SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 1996
Commission File Number 0-25184
U. S. ELECTRICAR, INC.
(Exact name of registrant as specified in its charter)
California 95-3056150
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
5 Thomas Mellon Circle, Suite 305, San Francisco, California 94134
(Address of principal executive offices, including zip code)
(415) 656-2400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of November 5, 1996 was $8,465,402. For purposes of this
calculation only, (i) shares of Common Stock and Series A and B Preferred Stock
are deemed to have a market value of $0.27 per share, the average of the high
bid and low ask price of the Common Stock on November 5, 1996, and (ii) each of
the executive officers, directors and persons holding 5% or more of the
outstanding Common Stock (including Series A and B Preferred Stock on an as
converted basis) is deemed to be an affiliate.
The number of shares of Common Stock outstanding as of November 5, 1996 was
127,168,477.
<PAGE>
EXPLANATORY NOTE
This Form 10-K/A constitutes Amendment No. 1 to the Registrant's Annual
Report on Form 10-K for the year ended July 31, 1996, originally filed by the
Registrant on November 12, 1996, and is being filed solely for the purpose of
filing the information required by Part III (Items 10, 11, 12 and 13) to the
Form 10-K.
2
<PAGE>
U.S. ELECTRICAR, INC.
FORM 10-K/A
AMENDMENT NO. 1 TO 1996 ANNUAL REPORT
TABLE OF CONTENTS
PART III
Item 10. Directors and Executive Officers of the Registrant .............. 4
Item 11. Executive Compensation .......................................... 8
Item 12. Security Ownership of Certain Beneficial Owners and Management... 13
Item 13. Certain Relationships and Related Transactions .................. 15
SIGNATURES ............................................................ 19
3
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
<TABLE>
The following table sets forth certain information with respect to
the Directors and executive officers of U.S. Electricar, Inc. (the "Company"):
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Roy Y. Kusumoto 53 Chairman, Chief Executive Officer, President, acting Chief
Financial Officer and Director
Carl D. Perry 64 Executive Vice President, International, and Director
John J. Micek III(3) 44 Vice President, General Counsel and Secretary
Robert A. Sackerman 54 Executive Vice President, Manufacturing
Malcolm R. Currie(1)(3) 69 Director
James S. Miller(1) 61 Director
Edwin O. Riddell(2)(3) 54 Director
David A. Ishag(1)(2) 36 Director
William J. Gilliam 44 Director
<FN>
- --------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of the Executive Committee
</FN>
</TABLE>
Roy Y. Kusumoto, President, Chief Executive Officer and Director. Mr.
Kusumoto has served as a Director of the Company since June 1994. He has served
as the Company's Chief Executive Officer since April 1995 and as President and
Chairman of the Board of the Company since June 1995. Since September 1995, he
has also served as acting Chief Financial Officer. Mr. Kusumoto founded Echoic
Corporation, a sub-contract manufacturer of electronic and electro-mechanical
products, in June 1989 and has served as its President and Chairman since then
to December 1994. Since March 1992 and July 1992, Mr. Kusumoto has served as the
Chairman of Aydia International and Chief Executive Officer of Fuel Technology,
Inc., respectively. Prior to June 1989, Mr. Kusumoto founded and was the
Chairman and Chief Executive Officer of Solectron Corporation, a publicly traded
company, which is one of the largest sub-contract manufacturers in the United
States. From 1988 until 1992, he was also the President of Sanwa Electric, Inc.,
an electronics manufacturer and distributor.
Carl D. Perry, Executive Vice President, International, and Director.
Mr. Perry has served as a Director and as an Executive Vice President of the
Company since July 1993. Prior to joining the Company, he served as Executive
Vice President of Canadiar Ltd., Canada's largest aerospace corporation, from
1984 to 1988, where he conducted strategic planning, worldwide marketing, and
international joint ventures. From 1979 to 1983, Mr. Perry served as Executive
Vice President of the Howard Hughes Summa Corporation's Helicopter Company, now
known as McDonnell Douglas Helicopters, where he was responsible for general
management, worldwide business development, and international operations.
John J. Micek III, Vice President, General Counsel and Secretary. Mr.
Micek joined the Company in March 1994 as its Vice President, General Counsel
and Secretary. Prior to joining the Company, Mr. Micek had practiced law since
January 1989. From 1987 to March 1994 Mr. Micek held several positions with
Armanino Foods of Distinction, Inc., a publicly traded specialty food company,
including serving as its General Counsel and Chief Financial Officer from
February 1987 to December 1988 and Vice President from January 1989 to March
1994. Mr. Micek has also been a Director of Armanino Foods since 1988. Mr. Micek
4
<PAGE>
has also served as a Director of Universal Group, Inc., a mid-west group of
insurance companies, since 1981, and of Cole Group, Inc., a publishing company
based in Northern California, since 1991. Mr. Micek served as the President and
Director of Catalina Capitol, Inc., a publicly traded company, from 1990 until
its merger into Instant Video Technologies, Inc. ("IVT"), an interactive
multi-media network technology company, in 1992. He continues to serve as a
Director of IVT.
