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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
---------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of Earliest Event Reported): Commission File Number:
JANUARY 24, 1996 0-17303
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VECTOR AEROMOTIVE CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 33-0254334
State of Incorporation (I.R.S. Employer
Identification Number)
7601 CENTURION PARKWAY SOUTH
JACKSONVILLE, FL 32256
(904) 645-0505
(Address of principal executive
offices and telephone number)
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ITEM 5. OTHER EVENTS
Effective as of December 29, 1995, Vector Aeromotive Corporation (the
"Company") entered into a Share Purchase Agreement (the "Purchase Agreement"),
an Option Agreement (the "Option"), and Registration Rights Agreement (the
"Registration Agreement"), (collectively, the "VPC Agreements"), with V'Power
Corporation ("VPC"). VPC is the Company's largest shareholder.
Pursuant to the VPC Agreements, on January 24, 1996, VPC purchased 10
million shares of Common Stock (the "Shares") at a price of $.45 per share and
an option to purchase an additional 50 million shares of Common Stock (the
"Option Shares") at $.45 per share for a total purchase price of $5 million.
Proceeds from the sale of the Shares will be utilized for development of
additional new product as well as working capital purposes. After its purchase
of the Shares, VPC owns a total of 37,333,333 shares of Common Stock,
representing approximately 70% of the issued and outstanding Common Stock of
the Company. The Option may be exercised at any time within 12 months
following its date of grant at a price of $.45 per share. VPC owns presently
exercisable options for 106,000,000 shares of Common Stock, upon the exercise
of which VPC would own approximately 90% of the Company's Common Stock.
Pursuant to the Registration Agreement, the Company has granted to VPC
certain rights to have the Shares and the Option Shares (together, the
"Registrable Securities") registered under the Securities Act of 1933, as
amended (the"Act"). Specifically, the Company has agreed that the holders of
25% of the Registrable Securities which are then outstanding may demand that
the Company register their Registrable Securities under the Act. The Company
has agreed that it will bear all costs associated with the first demand for
such registration, excluding underwriting commissions or discounts. All costs
associated with subsequent demands for registration will be borne by the
holders making such demands.
Also pursuant to the Registration Agreement, the Company has granted to
VPC certain "piggyback" registration rights. Specifically, the Company has
agreed that holders of Registrable Securities shall be allowed to include on
any registration statement which the Company elects to file under the Act all
or any portion of the Registrable Securities which they own. However, if the
underwriter of the Company's offering determines that market factors require a
limitation on the number of shares to be distributed, then the number of
Registrable Securities which may be included on the registration statement will
be limited on a pro rata basis. The piggyback registration rights may be
exercised at any time within three years of the closing under the Share
Purchase Agreement. All costs associated with piggyback registrations, other
than underwriting commissions or discounts, will be borne by the Company.
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Effective as of December 7, 1995, the Company entered into a financial
consulting agreement (the "Consulting Agreement") with Broadleaf Limited, an
Irish Republic limited company ("Broadleaf"). Pursuant to the Consulting
Agreement, Broadleaf has provided certain services relating to the transactions
described above. In addition, Broadleaf has agreed to perform continuing
financial advisory services to the Company through December 31, 1996. In
consideration for all services rendered and to be rendered under the Consulting
Agreement, the Company has agreed to pay Broadleaf $200,000 which is payable
following the closing under the Purchase Agreement.
On November 21, 1995, an independent committee of the Company's Board of
Directors (the "Committee") engaged an independent investment banking firm for
the purpose of rendering an opinion as to the fairness to the Company of the
transactions contemplated by the VPC Agreements from a financial point of view.
The Committee engaged the firm of CoView Capital Inc. ("CoView") for such
purpose. CoView is an investment banking firm with broad experience in
advising companies with respect to acquisitions. CoView was paid a fee of
$25,000 to provide its fairness opinion.
