SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
U.S. ELECTRICAR, INC.
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(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)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transactions 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>
U.S. ELECTRICAR, INC.
Notice of Annual Meeting of Shareholders
To Be Held June 1, 2000
To the Shareholders of U.S. ELECTRICAR, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of U.S. Electricar, Inc., a California corporation (the
"Company"), will be held at 19850 South Magellan Drive, Torrance, California
90502, on Thursday, June 1, 2000, at 10:00 a.m., local time, for the following
purposes:
1. AUTHORIZATION FOR THE BOARD OF DIRECTORS TO EFFECT A
REVERSE STOCK SPLIT IN A RATIO OF ONE-FOR-TWENTY. To authorize the Board of
Directors to effect, any time until the next Annual Meeting of Shareholders, a
reverse stock split of the Company's Common Stock in a ratio of one-for-twenty;
2. AUTHORIZATION FOR THE BOARD OF DIRECTORS TO EFFECT A
REVERSE STOCK SPLIT IN A RATIO OF ONE-FOR-FIFTEEN. To authorize the Board of
Directors to effect, any time until the next Annual Meeting of Shareholders, a
reverse stock split of the Company's Common Stock in a ratio of one-for-fifteen;
3. AUTHORIZATION FOR THE BOARD OF DIRECTORS TO EFFECT A
REVERSE STOCK SPLIT IN A RATIO OF ONE-FOR-TEN. To authorize the Board of
Directors to effect, any time until the next Annual Meeting of Shareholders, a
reverse stock split of the Company's Common Stock in a ratio of one-for-ten;
4. AUTHORIZATION FOR THE BOARD OF DIRECTORS TO EFFECT A
REVERSE STOCK SPLIT IN A RATIO OF ONE-FOR-FIVE. To authorize the Board of
Directors to effect, any time until the next Annual Meeting of Shareholders, a
reverse stock split of the Company's Common Stock in a ratio of one-for-five;
5. AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE
NAME OF THE COMPANY TO "ENOVA SYSTEMS, INC." To approve an amendment to the
Articles of Incorporation to change the name of the Company to Enova Systems,
Inc.
6. ELECTION OF DIRECTORS. To elect six (6) Directors of the
Company to serve until the next Annual Meeting of Shareholders or until their
respective successors are elected and qualified;
7. SELECTION OF INDEPENDENT AUDITORS. To ratify the
appointment of Moss Adams LLP as the independent auditors for the Company for
the fiscal year ending December 31, 2000; and
8. To transact such other business as may properly come before
the Annual Meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement which is attached and made a part hereof.
<PAGE>
The Board of Directors has fixed the close of business on May 1, 2000
as the record date for determining the shareholders entitled to notice of and to
vote at the Annual Meeting and any adjournment or postponement thereof.
After careful consideration, the Company's Board of Directors has
approved the proposals and recommends that you vote in favor of each such
proposal.
By Order of the Board of Directors
/s/ Carl D. Perry
-----------------------
Carl D. Perry
Chief Executive Officer
Torrance, California
May 12, 2000
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY. IF YOU DO NOT EXPECT TO ATTEND IN
PERSON, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE ANNUAL MEETING
AND VOTE BY BALLOT, YOUR PROXY WILL BE AUTOMATICALLY REVOKED AND ONLY YOUR VOTE
AT THE ANNUAL MEETING WILL BE COUNTED.
<PAGE>
1
Mailed to Shareholders on or about May 15, 2000
U.S. ELECTRICAR, INC.
19850 South Magellan Drive
Torrance, California 90502
---------------------------------
PROXY STATEMENT
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For the Annual Meeting of Shareholders
To Be Held on June 1, 2000
The enclosed proxy ("Proxy") is solicited on behalf of the Board of
Directors (the "Board") of U.S. Electricar, Inc., a California corporation (the
"Company"), for use at the 2000 Annual Meeting of Shareholders to be held on
Thursday, June 1, 2000 at 10:00 a.m., local time, at the Company's executive
offices located at 19850 South Magellan Drive, Torrance, California 90502, and
at any adjournment thereof.
This Proxy Statement and the accompanying form of Proxy are to be
mailed to the shareholders entitled to vote at the Annual Meeting on or about
May 15, 2000. The specific proposals to be considered and acted upon at the
Annual Meeting are summarized in the accompanying Notice and are described in
more detail in the Proxy Statement. All shareholders of record at the close of
business on May 1, 2000 are entitled to notice of, and to vote at, the Annual
Meeting.
Proxies
If any shareholder is unable to attend the Annual Meeting, such
shareholder may vote by proxy. The enclosed proxy is solicited by the Board. The
shares represented by the proxies received, properly marked, dated, executed and
not revoked will be voted at the Annual Meeting. Shareholders are urged to
specify their choices on the enclosed proxy card. If a proxy card is signed and
returned without choices specified, in the absence of contrary instructions, the
shares of Common Stock, Series A Convertible Preferred Stock ("Series A
Preferred Stock") and Series B Convertible Preferred Stock ("Series B Preferred
Stock"), as the case may be, represented by such proxy card will be voted "FOR"
Proposals 1, 2, 3, 4, 5, 6 and 7, and will be voted in the proxy holders'
discretion as to other matters that may properly come before the Annual Meeting.
Revocability of Proxy
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is exercised by: (i) delivering to the
Company at its executive offices, 19850 South Magellan Drive Torrance,
California 90502 (to the attention of Carl D. Perry, the Company's President), a
written notice of revocation or a duly executed proxy bearing a later date; or
(ii) attending the Annual Meeting and voting in person.
Solicitation
The solicitation of proxies will be conducted by mail and the Company
will bear all attendant costs. These costs will include the expense of preparing
and mailing proxy materials for the Annual Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's Common Stock. The Company may conduct further solicitation personally,
telephonically or by facsimile through its Officers, Directors and regular
employees, none of whom will receive additional compensation for assisting with
the solicitation.
<PAGE>
2
Record Date and Voting
The close of business on May 1, 2000 has been fixed as the record date
(the "Record Date") for determining the holders of shares of Common Stock,
Series A Preferred Stock, and Series B Preferred Stock of the Company entitled
to notice of and to vote at the Annual Meeting. As of the close of business on
the Record Date, the Company had 225,182,278 shares of Common Stock, 3,165,767
shares of Series A Preferred Stock, and 4,125,957 shares of Series B Preferred
Stock, for an aggregate of 232,474,002 shares, outstanding and entitled to vote
at the Annual Meeting.
The presence at the Annual Meeting of a majority of the shares of
Common Stock, Series A Preferred Stock, and Series B Preferred Stock of the
Company in the aggregate on an as converted basis, or approximately 116,237,002
of these shares on an as converted basis either in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting.
Each outstanding share of Common Stock and Series A Preferred Stock on
the Record Date is entitled to one (1) vote, and each outstanding share of
Series B Preferred Stock on the Record Date is entitled to two and two-thirds (2
2/3) votes on all matters voted on at the Annual Meeting, except that (i) the
holders of the Series B Preferred Stock are voting as a separate class to fill
one of two vacancies allotted to the Series B Preferred Stock by voting for one
(1) director, (ii) the holders of the Common Stock and Series A Preferred Stock
are voting together as a single class for the election of five (5) directors,
and (iii) cumulative voting may be used in the election of directors to be
elected by the Common Stock and the Series A Preferred Stock. Since only one
director has been nominated that will be voted upon by the holders of the Series
B Preferred Stock, the Company does not believe cumulative voting will be
applicable for the election of this director. Under cumulative voting, each
holder of Common Stock and Series A Preferred Stock may cast for a single
candidate, or distribute among the candidates as such holder chooses, a number
of votes equal to the number of candidates (five (5) at this meeting) multiplied
by the number of shares held by such shareholder. Cumulative voting will apply
only to those candidates whose names have been placed in nomination prior to
voting. No shareholder shall be entitled to cumulate votes unless the
shareholder has given notice at the meeting, prior to the voting, of the
shareholder's intention to cumulate the shareholder's votes. If any one
shareholder gives such notice, all shareholders may cumulate their votes for
candidates in nomination, except to the extent that if a shareholder withholds
votes from the nominees, the proxy holders named in the accompanying form of
proxy, in their sole discretion, will vote such proxy for, and, if necessary,
exercise cumulative voting rights to secure the election of the nominees listed
below as directors of the Company.
The Common Stock, Series A Preferred Stock, and Series B Preferred
Stock will vote together as a single class on all matters scheduled to be voted
on at the Annual Meeting, other than: (i) Proposal No. 1, 2, 3 and 4, the
authorization for the Board to effect a one-for-twenty, one-for-fifteen,
one-for-ten or one-for-five reverse stock split, for which the affirmative vote
of a majority of the outstanding Common Stock, voting as a separate class, will
be required in addition to the affirmative vote of a majority of the outstanding
Common Stock, Series A Preferred Stock, and Series B Preferred Stock, voting
together as a single class; and (iii) Proposal No. 6, the election of directors,
for which the Series B Preferred Stock, voting as a separate class, shall vote
to elect one (1) of the six (6) directors, and for which the outstanding Common
Stock and Series A Preferred Stock, voting together as a single class, shall
vote to elect five (5) directors.
An affirmative vote of a majority of the issued and outstanding shares
of Common Stock (not just shares present and voting at the meeting), and an
affirmative vote of a majority of the issued and outstanding shares of Common
Stock, Series A Preferred Stock, and Series B Preferred Stock in the aggregate
(not just shares present and voting at the meeting) is required for approval of
Proposal 1, 2, 3 and 4. An affirmative vote of a majority of the issued and
outstanding shares of Common Stock (not just shares present and voting at the
meeting) is required for approval of Proposal 5. An affirmative vote of a
majority of the shares of Common Stock, Series A Preferred Stock, and Series B
Preferred Stock, present and voting at the meeting, either in person or by
proxy, is required for approval of Proposals 6 (subject to cumulative voting if
invoked) and 7.
<PAGE>
3
An automated system administered by the Company's Common Stock transfer
agent will tabulate votes of the holders of Common Stock cast by proxy, and the
Company's Series A and Series B Preferred Stock transfer agent will tabulate
votes of the holders of Series A and Series B Preferred Stock cast by proxy. An
employee of the Company will tabulate votes cast in person at the Annual
Meeting. Abstentions and broker non-votes are each included in the determination
of the number of shares present and voting, and each is tabulated separately.
However, broker non-votes are not counted for purposes of determining the number
of votes cast with respect to a particular proposal. In determining whether a
proposal has been approved, abstentions are counted as votes against the
proposal and broker non-votes are not counted as votes for or against the
proposal, except broker non-votes will have the effect of a negative vote for
Proposals 1, 2, 3, and 4 since such proposals requires for approval an
affirmative vote of a majority of the outstanding shares of the Company's Common
Stock (not just shares present and voting at the meeting), and an affirmative
vote of a majority of the Common Stock, Series A Preferred Stock, and Series B
Preferred Stock (not just shares present and voting at the meeting).
The Annual Report of the Company for the five-month stub period ended
December 31, 1999 has been mailed concurrently with the mailing of the Notice of
Annual Meeting and Proxy Statement to all shareholders entitled to notice of and
to vote at the Annual Meeting. The Annual Report is not incorporated into this
Proxy Statement and is not considered proxy soliciting material.
Please mark, date, sign and return the enclosed Proxy in the
accompanying postage-prepaid, return envelope as soon as possible so that, if
you are unable to attend the Annual Meeting, your shares may be voted.
<PAGE>
4
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1
AUTHORIZATION FOR THE BOARD TO
EFFECT A ONE-FOR-TWENTY
REVERSE STOCK SPLIT
General
The Company's shareholders are being asked at this annual meeting to
approve four different reverse stock split proposals. The Board has directed
that each of the reverse stock splits outlined in Proposals 1, 2, 3 and 4 of
this Proxy be submitted to the Company's shareholders for consideration and
action. The Board may subsequently approve and effect, in its sole discretion,
one of the reverse stock splits approved by the shareholders based on its
determination of which reverse stock split will allow adequate additional shares
of Common Stock to be issued for potential future financing and which results in
the greatest marketability and liquidity of the Common Stock.
The Company's shareholders are being asked in Proposal 1 to act upon a
proposal to authorize the Board to effect a reverse stock split in the ratio of
one-for-twenty at any time prior to the next Annual Meeting of Shareholders. At
the last annual meeting, held on July 29, 1999, a reverse stock split of
one-for-twenty was approved by the shareholders. However, the Company did not
implement that reverse stock split.
Except as may result from the rounding of fractional shares as
described below, each shareholder will hold the same percentage of Common Stock
outstanding immediately following a one-for-twenty reverse stock split as each
shareholder did immediately prior to a one-for-twenty reverse stock split. If
approved by the shareholders of the Company, one of the four proposed reverse
stock splits would become effective on any date (the "Effective Date") selected
and approved by the Board on or prior to the Company's next Annual Meeting of
Shareholders. If none of the reverse stock splits adopted by the shareholders is
subsequently approved by the Board and effected by such date, the Board will
again seek shareholder approval.