Robert A. Sackerman, Executive Vice President, Manufacturing. Mr.
Sackerman joined the Company as Executive Vice President, Manufacturing, in
September 1994. From 1993 to 1994, Mr. Sackerman was President and Founder of
Performance Strategies International, a virtual engineering,
business/manufacturing reprocess company doing business in Europe, the United
States and Mexico. From 1990 to 1993, Mr. Sackerman was part of the senior
start-up team for Saturn Corporation, an automotive manufacturer, functioning as
car assembly and component plant operations manager. Prior to 1990, Mr.
Sackerman spent 27 years with General Motors, in both domestic and foreign
automotive manufacturing operations in senior plant management.
Malcolm R. Currie, Director. Dr. Currie has served as a Director of
the Company since March 1995. From 1986 until July 1992, Dr. Currie served as
Chairman and Chief Executive Officer of Hughes Aircraft Co. (now Hughes
Electronics), and from 1985 until 1988, he was the Chief Executive Officer of
Delco Electronics. His career in electronics and management has included
research with many patents and papers in microwave and millimeter wave
electronics, laser, space systems, and related fields. He has led major programs
in radar, commercial satellites, communication systems, and defense electronics.
He served as Undersecretary of Defense for Research and Engineering, the Defense
Science Board, and currently serves on the Boards of Directors of UNOCAL,
Investment Company of America, and LSI Logic, all of which are publicly traded
companies. He is President of the American Institute of Aeronautics and
Astronautics, and is Chairman of the Board of Trustees of the University of
Southern California.
James S. Miller, Director. Mr. Miller has served as a Director of the
Company since November 1990. From 1963 to the present, Mr. Miller has been
active in start-up and growth businesses, including the ownership of his own
vineyards. He was Director and Officer of Oxford Laboratories from 1959 to 1974,
Chemetrics Corporation from 1975 to 1979, and Grand Cru Vineyards from 1976 to
1981. Oxford Laboratories and Chemetrics Corporation are medical diagnostic
laboratory equipment companies. Currently, Mr. Miller is a director of Mast
Immunosystems, of Mountain View.
Edwin O. Riddell, Director. Mr. Riddell has served as a Director of
the Company since June 1995. From January 1991 to the present, Mr. Riddell has
served as Manager of the Transportation Business Unit in the Customer Systems
Group at the Electric Power Research Institute in Palo Alto, California, and
from 1985 until November 1990, he served with the Transportation Business Unit
as Vice President, Engineering, working on electric public transportation
systems. From 1979 to 1985, he was Vice President and General Manager of Lift U,
Inc., the leading manufacturer of handicapped wheelchair lifts for the transit
industry. Mr. Riddell has also worked with Ford, Chrysler, and General Motors in
the area of auto design (styling), and has worked as a member of senior
management for a number of public transit vehicle manufacturers. Mr. Riddell has
been a member of the American Public Transit Association's ("APTA") Association
Member Board of Governors for over 15 years. He has also served on APTA's Board
of Directors.
David A. Ishag, Director. Mr. Ishag was elected as a Director of the
Company in September 1995. In 1994, Mr. Ishag founded, and continues as a
general partner of, the firm Hirsch & Cie, an external financial advisor to
Union Bancaire Privee (CGI-TDB) in Geneva, Switzerland, where his principal
activities are private banking and asset allocation. From 1991 to 1994, Mr.
Ishag conducted asset management and general banking duties for the Republic
National Bank of New York (Geneva), and also had marketing responsibility for
building clientele portfolios. From 1988 to 1991, Mr. Ishag was associated with
European Investments & Development Group PLC, a London property investment
company, acting as a Director of portfolio management. From 1986 to 1988, Mr.
Ishag was with Barclays de Zoete Wedd Ltd., a graduate banking program, working
with mergers and acquisitions in the Corporate Finance department.
5
<PAGE>
William J. Gilliam, Director. Mr. Gilliam has served as a Director of
the Company since February 1996. Mr. Gilliam has served as Chairman of Kestrel
Financial Services, LLC, the successor company to several private Merchant
Banking Firms formed in July 1997. Mr. Gilliam is also Chairman of New
Charleston Energy Partners, Inc., a California independent power producer, and
Marine Energy Systems Corporation, a manufacturer and supplier of industrial
processing and energy systems. From 1981 to 1987 Mr. Gilliam was an Investment
Banker at Lehman Brothers Kuhn Loeg, Thomson McKinnon Securities, Inc., and
Quadrex Securities, Inc. where he worked with a variety of industries on merger
and acquisition related transactions. He was Chairman of Rexene Corporation, a
NYSE manufacturer of thermoplastics and chemicals, and the Polymar Corporation,
a manufacturer of engineering plastics. He was also a founder, major shareholder
and a Director of Calgon Carbon Corporation, a NYSE corporation which is the
world leader in the production of granular activated carbon.
