
(the "Class B Shares"); and
WHEREAS, subject to obtaining approval of holders of a majority of the
disinterested shares of Company, Company is willing to exchange all of the
shares of Subsidiary's outstanding common stock owned by Company for the Class B
Shares.
NOW, THEREFORE, in consideration of the premises set forth above, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
ARTICLE I
SHARE TRANSFER
SECTION 1.1 SHARE TRANSFER.
(a) Company hereby agrees, upon satisfaction of the Closing Conditions (as
defined herein), to transfer to Bell 850 shares of common stock of Subsidiary
(the "Subsidiary Shares"), representing all of the shares of common stock of
Subsidiary owned by Company, and Bell hereby agrees, upon the satisfaction of
the Closing Conditions, to simultaneously deliver all outstanding Class B Shares
to Company for cancellation (such transaction is collectively referred to herein
as the "Exchange"). The "Closing Conditions" are (i) the approval of the
Exchange by a majority of the disinterested shares voting thereon at a duly
called meeting of the shareholders of Company, (ii) the closing of the
transactions contemplated by the Securities Purchase Agreement, dated as of
March 29, 1999, among Company and each of the "Investors" named therein, and
(iii) Company having the legal capacity to effect a repurchase of the Class B
Shares in accordance with the California General Corporation Law.
(b) The Exchange will occur at the offices of Company or its counsel
immediately after the condition set forth in Section 1.1(a)(ii) is satisfied, if
all Closing Conditions are then satisfied, or at such other place and time as
Company and Bell may agree to.
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SECTION 1.2 SHARE PURCHASE.
(a) If the condition set forth in Section 1.1(a)(i) is not met but the other
Closing Conditions are met, then:
(1) Bell will sell all outstanding Class B Shares to Company for a price
per share equal to 5% of the average of the closing price of Company's Class
A Common Shares at the close of trading on each of the ten immediately
preceding days during which Company's Class A Common Shares were traded on
the NASDAQ Stock Exchange (such transaction is collectively referred to
herein as the "Purchase"); and
(2) Company will grant to Bell the following rights:
(i) the right to appoint a majority of the members of Subsidiary's
Board of Directors;
(ii) if Company proposes to transfer all or any part of its
Subsidiary Shares (or is required by operation of law or other
involuntary transfer to do so), the right to purchase such Subsidiary
Shares in accordance with the following provisions:
(A) Company will deliver a written notice ("Option Notice") to
Bell stating (w) Company's bona fide intention to transfer such
Subsidiary Shares, (x) the number of Subsidiary Shares to be
transferred, (y) the purchase price and terms of payment for which
Company proposes to transfer such Subsidiary Shares, and (iv) the
name and address of the proposed purchaser, and
(B) within 30 days after receipt of the Option Notice, Bell will
have the right to elect to purchase all or any part of the Subsidiary
Shares upon the price and terms of payment designated in the Option
Notice (or, if the consideration proposed to be paid is not cash, for
cash in an amount equal to the fair market value of the non-cash
consideration proposed to be paid) by delivering written notice of
his exercise of such right within such 30-day period, and the closing
of such purchase will occur within 90 days after receipt of such
notice and Company and Bell will execute such documents and
instruments and make such deliveries as may be reasonably required to
consummate such purchase; and
(iii) if an Option Notice is provided by Company, the right to
participate in the proposed sale of Subsidiary Shares on the same terms
and conditions, and for the same consideration per Subsidiary Share, as
Company, by giving written notice to Company within 10 days after
delivery of the Option Notice; PROVIDED that Bell must, and will then be
obligated to, sell the same pro-rata number of his Subsidiary Shares as
Company is selling of its Subsidiary Shares.
(b) The Purchase will occur at the offices of Company or its counsel
immediately after the conditions set forth in Sections 1.1(a)(ii), 1.1(a)(iii),
and 1.2(a)(1) are satisfied, if at all.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 REPRESENTATIONS AND WARRANTIES OF COMPANY.
(a) Company hereby represents and warrants that that it has sole and
marketable title to the Subsidiary Shares, and that such Subsidiary Shares, when
transferred to Bell will be free and clear of all liens, claims and
encumbrances.