An amendment of the Company's Articles of Incorporation is required
to effect a reverse stock split. The complete text of the form of an amendment
to the Articles of Incorporation for the one-for-twenty reverse stock split is
set forth in Exhibit A to this Proxy Statement; however, such text is subject to
amendment to include such changes as may be required by the California Secretary
of State. If any of the four reverse stock splits set forth in Proposals 1, 2,
3, or 4 is approved by the requisite vote of the Company's shareholders and
thereafter approved by the Board, upon filing of the applicable Amendment to the
Articles with the California Secretary of State on the Effective Date, a reverse
stock split will be effective. For example, if the one-for-twenty reverse stock
split is approved, upon the filing of the one-for-twenty reverse stock split
amendment to the Articles of Incorporation, each share of the Common Stock
issued and outstanding immediately prior thereto (the "Old Common Stock"), will
be, automatically and without any action on the part of the shareholders,
converted into and reconstituted into 1/20th, of a share of the Company's Common
Stock (the "New Common Stock"); provided, however, that no fractional shares of
New Common Stock will be issued as a result of any of the one-for-twenty reverse
stock split. In lieu of any such fractional share interest, each holder of Old
Common Stock who would otherwise be entitled to receive a fractional share of
New Common Stock will receive cash in lieu of such fractional share of New
Common Stock in an amount equal to the product obtained by multiplying (a) the
average of the high-bid and low-asked per share prices of the Common Stock as
reported on the NASDAQ electronic "Bulletin Board" on the Effective Date
(adjusted if necessary to reflect the per share price of the Old Common Stock
without giving effect to the reverse stock splits) by (b) the number of shares
of Old Common Stock held by such holder that would otherwise have been exchanged
for such fractional share interest.
<PAGE>
5
Shortly after the Effective Date, shareholders will be asked to
surrender certificates representing shares of Old Common Stock in accordance
with the procedures set forth in a letter of transmittal to be sent by the
Company. Upon such surrender, a certificate representing shares of Common Stock
resulting from the applicable reverse stock split will be issued and forwarded
to the shareholders (and cash in lieu of any fractional share interest);
however, each certificate representing shares of Old Common Stock will continue
to be valid and represent the number of shares of newly issued Common Stock
equal to the number of shares of Old Common Stock (and cash in lieu of such
fractional share, as described above) that such shareholder is entitled to
receive as a consequence of the resulting reverse stock split. SHAREHOLDERS
SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL
LETTER.
Purposes of the Proposed Reverse Stock Splits
At the appropriate time, the Board believes any one of the four
proposed reverse stock splits is desirable for several reasons. A reverse stock
split should enhance the acceptability of the Common Stock by the financial
community and the investing public. The reduction in the number of issued and
outstanding shares of Common Stock caused by any one of the four proposed
reverse stock splits is anticipated initially to increase proportionally the per
share market price of the Common Stock. The Board also believes that the
proposed reverse stock splits may result in a broader market for the Common
Stock than that which currently exists. The expected increased price level may
encourage interest and trading in the Common Stock and possibly promote greater
liquidity for the Company's shareholders, although such liquidity could be
adversely affected by the reduced number of shares of Common Stock outstanding
after the Effective Date of any one of the four proposed reverse stock splits.
Additionally, a variety of brokerage house policies and practices tend to
discourage individual brokers within those firms from dealing with lower priced
stocks. Some of those policies and practices pertain to the payment of broker's
commissions and to time consuming procedures that function to make the handling
of lower priced stocks economically unattractive to brokers. In addition, the
structure of trading commissions also tends to have an adverse impact upon
holders of lower priced stock because the brokerage commission on a sale of
lower priced stock generally represents a higher percentage of the sales price
than the commission on a relatively higher priced issue. The four proposed
reverse stock splits could result in a price level for the Common Stock that
will reduce, to some extent, the effect of the above-referenced policies and
practices of brokerage firms and diminish the adverse impact of trading
commissions on the market for the Common Stock. Any reduction in brokerage
commissions resulting from the one of the four proposed reverse stock splits may
be offset, however, in whole or in part, by increased brokerage commissions
required to be paid by shareholders selling "odd lots" created by such reverse
stock splits.
However, there can be no assurance that any or all of these effects
will occur; including, without limitation, that the market price per share of
Common Stock after a reverse stock split will be equal to the applicable
multiple of the market price per share of Old Common Stock before a reverse
stock split, or that such price will either exceed or remain in excess of the
current market price. Further, there is no assurance that the market for the
Common Stock will be improved. Shareholders should note that the Board cannot
predict what effect any one of the four Reverse Stock Split proposals will have
on the market price of the Common Stock.
<PAGE>
6
Effects of the One-for-Twenty Reverse Stock Split
Contingent upon shareholder and Board approval, one of the four
proposed reverse stock splits will be effected by filing the applicable
Amendment to the Company's Articles of Incorporation and will be effective
immediately upon such filing. The Company reserves the right to forego or
postpone filing a reverse stock split amendment to the Articles if such action
is determined not to be in the best interests of the Company and its
shareholders.
Without any further action on the part of the Company or the
shareholders, after the filing of the applicable Amendment to the Company's
Articles effecting one of the approved reverse stock splits, the shares of Old
Common Stock will be converted into and reconstituted as the appropriate number
of shares of Common Stock resulting from one of the proposed reverse stock
splits (and, where applicable, cash in lieu of such fractional share, as
described above). As a result of paying cash in lieu of fractional shares
resulting from a twenty-for-one reverse stock split, the Company estimates that
the entire interest of approximately 50 shareholders (those holding fewer than
20 shares of Common Stock) will be eliminated pursuant to a one-for-twenty
reverse stock split. Because such transaction would be mandatory, such
shareholders holding fewer than 20 shares who wish to retain their existing
equity interest in the Company would be adversely affected. The Company expects
that approximately 1,275 shares of currently outstanding shares of Common Stock
would result in fractional share interests for which cash would be paid in the
twenty-for-one reverse stock split. Shares of Common Stock no longer outstanding
as a result of the fractional share settlement procedure will be returned to
authorized but unissued shares of the Company.
After giving effect to the settlement of fractional shares of Common
Stock, there will be no material differences between the rights of the shares of
Common Stock outstanding prior to the one-for-twenty reverse stock split and
those outstanding after the one-for-twenty reverse stock split is effected. The
one-for-twenty reverse stock split will, however, result in certain adjustments
to the voting rights and conversion ratios of the Series A Preferred Stock and
the Series B Preferred Stock. Specifically, pursuant to the terms of the
Company's Articles of Incorporation, the one-for-twenty reverse stock split will
result in an adjustment to the voting rights of the Series A Preferred Stock and
the Series B Preferred Stock so that once a reverse stock split is effected, the
relative voting power of such shares to the voting power of the Common Stock and
to the voting power of the other series of outstanding Preferred Stock will be
in the same proportion as existed immediately prior to a one-for-twenty reverse
stock split. For example, under Proposal No. 1, this adjustment would result in
a reduction in the voting power of each share of the Series A Preferred Stock
from one vote per share to 1/20th of a vote per share and a reduction in the
voting power of the Series B Preferred Stock from 2-2/3 votes per share to
2/15ths of a vote per share. Thus, the proportionate voting power of the holders
of the stock of the Company would not be affected. All of the proposed reverse
stock splits will also result in adjustments being made to the conversion ratios
of the Series A Preferred Stock and the Series B Preferred Stock so that such
shares will be convertible into such number of shares of Common Stock that a
holder of such Preferred Stock would have been entitled to receive if such
Preferred Stock were to have been converted into Common Stock immediately prior
to a proposed reverse stock split. For example, under such adjustments, after
the one-for-twenty reverse stock split is made effective, each share of the
Series A Preferred Stock will be convertible into 1/20th of a share of Common
Stock, as compared to one share of Common Stock prior to the one-for-twenty
reverse stock split, and each share of the Series B Preferred Stock will be
convertible into either 2/15ths, of a share of Common Stock, as compared to
2-2/3 shares of Common Stock prior to the twenty-for-one reverse stock split.
Similar adjustments will also be made to the conversion ratios and exercise
provisions of the Company's various other outstanding convertible or exercisable
securities.
<PAGE>
7
As proposed hereunder, shareholders have no right under California law
to dissent from a reverse stock split of the Common Stock.
Consummation of a one-for-twenty reverse stock split will not alter the
number of authorized shares of Common Stock which will remain at 500,000,000
shares. As discussed above, proportionate voting rights and other rights of the
holders of Common Stock and Preferred Stock will not be altered by the
one-for-twenty reverse stock split (other than as a result of the payment of
cash in lieu of fractional shares, as described above, and other than the change
in the number of shares of Common Stock into which the outstanding shares of
Series A Preferred Stock and Series B Preferred Stock are convertible).
Shareholders should note that certain disadvantages may result from the
adoption of any of the proposed reverse stock splits. In the event either
Proposals 1,2,3 or 4 is approved by the shareholders and one of the approved
reverse stock splits is subsequently approved and effected by the Board, the
number of outstanding shares of Common Stock would be decreased as a result of
the reverse stock split, but the number of authorized shares of Common Stock
would not be so decreased. The Company would therefore have the authority to
issue a greater number of shares of Common Stock following the one-for-twenty
reverse stock split without the need to obtain shareholder approval to authorize
additional shares. Any such additional issuance may have the effect of
significantly reducing the interest of the existing shareholders of the Company
with respect to earnings per share, voting, liquidation value and book and
market value per share.
As of March 31, 2000, the number of issued and outstanding shares of
Old Common Stock was 232,627,663. The following table illustrates the effects of
a one-for-twenty reverse stock split upon the number of shares of Old Common
Stock issued and outstanding, and the number of authorized and unissued shares
of Common Stock (assuming that no additional shares of Old Common Stock are
issued by the Company after the Record Date).
Common Stock Authorized and
Reverse Stock Split Ratio Outstanding(1) Unissued Common Stock(2)
- ------------------------- -------------- ------------------------
1 for 20 11,631,383 488,368,617
(1) The figures in this table are calculated based on March 31, 2000 issued and
outstanding shares of Old Common Stock as reported in the Company's Form 10Q for
the three months ended March 31, 2000, to be filed with the Securities and
Exchange Commission on or about May 15, 2000. These figures do not take into
account any reduction in the number of outstanding shares of Common Stock
resulting from the procedures for cashing out fractional shares. In addition,
the number of Common Stock shares outstanding does not include shares of Common
Stock issuable upon exercise or conversion of outstanding options, warrants or
convertible debt but does include the conversion of the Series A and Series B
Preferred Stock.
(2) These figures are based on a pre-Reverse Stock Split number of 500,000,000
authorized shares as of March 31, 2000.
The Common Stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934 (the "Exchange Act") and, as a result, the
Company is subject to the periodic reporting and other requirements of the
Exchange Act. The one-for-twenty reverse stock split will not effect the
registration of the Common Stock under the Exchange Act. After the Effective
Date, trades of the New Common Stock will continue to be reported on the NASDAQ
electronic "Bulletin Board" under the Company's symbol "ECAR." The
one-for-twenty reverse stock split will not result in a Rule 13e-3 transaction
as defined under the Exchange Act.
<PAGE>
8
Federal Income Tax Consequences of the Proposed Reverse Stock Splits
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the four proposed reverse stock splits. The Company, however,
believes that because the proposed reverse stock splits are not part of a plan
to increase any shareholder's proportionate interest in the assets or earnings
and profits of the Company, all of the proposed reverse stock splits will have
the following federal income tax effects:
1. A shareholder will not recognize gain or loss on the exchange of Old
Common Stock for newly issued Common Stock resulting from a reverse
stock split. In the aggregate, the shareholder's basis in shares of
newly issued Common Stock resulting from a reverse stock split will
equal his basis in shares of Old Common Stock, excluding any basis
attributable to shares of Old Common Stock which the shareholder
surrenders for cash in lieu of a fractional share of newly issued
Common Stock resulting from a reverse stock split.
2. A shareholder's holding period for tax purposes for shares of Common
Stock resulting from a reverse stock split will be the same as the
holding period for tax purposes of the shares of Old Common Stock
exchanged therefor.
3. All of the four proposed reverse stock splits will constitute a
reorganization within the meaning of Section 368(a)(1)(E) of the
Internal Revenue Code or will otherwise qualify for general
nonrecognition treatment, and the Company will not recognize any gain
or loss as a result of any of the proposed reverse stock splits.
