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:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Amerigon Incorporated
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 __, 1999.
We hope that you like the new format of our Proxy Statement. We
welcome your comments.
By order of the Board of
Directors,
President and Chief Operating
Officer
April __, 1999
<PAGE>
TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS 1
PROPOSALS YOU MAY VOTE ON 5
1. ELECTION OF DIRECTORS 5
2. APPROVAL OF THE SHARE EXCHANGE AGREEMENT AND THE
EXCHANGE OF AMERIGON'S SHARES IN ITS ELECTRIC VEHICLE
SUBSIDIARY FOR CLASS B COMMON STOCK HELD BY DR. LON BELL 5
3. APPROVAL OF THE SECURITIES PURCHASE AGREEMENT, THE
INVESTORS' RIGHTS AGREEMENT AND THE ISSUANCE OF THE SERIES A
PREFERRED SHARES AND THE WARRANTS 5
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON 7
NOMINEES FOR THE BOARD OF DIRECTORS 8
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 AND WARRANTS 16
APPROVAL OF THE EXCHANGE OF AMERIGON'S SHARES IN ITS
ELECTRIC VEHICLE SUBSIDIARY PURSUANT TO THE SHARE EXCHANGE
AGREEMENT 22
STATEMENT ON CORPORATE GOVERNANCE 26
DIRECTORS' COMPENSATION 28
STOCK PERFORMANCE GRAPH 30
OWNERSHIP OF AMERIGON STOCK BY DIRECTORS, OFFICERS, AND
CERTAIN OTHERS 31
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION 33
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION 35
AGGREGATED OPTION EXERCISES AND YEAR-END VALUES 38
CERTAIN TRANSACTIONS 39
FINANCIAL AND OTHER INFORMATION 39
INDEPENDENT ACCOUNTANTS 39
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 40
OTHER MATTERS 40
<PAGE>
QUESTIONS AND ANSWERS
1. Q: What may I vote on?
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 7,
below, and discussed more fully beginning on page 11,
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.
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.
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 January 12, 2000. Any
proposal received after this date will be considered
untimely. 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.
<PAGE>
PROPOSALS YOU MAY VOTE ON
1. ELECTION OF DIRECTORS
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
11, 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
21, 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 11, 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.
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 Series 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 24, 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.
<PAGE>
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 32, 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.
<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 is
obtained and all other conditions to closing are satisfied.
<TABLE>
<CAPTION>
Name Age Last Five Years Director
Since
<S> <C> <C> <C>
Lon E. Bell 58 Chairman of the Board and Chief 1991
Executive Officer of Amerigon
since its 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 1997
Officer of Amerigon since 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 1996
Associates, a private equity
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 1993
Corporation. He served as
Chairman of the Board and Chief
Executive Officer of Lockheed from
1977 until his retirement on
December 31, 1985. He continued
to serve as a director of Lockheed
until December 31, 1990 and also
served as a consultant to that
company until December 31, 1992.
Mr. Anderson is a member of the
boards of directors of the Los
Angeles Music Center, the Greater
Los Angeles United Way and the Los
Angeles World Affairs Council. He
is Chairman and Chief Executive
Officer of the Weingart Foundation
and Co-Chairman of the Select
Panel of Project California.
Michael R. Peevey 61 President and Chief Executive 1993
Officer of New Energy Ventures,
Inc., a 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>
<PAGE>
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) 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 24, 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.
- - 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 (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 liquidation, dissolution or winding
up (including 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.
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 24,
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 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.
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
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 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.
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 14, 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 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 10, 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 10, above. Each of the Directors was aware
of these interests and considered them in recommending and
approving the Financing Transaction.
<PAGE>
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.
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 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 16, 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 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 10, 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 23,
above, and "- Reasons for the Exchange," beginning on page 25, above.
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 8, 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.
<PAGE>
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)
Name Audit Compensation
Lon E. Bell
Richard A. Weisbart
Roy A. Anderson X X
Michael R. Peevey X X
John W. Clark X X
<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.
<TABLE>
<CAPTION>
Fiscal Year Ending
Company/Index/
Market 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Amerigon 100.00 120.00 107.50 58.75 25.00 3.44
Incorporated
NASDAQ Non- 100.00 96.16 134.03 162.84 191.05 279.82
Financial Index
NASDAQ Market 100.00 97.75 138.26 170.01 208.58 293.21
Index-U.S.
Companies
</TABLE>
<PAGE>
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.
Amount Beneficially
Name and Address of Owned and Nature of
Beneficial Owner(1) Beneficial Ownership Percent of
(10) Class
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 778,562 31.4%
(8 persons) (2) (3) (4) (5)
(6) (7) (8) (9)
* 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.
(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 22, 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 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 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
<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 10, 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.