6
<PAGE>
Relationships Among Directors or Executive Officers
There are no family relationships among any of the Directors or
executive officers of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors, executive officers and persons who own more than 10% of the
Company's Common Stock (collectively, "Reporting Persons") to file reports of
ownership and changes in ownership of the Company's Common Stock to the
Securities and Exchange Commission ("SEC").
Copies of these reports are also required to be delivered to the Company.
Except as set forth below, the Company believes, based solely on its
review of the copies of such reports received or written representations from
certain Reporting Persons, that during fiscal 1996, all Reporting Persons
complied with all applicable filing requirements.
Exceptions: Form 5s were inadvertently not filed on a timely basis by
September 16, 1996, with respect to option grants made automatically to certain
of the nonemployee Directors pursuant to the Company's 1994 Director Stock
Option Plan (the "Director Option Plan") during fiscal 1996. Each nonemployee
Director was granted 1,000 options under the Director Option Plan on the date of
each Board meeting attended by such Director. Director Miller was granted
options under the Director Option Plan on three occasions, for which a total of
one Form 5 was required. Director Currie was granted options under the Director
Option Plan on two occasions, for which a total of one Form 5 was required,
however, Dr. Currie has declined to accept and disclaims ownership of these
options. Director Riddell was granted options under the Director's Option Plan
on three occasions for which a total of one Form 5 was required; and Director
Ishag was granted options under the Director's Option Plan on one occasion for
which a total of one Form 5 was required. The Company has requested that such
Directors file the required Form 5s reporting such option grants with the SEC as
soon as possible.
To the Company's knowledge, a Form 4 or Form 5 was not filed by Itochu
Corporation relating to their purchase of shares of the Company's common stock
pursuant to conversion of debt to equity in June 1996 (see "Certain
Relationships and Related Transactions"). The Company has requested that Itochu
Corporation file the required Form 5 as soon as possible.
To the Company's knowledge, a Form 4 or Form 5 was not filed by
Gerlach & Co. relating to their purchase of shares of the Company's common stock
pursuant to conversion of debt to equity in June 1996 (see "Certain
Relationships and Related Transactions"). The Company has requested that Gerlach
& Co. file the required Form 5 as soon as possible.
To the Company's knowledge, a Form 3 was not filed by Fontal
International L.T.D. ("Fontal"), relating to its purchase of shares in December
1995 of Form 4 was not filed by Fontal relating to the issuance of warrants to
Fontal in May 1996 (see Item 13, "Certain Relationships and Related
Transactions"). The Company has requested that Fontal file the requested forms
as soon as possible.
With regard to regrants of options under the Company's employee and
consultant stock plan in January, 1996, each of Messrs. Kusumoto, Perry, Micek
and Sackerman inadvertently did not file a Form 5 on a timely basis. Each of
these persons has been asked by the Company to file the required Form 5
reporting the regrants of stock options as soon as possible.
7
<PAGE>
Item 11. Executive Compensation
<TABLE>
Summary Compensation Table
The following table sets forth all compensation earned by the
Company's Chief Executive Officer and each of the other most highly compensated
executive officers of the Company whose annual salary and bonus exceeded
$100,000 for the years ended July 31, 1996, 1995 and 1994 (collectively, the
"Named Executive Officers"):
Summary Compensation Table
<CAPTION>
Long-Term
---------
Annual Compensation
------ ------------
Compensation on Awards Securities
------------ --------- Underlying
Salary Bonus Options/SARs
Name and Principal Position Year ($) ($) (#)
- --------------------------- ---- ------ ----- ----------
<S> <C> <C> <C> <C>
Roy Y. Kusumoto(1) 1996 50,000 -- 10,002,000(2)
Chief Executive Officer, 1995 13,461 -- 10,002,000(3)
President and acting Chief 1994 -- -- --
Financial Officer
<FN>
- ---------------
(1) Mr. Kusumoto became Chief Executive Officer of the Company on April 17,
1995. Salary in 1995 was paid for the period April 17, 1995 through July 31,
1995.
(2) For information regarding options, see "Option Repricing in 1996".
(3) 2,000 of such options were granted to Mr. Kusumoto in his capacity as a
nonemployee Director under the 1994 Director Stock Option Plan prior to his
appointment as an officer of the Company in April 1995.
</FN>
</TABLE>
8
<PAGE>
<TABLE>
Option/SAR Grants
The following table sets forth certain information with respect to
stock options and stock appreciation rights ("SARs") granted during 1996 to each
of the Named Executive Officers. In accordance with the rules of the Securities
and Exchange Commission, also shown below is the potential realizable value over
the term of the option (the period from the grant date to the expiration date)
based on assumed rates of stock appreciation of 0%, 5% and 10%, compounded
annually. These amounts are based on certain assumed rates of appreciation and
do not represent the Company's estimate of future stock price. Actual gains, if
any, on stock option and SAR exercises will be dependent on the future
performance of the Common Stock.