4. To the extent a shareholder receives cash from the Company in lieu of a
fractional share of Common Stock resulting from one of the proposed
reverse stock splits, the shareholder will be treated for tax purposes
as though he sold the fractional share to the Company. Such a
shareholder will recognize a gain equal to the excess of (i) his cash
distribution over (ii) his tax basis in the fractional share deemed
sold. The gain will be long-term capital gain if the shareholder's
shares are capital assets in his hands and if he had held his shares
for more than one year before a reverse stock split. If the
shareholder's tax basis in the fractional share deemed sold exceeds his
cash distribution, the shareholder will recognize a loss.
Vote Required for Shareholder Approval of a One-for-Twenty Reverse Stock Split
The approval of this Proposal No. 1 requires the affirmative vote of a
majority of the outstanding shares of Common Stock, voting separately as a
class, and the affirmative vote of a majority of the outstanding shares of
Common Stock, Series A Preferred Stock and Series B Preferred Stock, voting
together as a single class (with both the Common Stock and the Series A
Preferred Stock having one vote per share and the Series B Preferred Stock
having 2-2/3 votes per share).
THE BOARD RECOMMENDS A VOTE FOR THE AUTHORIZATION OF THE BOARD
TO AMEND THE ARTICLES OF INCORPORATION
PURSUANT TO THE RESOLUTIONS SET FORTH IN EXHIBIT A TO THIS PROXY STATEMENT TO
EFFECT A ONE-FOR-TWENTY REVERSE STOCK SPLIT
<PAGE>
9
PROPOSAL NO. 2
AUTHORIZATION FOR THE BOARD TO
EFFECT A ONE-FOR-FIFTEEN
REVERSE STOCK SPLIT
General
The Company's shareholders are also being asked to act upon a proposal
to authorize the Board to effect a reverse stock split in the ratio of
one-for-fifteen at any time prior to the next Annual Meeting of Shareholders.
Shareholders are being asked to approve four different reverse stock
split proposals. The Board has directed that each of the reverse stock splits
outlined in Proposals 1, 2, 3 and 4 be submitted to the Company's shareholders
for consideration and action. The Board may subsequently approve and effect, in
its sole discretion, one of the reverse stock splits approved by the
shareholders based on its determination of which of them will allow adequate
additional shares of Common Stock to be issued for potential future financing
and which results in the greatest marketability and liquidity of the Common
Stock.
Except as may result from the rounding of fractional shares as
described below, each shareholder will hold the same percentage of Common Stock
outstanding immediately following the one-for-fifteen reverse stock split as
each shareholder did immediately prior to the one-for-fifteen reverse stock
split. If approved by the shareholders and Board of the Company, a reverse stock
split would become effective on any date (the "Effective Date") approved and
selected by the Board on or prior to the Company's next Annual Meeting of
Shareholders. If none of the proposed reverse stock splits is effected by such
date, the Board will again seek shareholder approval.
An amendment of the Company's Articles of Incorporation is required to
effect a reverse stock split. The complete text of the form of an amendment to
the Articles of Incorporation for the one-for-fifteen reverse stock split is set
forth in Exhibit B to this Proxy Statement; however, such text is subject to
amendment to include such changes as may be required by the California Secretary
of State. If any one of the four reverse stock splits set forth in Proposals 1,
2, 3, or 4 is approved by the requisite vote of the Company's shareholders and
thereafter approved by the Board, upon filing of the applicable Amendment to the
Articles with the California Secretary of State on the Effective Date, a reverse
stock split will be effective. For example, if the one-for-fifteen reverse stock
split is approved, upon the filing of the one-for-fifteen reverse stock split
amendment to the Articles of Incorporation each share of the Common Stock issued
and outstanding immediately prior thereto ("Old Common Stock"), will be,
automatically and without any action on the part of the shareholders, converted
into and reconstituted into 1/15th of a share of the Company's Common Stock (the
"New Common Stock"); provided, however, that no fractional shares of New Common
Stock will be issued as a result of the one-for-fifteen reverse stock split. In
lieu of any such fractional share interest, each holder who would otherwise be
entitled to receive a fractional share of New Common Stock will receive cash in
lieu of such fractional share of New Common Stock in an amount equal to the
product obtained by multiplying (a) the average of the high-bid and low-asked
per share prices of the Common Stock as reported on the NASDAQ electronic
"Bulletin Board" on the Effective Date (adjusted if necessary to reflect the per
share price of the Old Common Stock without giving effect to the Reverse Stock
Splits) by (b) the number of shares of Old Common Stock held by such holder that
would otherwise have been exchanged for such fractional share interest.
<PAGE>
10
Shortly after the Effective Date, shareholders will be asked to
surrender certificates representing shares of Old Common Stock in accordance
with the procedures set forth in a letter of transmittal to be sent by the
Company. Upon such surrender, a certificate representing shares of Common Stock
resulting from the applicable reverse stock split will be issued and forwarded
to the shareholders (and cash in lieu of any fractional share interest);
however, each certificate representing shares of Old Common Stock will continue
to be valid and represent the number of shares of newly issued Common Stock
equal to the number of shares of Old Common Stock (and cash in lieu of such
fractional share, as described above) that such shareholder is entitled to
receive as a consequence of the resulting reverse stock split. SHAREHOLDERS
SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL
LETTER.
Purposes of the Proposed Reverse Stock Splits
For a discussion of the purposes of the reverse splits, see the caption
entitled "Purposes of the Proposed Reverse Stock Splits" in Proposal No. 1.
Effects of the One-for-Fifteen Reverse Stock Split
Contingent upon shareholder and Board approval, one of the four
proposed reverse stock splits will be effected by filing the applicable
Amendment to the Company's Articles of Incorporation and will be effective
immediately upon such filing. The Company reserves the right to forego or
postpone filing a reverse stock split amendment to the Articles if such action
is determined not to be in the best interests of the Company and its
shareholders.
Without any further action on the part of the Company or the
shareholders, after the filing of the applicable Amendment to the Company's
Articles effecting a reverse stock split, the shares of Old Common Stock will be
converted into and reconstituted as the appropriate number of shares of newly
issued Common Stock resulting from a reverse stock split (and, where applicable,
cash in lieu of such fractional share, as described above). As a result of
paying cash in lieu of fractional shares resulting from a one-for-fifteen
reverse stock split, the Company estimates that the entire interest of
approximately 50 shareholders (those holding fewer than 15 shares of Common
Stock) will be eliminated pursuant to such reverse stock split. Because such
transaction would be mandatory, such shareholders holding fewer than 15 shares
who wish to retain their existing equity interest in the Company would be
adversely affected. The Company expects that approximately 1,275 shares of
currently outstanding shares of Common Stock would result in fractional share
interests for which cash would be paid in the one-for-fifteen reverse stock
split. Shares of Common Stock no longer outstanding as a result of the
fractional share settlement procedure will be returned to authorized but
unissued shares of the Company.
After giving effect to the settlement of fractional shares of Common
Stock, there will be no material differences between the rights of the shares of
Common Stock outstanding prior to the one-for-fifteen reverse stock split and
those outstanding after the one-for-fifteen reverse stock split is effected. The
one-for-fifteen reverse stock split will, however, result in certain adjustments
to the voting rights and conversion ratios of the Series A Preferred Stock and
the Series B Preferred Stock. Specifically, pursuant to the terms of the
Company's Articles of Incorporation, the one-for-fifteen reverse stock split
will result in an adjustment to the voting rights of the Series A Preferred
Stock and the Series B Preferred Stock so that once the one-for-fifteen reverse
stock split is effected, the relative voting power of such shares to the voting
power of the Common Stock and to the voting power of the other series of
outstanding Preferred Stock will be in the same proportion as existed
immediately prior to the reverse stock split. For example, under this proposal,
this adjustment would result in a reduction in the voting power of
<PAGE>
11
each share of the Series A Preferred Stock from one vote per share to 1/15th of
a vote per share and a reduction in the voting power of the Series B Preferred
Stock from 2-2/3 votes per share to 8/45ths of a vote per share. Thus, the
proportionate voting power of the holders of the stock of the Company would not
be affected. The one-for-fifteen reverse stock split will also result in
adjustments being made to the conversion ratios of the Series A Preferred Stock
and the Series B Preferred Stock so that such shares will be convertible into
such number of shares of Common Stock that a holder of such Preferred Stock
would have been entitled to receive if such Preferred Stock were to have been
converted into Common Stock immediately prior to the reverse stock split. For
example, under such adjustments, after the one-for-fifteen reverse stock split
is made effective, each share of the Series A Preferred Stock will be
convertible into 1/15th of a share of Common Stock, as compared to one share of
Common Stock prior to the one-for-fifteen reverse stock split, and each share of
the Series B Preferred Stock will be convertible into either 8/45ths, of a share
of Common Stock, as compared to 2-2/3 shares of Common Stock prior to the
one-for-fifteen reverse stock split. Similar adjustments will also be made to
the conversion ratios and exercise provisions of the Company's various other
outstanding convertible or exercisable securities.
As proposed hereunder, shareholders have no right under California law
to dissent from a reverse stock split of the Common Stock.
Consummation of the one-for-fifteen reverse stock split will not alter
the number of authorized shares of Common Stock which will remain at 500,000,000
shares. As discussed above, proportionate voting rights and other rights of the
holders of Common Stock and Preferred Stock will not be altered by the
one-for-fifteen reverse stock split (other than as a result of the payment of
cash in lieu of fractional shares, as described above, and other than the change
in the number of shares of Common Stock into which the outstanding shares of
Series A Preferred Stock and Series B Preferred Stock are convertible).
Shareholders should note that certain disadvantages may result from the
adoption of any of the proposed reverse stock splits. In the event either
Proposals 1,2,3 or 4 is approved by the shareholders and one of the approved
reverse stock splits is subsequently approved and effected by the Board, the
number of outstanding shares of Common Stock would be decreased as a result of a
reverse stock split, but the number of authorized shares of Common Stock would
not be so decreased. The Company would therefore have the authority to issue a
greater number of shares of Common Stock following any of the proposed reverse
stock splits without the need to obtain shareholder approval to authorize
additional shares. Any such additional issuance may have the effect of
significantly reducing the interest of the existing shareholders of the Company
with respect to earnings per share, voting, liquidation value and book and
market value per share.
As of March 31, 2000, the number of issued and outstanding shares of
Old Common Stock was 232,627,663. The following table illustrates the effects of
the one-for-fifteen reverse stock split upon the number of shares of Old Common
Stock issued and outstanding, and the number of authorized and unissued shares
of Common Stock (assuming that no additional shares of Old Common Stock are
issued by the Company after the Record Date).
Common Stock Authorized and
Reverse Stock Split Ratio Outstanding(1) Unissued Common Stock(2)
- ------------------------- -------------- ------------------------
1 for 15 15,508,511 484,491,489
<PAGE>
12
(1) The figures in this table are calculated based on March 31, 2000 issued and
outstanding shares of Old Common Stock as reported in the Company's Form 10Q for
the three months ended March 31, 2000, to be filed with the Securities and
Exchange Commission on or about May 15, 2000. These figures do not take into
account any reduction in the number of outstanding shares of Common Stock
resulting from the procedures for cashing out fractional shares. In addition,
the number of Common Stock shares outstanding does not include shares of Common
Stock issuable upon exercise or conversion of outstanding options, warrants or
convertible debt but does include the conversion of the Series A and Series B
Preferred Stock.
(2) These figures are based on a pre-Reverse Stock Split number of 500,000,000
authorized shares as of March 31, 2000.
The Common Stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934 (the "Exchange Act") and, as a result, the
Company is subject to the periodic reporting and other requirements of the
Exchange Act. The one-for-fifteen reverse stock split will not effect the
registration of the Common Stock under the Exchange Act. After the Effective
Date, trades of the New Common Stock will continue to be reported on the NASDAQ
electronic "Bulletin Board" under the Company's symbol "ECAR." The
one-for-fifteen reverse stock split will not result in a Rule 13e-3 transaction
as defined under the Exchange Act.
Federal Income Tax Consequences of the Reverse Stock Split
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the Reverse Stock Split. For a discussion of the Federal income
tax consequences of a reverse stock split see the caption entitled "Federal
Income Tax Consequences of the Proposed Reverse Stock Splits" under Proposal No.
1.
Vote Required for Shareholder Approval of the One-for-Fifteen Reverse Stock
Split
The approval of Proposal No. 2 requires the affirmative vote of a
majority of the outstanding shares of Common Stock, voting separately as a
class, and the affirmative vote of a majority of the outstanding shares of
Common Stock, Series A Preferred Stock and Series B Preferred Stock, voting
together as a single class (with both the Common Stock and the Series A
Preferred Stock having one vote per share and the Series B Preferred Stock
having 2-2/3 votes per share).