ITEM 7. EXHIBITS
The following documents are filed as Exhibits to this Form 8-K:
99.1 Share Purchase Agreement dated December 29, 1995 by and between the
Company and V'Power Corporation
99.2 Fairness Opinion of CoView dated December 28, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VECTOR AEROMOTIVE CORPORATION
Dated: January 29, 1996 By: /s/ D. PETER ROSE
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D. Peter Rose, President
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EXHIBIT 99.1
SHARE PURCHASE AGREEMENT
By and Between
V'POWER CORPORATION,
as the "Buyer" herein, on the one hand,
and
VECTOR AEROMOTIVE CORPORATION
on the other
Dated as of December 29, 1995
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TABLE OF CONTENTS
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ARTICLE I
The Share Purchase and Ancillary Agreements
1.1 Purchase of the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Registration Rights and Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Closing
2.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Deliveries by Vector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Deliveries by the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
Representations and Warranties of Vector . . . . . . . . . . . . . . . . . . 3
ARTICLE IV
Representations and Warranties of the Buyer . . . . . . . . . . . . . . . . 13
ARTICLE V
Covenants of Vector
5.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Information Following Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
Conditions to Each Party's Obligation to Close . . . . . . . . . . . . . . . 16
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ARTICLE VII
Conditions to Vector's Obligation to Close . . . . . . . . . . . . . . . . 17
ARTICLE VIII
Conditions to Buyer's Obligation to Close . . . . . . . . . . . . . . . . 17
ARTICLE IX
Termination, Amendment and Waiver
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE X
Investment Banking Fees
10.1 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2 Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XI
Indemnification and Contribution
11.1 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.2 Notice of Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.3 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XII
Notices . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XIII
Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE XIV
Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE XV
Merger Clause and Costs, Fees and Expenses . . . . . . . . . . . . . . . . 24
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ARTICLE XVI
Severability . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XVII
Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XVIII
Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XIX
Headings . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XX
Survival . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XXI
Governing Law . . . . . . . . . . . . . . . . . . . . . . . 25
TABLE OF ATTACHMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT, dated as of December 29, 1995, by
and between V' POWER CORPORATION, a Bahamian corporation (the "Buyer"), on the
one hand, and VECTOR AEROMOTIVE CORPORATION, a Nevada corporation ("Vector") on
the other.
W I T N E S S E T H:
WHEREAS, the Buyer and Vector have entered into a letter of
intent dated November 21, 1995 (the "Letter"), which describes the general
terms on which Vector would sell to Buyer 10,000,000 Common Shares, par value
$.01 per share, of Vector (the "Shares") and an option to purchase an
additional 50,000,000 Common Shares of Vector (the "Option"), together with
certain other rights to be vested in the Buyer; and
WHEREAS, the Letter contemplates that the parties will enter
into a definitive agreement and prepare such other documentation as the parties
and their respective legal counsel determine is appropriate; and
WHEREAS, the parties intend that this Share Purchase Agreement
(the "Agreement"), together with the schedules, exhibits and other documents
attached hereto, serve as the definitive agreement between the parties with
respect to the transactions described in the Letter;
NOW, THEREFORE, in consideration of the covenants,
representations, warranties and mutual agreements herein set forth, the Buyer
and Vector hereby agree as follows:
ARTICLE I
The Share Purchase and Ancillary Agreements
1.1 Purchase of the Shares.
Subject to and upon the terms and conditions hereof and the
representations, warranties and covenants contained herein, on the Closing Date
(as defined below) Vector shall sell, transfer, assign and deliver
certificate(s) representing 10,000,000 Common Shares of Vector, par value $.01
per share (the "Shares") to the Buyer, and the Buyer shall purchase the Shares
from Vector, free and clear of all liens, claims and encumbrances thereon (the
"Purchase Transaction").
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1.2 Registration Rights and Option.
(a) Contemporaneously with the execution of this
Agreement, the parties shall execute a registration rights agreement (the
"Registration Rights Agreement"), a copy of which is attached hereto as Annex I
and incorporated by reference herein. The Registration Rights Agreement shall
extend to the Buyer the right, on or after the Closing Date, to demand that
Vector cause to be filed and become effective under the Securities Act of 1933
(the "1933 Act"), as amended, a registration statement covering any or all of
the Shares.
(b) On the Closing Date (as defined below), Vector shall
execute and deliver to Buyer an option agreement (the "Option Agreement") in
the form attached hereto as Annex II and incorporated by reference herein. As
set forth in the Option Agreement, Vector will grant to Buyer or its
transferee(s), if any, the right to purchase (the "Option") up to an additional
50,000,000 Common Shares of Vector (the "Option Shares") at an exercise price
of $.45 per share (the "Option Exercise Price"), all as more fully set forth in
the Option Agreement.