<CAPTION>
Option/SAR Grants in Fiscal 1996
Individual Grants
---------------------------------------------
Number of
Securities % of Total
Underlying Options/ Potential Realizable Value at
Options/ SARs Market Assumed Annual Rates of Stock
SARs Granted to Exercise Price on Price Appreciation for Option Term
Granted Employees or Base Date of Expiration ----------------------------------
Name (#) in 1996 Price(3) Grant(4) Date 0% 5% 10%
- ---- ------------ ------- --------- -------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roy Y. Kusumoto 2,000,000(1) 18% $0.30 $0.33 04/25/2000 $ 70,000 $255,120 $479,060
4,000,000(1) 36% $0.30 $0.33 04/25/2000 $140,000 $428,800 $761,920
4,000,000(2) 100% $0.30 $0.33 04/25/2000 $140,000 $428,800 $761,920
<FN>
- ----------------
(1) Options granted.
(2) SARs granted.
(3) For information regarding the repricing of options granted to the named
Executive Officers in 1996, see "Repricing of Options".
(4) Based on the average of the high bid and low ask prices of the Common Stock
on the date of grant.
</FN>
</TABLE>
9
<PAGE>
<TABLE>
Option Exercises and Option Values
The following table sets forth information concerning option exercises
during 1996, and the aggregate value of unexercised options as of July 31, 1996,
held by the Named Executive Officer:
Aggregated Option/SAR Exercises in 1996
and Option Values at July 31, 1996
<CAPTION>
Number of Securities
Aggregate Underlying Unexercised Value of Unexercised In-
Option/SAR Options/SARs at the-Money Options at
Exercises in 1996 July 31, 1996 July 31, 1996(1)
----------------- --------------- --------------------
Shares Value
Acquired on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roy Y. Kusumoto -- -- 2,002,000 8,000,000(2) $ -- $ --
<FN>
- ---------------
(1) Calculated on the basis of the average of the high bid and low ask prices of
the Common Stock on July 31, 1996 of $0.27 per share, minus the exercise price.
(2) 2,000,000 options and 2,000,000 stock appreciation rights will become
exercisable at such time as the Company has achieved two consecutive quarters of
profitability and has reported such financial results on quarterly reports filed
with the Securities and Exchange Commission on Form 10-Q (the "Date of
Vesting"). An additional 2,000,000 options and 2,000,000 stock appreciation
rights will become exercisable on the first anniversary of the Date of Vesting,
provided that Mr. Kusumoto is the Chief Executive Officer of the Company at such
time.
</FN>
</TABLE>
Repricing of Options
Compensation Committee Report on Repricing of Options
In September 1995, the Compensation Committee recommended that the Board of
Directors consider repricing previously granted options under the Company's
Employee and Consultant Stock Plan to its Officers and key employees. Due to the
Company's reorganization, the Compensation Committee believed that the
relationship between the exercise price of those options and the recent market
price of the Company's Common Stock did not provide effective equity incentives
for the Company's Officers and key employees. Equity incentives are a
significant component of the total compensation package of the Company's
employees and play a substantial role in the Company's ability to retain the
services of individuals essential to the Company's long-term success. The
Compensation Committee felt that the Company's ability to retain key employees
would be significantly impaired unless value was restored to their options.
Accordingly, the Compensation Committee determined it was necessary to reprice
the options based on at least 85% of current market value to provide realistic
incentives for the Officers, Directors and employees to whom such options has
been granted.
In light of the Company's circumstances at the time, and the competitive
environment for its employees, the Board of Directors approved the repricing in
October 1995. The options were repriced to $0.30, which was approximately 90% of
the average of the high bid and low ask of the Company's Common Stock on January
16, 1996 for the Officers and key employees that the Company believes to be
important to its long-term success. Because of the critical need to retain these
individuals, the vesting period was not restarted. With respect to the Named
Executive Officer, the options for Mr. Kusumoto were repriced.
Submitted by the Compensation Committee:
Jim Miller
Malcolm Currie
10
<PAGE>
<TABLE>
Option Reprices in 1996
<CAPTION>
Number of
Securities Length of
Underlying Market Price at Exercise Price Original
Name Date Options Time of at Time of New Exercise Option Term
Repriced Repricing Repricing Price Remaining at Date
# $ $ $ of Repricing
<S> <C> <C> <C> <C> <C> <C>
Roy 1/16/96 2,000,000 (1) $0.335 $0.40 $0.30 4 years
Kusumoto
1/16/96 4,000,000 (1) $0.335 $0.64 $0.30 4 years
1/16/96 4,000,000 (1) $0.335 $0.64 $0.30 4 years
<FN>
(1) For information regarding the granting of options and SARs, see "Option/SAR
Grants in Fiscal 1996".