THE BOARD RECOMMENDS A VOTE FOR THE AUTHORIZATION OF THE BOARD
TO AMEND THE ARTICLES OF INCORPORATION
PURSUANT TO THE RESOLUTIONS SET FORTH IN EXHIBIT B TO THIS PROXY STATEMENT TO
EFFECT A ONE-FOR-FIFTEEN REVERSE STOCK SPLIT
<PAGE>
13
PROPOSAL NO. 3
AUTHORIZATION FOR THE BOARD TO
EFFECT A ONE-FOR-TEN
REVERSE STOCK SPLIT
General
The Company's shareholders are also being asked to act upon a proposal
to authorize the Board to effect a reverse stock split in the ratio of
one-for-ten at any time prior to the next Annual Meeting of Shareholders.
Shareholders are being asked to approve four different reverse stock
split proposals. The Board has directed that each of the reverse stock splits
outlined in Proposals 1, 2, 3 and 4 be submitted to the Company's shareholders
for consideration and action. The Board may subsequently approve and effect, in
its sole discretion, one of the reverse stock splits approved by the
shareholders based on its determination of which of them will allow adequate
additional shares of Common Stock to be issued for potential future financing
and which results in the greatest marketability and liquidity of the Common
Stock.
Except as may result from the rounding of fractional shares as
described below, each shareholder will hold the same percentage of Common Stock
outstanding immediately following all of the reverse stock splits as each
shareholder did immediately prior to a reverse stock split. If approved by the
shareholders of the Company, a reverse stock split would become effective on any
date (the "Effective Date") selected and approved by the Board on or prior to
the Company's next Annual Meeting of Shareholders. If none of the proposed
reverse stock splits is effected by such date, the Board will again seek
shareholder approval.
One of the reverse stock splits approved by shareholders will be
effected by an amendment of the Company's Articles of Incorporation. The
complete text of the form of an amendment to the Articles of Incorporation for
the one-for-ten reverse stock split is set forth in Exhibit C to this Proxy
Statement; however, such text is subject to amendment to include such changes as
may be required by the California Secretary of State. If the reverse stock
splits set forth in Proposals 1, 2, 3, or 4 is approved by the requisite vote of
the Company's shareholders and thereafter approved by the Board, upon filing of
the applicable Amendment to the Articles with the California Secretary of State
on the Effective Date, a reverse stock split will be effective. For example, if
the one-for-ten reversed stock split is approved, upon the filing of the
amendment to the Articles of Incorporation for the one-for-ten reverse split,
each share of the Common Stock issued and outstanding immediately prior thereto
(the "Old Common Stock"), will be, automatically and without any action on the
part of the shareholders, converted into and reconstituted into 1/10th of a
share of the Company's Common Stock (the "New Common Stock"); provided, however,
that no fractional shares of New Common Stock will be issued as a result of the
Reverse Stock Splits. In lieu of any such fractional share interest, each holder
of Old Common Stock who would otherwise be entitled to receive a fractional
share of New Common Stock will receive cash in lieu of such fractional share of
New Common Stock in an amount equal to the product obtained by multiplying (a)
the average of the high-bid and low-asked per share prices of the Common Stock
as reported on the NASDAQ electronic "Bulletin Board" on the Effective Date
(adjusted if necessary to reflect the per share price of the Old Common Stock
without giving effect to the Reverse Stock Splits) by (b) the number of shares
of Old Common Stock held by such holder that would otherwise have been exchanged
for such fractional share interest.
<PAGE>
14
Shortly after the Effective Date, shareholders will be asked to
surrender certificates representing shares of Old Common Stock in accordance
with the procedures set forth in a letter of transmittal to be sent by the
Company. Upon such surrender, a certificate representing shares of Common Stock
resulting from the applicable reverse stock split will be issued and forwarded
to the shareholders (and cash in lieu of any fractional share interest);
however, each certificate representing shares of Old Common Stock will continue
to be valid and represent the number of shares of newly issued Common Stock
equal to the number of shares of Old Common Stock (and cash in lieu of such
fractional share, as described above) that such shareholder is entitled to
receive as a consequence of the resulting reverse stock split. SHAREHOLDERS
SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL
LETTER.
Purposes of the Reverse Stock Split
For a discussion of the purposes of the reverse splits, see the caption
entitled "Purposes of the Proposed Reverse Stock Splits" in Proposal No. 1.
Effects of the One-for-Ten Reverse Stock Split
Contingent upon shareholder and Board approval, one of the four
proposed reverse stock splits will be effected by filing the applicable
Amendment to the Company's Articles of Incorporation and will be effective
immediately upon such filing. The Company reserves the right to forego or
postpone filing a reverse stock split amendment to the Articles if such action
is determined not to be in the best interests of the Company and its
shareholders.
Without any further action on the part of the Company or the
shareholders, after the filing of the Amendment to the Company's Articles
effecting one of the four the Reverse Stock Splits, the shares of Old Common
Stock will be converted into and reconstituted as the appropriate number of
shares of newly issued Common Stock resulting from a reverse stock split (and,
where applicable, cash in lieu of such fractional share, as described above). As
a result of paying cash in lieu of fractional shares resulting from a
one-for-ten reverse stock split, the Company estimates that the entire interest
of approximately 35 shareholders (those holding fewer than 10 shares of Common
Stock) will be eliminated pursuant to such reverse stock split. Because such
transaction would be mandatory, such shareholders holding fewer than 10 shares
who wish to retain their existing equity interest in the Company would be
adversely affected. The Company expects that approximately 1,275 shares of
currently outstanding shares of Common Stock would result in fractional share
interests for which cash would be paid in the one-for-ten reverse stock split.
Shares of Common Stock no longer outstanding as a result of the fractional share
settlement procedure will be returned to authorized but unissued shares of the
Company.
After giving effect to the settlement of fractional shares of Common
Stock, there will be no material differences between the rights of the shares of
Common Stock outstanding prior to the one-for-ten reverse stock split and those
outstanding after the one-for-ten reverse stock split is effected. The
one-for-ten reverse stock split will, however, result in certain adjustments to
the voting rights and conversion ratios of the Series A Preferred Stock and the
Series B Preferred Stock. Specifically, pursuant to the terms of the Company's
Articles of Incorporation, the one-for-ten reverse stock split will result in an
adjustment to the voting rights of the Series A Preferred Stock and the Series B
Preferred Stock so that once the one-for-ten reverse stock split is effected,
the relative voting power of such shares to the voting power of the Common Stock
and to the voting power of the other series of outstanding Preferred Stock will
be in the same proportion as existed immediately prior to the reverse stock
split. For example, under Proposal No. 3, this adjustment would result in a
reduction in the voting power of
<PAGE>
15
each share of the Series A Preferred Stock from one vote per share to 1/10th of
a vote per share and a reduction in the voting power of the Series B Preferred
Stock from 2-2/3 votes per share to 4/15ths of a vote per share. Thus, the
proportionate voting power of the holders of the stock of the Company would not
be affected. The one-for-ten reverse stock split will also result in adjustments
being made to the conversion ratios of the Series A Preferred Stock and the
Series B Preferred Stock so that such shares will be convertible into such
number of shares of Common Stock that a holder of such Preferred Stock would
have been entitled to receive if such Preferred Stock were to have been
converted into Common Stock immediately prior to the reverse stock split. For
example, under such adjustments, after the one-for-ten reverse stock split is
made effective, each share of the Series A Preferred Stock will be convertible
into 1/10th of a share of Common Stock, as compared to one share of Common Stock
prior to the one-for-ten reverse stock split, and each share of the Series B
Preferred Stock will be convertible into either 4/15ths, of a share of Common
Stock, as compared to 2-2/3 shares of Common Stock prior to the one-for-ten
reverse stock split. Similar adjustments will also be made to the conversion
ratios and exercise provisions of the Company's various other outstanding
convertible or exercisable securities.
As proposed hereunder, shareholders have no right under California law
to dissent from a reverse stock split of the Common Stock.
Consummation of one-for-ten reverse stock split will not alter the
number of authorized shares of Common Stock which will remain at 500,000,000
shares. As discussed above, proportionate voting rights and other rights of the
holders of Common Stock and Preferred Stock will not be altered by the
one-for-ten reverse stock split (other than as a result of the payment of cash
in lieu of fractional shares, as described above, and other than the change in
the number of shares of Common Stock into which the outstanding shares of Series
A Preferred Stock and Series B Preferred Stock are convertible).
Shareholders should note that certain disadvantages may result from the
adoption of the one-for-ten reverse stock split. In the event the one-for-ten
reverse stock split is approved by the shareholders and is subsequently approved
and effected by the Board, the number of outstanding shares of Common Stock
would be decreased as a result of a one-for-ten reverse stock split, but the
number of authorized shares of Common Stock would not be so decreased. The
Company would therefore have the authority to issue a greater number of shares
of Common Stock following the one-for-ten reverse stock split without the need
to obtain shareholder approval to authorize additional shares. Any such
additional issuance may have the effect of significantly reducing the interest
of the existing shareholders of the Company with respect to earnings per share,
voting, liquidation value and book and market value per share.
As of March 31, 2000, the number of issued and outstanding shares of
Old Common Stock was 232,627,663. The following table illustrates the effects of
the one-for-ten reverse stock split upon the number of shares of Old Common
Stock issued and outstanding, and the number of authorized and unissued shares
of Common Stock (assuming that no additional shares of Old Common Stock are
issued by the Company after the Record Date).
Common Stock Authorized and
Reverse Stock Split Ratio Outstanding(1) Unissued Common Stock(2)
- ------------------------- -------------- ------------------------
1 for 10 23,262,766 476,737,234
<PAGE>
16
(1) The figures in this table are calculated based on March 31, 2000 issued and
outstanding shares of Old Common Stock as reported in the Company's Form 10Q for
the three months ended March 31, 2000, to be filed with the Securities and
Exchange Commission on or about May 15, 2000. These figures do not take into
account any reduction in the number of outstanding shares of Common Stock
resulting from the procedures for cashing out fractional shares. In addition,
the number of Common Stock shares outstanding does not include shares of Common
Stock issuable upon exercise or conversion of outstanding options, warrants or
convertible debt but does include the conversion of the Series A and Series B
Preferred Stock.
(2) These figures are based on a pre-Reverse Stock Split number of 500,000,000
authorized shares as of March 31, 2000.
The Common Stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934 (the "Exchange Act") and, as a result, the
Company is subject to the periodic reporting and other requirements of the
Exchange Act. The one-for-ten reverse stock split will not effect the
registration of the Common Stock under the Exchange Act. After the Effective
Date, trades of the New Common Stock will continue to be reported on the NASDAQ
electronic "Bulletin Board" under the Company's symbol "ECAR." The one-for-ten
reverse stock split will not result in a Rule 13e-3 transaction as defined under
the Exchange Act.
Federal Income Tax Consequences of the Reverse Stock Split
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the Reverse Stock Split. For a discussion of the Federal income
tax consequences of a reverse stock split see the caption entitled "Federal
Income Tax Consequences of the Proposed Reverse Stock Splits" under Proposal No.
1.
Vote Required for Shareholder Approval of the One-for-Ten Reverse Stock Split
The approval of Proposal No. 3 requires the affirmative vote of a
majority of the outstanding shares of Common Stock, voting separately as a
class, and the affirmative vote of a majority of the outstanding shares of
Common Stock, Series A Preferred Stock and Series B Preferred Stock, voting
together as a single class (with both the Common Stock and the Series A
Preferred Stock having one vote per share and the Series B Preferred Stock
having 2-2/3 votes per share).
THE BOARD RECOMMENDS A VOTE FOR THE AUTHORIZATION OF THE BOARD
TO AMEND THE ARTICLES OF INCORPORATION
PURSUANT TO THE RESOLUTIONS SET FORTH IN EXHIBIT C TO THIS PROXY STATEMENT TO
EFFECT A ONE-FOR-TEN REVERSE STOCK SPLIT
<PAGE>
17
PROPOSAL NO. 4
AUTHORIZATION FOR THE BOARD TO
EFFECT A ONE-FOR-FIVE
REVERSE STOCK SPLIT
General
The Company's shareholders are also being asked to act upon a proposal
to authorize the Board to effect a reverse stock split in the ratio of
one-for-five at any time prior to the next Annual Meeting of Shareholders.
Shareholders are being asked to approve four different reverse stock
split proposals. The Board has directed that each of the reverse stock splits
outlined in Proposals 1, 2, 3 and 4 be submitted to the Company's shareholders
for consideration and action. The Board may subsequently approve and effect, in
its sole discretion, one of the reverse stock splits approved by the
shareholders based on its determination of which of them will allow adequate
additional shares of Common Stock to be issued for potential future financing
and which results in the greatest marketability and liquidity of the Common
Stock.