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
Annual Compensation Awards
Name/Position Securities
Underlying
Year Salary Bonus Options (#)(3)
<S> <C> <C> <C> <C>
Lon E. Bell 1998 $144,070 $57,705(1) 8,000
Chairman of the 1997 $134,784 $0 0
Board and 1996 $140,071 $0 0
Chief Executive
Officer
Richard A. 1998 $190,337 $79,205(1) 16,000
Weisbart 1997 $120,692 $45,000(2) 30,000
President and
Chief
Operating Officer
Daniel R. Coker 1998 $150,722 $42,669 14,000
Vice President of 1997 $138,170 $36,667 900
Sales and 1996 $91,664 $21,528 1,000
Marketing
James L. Mertes 1998 $104,942 $41,402 8,000
Vice President of 1997 $105,234 $20,500 2,221
Quality and 1996 $81,920 $9,500 0
Operations
Scott O. Davis 1998 $117,895 $9,787(1) 0
Chief Financial 1997 $61,302 $8,000 8,000
Officer
(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.
</TABLE>
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:
<PAGE>
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed
Annual Rates
of Stock
Price
Appreciation
for Option
Term
Number Percent Exercise Expiration 5% 10%
of of Total or Base Date
Securities Options Price
Underlying Granted to
Option Employees
Granted in Fiscal
Name/Position Year
<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. 16,000 13.2% $3.45 6/14/2008 $34,715 $87,975
Weisbart
President and
Chief
Operating
Officer
Daniel R. 6,000 5.0% $3.45 6/14/2008 $13,018 $32,990
Coker
Vice 8,000 6.6% $11.40 1/26/2008 $57,335 $145,228
President of
Marketing and
Sales
Scott Davis 0 0% n/a n/a n/a n/a
James L. 6,000 5.0% $3.45 6/14/2008 $13,018 $32,990
Mertes
Vice 2,000 1.7% $11.40 1/26/2008 $14,334 $36,322
President of
Quality and
Operations
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.
</TABLE>
<PAGE>
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.
Number of Securities Underlying
Unexercised Options at December
31, 1998
Name Exercisable Unexercisable
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
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.
<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 10, 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.
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 23,
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,
President and Chief Operating Officer
<PAGE>
Appendix A: Securities Purchase Agreement, dated as of March 29, 1999
<PAGE>
AMERIGON INCORPORATED
SECURITIES PURCHASE AGREEMENT
MARCH 29, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. PURCHASE AND SALE OF STOCK AND WARRANTS 1
1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK AND
WARRANTS. 1
1.2 CLOSING. 1
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. 2
2.2 CAPITALIZATION AND VOTING RIGHTS. 2
2.3 SUBSIDIARIES. 3
2.4 AUTHORIZATION. 3
2.5 VALID ISSUANCE OF PREFERRED AND CLASS A COMMON
STOCK. 3
2.6 CONSENTS. 4
2.7 OFFERING. 4
2.8 LITIGATION. 4
2.9 PROPRIETARY INFORMATION AGREEMENTS. 4
2.10 PATENTS AND TRADEMARKS. 5
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. 5
2.12 AGREEMENTS; ACTION. EXCEPT AS SET FORTH ON THE
DISCLOSURE SCHEDULES: 6
2.13 RELATED-PARTY TRANSACTIONS. 6
2.14 SEC DOCUMENTS AND FINANCIAL STATEMENTS. 7
2.15 CHANGES. 7
2.16 TAX RETURNS. 8
2.17 PERMITS. 8
2.18 ENVIRONMENTAL AND SAFETY LAWS. 8
2.19 DISCLOSURE. 8
2.20 REGISTRATION RIGHTS. 9
2.21 CURRENT PUBLIC INFORMATION. 9
2.22 NO GENERAL SOLICITATION. 9
2.23 NO INTEGRATED OFFERING. 9
2.24 CORPORATE DOCUMENTS. 9
2.25 TITLE TO PROPERTY AND ASSETS. 9
2.26 FOREIGN CORRUPT PRACTICES. 9
2.27 INSURANCE. 9
2.28 EMPLOYEE BENEFIT PLANS. 10
2.29 LABOR AGREEMENTS AND ACTIONS. 10
2.30 YEAR 2000 COMPLIANCE. 10
2.31 COMPUTER AND COMMUNICATION INFRASTRUCTURE. 11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS 11
3.1 AUTHORIZATION. 11
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. 11
3.3 ACCREDITED INVESTOR. 11
3.4 RESTRICTED SECURITIES. 11
3.5 LEGENDS. 11
ARTICLE IV. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING 12
4.1 REPRESENTATIONS AND WARRANTIES. 12
4.2 PERFORMANCE. 12
4.3 COMPLIANCE CERTIFICATE. 12
4.4 QUALIFICATIONS. 12
4.5 SHAREHOLDER APPROVAL. 12
4.6 CERTIFICATE OF DETERMINATION. 12
4.7 DUE DILIGENCE. 12
4.8 PROCEEDINGS AND DOCUMENTS. 12
4.9 NO MATERIAL ADVERSE EFFECT. 12
4.10 PROCEEDING OR LITIGATION. 12
4.11 OPINION OF COMPANY COUNSEL. 13
4.12 REDEMPTION. 13
4.13 INVESTORS' RIGHTS AGREEMENT. 13
4.14 BOARD OF DIRECTORS. 13
4.15 LOAN DOCUMENTS. 13
ARTICLE V. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT
CLOSING 13
5.1 REPRESENTATIONS AND WARRANTIES. 13
5.2 PAYMENT OF PURCHASE PRICE. 13
5.3 QUALIFICATIONS. 14
5.4 SHAREHOLDER APPROVAL. 14
5.5 INVESTMENT REPRESENTATION. 14
5.6 CREDIT AGREEMENT. 14
ARTICLE VI. OTHER AGREEMENTS 14
6.1 CONDUCT OF BUSINESS. 14
6.2 ACCESS TO INFORMATION. 16
6.3 OTHER DISCUSSIONS; BREAK UP ARRANGEMENT. 16
6.4 PROXY STATEMENT. 17
6.5 SHAREHOLDERS' MEETING. 17
6.6 PUBLIC DISCLOSURE. 17
6.7 REASONABLE EFFORTS. 17
6.8 BOARD OF DIRECTORS. 17
6.9 BRIDGE LOAN. 18
6.10 NOTIFICATION OF CERTAIN MATTERS. 18
6.11 INDEMNIFICATION. 18
ARTICLE VII. MISCELLANEOUS 18
7.1 SURVIVAL. 18
7.2 SUCCESSORS AND ASSIGNS. 18
7.3 GOVERNING LAW. 18
7.4 TITLES AND SUBTITLES. 19
7.5 NOTICES. 19
7.6 FINDER'S FEE. 19
7.7 EXPENSES. 19
7.8 AMENDMENTS AND WAIVERS. 19
7.9 SEVERABILITY. 19
7.10 TERMINATION. 20
7.11 AGGREGATION OF STOCK. 20
7.12 ENTIRE AGREEMENT. 20
7.13 COUNTERPARTS. 20
<PAGE>
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