1.3 Purchase Price.
(a) Upon the terms and subject to the conditions herein
set forth, Vector and the Buyer agree that on the Closing Date Vector shall
sell to the Buyer, and the Buyer shall purchase from Vector, the Shares and the
Option for aggregate cash consideration of $5,000,000 payable in United States
currency (the "Purchase Price"). The principal and accrued interest payable to
Buyer pursuant to the Promissory Note dated November 27, 1995 shall be applied
to the Purchase Price, whereupon such note shall be cancelled.
(b) At the Closing, Vector shall deliver to the Buyer one
or more certificates representing the Shares against delivery by the Buyer to
Vector of the Purchase Price. Certificates for the securities comprising the
Shares shall be registered in such name or names and in such authorized
denominations as the Buyer may request in writing at least five full business
days prior to the Closing Date.
ARTICLE II
Closing
2.1 The Closing. The closing of the sale of Shares
contemplated hereby (the "Closing") shall take place at a date and time to be
specified by the Buyer and Vector (the "Closing Date") following satisfaction
or waiver of all conditions precedent to Closing as described in Articles VI,
VII and VIII hereof, which date shall be not later than January 31, 1996,
unless otherwise mutually agreed by the parties. The Closing
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shall take place at the offices of Vector in Jacksonville, Florida, or any
other place mutually agreeable to the parties, subject to the right of the
parties to close by exchange of executed counterpart documents on the Closing
Date.
2.2 Deliveries by Vector. At the Closing, Vector shall
deliver to the Buyer or cause to be delivered to the Buyer the following
instruments and documents:
(a) A certificate or certificates representing the Shares
registered in the name of the Buyer or in such name as may be designated by the
Buyer. Any sales, stock transfer or other taxes payable in connection with the
sale to the Buyer by Vector of the Shares, the Option or the Option Shares
shall be paid by the Buyer;
(b) The opinion of counsel for Vector as provided in
Article VIII below; and
(c) Such other documents, instruments and certificates of
the officers of Vector as are described in Article XIII or as may be reasonably
requested by the Buyer.
2.3 Deliveries by the Buyer. At the Closing, the Buyer
shall deliver to Vector or cause to be delivered to Vector the following
instruments and documents:
(a) The Purchase Price as provided in Section 1.2(a) here
of; and
(b) Such other documents, instruments and certificates of
the officers of the Buyer as may be reasonably requested by Vector.
2.4 Further Assurances. Vector shall execute and deliver
on the Closing Date or thereafter any and all such other instruments, and take
or cause to be taken all such further action as may be necessary or appropriate
to vest fully and confirm to the Buyer title to and possession of the Shares or
the Option to be delivered hereunder by Vector.
ARTICLE III
Representations and Warranties of Vector
As a material inducement to the Buyer to (i) enter into this
Agreement, and (ii) purchase and acquire the Shares and the Option, Vector
represents and warrants to the Buyer, except as disclosed in the Exhibits to
this Agreement, that:
(a) Vector is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Vector is
duly authorized to conduct business in the
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State of Florida as a foreign corporation, and is in good standing in each
state in which the ownership of its property or the conduct of its business
renders such qualification necessary, and has all corporate power and authority
necessary to engage in the business in which it is presently engaged. From
January 1, 1990 through the date hereof, Vector has not done any business in
the State of Nevada either directly or through an affiliated corporation, and
therefore the provisions of NRS 78.378 to NRS 78.3793 of the Nevada Business
Corporation Act (the "Nevada Law") do not apply to Vector by virtue of NRS
78.3788 of the Nevada Law.
(b) Vector does not own or control, directly or
indirectly, any interest in any other corporation, joint venture, partnership,
association or other business entity.
(c) Vector has furnished to the Buyer, or will furnish to
the Buyer prior to the Closing Date, copies of the audited financial statements
of Vector for the years ended September 30, 1994, 1993 and 1992 (hereinafter
collectively referred to as the "Vector Financial Statements"). The Vector
Financial Statements include a balance sheet and related statements of net
income (loss), shareholders' equity and cash flows for the year ended on such
date audited by Vector's certified public accountants.
The Vector Financial Statements fairly present the financial
position, results of operations and other information purported to be shown
therein at the respective dates and for the respective periods to which they
apply. The Vector Financial Statements have been prepared in accordance with
generally accepted accounting principles (except to the extent that certain
footnote disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), consistently applied throughout the periods involved, are correct
and complete, and are in accordance with the books and records of Vector. The
accountants whose report on the audited financial statements is filed with the
Commission are, and during the periods covered by the reports included in
filings made with the Commission were, independent certified public accountants
with respect to Vector within the meaning of the 1934 Act.