</FN>
</TABLE>
Compensation of Directors
Directors who are employees of the Company do not receive any
compensation for their services as Directors. In February 1995, the Board
resolved that Directors who are not employees of the Company will receive (i)
$1,000 for attendance in person at each regularly scheduled Board meeting, (ii)
$500 for participation at a Board meeting by telephonic conference call, and
(iii) $500 for each committee meeting attended which is held not in conjunction
with a regularly scheduled Board meeting. The payment of these amounts is
subject to the Company receiving $15 million in equity financing after February
1995; however, the amounts are being accrued on the Company's accounting
records. All Directors are reimbursed for expenses incurred in connection with
attending Board and committee meetings.
Each nonemployee Director of the Company is entitled to participate in
the Company's 1994 Director Stock Option Plan (the "Director Option Plan"). The
Board of Directors and the shareholders have authorized a total of 150,000
shares of Common Stock for issuance under the Director Option Plan. The Director
Option Plan provides for the grant of nonstatutory options to nonemployee
Directors of the Company. The Director Option Plan is designed to work
automatically and not to require administration; however, to the extent
administration is necessary, it will be provided by the Board of Directors.
The Director Option Plan provides that each eligible Director is
granted an option to purchase 1,000 shares of Common Stock for each Board
meeting attended in person.
Options granted under the Director Option Plan have a term of five
years unless terminated sooner upon termination of the optionee's status as a
Director or otherwise pursuant to the Director Option Plan. No option granted
under the Director Option Plan is transferable by the optionee other than by
will or the laws of descent and distribution, and each option is exercisable,
during the lifetime of the optionee, only by such optionee. The Director Option
Plan provides that the options become exercisable in full immediately upon the
grant of such options.
The exercise price of all stock options granted under the Director
Option Plan is equal to the fair market value of a share of the Company's Common
Stock on the date of grant of the option. Fair Market Value is defined under the
Director Option Plan as the mean of the bid and asked prices of the Common Stock
in the over-the-counter market on the date of grant, as reported by the National
Association of Securities Dealers Automated Quotation System.
In the event of a merger of the Company with or into another
corporation or a sale of substantially all of the Company's assets, the Director
Option Plan requires that each outstanding option be assumed or an equivalent
option substituted by the successor corporation. The Director Option Plan will
terminate in December 2004. The Board of Directors may amend or terminate the
Director Option Plan; provided, however, that no such action may adversely
affect any outstanding options, and the provisions of the
11
<PAGE>
Director Option Plan affecting the grant and terms of options granted thereunder
may not be amended more than once in any six-month period. Executive officers of
the Company are not eligible to participate in the Director Option Plan.
As of November 5, 1996, 20,000 options had been granted and remained
outstanding under the Director Option Plan.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Mr. Ishag, Mr. Miller
and Dr. Currie. Mr. Miller and Dr. Currie served as members of the Compensation
Committee during all of fiscal 1996. Mr. Ishag has served on the Committee since
February, 1996
12
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
<TABLE>
The following table sets forth certain information regarding beneficial
ownership of the Company's stock as of November 5, 1996, (i) by each person (or
group of affiliated persons) who is known by the Company to own beneficially
more than 5% of each class of the Company's stock, (ii) by each of the Company's
directors, (iii) by each of the Company's executive officers named in the
Summary Compensation Table below, and (v) by the Company's directors and
executive officers as a group. Except as indicated in the footnotes to this
table and subject to applicable community property laws, the persons named in
the table, based on information provided by such persons, have sole voting and
investment power with respect to all shares of stock beneficially owned by them.
<CAPTION>
5% Shareholders, Directors, Officers Common Shares Percentage of Common Shares Voting
and Directors and Officers as a Group Beneficially Owned (1) Beneficially Owned (2) Percentage (3)
- ------------------------------------- ---------------------- ----------------------- --------------
<S> <C> <C> <C>
Itochu Corporation 47,455,789(4) 36.44% 34.94%
2-5-1, Kita-Aoyama 2-chome,
Minato-ku, Tokyo
107-77, Japan
Gerlach & Co. 54,250,947(5) 41.42% 39.72%
c/o Citibank N.A.
111 Wall Street, 8th Floor
New York, NY 10043
Fontal International L.T.D. 16,333,333(11) 11.8% 10.1%
9 Quai des Bergues
Geneva, Switzerland
John J. Micek III 540,000(a) *
Roy Y. Kusumoto 4,002,000(6) 3.47% 3.13%
James S. Miller 111,459(7) * *
Carl D. Perry 732,500(b) * *
Robert Sackerman 324,000(c) *
Malcolm R. Currie 3,000(8) * *
Edwin O. Riddell 3,000(9) * *
David A. Ishag 1,000(10) * *
William J. Gilliam 0 * *
All Directors and executive officers 3,816,418(12) 11.48% 10.35%
as a group (9 persons)
<FN>
*Indicates less than 1%
</FN>
</TABLE>
13
<PAGE>
(1) Number of Common Stock shares includes Series A Preferred Stock shares and
Common Stock shares issuable pursuant to stock options, warrants and other
securities convertible into Common Stock beneficially held by the person or
class in question which may be exercised or converted within 60 days after
November 5, 1996.