Except as may result from the rounding of fractional shares as
described below, each shareholder will hold the same percentage of Common Stock
outstanding immediately following all of the reverse stock splits as each
shareholder did immediately prior to a reverse stock split. If approved by the
shareholders of the Company, a reverse stock split would become effective on any
date (the "Effective Date") selected and approved by the Board on or prior to
the Company's next Annual Meeting of Shareholders. If none of the proposed
reverse stock splits is effected by such date, the Board will again seek
shareholder approval
One of the reverse stock splits approved by the shareholders will be
effected by an amendment of the Company's Articles of Incorporation. The
complete text of the form of an amendment to the Articles of Incorporation for
the one-for-five reverse stock split is set forth in Exhibit D to this Proxy
Statement; however, such text is subject to amendment to include such changes as
may be required by the California Secretary of State. If any one of the four
reverse stock splits set forth in Proposals 1, 2, 3, 4 is approved by the
requisite vote of the Company's shareholders and thereafter approved by the
Board, upon filing of the applicable Amendment to the Articles of Incorporation
with the California Secretary of State on the Effective Date, a reverse stock
split will be effective. For example, if the one-for-five reverse stock split is
approved, upon the filing of the one-for-five reverse stock split amendment to
the Articles of Incorporation, each share of the Common Stock issued and
outstanding immediately prior thereto (the "Old Common Stock"), will be,
automatically and without any action on the part of the shareholders, converted
into and reconstituted into 1/5th of a share of the Company's Common Stock (the
"New Common Stock"); provided, however, that no fractional shares of New Common
Stock will be issued as a result of the one-for-five reverse stock split. In
lieu of any such fractional share interest, each holder of Old Common Stock who
would otherwise be entitled to receive a fractional share of New Common Stock
will receive cash in lieu of such fractional share of New Common Stock in an
amount equal to the product obtained by multiplying (a) the average of the
high-bid and low-asked per share prices of the Common Stock as reported on the
NASDAQ electronic "Bulletin Board" on the Effective Date (adjusted if necessary
to reflect the per share price of the Old Common Stock without giving effect to
the Reverse Stock Splits) by (b) the number of shares of Old Common Stock held
by such holder that would otherwise have been exchanged for such fractional
share interest.
Shortly after the Effective Date, shareholders will be asked to
surrender certificates representing shares of Old Common Stock in accordance
with the procedures set forth in a letter of transmittal to be sent by the
Company.
<PAGE>
18
Upon such surrender, a certificate representing shares of Common Stock resulting
from the applicable reverse stock split will be issued and forwarded to the
shareholders (and cash in lieu of any fractional share interest); however, each
certificate representing shares of Old Common Stock will continue to be valid
and represent the number of shares of newly issued Common Stock equal to the
number of shares of Old Common Stock (and cash in lieu of such fractional share,
as described above) that such shareholder is entitled to receive as a
consequence of the resulting reverse stock split. SHAREHOLDERS SHOULD NOT SEND
THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL LETTER.
Purposes of the Reverse Stock Split
For a discussion of the purposes of the reverse stock split see the
caption entitled "Purposes of the Proposed Reverse Stock Splits" in Proposal No.
1.
Effects of the One-for-Five Reverse Stock Split
Contingent upon shareholder and Board approval, one of the four reverse
stock splits will be effected by filing the applicable Amendment to the
Company's Articles of Incorporation and will be effective immediately upon such
filing. The Company reserves the right to forego or postpone filing a reverse
stock split amendment to the Articles if such action is determined not to be in
the best interests of the Company and its shareholders.
Without any further action on the part of the Company or the
shareholders, after the filing of the Amendment to the Company's Articles
effecting one of the four the Reverse Stock Splits, the shares of Old Common
Stock will be converted into and reconstituted as the appropriate number of
shares of newly issued Common Stock resulting from a reverse stock split (and,
where applicable, cash in lieu of such fractional share, as described above). As
a result of paying cash in lieu of fractional shares resulting from a
one-for-five reverse stock split, the Company estimates that the entire interest
of approximately 20 shareholders (those holding fewer than 5 shares of Common
Stock) will be eliminated pursuant to such reverse stock split. Because such
transaction would be mandatory, such shareholders holding fewer than 5 shares
who wish to retain their existing equity interest in the Company would be
adversely affected. The Company expects that approximately 1,275 shares of
currently outstanding shares of Common Stock would result in fractional share
interests for which cash would be paid in the one-for-five reverse stock split.
Shares of Common Stock no longer outstanding as a result of the fractional share
settlement procedure will be returned to authorized but unissued shares of the
Company.
After giving effect to the settlement of fractional shares of Common
Stock, there will be no material differences between the rights of the shares of
Common Stock outstanding prior to the one-for-five reverse stock split and those
outstanding after the one-for-five reverse stock split is effected. The
one-for-five reverse stock split will, however, result in certain adjustments to
the voting rights and conversion ratios of the Series A Preferred Stock and the
Series B Preferred Stock. Specifically, pursuant to the terms of the Company's
Articles of Incorporation, the one-for-five reverse stock split will result in
an adjustment to the voting rights of the Series A Preferred Stock and the
Series B Preferred Stock so that once the one-for-five reverse stock split is
effected, the relative voting power of such shares to the voting power of the
Common Stock and to the voting power of the other series of outstanding
Preferred Stock will be in the same proportion as existed immediately prior to
the one-for-five reverse stock split. For example, this adjustment would result
in a reduction in the voting power of each share of the Series A Preferred Stock
from one vote per share to 1/5th of a vote per share and a reduction in the
voting power of the Series B Preferred Stock from 2-2/3 votes per share to
8/15ths of a vote per share. Thus, the proportionate voting power of the holders
of the stock of the Company would not be affected. The one-for-five
<PAGE>
19
reverse stock split will also result in adjustments being made to the conversion
ratios of the Series A Preferred Stock and the Series B Preferred Stock so that
such shares will be convertible into such number of shares of Common Stock that
a holder of such Preferred Stock would have been entitled to receive if such
Preferred Stock were to have been converted into Common Stock immediately prior
to the reverse stock split. For example, under such adjustments, after the
one-for-five reverse stock split is made effective, each share of the Series A
Preferred Stock will be convertible into 1/5th of a share of Common Stock, as
compared to one share of Common Stock prior to the one-for-five reverse stock
splits, and each share of the Series B Preferred Stock will be convertible into
either 8/15ths, of a share of Common Stock, as compared to 2-2/3 shares of
Common Stock prior to the reverse stock split. Similar adjustments will also be
made to the conversion ratios and exercise provisions of the Company's various
other outstanding convertible or exercisable securities.
As proposed hereunder, shareholders have no right under California law
to dissent from a Reverse Stock Split of the Common Stock.
Consummation of the one-for-five reverse stock split will not alter the
number of authorized shares of Common Stock which will remain at 500,000,000
shares. As discussed above, proportionate voting rights and other rights of the
holders of Common Stock and Preferred Stock will not be altered by the
one-for-five reverse stock split (other than as a result of the payment of cash
in lieu of fractional shares, as described above, and other than the change in
the number of shares of Common Stock into which the outstanding shares of Series
A Preferred Stock and Series B Preferred Stock are convertible).
Shareholders should note that certain disadvantages may result from the
adoption of this Proposal No. 4. In the event this Proposal No. 4 is approved by
the shareholders and is subsequently approved and effected by the Board, the
number of outstanding shares of Common Stock would be decreased as a result of a
one-for-five reverse stock split, but the number of authorized shares of Common
Stock would not be so decreased. The Company would therefore have the authority
to issue a greater number of shares of Common Stock following the one-for-five
reverse stock split without the need to obtain shareholder approval to authorize
additional shares. Any such additional issuance may have the effect of
significantly reducing the interest of the existing shareholders of the Company
with respect to earnings per share, voting, liquidation value and book and
market value per share.
As of March 31, 2000, the number of issued and outstanding shares of
Old Common Stock was 232,627,663. The following table illustrates the effects of
the one-for-five reverse stock split upon the number of shares of Old Common
Stock issued and outstanding, and the number of authorized and unissued shares
of Common Stock (assuming that no additional shares of Old Common Stock are
issued by the Company after the Record Date).
Common Stock Authorized and
Reverse Stock Split Ratio Outstanding(1) Unissued Common Stock(2)
- ------------------------- -------------- ------------------------
1 for 5 46,525,533 453,474,467
(1) The figures in this table are calculated based on March 31, 2000 issued and
outstanding shares of Old Common Stock as reported in the Company's Form 10Q for
the three months ended March 31, 2000, to be filed with the Securities and
Exchange Commission on or about May 15, 2000. These figures do not take into
account any reduction in the number of outstanding shares of Common Stock
resulting from the procedures for cashing out fractional shares. In addition,
the number of Common Stock shares outstanding does not include shares of Common
Stock issuable upon exercise or conversion of outstanding options, warrants or
convertible debt but does include the conversion of the Series A and Series B
Preferred Stock.
(2) These figures are based on a pre-Reverse Stock Split number of 500,000,000
authorized shares as of March 31, 2000.
<PAGE>
20
The Common Stock is currently registered under Section 12(g) of the Securities
Exchange Act of 1934 (the "Exchange Act") and, as a result, the Company is
subject to the periodic reporting and other requirements of the Exchange Act.
The one-for-five reverse stock split will not effect the registration of the
Common Stock under the Exchange Act. After the Effective Date, trades of the New
Common Stock will continue to be reported on the NASDAQ electronic "Bulletin
Board" under the Company's symbol "ECAR." The one-for-five reverse stock split
will not result in a Rule 13e-3 transaction as defined under the Exchange Act.
Federal Income Tax Consequences of the Reverse Stock Split
The Company has not sought and will not seek an opinion of counsel or a ruling
from the Internal Revenue Service regarding the federal income tax consequences
of the Reverse Stock Split. For a discussion of the Federal income tax
consequences of a reverse stock split see the caption entitled "Federal Income
Tax Consequences of the Proposed Reverse Stock Splits" under Proposal No. 1.
Vote Required for Shareholder Approval of a One-for-five Reverse Stock Split
The approval of Proposal No. 4 requires the affirmative vote of a
majority of the outstanding shares of Common Stock, voting separately as a
class, and the affirmative vote of a majority of the outstanding shares of
Common Stock, Series A Preferred Stock and Series B Preferred Stock, voting
together as a single class (with both the Common Stock and the Series A
Preferred Stock having one vote per share and the Series B Preferred Stock
having 2-2/3 votes per share).
THE BOARD RECOMMENDS A VOTE FOR THE AUTHORIZATION OF THE BOARD
TO AMEND THE ARTICLES OF INCORPORATION
PURSUANT TO THE RESOLUTIONS SET FORTH IN EXHIBIT D TO THIS PROXY STATEMENT TO
EFFECT A ONE-FOR-FIVE REVERSE STOCK SPLIT
<PAGE>
21
PROPOSAL NO. 5
AMENDMENT TO THE ARTICLES OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
The Company's shareholders are being asked to act upon a proposal to
amend the Company's Articles of Incorporation to change the name of the Company
to "Enova Systems, Inc.," to file and complete the necessary paperwork to
effectuate the name change with the California Secretary of State and all other
pertinent agencies. The name change will be effected by means of filing an
amendment to the Articles of Incorporation with the California Secretary of
State as set forth on Exhibit E. Assuming approval of the name change by the
requisite vote of the shareholders at the Annual Meeting, the amendment to the
Articles of Incorporation will be filed with the California Secretary of State
as promptly as practicable and the name change will become effective on the date
of such filing.
THE BOARD RECOMMENDS A VOTE FOR AUTHORIZATION OF THE BOARD OF DIRECTORS
TO CHANGE THE NAME FOR THE COMPANY TO "ENOVA SYSTEMS, INC." AND FILE AN
AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE
COMPANY TO ENOVA SYSTEMS, INC. AS SET FORTH ON EXHIBIT E
TO THIS PROXY STATEMENT
<PAGE>
22
PROPOSAL NO. 6
ELECTION OF DIRECTORS
A board of six (6) Directors will be elected at the Annual Meeting,
each of whom will serve until the next annual meeting of shareholders or until a
successor is elected or appointed and qualified or until the Director's earlier
resignation or removal. The Company's Articles of Incorporation provide that the
holders of the Series B Preferred Stock are entitled, voting as a separate
class, to elect two members of the Board. The holders of the Common Stock and
Series A Preferred Stock, voting together as a single class, are entitled to
elect the balance of the authorized members of the Board. One (1) nominee has
been nominated for election by the holders of the Series B Preferred Stock and
five (5) nominees will be elected by the holders of the Common Stock and Series
A Preferred Stock.