(d) Vector has good and marketable title to all of its
properties and assets carried on the Vector Financial Statements and such
properties and assets are subject to no material mortgage, pledge, lien,
security interest, claim or other encumbrance except (i) as disclosed in the
Vector Financial Statements and the notes thereto, or except as otherwise
disclosed in this Agreement, or in writing to Buyer, (ii) as may arise in the
ordinary course of business, or (iii) the interest of a lessor under any
non-capital lease.
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(e) Except as otherwise described on hereto, since
September 30, 1994, there has been no material change in the nature of the
business of Vector, nor in its financial condition or property, and Vector has
incurred no material obligations or liabilities or made any commitments other
than as disclosed in Vector Financial Statements or as otherwise disclosed on
hereto. Moreover, since September 30, 1994, there has been no damage,
destruction or loss or other occurrence or other development (whether or not
insured against) which either singly or in the aggregate materially adversely
affects Vector and Vector's executive officers have no knowledge of any
threatened occurrence or development which would materially adversely affect
the properties or assets or the business or operations of Vector. Buyer is
aware that Vector has continued to incur financial losses through the date of
this Agreement.
(f) Except as disclosed in Exhibit B hereto, Vector is
not a party to any employment agreement with any of its officers, directors or
shareholders, or to any lease, agreement or other commitment, nor to any
pension, insurance, profit sharing or bonus plan. Except as disclosed in
Exhibit B hereto, none of Vector's officers or directors nor any associate
(i.e., any relative or spouse of any of the officers or directors or any firm,
corporation, association or business enterprise in which any of the officers or
directors or any such relative or spouse participates as a director, officer,
employee, agent, representative, shareholder, partner or joint venturer or has
any direct or indirect financial interest, including, without limitation, the
interest of a creditor in any form) or any of the officers or directors has any
direct or indirect interest, in any firm, corporation, association or business
enterprise which competes with, is a supplier, customer or sales agent of, or
is engaged in any business of the kind being conducted by Vector, and none of
Vector's officers or directors nor any associate of any of the officers or
directors has any interest, directly or indirectly, and any contract with,
commitment or obligation of or to, or claim against, Vector.
(g) Except as otherwise disclosed on Exhibit C hereto,
Vector is not a party to any litigation, pending or threatened nor has any
claim been made or, to the best knowledge of Vector's executive officers,
asserted against Vector nor are there any proceedings threatened or pending
before any federal, state or municipal government, or any department, board,
body or agency thereof, involving Vector.
(h) Vector is not in violation or default of any
provision of its Articles of Incorporation or Bylaws or of any provision of any
instrument or contract to which it is party, or by which it is bound or, to the
best knowledge of its executive officers, of any provision of any federal,
state or local judgment, writ, decree, order, law, statute, rule or government
regulation, applicable to it. The execution, delivery and performance of this
Agreement and the consummation of the
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transactions contemplated hereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a violation or default under any such provision or an event
which results in the creation of any lien, charge or encumbrance upon any asset
of Vector. Vector has all requisite power and authority to execute, deliver
and perform each of (a) this Agreement (b) the Option Agreement, and (c) the
Registration Rights Agreement, and has all requisite power and authority to
execute and deliver the certificates representing the Shares, and the Option
Shares. All necessary corporate proceedings of Vector have been duly taken to
authorize the execution, delivery and performance by Vector of this Agreement,
the Option Agreement and the Registration Rights Agreement. This Agreement has
been duly authorized, executed and delivered by Vector, is the legal, valid and
binding obligation of Vector, and is enforceable as to Vector in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or other tribunal is
required by Vector for the execution, delivery or performance by Vector of this
Agreement, the Option Agreement or the Registration Rights Agreement. No
consent of any party to any contract, agreement, instrument, lease, license,
arrangement or understanding to which Vector is a party, or to which any of its
properties or assets are subject, is required for the execution, delivery or
performance of this Agreement, the Option Agreement or the Registration Rights
Agreement.