<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:
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.
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 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 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.
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 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.
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 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."
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.
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.
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, 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 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 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 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.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
THE COMPANY: AMERIGON INCORPORATED
By: /S/ LON E. BELL
Its:
Address:
INVESTORS: WESTAR CAPITAL II LLC
By: /S/ JOHN CLARK
Its:
Address:
BIG BEAVER INVESTMENTS LLC
By: /S/ OSCAR B. MARX
Its: President
Address: 801 W. Big Beaver, Suite 201
Troy, Michigan 48084
<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 $500
of Class A Common 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 $500
of Class A Common 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>
<PAGE>
Appendix B: Investors' Rights Agreement
<PAGE>
INVESTORS' RIGHTS AGREEMENT
__________, 1999
<PAGE>
TABLE OF CONTENTS
Page
1. Registration Rights. 1
1.1 Definitions. 1
1.2 Request for Registration. 2
1.3 Company Registration. 3
1.4 Obligations of the Company. 4
1.5 Furnish Information. 5
1.6 Expenses of Demand Registration. 5
1.7 Expenses of Company Registration. 6
1.8 Underwriting Requirements. 6
1.9 Delay of Registration. 6
1.10 Indemnification. 7
1.11 Reports Under Securities Exchange Act of 1934. 9
1.12 Form S-3 Registration. 9
1.13 Assignment of Registration Rights. 10
1.14 Limitations on Subsequent Registration Rights. 10
1.15 "Market Stand-Off" Agreement. 11
1.16 Termination of Registration Rights. 11
2. Right of First Offer. 11
3. Miscellaneous. 13
3.1 Successors and Assigns. 13
3.2 Governing Law. 13
3.3 Counterparts. 13
3.4 Titles and Subtitles. 13
3.5 Notices. 13
3.6 Expenses. 14
3.7 Amendments and Waivers. 14
3.8 Severability. 14
3.9 Aggregation of Stock. 14
3.10 Entire Agreement; Amendment; Waiver. 14
<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.
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 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 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
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,
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 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.
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.
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:
(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 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.
<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:
<PAGE>
Appendix C: Form of a Contingent Warrant
<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
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:
Y (A - B)
-------
X = A
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 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."
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.
[Remainder of page intentionally left blank]
<PAGE>
This Warrant is executed as of this ____ day of ___________,
1999.
AMERIGON INCORPORATED
By:___________________________________
Name:_________________________________
Title:_______________________________
<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
<PAGE>
Appendix D: Certificate of Determination
<PAGE>
CERTIFICATE OF DETERMINATION
OF RIGHTS, PREFERENCES AND PRIVILEGES
OF
THE SERIES A PREFERRED STOCK
OF
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 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.
(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 preceding 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 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 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 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.
(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.
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
<PAGE>
Appendix E: Share Exchange Agreement, dated as of March 29, 1999
<PAGE>
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.
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.
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.]
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first set forth above.
AMERIGON INCORPORATED
By: /S/ RICHARD A. WEISBART
Name: Richard A. Weisbart
Title: President
/S/ LON E. BELL
LON E. BELL
<PAGE>
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN
YOUR PROXY CARD
IN THE ENVELOPE PROVIDED
AS SOON AS POSSIBLE
<PAGE>
FORM OF PROXY
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.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
<PAGE>
[x] Please mark your votes as in this example
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.)
__________________________________________________
_______________
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
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