The Series B Preferred Stock proxy holders will vote, as a separate
class, the proxies received by them to elect the Series B nominee named below to
the Board of Directors. The Common Stock and Series A Preferred Stock proxy
holders will vote, as a single class, the proxies received by them to elect the
five (5) nominees named below to the Board of Directors. If a nominee is unable
or declines to serve as a Director at the time of the Annual Meeting, the
proxies will be voted for any nominee designated by the proxy holders to fill
such vacancy. However, it is not expected that any nominee will be unable or
will decline to serve as a Director. If shareholders nominate persons other than
the Company's nominees for election as Directors, the Common Stock, Series A
Preferred Stock, and Series B Preferred Stock proxy holders may vote all proxies
received by them in accordance with cumulative voting if invoked to assure the
election of as many of the Company's nominees as possible. The term of office of
each person elected as a Director will continue until the next annual meeting of
shareholders or until the Director's successor has been elected or appointed or
until the Director's earlier resignation or removal.
Currently, the Company's Bylaws were amended at the last annual
shareholders' meeting to authorize the number of Directors to be not less than
four (4) nor more than seven (7), with the exact number in this range as
established from time to time by the Board of Directors. The number of Directors
on the Board is currently fixed at seven (7). Following the Annual Meeting, one
Board seat allocated to the Company's Series B Preferred Stock shareholders
established pursuant to the Company's Articles of Incorporation will be vacant.
Certain information about the nominees for the Board of Directors is furnished
below.
Common Stock and Series A Preferred Stock Nominees:
Malcolm R. Currie, Ph.D, Director. Dr. Currie was re-elected to the
Board of Directors in July 1999. Dr. Currie had served as a Director of the
Company from March 1995 through May 1997. Since 1994, he has served as Chairman
of Electric Bicycle Co., a developer of electric bicycles. 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.
John J. Micek III, Director. Mr. Micek was elected a Director of the
Company in April 1999. Mr.
<PAGE>
23
Micek served as the Company's Vice President, General Counsel and Secretary from
March 1994 to March 1997. From 1997 to 1999, Mr. Micek served as Chief Financial
Officer of Protozoa, Inc., a private animation and software production company.
From 1997 to the present, Mr. Micek has served as President of Universal
Assurors, Inc. Prior to joining the Company, Mr. Micek 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 foods 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, and a Director of Armanino Foods from 1988 to 1989. 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. Mr. Micek continues
to serve as a Director of IVT.
Carl D. Perry, Chief Executive Officer, President and Director. Mr.
Perry served as a Director and as an Executive Vice President of the Company
from July 1993 until November 1997. In November 1997, Mr. Perry was elected as
Chairman of the Board and Chief Executive Officer of the Company, and was
elected President in June 1999. In July 1999, Mr. Perry resigned his position as
Chairman of the Board to allow Mr. Anthony Rawlinson to become Chairman. Mr.
Perry continues as Chief Executive Officer and President and as a Director.
Prior to joining the Company, he was an international aerospace and financial
consultant from 1989 to 1993. Mr. Perry served as Executive Vice President of
Canadair Ltd., Canada's largest aerospace corporation, from 1984 to 1989, 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 Helicopter Company, now known as Boeing Helicopter Company, where
he was responsible for general management, worldwide business development, and
international operations.
Anthony Rawlinson, Chairman of the Board. Mr. Rawlinson was appointed
Chairman of the Board in July 1999. Since 1996, Mr. Rawlinson has been Managing
Director of the Global Value Investment Portfolio Management Pte. Ltd., a
Singapore based International Fund Management Company managing discretionary
equity portfolios for institutions, pension funds and clients globally. Mr.
Rawlinson has more than twenty years experience in international fund
management. Mr. Rawlinson is a specialist in analysis and investment in high
technology companies. From 1996 to 1999, Mr. Rawlinson was Chairman of IXLA
Ltd., an Australian public company in the field of PC photography software and
its wholly-owned subsidiary, photohighway.com. Mr. Rawlinson is currently
Chairman of Matrix Oil NL, an Australian publicly listed company. Mr. Rawlinson
is also a director of Cardsoft, Inc., a high technology software company with
secure java based solutions for mobile phones and handheld devices.
Edwin O. Riddell, Director. Mr. Riddell has served as a Director of the
Company since June 1995. From March 1999 to the present, Mr. Riddell has been
President of CR Transportation Services, a consultant to the electric vehicle
industry. From January 1991 to March 1999, 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 Group, Inc. 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.
<PAGE>
24
Series B Preferred Stock Nominee:
Donald H. Dreyer, Director. Mr. Dreyer was elected a Director of the
Company in January 1997. Mr. Dreyer is President and CEO of Dreyer & Company,
Inc., a consultancy in credit, accounts receivable and insolvency services,
which was established in 1990. Mr. Dreyer has served as Chairman of the Board of
Credit Managers Association of California during the 1994 to 1995 term and
continues to serve as a member of the Advisory Committee of that organization.
Mr. Dreyer is currently the co-Chair of the Creditors Committees' Subcommittee
of the American Bankruptcy Institute and is a member of the Western Advisory
Committee of Dun & Bradstreet, Inc.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF THE NOMINEES NAMED ABOVE
<PAGE>
25
Directors, Nominees and Executive Officers
The following table sets forth certain information with respect to the
Directors, Nominees and Executive Officers of the Company:
Directors, Nominees and Executive Officers
Name Age Position
Carl D. Perry 67 President, Chief Executive Officer,
Acting Chief Financial Officer and
Secretary
Edwin O. Riddell (2) 57 Director
Donald H. Dreyer (1) 63 Director
John J. Micek III (1) 48 Director
Anthony Rawlinson 45 Chairman of the Board
Malcolm R. Currie, Ph.D. (2) 71 Director
- -----------------------------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Relationships Among Directors or Executive Officers
There are no family relationships among any of the Directors or
Executive Officers of the Company.
Meetings and Committees of the Board of Directors
During the twelve months ended December 31, 1999, the Board of
Directors met four times. No Director attended fewer than 75% of the aggregate
of the total number of meetings of the Board, plus the total number of all
meetings of committees of the Board on which he served. The Board currently has
two committees: the Compensation Committee and the Audit Committee.
The Compensation Committee held two meetings in the year ended December
31, 1999. The Compensation Committee currently consists of Mr. Edwin Riddell and
Dr. Malcolm Currie. Its functions are to establish and apply the Company's
compensation policies with respect to the Company's Executive Officers, and to
administer the Company's stock option plans.
The Audit Committee held one meeting in 1999. The Audit Committee
currently consists of Messrs. Donald Dreyer and John Micek. The Audit Committee
recommends engagement of the Company's independent auditors and is primarily
responsible for approving the services performed by the Company's independent
auditors and for reviewing and evaluating the Company's accounting principles
and its system of internal accounting controls.
<PAGE>
26
Compensation of Directors
Directors who are employees of the Company do not receive any
compensation for their services as Directors. All Directors are reimbursed for
expenses incurred in connection with attending Board and committee meetings. One
Director, Donald H. Dreyer, was paid a consulting fee for attendance at Company
Board meetings prior to September 1, 1999. In 1999, the total amount paid to Mr.
Dreyer was approximately $4,000 for Board meetings and other consulting
activities.
In September 1999, the Company's Board of Directors unanimously
approved a compensation package for outside directors consisting of the
following. For each meeting attended in person, each outside director shall
receive $1,000 in cash and $2,000 of stock valued on the date of the meeting at
the average of the closing ask and bid prices; for each telephonic Board
meeting, each outside director shall receive $250 in cash and $250 of stock
valued on the date of the meeting at the average of the closing ask and bid
prices; for each meeting of a Board committee attended in person , the committee
chairman shall receive $500 in cash and $500 of stock valued on the date of the
meeting at the average of the closing ask and bid prices. All Directors are
reimbursed for expenses incurred in connection with attending Board and
committee meetings.
In lieu of this new compensation package, the Directors Stock Option
Plan has been suspended and all options granted under that plan have been
forfeited and canceled. As of December 31, 1999, 25,000 options had been granted
and forfeited.
As of March 31, 2000, 535,960 shares had been issued under this
directors' compensation plan.
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 August 1, 1998.
Jagen Pty, Ltd. And Anthony Rawlinson
On June 14, 1999, the Company, Jagen Pty, Ltd. ("Jagen"), and Anthony
Rawlinson entered into a Securities Purchase Agreement dated as of June 1, 1999,
pursuant to which Jagen purchased 70,000,000 shares of the Company's Common
Stock at a purchase price of $0.03 per share, for an aggregate purchase price of
$2.1 million in cash. In addition, pursuant to the terms of the Securities
Purchase Agreement, Jagen loaned the Company the principal amount of $400,000 in
exchange for a secured promissory note convertible into 13,333,334 shares of
Common Stock, at a conversion price of $0.03 per share, and a warrant to
purchase 41,666,666 shares of Common Stock, at an exercise price of $0.06 per
share. The Jagen promissory note bore an interest at the rate of six percent
(6%) per annum and was due and payable on August 31, 1999. This note was
converted into common stock on July 29, 1999. In addition, pursuant to the
Securities Purchase Agreement, Mr. Rawlinson committed to loan to the Company,
on July 31, 1999, the principal amount of $500,000 in exchange for a secured
promissory note convertible into 16,666,666 shares of Common Stock, at a
conversion price of $0.03 per share, and a warrant to purchase 8,333,334 shares
of Common Stock, at an exercise price of $0.06 per share. Mr. Rawlinson's
promissory note bore an interest at the rate of six percent (6%) per annum and
if not converted earlier was to be due and payable on August 31, 1999. Mr.
Rawlinson simultaneously lent the Company $500,000 and converted that amount
into shares of common stock at the stated price per share on July 31, 1999. In
connection with the Securities Purchase Agreement, the Company, Jagen, Mr.
Rawlinson and Carl Perry, the Company's Chief
<PAGE>
27
Executive Officer and President and the holder of more than 10% of its Common
Stock, entered into a Shareholders' Agreement dated as of June 1, 1999, pursuant
to which Jagen and Mr. Perry agreed to vote all shares of the Company's Common
Stock held by them in favor of one director to be designated by Jagen and Mr.
Rawlinson, and such other directors as are designated by a majority of the Board
of Directors of the Company, as it is constituted from time to time. Mr. Perry
also agreed to vote his shares in favor of Mr. Rawlinson as Chairman of the
Board of Directors. Prior to consummation of the transaction, neither Jagen nor
Mr. Rawlinson beneficially owned any of the Company's capital stock or was
affiliated with the Company. As a result of the transaction, Jagen beneficially
owns more than 10% of the Company's Common Stock and Mr. Rawlinson, who is a
Chairman of the Board of Directors, is the holder of rights to acquire more than
10% of the Company's Common Stock.
Carl D. Perry and Itochu
As of March 1999, there was $3,000,000 of debt outstanding to
Itochu, a former principle shareholder of the Company, pursuant to a
Supplemental Loan Agreement. The debt was 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 was secured by
all of the assets of the Company. Additionally, Itochu issued $1,300,000 of
convertible secured notes to the Company under a Supplemental loan Agreement
with a maturity date of December 1997.
In March 1999, Itochu Corporation sold all of the aforementioned
debt plus accrued interest outstanding ($5,693,400) to Carl D. Perry, the
Company's Chief Executive Officer and President, for $50,000. Itochu also sold
all of the shares of common stock it held to Mr. Perry for $1.00. Mr. Perry
forgave $2,693,400 of accrued interest and principal on July 30, 1999 and an
additional $1,817,000 in accrued interest and principal during the five months
ended December 31, 1999. As of December 31, 1999, there is $1,300,000 in
principal owed by the Company to Mr. Perry under this loan.
In September 1999, the Company entered in to a call option agreement
with Carl D. Perry to re-purchase 23,970,000 shares of common stock for
$100,000. The terms of this agreement require the Company to exercise this call
option between March 25, 2000 and March 30, 2000. This call option was exercised
by the Company on March 30, 2000. In addition, Mr. Perry was also granted the
right to sell these shares to the Company for $50,000. This right to sell
expired with the exercise of the call option.
Fontal International, Ltd. ("Fontal")
In January 1998, the Company borrowed $200,000 from Fontal, a creditor
and principal shareholder of the Company, under a short term, non-interest
bearing promissory note, and this amount was outstanding at the end of fiscal
1999. Additionally, there is an outstanding balance of $800,000 on unsecured
convertible bonds held by Fontal at the end of fiscal 1999. Both these notes and
accrued interest thereon were converted to common stock as of December 31, 1999
for a total of 4,246,000 shares at $0.30 per share.
The Company believes that the 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.
<PAGE>
28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of March
31, 2000, by (i) each shareholder known to the Company to own beneficially more
than 5% of the Company's Common Stock; (ii) each of the Company's Directors;
(iii) the Chief Executive Officer and all other Executive Officers of the
Company; and (iv) all Executive Officers and Directors of the Company 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 Common Stock shown as beneficially owned by them.