(i) Since September 30, 1994, Vector has not, except as
disclosed in Exhibit E hereto, and prior to the Closing, Vector will not have
(i) paid or declared any dividends on or made any distributions in respect of,
or purchased or redeemed, any of the outstanding shares of its capital stock or
issued any additional shares of its capital stock; or (ii) made or authorized
any amendments to its Articles of Incorporation, or to its By-Laws except an
amendment to Vector's Articles of Incorporation to increase to 600,000,000
Vector's authorized common shares; or (iii) mortgaged or pledged or subjected
to any lien, charge or other encumbrance, any of its assets, tangible or
intangible; or (iv) sold, leased, transferred or contracted to sell, lease or
transfer any material assets, tangible or intangible, or entered into any other
transactions outside of the ordinary course of business; (v) made any loan or
advance to or become obligated as guarantor or otherwise on behalf of any
officer, director or shareholder of Vector or to any other person, firm or
corporation; (vi) paid any compensation to any officer or director (in their
capacities as such) other than in the ordinary course of business; (vii)
suffered any labor trouble; (viii) made or become a party to any contract or
commitment or renewed, extended, amended or modified any contract or commitment
which in any case involved an amount in excess of $50,000 or term in excess of
90 days, except in the ordinary course of business; (ix) become bound or
entered into any contract, commitment or transaction other than in the ordinary
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course of business or except as otherwise contemplated by this Agreement; or
(x) waived any rights which alone or in the aggregate are material to Vector.
(j) The authorized capitalization of Vector consists of
600,000,000 Common Shares, par value $.01 per share (the "Common Shares") and
5,000,000 Preferred Shares, par value $.10 per share (the "Preferred Shares").
As of the date hereof, 42,664,699 Common Shares have been duly authorized and
validly issued and are outstanding, fully paid and nonassessable, and no
Preferred Shares are issued or outstanding. The Shares, when issued in
accordance with the terms and conditions of this Agreement, and the Option
Shares, when issued in accordance with the terms and conditions of the Option
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable. Except as described in Exhibit F hereto or as may be
contemplated by this Agreement, Vector has no commitments or obligations of any
nature whatsoever to issue, deliver or sell under any preemptive rights, offer,
stock option agreement, bonus agreement or purchase plan, stock incentive
compensation plan, conversion right, contingent share agreement or otherwise,
any Common Shares or Preferred Shares.
(k) Except as set forth in Exhibit G hereto, to the best
knowledge of Vector's executive officers after reasonable investigation, Vector
has not infringed, and is not now infringing, upon, any trademark, trade name,
service mark, or copyright belonging to any other person, firm or corporation.
Vector is not a party to any license agreement, or any other agreement with
respect to any trademark, service mark, trade names or applications for same or
any copyrights except as disclosed in Exhibit H hereto. To the best of its
knowledge after reasonable inquiry, and except as disclosed on Exhibit H
hereto, Vector owns or holds adequate licenses or rights to use all trademarks,
service marks, trade names, or copyrights used in the business as now conducted
by it and such use does not and will not, infringe upon or otherwise violate
the rights of others in a manner which might have a material adverse effect on
Vector. "Vector" is a trademark used by Vector to identify its products, and
such trademark is protected by registration in the name of Gerald Wiegert, as
assignor to Vector, on the principal register of the United States Patent and
Trademark Office. There is no right to any intangible, except as now possessed
subject to the claims of Gerald Wiegert as described in Exhibit G, necessary to
the business of Vector as presently conducted.
(l) Vector does not have any liabilities or obligations,
either accrued, absolute, contingent or otherwise except (i) to the extent
reflected on or reserved against on the Vector Financial Statements or in the
notes thereto, (ii) those incurred in or as a result of the ordinary course of
business since September 30, 1994 and (iii) any liabilities not material or
adverse to Vector's business as a whole, except as disclosed in this Agreement.
There is no basis for any material claim
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against Vector, or any liability of Vector which involves an amount in excess
of $50,000, except as set forth in Exhibit H hereto.
(m) Vector is not in material default under any agreement
to which it is a party nor in material default in the payment of any of its
material obligations. Vector has not received any notices alleging any
material failure in the performance of its obligations under any agreement,
contract, lease, debt, guarantee, written commitment, loan or other material
agreements.