(2) The percentages are based on the number of shares of Common Stock owned by
the shareholder divided by the sum of: (i) the total Common Stock outstanding,
(ii) the Series A Preferred Stock owned by such shareholder; and (iii) Common
Stock issuable pursuant to warrants, options and other convertible securities
exercisable or convertible by such shareholder within sixty (60) days after
November 5, 1996.
(3) The percentages are based on the number of shares of Common Stock owned by
the shareholder divided by the sum of: (i) the total Common Stock outstanding,
(ii) the total Series A Preferred Stock outstanding; and (iii) Common Stock
issuable pursuant to warrants, options and other convertible securities
exercisable or convertible by such shareholder within sixty (60) days after
November 5, 1996. This percentage calculation has been included to show more
accurately the actual voting power of each of the shareholders, since the
calculation takes into account the fact that the outstanding Series A Preferred
Stock is entitled to vote together with the Common Stock as a single class on
most shareholder matters.
(4) Includes 26,266,667 shares of Common Stock issuable upon conversion of
convertible debt in the amount of $7,880,000 plus accrued interest, at a
conversion price of $0.30 per share.
(5) Includes 27,664,000 shares of Common Stock issuable upon conversion of
convertible debt in the amount of $8,299,200 plus accrued interest, at a
conversion price of $0.30 per share.
(6) Includes 2,002,000 shares of Common Stock issuable pursuant to stock
options.
(7) Includes (i) 11,000 shares of Common Stock issuable pursuant to stock
options; and 1,000 shares held in revocable trust FBO Mr. Miller's son. Excludes
20,894 shares of Common Stock held in an irrevocable trust for Mr. Miller's son,
as to which Mr. Miller has no voting or investment power. Mr. Miller disclaims
beneficial ownership of such shares.
(8) Includes 3,000 shares of Common Stock issuable pursuant to stock options,
however, Dr. Currie has declined and disclaims ownership of such options.
(9) Includes 3,000 shares of Common Stock issuable pursuant to stock options.
(10) Includes 1,000 shares of Common Stock issuable pursuant to stock options.
(11) Includes (i) 10,333,333 shares of Common Stock issuable upon conversion of
warrants at a conversion price of $0.30 per share. For description of terms of
warrants see "Transaction with Secured Creditors and Others."
(12) Includes 3,816,418 shares of Common Stock issuable pursuant to stock
options.
(a) Includes 540,000 shares of common stock issuable pursuant to stock options.
(b) Includes 732,000 shares of common stock issuable pursuant to stock options.
(c) Includes 324,000 shares of common stock issuable pursuant to stock options.
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Item 13. Certain Relationships and Related Transactions
The following are certain transactions entered into between the Company and its
officers, Directors and principal shareholders and their affiliates since July
31, 1995.
Transactions with Secured Creditors and Others
Gerlach & Co.
The Company and Gerlach & Co., a principal shareholder and creditor of the
Company, agreed to amend Warrants issued to Gerlach & Co. for the purchase of
750,000 shares of the Company's Common Stock. Such Warrants originally had an
exercise price of $3.20 per share. The amendment provides that the exercise
price is equal to the lower of (a) a floating rate of 35% below the market price
of the Common Stock immediately prior to either (i) March 1995, (ii) the date of
exercise, or (iii) the date a reverse stock split is effected by the Company (if
effected by the Company prior to the end of September 1995), or (b) $0.40 per
share. The warrants expire on July 31, 1997.
As of August 1995, Gerlach & Co. held $3,775,000 in principal amount of Series S
Secured Convertible Bonds ("Series S Bonds"). In September 1995, Citibank
Switzerland transferred ownership of $3,255,00 of the Series S Bonds to Gerlach
& Co. In March 1996, accrued unpaid interest of $35,729 on the Series S Bonds
was added to principal. Also in March 1996, the Company converted $210,000 of
the Series S Bonds plus the $35,729 of accrued interest to 471,287 shares of
Common Stock at a conversion price of $0.5214 per share. In June 1996, Gerlach &
Co. converted $3,820,000 of its Series S Bonds into 12,733,334 shares of Common
Stock at $0.30 per share, and accrued interest of $977,452 was converted to
3,258,173 shares of Common Stock at $0.30 per share. The maturity date of the
remaining Series S Bonds was extended to March 1997.
In April 1995, the Company issued to Gerlach & Co. Secured Convertible 10%
Series I Bonds ("Series I Bonds") in the aggregate principal amount of $500,000.