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
5% Shareholders, Directors, Officers and Common Shares Percentage of Common Shares Voting
Directors and Officers as a Group Beneficially Owned (1) Beneficially Owned (2) Percentage (3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jagen, Pty., Ltd. 125,000,000 (4) 38.12% 34.73%
9 Oxford Street, South Yorra 3141
Melbourne, Victoria Australia
- -------------------------------------------------------------------------------------------------------------------------
Citibank N.A. 39,532,454 12.06% 16.48%
111 Wall Street, 8th Floor
New York, NY 10043
- -------------------------------------------------------------------------------------------------------------------------
Anthony Rawlinson 25,022,149 (5) 7.63% 6.96%
c/o U.S. Electricar, Inc.
19850 South Magellan Drive
Torrance, CA 90502
- -------------------------------------------------------------------------------------------------------------------------
Carl D. Perry 11,200,500 (6) 3.42% 4.17%
c/o U.S. Electricar, Inc.
19850 South Magellan Drive
Torrance, CA 90502
- -------------------------------------------------------------------------------------------------------------------------
John J. Micek, III 631,994 (7) * *
- -------------------------------------------------------------------------------------------------------------------------
Edwin O. Riddell 252,939 * *
- -------------------------------------------------------------------------------------------------------------------------
Dr. Malcolm Currie 157,587 * *
- -------------------------------------------------------------------------------------------------------------------------
Donald H. Dreyer 20,182 * *
- -------------------------------------------------------------------------------------------------------------------------
All Directors and executive officers as 37,285,351 (8) 11.37% 11.68%
a group (6 persons)
- -------------------------------------------------------------------------------------------------------------------------
<FN>
* Indicates less than 1%
(1) Number of Common Stock shares includes Series A Preferred Stock, Series B Preferred Stock 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
March 31, 2000.
(2) The percentages are based on the number of shares of Common Stock, Series A Preferred Stock and Series B
Preferred Stock owned by the shareholder divided by the sum of: (i) the total Common Stock outstanding, (ii) the
Series A Preferred Stock
<PAGE>
29
owned by such shareholder; (iii) the Series B Preferred Stock owned by such shareholder; and (iv) Common Stock
issuable pursuant to warrants, options and other convertible securities exercisable or convertible by such
shareholder within sixty (60) days after March 31, 2000.
(3) The percentages are based on the number of shares of Common Stock, Series A Preferred Stock and Series B
Preferred Stock owned by the shareholder divided by the sum of: (i) the total Common Stock outstanding, (ii) the
total Series A Preferred Stock outstanding; (iii) the total Series B Preferred Stock outstanding; and (iv)
Common Stock issuable pursuant to warrants, options and other convertible securities exercisable or convertible
by such shareholder within sixty (60) days after March 31, 2000. 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 and Series B Preferred Stock are entitled to vote
together with the Common Stock as a single class on certain matters to be voted upon by the shareholders.
(4) Includes 41,666,667 shares issuable pursuant to warrants redeemable at $0.06 per share. Said warrants expire in
July, 2001.
(5) Includes 8,333,333 shares issuable pursuant to warrants redeemable at $0.06 per share. Said warrants expire in
July, 2001.
(6) Includes 1,200,000 shares of Common Stock issuable pursuant to stock options issued under a employee stock
option plan exercisable at a price of $0.10 per share. The option exercise price, for Mr. Perry's and other
employees under the 1996 Stock Option Plan, was amended to $0.10 per share from $0.30 per share on August 19,
1998 at the approval of the Board of Directors.
(7) Includes 565,000 shares of Common Stock issuable pursuant to stock options exercisable at a price of $0.10 per
share. The option exercise price was amended to $0.10 per share from $0.30 per share on June 10, 1999 at the
approval of the Board of Directors.
(8) Includes 1,765,000 shares of Common Stock issuable pursuant to stock options exercisable at prices ranging from
$0.10 to $0.60 per share, and 8,333,333 shares issuable pursuant to warrants redeemable at $0.06 per share. Said
warrants expire in July, 2001.
</FN>
</TABLE>
<PAGE>
30
PROPOSAL NO. 7
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Moss Adams LLP has served as the Company's independent auditors since 1996, and
has been appointed by the Board to continue as the Company's independent
auditors for the Company's year ending December 31, 2000. In the event that
ratification of this selection of auditors is not approved by a majority of the
shares of Common Stock, Series A Preferred Stock, and Series B Preferred Stock
voting at the Annual Meeting in person or by proxy, management will review its
future selection of auditors.
A representative of Moss Adams LLP is expected to be present at the
Annual Meeting. The representative will have an opportunity to make a statement
and will be able to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF MOSS ADAMS LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2000.
<PAGE>
31
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
<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, 1999, 1998, and 1997 (collectively, the "Named Executive
Officers"). Mr. Carl D. Perry is the sole executive officer of the Company whose
salary currently exceeds $100,000.
<CAPTION>
Summary Compensation Table
Name and Principal Position Annual Compensation
- --------------------------- ---------------------------------------------------------------------
Long-Term Compensation
Awards
Securities
Underlying
Salary Bonus Options/SARs
Year ($) ($) (#)
---- ------ ----- ------------
<S> <C> <C> <C> <C>
Carl D. Perry (1) 1999 75,000 -- --
Chief Executive Officer 1998 55,770 -- --
And President 1997 50,000 -- --
<FN>
(1) Mr. Perry was elected as Chief Executive Officer in November 1997. Mr. Perry's current salary is $110,000 per year.
</FN>
</TABLE>
<PAGE>
32
Option Grants/SAR Grants
The following table sets forth certain information with respect to
stock options granted during 1999 to the Named Executive Officer. In accordance
with the rules of the Securities and Exchange Commission, also shown below is
the potential realizable value over the term of the option (the period from the
grant date to the expiration date) based on assumed rates of stock appreciation
of 5% and 10%, compounded annually, calculated based on the average of the
high-bid and low-ask prices of the Common Stock on December 31, 1999. These
amounts are based on certain assumed rates of appreciation and do not represent
the Company's estimate of future stock price. Actual gains, if any, on stock
option exercises will be dependent on the future performance of the Common
Stock.
<TABLE>
No grants of stock options or stock appreciation rights ("SARs") were
made during the five month period ended December 31, 1999 to the Named Executive
Officer or any other Executive Officer.
<CAPTION>
Aggregated Option/SAR Exercises in 1999
and Option Values at December 31, 1999
Number of Securities
Aggregate Underlying Unexercised Value of Unexercised
Option/SAR Options/SARs at In-the-Money Options at
Exercises in 1999 December 31, 1999 December 31, 1999(1)
----------------- ------------------- ----------------------
Shares Value
Acquired on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl D. Perry -- -- 1,200,000 0 $ 393,600 $ --
<FN>
(1) Calculated on the basis of the average of the high-bid and low-ask prices of
the Common Stock on December 31, 1999 of $0.328 per share, minus the exercise
price.
</FN>
</TABLE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Edwin Riddell and John
Micek III.
Compensation Committee Report on Executive Compensation
Compensation Policy. The Company's Compensation Policy as established
by the Compensation Committee is that executive officers' total annual cash
compensation should vary with the performance of the Company and that long-term
incentives awarded to such officers should be aligned with the interest of the
Company's shareholders. The Company's executive compensation program is designed
to attract and retain executive officers who will contribute to the Company's
long-term success, to reward executive officers who contribute to the Company's
financial performance and to link executive officer compensation and shareholder
interests through the 1993 Plan and the 1996 Plan.
Compensation of the Company's executive officers consists of two
principal components: salary and long-term incentive compensation consisting of
stock option grants.
Salary. The base salaries for the Company's executive officers are
reviewed annually and set by the Compensation Committee. When setting base
salary levels, in a manner consistent with the Compensation Committee's policy
outlined above, the Committee considers competitive market conditions for
executive compensation, Company performance and individual performance as well
as the Company's current financial condition and available cashflow to sustain
operations.
<PAGE>
33
Long-term Incentive Compensation. The Company believes that option
grants (i) align executive interests with shareholder interests by creating a
direct link between compensation and shareholder return, (ii) give executives a
significant, long-term interest in the Company's success, and (iii) help retain
key executives in a competitive market for executive talent.
The Company's 1993 Plan and 1996 Plan authorize the Committee to grant
stock options to employees and consultants, including executives. Currently,
option grants will only be made under the 1996 Plan and will be made from time
to time to executives whose contributions have or will have a significant impact
on the Company's long-term performance. The Company's determination of whether
option grants are appropriate each year is based upon individual performance
measures established for each individual. Options are not necessarily granted to
each executive during each year. Options granted to executive officers typically
vest in equal monthly installments over a period of five years and expire either
five or ten years from the date of grant. No stock options were granted to the
Named Executive Officer during fiscal 1999.
Compensation of Chief Executive Officer. In determining the
compensation of Carl D. Perry, the Chief Executive Officer, the Board of
Directors considered the expense to replace an executive of Mr. Perry's caliber.
The Board therefore established a compensation package for 1999 consisting
solely of an annual salary of $110,000. The Committee believes that the salary
paid to Mr. Perry in 1999 was appropriate based on the financial condition of
the Company.
Compensation Policy Regarding Deductibility. The Company is required to
disclose its policy regarding qualifying executive compensation for
deductibility under Section 162(m) of the Internal Revenue Code which provides
that, for purposes of the regular income tax and the alternative minimum tax,
the otherwise allowable deduction for compensation paid or accrued with respect
to a covered employee of a publicly-held corporation is limited to $1 million
per year. For the fiscal year ended July 31, 1999, no executive officer of the
Company received in excess of $1 million in compensation from the Company, and
for the five month period ending December 31, 1999, no executive officer will
receive in excess of $1 million in compensation from the Company. The 1996 Plan
is structured so that any compensation deemed paid to an executive officer when
he exercises an outstanding option under the Plan, with an exercise price equal
to the fair market value of the option shares on the grant date, will qualify as
performance-based compensation which will not be subject to the $1 million
limitation. The Compensation Committee currently intends to limit the dollar
amount of all other compensation payable to the Company's executive officers to
no more than $1 million.
Submitted by the Compensation Committee:
Edwin Riddell
John J. Micek III
<PAGE>
34
Stock Performance Graph
The graph below compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total return on the Standard & Poor's
Small Capitalization 600 Index and an index of peer companies selected by the
Company. A group of six other electric vehicle companies comprise the peer group
index.(1)
The period shown commences on August 1, 1993, and ends on December 31,
1999, the end of the Company's last fiscal year. The graph assumes an investment
of $100 on August 1, 1993 and the reinvestment of any dividends. The comparisons
in the graph below are based upon historical data and are not indicative of, nor
intended to forecast, future performance of the Company's Common Stock.
TOTAL RETURN TO SHAREHOLDERS
AUGUST 1, 1993 TO DECEMBER 31, 1999
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
[Plot points to come]
1) Companies included in the peer group index are Amerigon, Inc. (ARGNA),
Electric Fuel Corp. (EFCX), Electrosource, Inc. (ELSI), Energy Conversion
Devices, Inc. (ENER), Unique Mobility (UQM), and Valence Technology, Inc.
(VLNC).
<PAGE>
35
Employment Agreements
Carl D. Perry, Chief Executive Officer of the Company, has no
employment agreement and is an "at will" employee with the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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.
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 1999, all Reporting Persons complied with all applicable filing
requirements: EXCEPTIONS: (i) Anthony Rawlinson, Chairman of the Board,
inadvertently missed a filing deadline for Form 5 for one transaction effected
in July 1999; the required Form 5 has been filed; (ii) Malcom Currie, a
Director, unintentionally missed a filing deadline for Form 3 that was due
within ten days of his appointment as a Director in July 1999; the required Form
3 has been filed; (iii) John J. Micek, a Director, unintentionally missed a
filing deadline for Form 3 that was due within ten days of his appointment as a
Director in April 1999; the required Form 3 has been filed; and (iv) Directors
and executive officers of the Company inadvertently missed a filing deadline for
Form 5 that was due within forty-five days after the end of the Company's fiscal
year, such reports were filed on February 15, 2000.
SHAREHOLDER PROPOSALS
To be considered for presentation to the annual meeting of the
Company's shareholders to be held in 2001, a shareholder proposal must be
received by Carl D. Perry, Chief Executive Officer, U.S. Electricar, Inc., 19850
South Magellan Drive, Torrance, California, no later than February 28, 2001.
OTHER MATTERS
The Board of Directors knows of no other business which will be
presented at the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted in respect thereof in accordance with the judgment of the persons
voting the proxies.