(n) Except as set forth in Exhibit I:
(i) Vector has obtained all permits, licenses and other
authorizations which are required under the Environmental Laws for the
ownership, use and operation of each location operated or leased by
Vector (the "Property"), all such permits, licenses and authorizations
are in effect, no appeal nor any other action is pending to revoke any
such permit, license or authorization, and Vector is in full
compliance with all terms and conditions of all such permits, licenses
and authorizations.
(ii) Vector and the Property are in compliance with all
Environmental Laws, including, without limitation, all restrictions,
conditions, standards, limitations, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental
Laws or contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
(iii) Vector has not and to the best knowledge of Vector's
executive officers, no other person has, Released, placed, stored,
buried or dumped any Hazardous Substances, Oils, Pollutants or
Contaminants or any other wastes produced by, or resulting from, any
business, commercial, or industrial activities, operations, or
processes, on, beneath, or adjacent to the Property or any property
formerly owned, operated or leased by Vector except for inventories of
such substances to be used, and wastes generated therefrom, in the
ordinary course of business of Vector (which inventories and wastes,
if any, were and are stored or disposed of in accordance with
applicable laws and regulations and in a manner such that there has
been no release of any such substances into the environment).
(iv) Except as provided to the Buyer, there exists no
written or tangible report, synopsis or summary of any asbestos, toxic
waste or Hazardous Substances, Oils, Pollutants or Contaminants
investigation made with respect to all or any portion of the assets of
Vector (whether or
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not prepared by experts and whether or not in the possession of the
executive officers of Vector).
(v) Definitions: As used herein:
(a) Environmental Laws - means all federal, state
and local laws, regulations, rules and ordinances relating to
pollution or protection of the environment, including, without
limitation, laws relating to Releases or threatened Releases
of Hazardous Substances, Oils, Pollutants or Contaminants into
the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, land,
surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
(b) Hazardous Substances, Oils, Pollutants or
Contaminants - means all substances defined as such in the
National Oil and Hazardous Substances Pollutant Contingency
Plan, 40 C.F.R. Section 300.6, or defined as such under any
Environmental Law.
(c) Release - means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or
outdoor environment (including, without limitation, ambient
air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement
of Hazardous Substances, Oils, Pollutants or Contaminants
through or in the air, soil, surface water, groundwater or any
property.
(o) To the best knowledge of Vector's executive officers,
Vector has complied with all applicable laws relating to the conduct of its
business.
(p) Prior to the Closing Date Vector will have filed all
federal, state and local tax returns and reports required to be filed by it and
Vector has paid or provided for all taxes shown to be due on such returns.
Vector has no knowledge of any deficiency or additional tax or charge assessed
or proposed to be assessed against Vector. To its knowledge, Vector is not the
subject of any ongoing, pending or threatened audit of its tax returns by the
Internal Revenue Service or by the tax commissioner of any state. Vector has
not executed any agreements for extension of time for the assessment or payment
of any tax.
(q) Except as described on Exhibit J hereto, Vector has
good leasehold interests in all real estate shown in
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Exhibit K as leased by it, in each case under valid leases, enforceable against
the lessors thereunder, and enjoys quiet possession of each leasehold.
(r) To the best knowledge of Vector's executive officers,
after reasonable investigation, no instrument of record, easement, license,
grant, applicable zoning or building law, ordinance or administrative
regulation or urban redevelopment law or other impediment of any kind prohibits
or interferes with, limits or impairs, or would if not permitted by any prior
nonconforming use, prohibit or interfere with, or limit or impair, the use,
operation, maintenance of or access to, or affect the value of, the real or
personal property owned of record or beneficially or leased by Vector, or any
item thereof, as now used, operated or maintained by Vector. No notice of any
violation of any applicable zoning or building law or ordinance or
administrative regulation has been received by Vector, nor to the knowledge of
Vector's executive officers is such a notice threatened. No condemnation
proceedings have been instituted in respect of any real estate owned or leased
by Vector nor to the knowledge of any of Vector's executive officers are such
proceedings threatened.
(s) Except as set forth in Exhibit L, each item of
machinery or equipment shown on the Vector Financial Statements as owned by
Vector is owned outright, in each case free and clear of all security
interests, claims, liens, charges or encumbrances whatever. Vector has good
leasehold interests in all machinery and equipment shown in the Vector
Financial Statements as leased by it, in each case under valid leases
enforceable against the lessors thereunder. Such machinery and equipment now
owned or leased or used by Vector is sufficient and adequate to carry on its
business as presently conducted.