Subsequently, in August 1995, Gerlach & Co. purchased $1,144,000 of additional
Series I Bonds. The Series I Bonds provide for an annual interest rate of 10%
and a maturity date of March 25, 1996, and are convertible into shares of Common
Stock upon the earlier to occur if (i) a Company-approved
restructuring/repayment workout plan accepted by the unsecured creditors holding
80% or more of the Company's unsecured trade debt, which plan has been approved
by the Company, or (ii) the sole election by Itochu Corporation, a principal
shareholder and creditor of the Company, to cause conversion of this debt. The
original conversion rate was the lower of a floating rate or $0.40 per share;
however, the parties agreed in May 1995 to set the minimum conversion rate at
$0.30 per share. In June 1996, the Company converted the total outstanding
balance of the Series I convertible bonds. The principal balance of $1,644,200
held by Gerlach & Co. was converted to 5,480,667 shares of Common Stock at $0.30
per share, and $166,246 of accrued interest was converted to 554,153 shares of
Common Stock at $0.30 per share.
In January 1996, the Company sold 670,000 unregistered shares of Common Stock to
Gerlach & Co at a price of $0.30 per share. The proceeds of the sale were
$201,000. In April 1996, the Company sold 6,666,667 unregistered shares of
Common Stock to Gerlach & Co. at a price of $0.30 per share, receiving proceeds
of $2,000,000. Both of these sales of Common Stock were pursuant to a Regulation
S Subscription Agreement.
Itochu Corporation
In December 1994, the Company defaulted on an interest payment of $331,000 due
December 9, 1994 on a $8,980,000 convertible subordinated note ("Subordinated
Note") due to Itochu Corporation ("Itochu"), a principal shareholder and
creditor of the Company. In July 1995, Itochu converted $4.1 million of the
Subordinated Note hold by it into 13,666,666 shares of Common Stock, at a
conversion price of $0.30 per share. In June 1996, the Company converted the
$4,880,000 balance of the note from ITOCHU to 16,266,667
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shares of Common Stock at $0.30 per share, and the accrued interest of
$1,611,737 was converted to 5,372,456 shares of Common Stock at $0.30 per share.
In April 1995, Itochu and the Company entered into a Supplemental Loan Agreement
(the "Itochu Agreement"), pursuant to which Itochu agreed to loan additional
funds to the Company up to a maximum of $3,000,000 on a matching basis to other
financing that the Company obtained. In August 1995, this $3,000,000 maximum was
reached. In connection with the Itochu Agreement, in April 1995, the Company
issued to Itochu a convertible secured promissory note in the principal amount
of $500,000, in repayment of an advance previously made to the Company by Itochu
International Inc., an affiliate of Itochu, and loaned to the Company an
additional principal amount of $1,356,000. In August 1995, Itochu loaned to the
Company an additional principal amount of $1,144,000. The terms of each of these
loans provided for interest at the rate of 10% per annum, payable semiannually,
with the full principal amount and any accrued but unpaid interest due on March
25, 1997. The debt is convertible at the election of Itochu at any time, or
automatically upon the occurrence of certain events, into shares of Common Stock
at a conversion rate of $0.30 per share. The debt is secured by all of the
assets of the Company.
Fontal International Ltd.
In December 1995, the Company sold 3,333,333 unregistered shares of its Common
Stock to Fontal International, Ltd. at a price of $0.15 per share pursuant to a
Regulation S Subscription Agreement. The proceeds were $500,000.
In May 1996, the Company issued 8,333,332 warrants to Fontal International, Ltd.
in exchange for services performed. The warrants are exercisable at $0.30 per
share for an equal number of shares of Common Stock, and expire on May 1, 1997.
If the market value of the Common Stock of the Company is equal to or greater
than $0.60 per share on the date of exercise, and if the average trading volume
was in excess of 100,000 shares per day for the preceding 20 trading days, the
warrants may be exercised without payment of cash. The warrants may not be
exercised in the United States, and the stock purchased may not be delivered to
the United States unless first registered under the Securities Act or receive an
available exemption from registration. In October 1996, an additional 2,000,000
cashless warrants, exercisable at $0.30 per share, were issued to Fontal
International, Ltd. pursuant to a finders fee relating to the acquisition of
Systronix Corporation.
In August 1996, the Company issued 1,000,000 unregistered shares of Common Stock
to Fontal International, Ltd. at a price of $0.30 per share, pursuant to a
Regulation S Subscription Agreement, and received proceeds of $300,000. In
October 1996, the Company issued 1,666,667 unregistered shares of Common Stock
to Fontal International, Ltd. at a price of $0.30 per share, also pursuant to a
Regulation S Subscription Agreement. The shares were issued to convert a
$500,000 convertible note assumed as part of the acquisition of Systronix
Corporation. The Company also assumed a $300,000 promissory note as part of this
acquisition.