It is important that the proxies be returned promptly and that your
shares be represented. Shareholders are urged to mark, date, execute and
promptly return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ Carl D. Perry
-------------------------------------
Carl D. Perry
President and Chief Executive Officer
May 12, 2000
Torrance, California
<PAGE>
36
EXHIBIT A
FORM OF ONE-FOR-TWENTY REVERSE STOCK SPLIT RESOLUTIONS
RESOLVED, that, prior to the Company's next Annual Meeting of
Shareholders, on the condition that no other amendment to the Company's
Certificate of Incorporation shall have been filed prior to such annual meeting
effecting a reverse stock split of the Common Stock, Article III of the Restated
and Amended Certificate of Incorporation of U.S. Electricar, Inc. be amended by
the addition of the following text immediately following the first paragraph of
Article III:
"On the effective date of this amendment to the Restated and
Amended Certificate of Incorporation (the "Effective Date"), each one
(1) share of Common Stock issued and outstanding immediately prior to
the Effective Date shall automatically be converted into and
reconstituted as 1/20th of a share of Common Stock (the "Reverse Stock
Split"). No fractional shares of Common Stock shall be issued upon the
Reverse Stock Split. In lieu thereof, each beneficial shareholder whose
shares of Common Stock are not evenly divisible by twenty will receive
a cash payment therefor in an amount equal to the product obtained by
multiplying (i) the average of the high bid and low asked per share
prices of the Common Stock as reported on the NASDAQ electronic
"Bulletin Board" on the Effective Date (adjusted if necessary to
reflect the per share price of the Common Stock without giving effect
to the conversion and reconstitution of the Common Stock effected
hereby) by (ii) the number of shares of Common Stock held by such
holder that would otherwise have been exchanged for such fractional
share of Common Stock."
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Restated and Amended Certificate of Incorporation
effecting the Reverse Stock Split, notwithstanding authorization of the proposed
amendment by the stockholders of the Company, the Board of Directors may abandon
such proposed amendment without further action by the stockholders.
<PAGE>
37
EXHIBIT B
FORM OF ONE-FOR-FIFTEEN REVERSE STOCK SPLIT RESOLUTIONS
RESOLVED, that, prior to the Company's next Annual Meeting of
Shareholders, on the condition that no other amendment to the Company's
Certificate of Incorporation shall have been filed prior to such annual
meeting effecting a reverse stock split of the Common Stock, Article III of
the Restated and Amended Certificate of Incorporation of U.S. Electricar, Inc.
be amended by the addition of the following text immediately following the
first paragraph of Article III:
"On the effective date of this amendment to the Restated and
Amended Certificate of Incorporation (the "Effective Date"),
each one (1) share of Common Stock issued and outstanding
immediately prior to the Effective Date shall automatically be
converted into and reconstituted as 1/15th of a share of
Common Stock (the "Reverse Stock Split"). No fractional shares
of Common Stock shall be issued upon the Reverse Stock Split.
In lieu thereof, each beneficial shareholder whose shares of
Common Stock are not evenly divisible by twenty will receive a
cash payment therefor in an amount equal to the product
obtained by multiplying (i) the average of the high bid and
low asked per share prices of the Common Stock as reported on
the NASDAQ electronic "Bulletin Board" on the Effective Date
(adjusted if necessary to reflect the per share price of the
Common Stock without giving effect to the conversion and
reconstitution of the Common Stock effected hereby) by (ii)
the number of shares of Common Stock held by such holder that
would otherwise have been exchanged for such fractional share
of Common Stock."
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Restated and Amended Certificate of Incorporation
effecting the Reverse Stock Split, notwithstanding authorization of the proposed
amendment by the stockholders of the Company, the Board of Directors may abandon
such proposed amendment without further action by the stockholders.
<PAGE>
38
EXHIBIT C
FORM OF ONE-FOR-TEN REVERSE STOCK SPLIT RESOLUTIONS
RESOLVED, that, prior to the Company's next Annual Meeting of
Shareholders, on the condition that no other amendment to the Company's
Certificate of Incorporation shall have been filed prior to such annual meeting
effecting a reverse stock split of the Common Stock, Article III of the Restated
and Amended Certificate of Incorporation of U.S. Electricar, Inc. be amended by
the addition of the following text immediately following the first paragraph of
Article III:
"On the effective date of this amendment to the Restated and
Amended Certificate of Incorporation (the "Effective Date"), each one
(1) share of Common Stock issued and outstanding immediately prior to
the Effective Date shall automatically be converted into and
reconstituted as 1/10th of a share of Common Stock (the "Reverse Stock
Split"). No fractional shares of Common Stock shall be issued upon the
Reverse Stock Split. In lieu thereof, each beneficial shareholder whose
shares of Common Stock are not evenly divisible by twenty will receive
a cash payment therefor in an amount equal to the product obtained by
multiplying (i) the average of the high bid and low asked per share
prices of the Common Stock as reported on the NASDAQ electronic
"Bulletin Board" on the Effective Date (adjusted if necessary to
reflect the per share price of the Common Stock without giving effect
to the conversion and reconstitution of the Common Stock effected
hereby) by (ii) the number of shares of Common Stock held by such
holder that would otherwise have been exchanged for such fractional
share of Common Stock."
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Restated and Amended Certificate of Incorporation
effecting the Reverse Stock Split, notwithstanding authorization of the proposed
amendment by the stockholders of the Company, the Board of Directors may abandon
such proposed amendment without further action by the stockholders.
<PAGE>
39
EXHIBIT D
FORM OF ONE-FOR-FIVE REVERSE STOCK SPLIT RESOLUTIONS
RESOLVED, that, prior to the Company's next Annual Meeting of
Shareholders, on the condition that no other amendment to the Company's
Certificate of Incorporation shall have been filed prior to such annual meeting
effecting a reverse stock split of the Common Stock, Article III of the Restated
and Amended Certificate of Incorporation of U.S. Electricar, Inc. be amended by
the addition of the following text immediately following the first paragraph of
Article III:
"On the effective date of this amendment to the Restated and Amended
Certificate of Incorporation (the "Effective Date"), each one (1) share
of Common Stock issued and outstanding immediately prior to the
Effective Date shall automatically be converted into and reconstituted
as 1/5th of a share of Common Stock (the "Reverse Stock Split"). No
fractional shares of Common Stock shall be issued upon the Reverse
Stock Split. In lieu thereof, each beneficial shareholder whose shares
of Common Stock are not evenly divisible by twenty will receive a cash
payment therefor in an amount equal to the product obtained by
multiplying (i) the average of the high bid and low asked per share
prices of the Common Stock as reported on the NASDAQ electronic
"Bulletin Board" on the Effective Date (adjusted if necessary to
reflect the per share price of the Common Stock without giving effect
to the conversion and reconstitution of the Common Stock effected
hereby) by (ii) the number of shares of Common Stock held by such
holder that would otherwise have been exchanged for such fractional
share of Common Stock."
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Restated and Amended Articles of Incorporation
effecting the Reverse Stock Split, notwithstanding authorization of the proposed
amendment by the shareholders of the Company, the Board of Directors may abandon
such proposed amendment without further action by the shareholders.
<PAGE>
40
EXHIBIT E
FORM OF RESOLUTION REGARDING
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
CHANGING THE NAME OF THE COMPANY
RESOLVED, that ARTICLE I of the Restated and Amended Articles of
Incorporation of U.S. Electricar, Inc. is hereby amended to read in its entirety
as follows to change the name of this Company"
"I
The name of this Corporation is Enova Systems, Inc."
<PAGE>
APPENDIX A
PROXY
U.S. ELECTRICAR, INC.
This Proxy is Solicited on Behalf of the Board of Directors
For the Annual Meeting of Stockholders
June 1, 2000
The undersigned stockholder of common stock and/or Series A preferred stock
of U.S. ELECTRICAR, INC., a California corporation, hereby acknowledges receipt
of the Notice of Annual Meeting of Shareholders and Proxy Statement, each dated
May 12, 2000, and the Annual Report on Form 10-K for the five month period
ended December 31, 1999, and hereby appoints Carl D. Perry and John J. Micek,
III, or any of them, proxies, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
2000 Annual Meeting of Shareholders of U.S. ELECTRICAR, INC. to be held on
Thursday, June 1, 2000, at 10:00 a.m., local time at U.S. ELECTRICAR, INC.'s
principal executive office located at 19850 South Megellan Drive, Torrance,
California 90502, and at any adjournment or adjournments thereof, and to vote
all shares of Common Stock and Series A Preferred Stock which the undersigned
would be entitled to vote if then and there personally present, on the matters
set forth below.
PROPOSAL 1. To authorize the Board of Directors to effect a reverse stock split
of the Company's Common Stock in a ratio of one-for-twenty at any time until the
next Annual Meeting of Shareholders;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 2. To authorize the Board of Directors to effect a reverse stock split
of the Company's Common Stock in a ratio of one-for-fifteen at any time until
the next Annual Meeting of Shareholders;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 3. To authorize the Board of Directors to effect a reverse stock split
of the Company's Common Stock in a ratio of one-for-ten at any time until the
next Annual Meeting of Shareholders;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 4. To authorize the Board of Directors to effect a reverse stock split
of the Company's Common Stock in a ratio of one-for-five at any time until the
next Annual Meeting of Shareholders;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 5. To approve an amendment to the Articles of Incorporation to change
the name of the Company to Enova Systems, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed, on reverse side)
(Continued from other side)
<PAGE>
PROPOSAL 6. To elect Anthony Rawlinson, Carl D. Perry, Malcolm R. Currie, Edwin
O. Riddell and John J. Micek, III as Directors of U.S. Electricar, Inc. to serve
until the next Annual Meeting of Shareholders or until their respective
successors are elected and qualified;
[ ] FOR all nominees listed below
[ ] WITHHOLD AUTHORITY to vote (except as indicated) for all nominees listed
below
If you wish to withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the following list below:
Anthony Rawlinson, Carl D. Perry, Malcolm R. Currie, Edwin O. Riddell, John J.
Micek, III
PROPOSAL 7. To ratify the appointment of Moss Adams LLP as independent auditors
of the Company for the fiscal years ending December 31, 2000;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR ALL OF THE PROPOSALS SET FORTH ABOVE AND AS SAID
DEEMED ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
- --------------------------------
Signature
- --------------------------------
Signature
Dated: ___________________, 1999
This proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the envelope enclosed.
Persons signing in a fiduciary capacity should so indicate. If shares are by
joint tenants or as community property, both should sign.
<PAGE>
APPENDIX B
PROXY
U.S. ELECTRICAR, INC.
This Proxy is Solicited on Behalf of the Board of Directors
For the Annual Meeting of Stockholders
June 1, 2000
The undersigned stockholder of Series B preferred stock of U.S. ELECTRICAR,
INC., a California corporation, hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement, each dated May 12, 2000,
and the Annual Report on Form 10-K for the five month period ended December 31,
1999, and hereby appoints Carl D. Perry and John J. Micek, III, or any of them,
proxies, with full power to each of substitution, on behalf and in the name of
the undersigned, to represent the undersigned at the 2000 Annual Meeting of
Shareholders of U.S. ELECTRICAR, INC. to be held on Thursday, June 1, 2000 at
10:00 a.m., local time at U.S. ELECTRICAR, INC.'s principal executive office
located at 19850 South Megellan Drive, Torrance, California 90502, and at any
adjournment or adjournments thereof, and to vote all shares of Series B
Preferred Stock which the undersigned would be entitled to vote if then and
there personally present, on the matters set forth below.
PROPOSAL 1. To authorize the Board of Directors to effect a reverse stock split
of the Company's Common Stock in a ratio of one-for-twenty at any time until the
next Annual Meeting of Shareholders;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 2. To authorize the Board of Directors to effect a reverse stock split
of the Company's Common Stock in a ratio of one-for-fifteen at any time until
the next Annual Meeting of Shareholders;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 3. To authorize the Board of Directors to effect a reverse stock split
of the Company's Common Stock in a ratio of one-for-ten at any time until the
next Annual Meeting of Shareholders;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 4. To authorize the Board of Directors to effect a reverse stock split
of the Company's Common Stock in a ratio of one-for-five at any time until the
next Annual Meeting of Shareholders;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 5. To approve an amendment to the Articles of Incorporation to change
the name of the Company to Enova Systems, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed, on reverse side)
<PAGE>
(Continued from other side)
PROPOSAL 6. To elect Donald Dreyer as Directors of U.S. Electricar, Inc. to
serve until the next Annual Meeting of Shareholders or until their respective
successor is elected and qualified;
[ ] FOR nominee [ ] WITHHOLD AUTHORITY to vote for nominee
PROPOSAL 7. To ratify the appointment of Moss Adams LLP as the independent
auditors for the Company for the fiscal years ending December 31, 2000;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR ALL OF THE PROPOSALS SET FORTH ABOVE AND AS SAID
DEEMED ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
- --------------------------------
Signature
- --------------------------------
Signature
Dated: __________________ , 1999
This proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed enclosed.
Persons signing in a fiduciary capacity should so indicate. If shares are by
joint tenants or as community property, both should sign.