(t) To the best knowledge of Vector's executive officers,
after reasonable investigation, the plant, building, structures, machinery and
equipment owned or leased by Vector or currently used or employed by it in its
business comply fully with all federal, state or local regulations, including,
without limitation, safety and other regulations promulgated by any federal,
state or local regulatory body governing or having authority over the conduct
of its business, in compliance with the terms and conditions of all leases,
franchises, charters and other agreements affecting or relating to any of such
property.
(u) The tangible real and personal property and assets,
whether owned or leased, of Vector are insured against the hazards and in the
amounts stated in the policies of insurance listed in Exhibit M hereto. Vector
carries insurance against personal injury and property damage to third persons
and in respect of its services and operations and such other insurance as is
stated in the policies of insurance listed in Exhibit M. All such insurance is
in full force and is carried with insurers rated "A" or better.
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(v) Except as set forth in Exhibit N, to the best
knowledge of Vector's executive officers, after reasonable investigation, there
is no pending or threatened labor trouble with any of the employees of Vector
or any unfair labor practices alleged, as such term is defined in the National
Labor Relations Act, as amended.
(w) Except as set forth on Exhibit O, all additions to
inventories since September 30, 1994, and all inventory classified as such in
Vector Financial Statements which is now on hand, consist of items of a
quantity and a quality usable or saleable in the ordinary course of the
business of Vector, and the value of all items of obsolete materials and all
materials of below standard quality have been priced at the lower of cost or
market value.
(x) Except as set forth on Exhibit P, to the best
knowledge of Vector's executive officers after reasonable investigation, all
notes and accounts receivable of Vector have been collected or are current and
collectible (in the case of any such accounts within 90 days after billing) at
the aggregate recorded amounts thereof on Vector's books, less the bad-debt
reserves provided therefore in the Vector Financial Statements, as such
reserves have been adjusted on their respective books in the ordinary course of
business to date, and are subject to no counterclaims or set-offs.
(y) To the best knowledge of Vector's executive officers,
after reasonable investigation, no shortage exists in (i) any inventory of raw
material, work-in-process or finished goods of Vector and stored upon the
premises of Vector; or (ii) any other item of personal property owned by
another for which Vector is accountable to another.
(z) Exhibit Q hereto contains (i) the names of all
incumbent directors and officers of Vector, (ii) the names and job designations
of all employees whose total compensation from Vector for the year ended
September 30, 1994 equaled or exceeded $60,000, together with a statement of
the full amount paid, or payable to each such person in respect of such year
and a summary of the basis on which each such person is compensated if such
basis is other than a fixed salary rate, (iii) the names of all persons holding
powers of attorney from Vector and copies thereof.
(aa) Vector has provided the Buyer with full and complete
access to information concerning all material aspects of, and material
information with respect to, Vector. All information which has been
communicated by Vector to the Buyer with respect to the assets, liabilities,
business, operations, financial condition and business prospects of Vector are
true, correct and complete in all material respects.
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(bb) The minute books of Vector accurately reflect all
meetings, actions, proceedings, and other matters properly includable therein.
(cc) Vector has filed with the Securities and Exchange
Commission ("SEC") all reports required to be filed by Vector under the
Securities Exchange Act of 1934 (the "1934 Act") since the date upon which its
registration statement on Form 8 (Commission File No. 0-17303) was declared
effective by the SEC. All reports filed by Vector with the SEC are complete
and accurate in all material respects in accordance with the requirements of
the 1934 Act and/or the rules and regulations promulgated thereunder, and do
not contain any material misstatements or omissions; provided, however, that
Vector makes no representation with respect to reports executed and filed with
the SEC by Vector's former President, Gerald A. Wiegert, from March 22, 1993
through July 14, 1993. Vector has not engaged in any action, activity, or
failure or omission to act which would constitute separately or in connection
with any other acts or omissions an attempt unlawfully to influence or
manipulate the price of Common Shares or in any other respect or manner violate
the 1934 Act and/or the rules and regulations promulgated thereunder.
(dd) Except as disclosed in Exhibit R hereto, neither the
Commission nor any "Blue Sky" or securities authority of any jurisdiction
(collectively, the "Securities Authorities") have issued an order (a "Stop
Order") suspending the effectiveness of a registration statement filed by
Vector with the Securities Authorities, preventing or suspending the use of any
preliminary prospectus, definitive prospectus, registration statement or any
amendment or supplement thereto, or suspending the registration or
qualification of any of the securities issued by Vector, nor have the
Securities Authorities instituted or threatened to institute any proceedings
with respect to a Stop Order.