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<PAGE>
Other Sales of Securities
In February 1996, the Company issued Stock options under the 1994
employee & consultant Stock Plan to purchase 900,000 shares of Common Stock to
Robert Sackerman, an Officer of the Company, at exercise price of $.30 per share
with a term of four years. In February 1996, the Company issued Stock options
under the 1994 employee & consultant Stock Plan to purchase 1,200,000 shares of
Common Stock to Carl Perry, an Officer of the Company, at exercise price of $.30
per share with a term of four years. In February 1996, the Company issued Stock
options under the 1994 employee & consultant Stock Plan to purchase 750,000
shares of Common Stock to John Micek, an Officer of the Company, at exercise
price of $.30 per share with a term of four years. In April 1996, the Company
issued Stock options under the 1994 employee & consultant Stock Plan to purchase
200,000 shares of Common Stock to Barrett Woodruff, an Officer of the Company,
at exercise price of $.30 per share with a term of four years.
In February 1996, the Company issued stock options to purchase an
aggregate of 6,002,000 shares of Common Stock and stock appreciation rights
relating to 4,000,000 shares of Common Stock to Roy Kusumoto, the Company's
Chief Executive Officer. See Item 11 -- Executive Compensation.
In fiscal 1996, the Company issued stock options to its nonemployee
Directors under the 1994 Director Stock Option Plan. See Item 11 -- Executive
Compensation -- Compensation of Directors.
Indebtedness of Management
In July 1993, the Company sold 300,983 shares of Series A Preferred
Stock at $0.60 per share to John Billington, a Director and former officer of
the Company, in exchange for a combination of cash, conversion of debt and
deferred compensation due to Mr. Billington, and a Secured, Partially
Nonrecourse Promissory Note in the principal amount of $140,295, on which the
nonrecourse amount was approximately $106,000. The Note is secured by the shares
issued to Mr. Billington. The Note provides for interest at the rate of 8% per
annum payable annually with the full principal amount and any accrued but unpaid
interest due on January 1, 1997. As of July 31, 1996, $165,772 of principal and
accrued interest were outstanding under the Note, which amount was the largest
amount of indebtedness outstanding under the Note in 1996.
The Company believes that the shares of Common Stock and other
securities issued in the above referenced transactions were sold at their fair
market value, that (with the exception of the 2,000,000 options granted to Mr.
Kusumoto at less than fair market value) the exercise prices of the options and
stock appreciation rights granted were equivalent to the fair market value of
the Company's Common Stock at the date of grant, and that the other transactions
described above were made on terms no less favorable to the Company than could
have been obtained from unaffiliated third parties. The above referenced
transactions were approved by a majority of the disinterested members of the
Board of Directors. All future transactions between the Company and its officers
directors, principal shareholders and affiliates will be approved by a majority
of the Board of Directors, including, where appropriate, a majority of the
disinterested, nonemployee directors on the Board of Directors, and, where
appropriate, will be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
Employment Agreements
Carl Perry, Executive Vice President, and John Micek, Vice President
and Secretary each have employment agreements for terms ending on December 31,
1996, subject to earlier termination "for cause" and otherwise with severance
pay as described below. If the Company terminates the employee "without cause"
or the Company elects to enforce a "covenant-not-to-compete" provision in each
employment agreement, the agreement provides that the employee is to be paid a
monthly severance payment from the termination date through December 31, 1996
based on 50% of the terminated employee's then authorized annual
17
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salary. In addition, each such officer is entitled to approximately two weeks of
paid vacation and is covered under the Company's health and disability
insurance. Mr. Perry's agreement currently provides for an annual salary of
$75,000, and Mr. Micek's agreement currently provides for an annual salary of
$90,000.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on November 27 , 1995.
U.S. ELECTRICAR, INC.
By: /s/ Roy Y. Kusumoto
----------------------------------------------
Roy Y. Kusumoto, Chief Executive Officer,
President, and Acting Chief Financial Officer
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Roy Y. Kusumoto President, Chief Executive Officer, November 27, 1996
- ----------------------------------- Acting Chief Financial Officer, and -----------------
Roy Y. Kusumoto Director (Principal Executive Officer
and Principal Financial and
Accounting Officer)
/s/ Carl D. Perry* Executive Vice President and Director November 27, 1996
- ----------------------------------- -----------------
Carl D. Perry
/s/ James S. Miller* Director November 27, 1996
- ----------------------------------- -----------------
James S. Miller
/s/ Malcolm R. Currie, Ph.D.* Director November 27, 1996
- ----------------------------------- -----------------
Malcolm R. Currie, Ph.D.
/s/ Edwin O. Riddell Director November 27, 1996
- ----------------------------------- -----------------
Edwin O. Riddell
/s/ David A. Ishag Director November 27, 1996
- ----------------------------------- -----------------
David A. Ishag
*By: /s/ Roy Y. Kusumoto
-------------------------------
Roy Y. Kusumoto, Attorney-in-Fact
19
</TABLE>