(b) The Company has the corporate power and authority to execute this
Agreement and to consummate the Exchange and the Purchase in accordance with the
terms of this Agreement, and the execution and delivery of this Agreement has
been duly authorized by the Board of Directors of Company and is a legally valid
and binding obligation of Company.
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SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF BELL.
(a) Bell hereby represents and warrants that that he has sole and marketable
title to the Class B Shares, and that such Class B Shares, when transferred to
Company, will be free and clear of all liens, claims and encumbrances.
(b) Bell hereby represents and warrants that he has the right, power and
authority to execute this Agreement and to consummate the Exchange and the
Purchase, and this Agreement is a legally valid and binding obligation of Bell.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, AND OF THE UNITED STATES.
SECTION 3.2 AMENDMENTS.
No amendment, modification, termination or waiver of any provision of this
Agreement, shall be effective unless the same shall be in writing and signed by
an authorized officer of Company (other than Bell) and Bell. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 3.3 SEVERABILITY.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 3.4 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
SECTION 3.5 INTEGRATION.
This Agreement, together with any exhibits and schedules hereto, constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior agreements and understandings of the parties in
connection therewith.
SECTION 3.6 FURTHER ASSURANCES.
Each party hereto agrees to execute, acknowledge and deliver any and all
further instruments, and to do any and all further acts, as may be necessary or
appropriate to carry out the intent and purpose of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
E-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
<TABLE>
<S> <C> <C>
AMERIGON INCORPORATED
By: /s/ RICHARD A. WEISBART
-----------------------------------------
Name: Richard A. Weisbart
Title: President
/s/ LON E. BELL
-----------------------------------------
LON E. BELL
</TABLE>
E-4
<PAGE>
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN
YOUR PROXY CARD
IN THE ENVELOPE PROVIDED
AS SOON AS POSSIBLE
<PAGE>
P R O X Y AMERIGON INCORPORATED
5462 IRWINDALE AVENUE
IRWINDALE, CALIFORNIA 90041
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Richard A.
Weisbart and James L. Mertes as Proxies, each with the power to appoint his
substitute, and hereby authorizes 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 9, 1999 at the annual meeting of shareholders
to be held on May 26, 1999 or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE FIVE DIRECTOR NOMINEES IN PROPOSALS (1) AND FOR
PROPOSALS (2) AND (3) AND, WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT
BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENTS THEREOF, IN THE DISCRETION OF
RICHARD A. WEISBART AND JAMES L. MERTES IN ACCORDANCE WITH THEIR BEST JUDGMENT.
/X/Please mark your votes as in this example
<TABLE>
<S> <C> <C> <C>
PROPOSAL (1): The election of the nominees for director specified in the Proxy Statement to the Board of Directors:
Lon E. Bell, Richard A. Weisbart, Roy A. Anderson, John W. Clark and Michael R. Peevey
/ / FOR ALL NOMINEES LISTED ABOVE (EXCEPT AS MARKED TO THE CONTRARY BELOW)
(INSTRUCTION: To withhold authority to vote for any nominee, write that nominee's name in the space
below.)
-------------------------------------------------------------------------------------------------------
</TABLE>
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
<PAGE>
<TABLE>
<S> <C> <C> <C>
PROPOSAL (2): Approval of the transactions contemplated by the Securities Purchase Agreement, including (A) the
issuance of shares of Series A Convertible Preferred Stock and Contingent Warrants and (B) the
Investors' Rights Agreement.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL (3): Approval of the Exchange of Amerigon's Shares in its Electric Vehicle subsidiary for the shares of
Class B Common Stock held by Dr. Lon Bell pursuant to the Share Exchange Agreement.
/ / FOR / / AGAINST / /ABSTAIN
</TABLE>
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD. IF
SHARES ARE HELD JOINTLY, EACH HOLDER
SHOULD SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS,
ATTORNEYS AND AGENTS SHOULD GIVE
THEIR FULL TITLES. IF THE STOCKHOLDER
IS A CORPORATION, SIGN IN FULL
CORPORATE NAME BY THE AUTHORIZED
OFFICER.
-------------------------------------
Signature
-------------------------------------
Signature (if jointly held)
Dated:
-------------------------------------,
1999