(ee) To the best knowledge of Vector's executive officers,
neither Vector nor any director, officer, agent, employee or other person
associated with or acting on behalf of Vector has, directly or indirectly:
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activities, made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any
bribe, rebate, pay-off, influence payment, kickback, or any other unlawful
payment.
(ff) Board and Special Committee Recommendations. The Board
of Directors of Vector has, by resolutions duly adopted as of December 29, 1995
by unanimous written consent approved and adopted this Agreement and the other
transactions contemplated herein and the terms and conditions set forth herein
as being in
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the best interests of Vector and its shareholders. Prior to such meeting, a
special committee duly constituted by Vector's Board of Directors (the "Special
Committee"), approved the terms of this Agreement and recommended that Vector's
full Board of Directors approve and adopt this Agreement and the other
transactions contemplated herein.
(gg) Fairness Opinion. At a meeting duly held on December
28, 1995 the Special Committee received a written opinion from CoView Capital,
Inc. as of November 21, 1995 and December 28, 1995 to the effect that the
consideration to be received by Vector for the sale of the Shares and the
Option, and the sale of the Option Shares upon exercise of the Option, is fair
to Vector and its public shareholders from a financial point of view (the
"Fairness Opinion").
ARTICLE IV
Representations and Warranties of the Buyer
As a material inducement to Vector to enter into this
Agreement, the Option Agreement, and the Registration Rights Agreement, the
Buyer represents and warrants to Vector that:
(a) The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the Bahamas, and is qualified
to transact business as a foreign corporation in all other jurisdictions in
which the character of its business requires the Buyer to be so qualified; and
has all corporate power necessary to engage in the business in which it is
presently engaged.
(b) Neither the execution and delivery of this Agreement
nor the consummation of the transactions herein contemplated, will conflict
with or result in the breach of, or accelerate the performance required by, any
terms of any agreement, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of the Buyer under the terms
of any such agreement.
(c) The Buyer has all requisite power and authority to
execute, deliver and perform each of (a) this Agreement, (b) the Option
Agreement, and (c) the Registration Rights Agreement, and has all requisite
power and authority to purchase and own the Shares, the Option, and the Option
Shares. All necessary corporate proceedings of the Buyer have been duly taken
to authorize the execution, delivery and performance by the Buyer of this
Agreement, the Option Agreement and the Registration Rights Agreement. This
Agreement has been duly authorized, executed and delivered by the Buyer, and is
enforceable as to the Buyer in accordance with its terms. No consent,
authorization, approval, order, license, certificate or permit of or from, or
declaration or filing with, any federal, state, local or other governmental
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authority or any court or other tribunal is required by the Buyer for the
execution, delivery or performance by the Buyer of this Agreement, the Option
Agreement or the Registration Rights Agreement. No consent of any party to any
contract, agreement, instrument, lease, license, arrangement or understanding
to which the Buyer is a party, or to which any of its properties or assets are
subject, is required for the execution, delivery or performance of this
Agreement, the Option Agreement or the Registration Rights Agreement.
(d) The Buyer has provided Vector with full and complete
access to information concerning all material aspects of, and information with
respect to, the Buyer. All information which has been communicated by the
Buyer to Vector with respect to the business and operations of the Buyer are
true, correct and complete in all material respects
(e) The Buyer is acquiring the Shares and the Option,
upon payment for and delivery thereof, not with a view to the distribution or
public resale thereof within the meaning of the 1933 Act. The Buyer further
agrees that Vector may cause to be set forth on the certificates for the Shares
and, if and when issued, the Option Shares, to be delivered to the Buyer
hereunder and pursuant to the Option Agreement a legend in substantially the
following form:
These securities have nor been registered under the Securities
Act of 1933, as amended, and may be offered and sold only if
registered pursuant to the provisions of that Act or if, in
the opinion of counsel to the seller an exemption from
registration thereunder is available, the availability of
which must be established to the satisfaction of Vector.
Vector shall not be obligated to recognize any purported
transfer by the Buyer of the Shares, the Option or the Option Shares unless
accompanied by an opinion of the Buyer's counsel in form and substance
satisfactory to counsel for Vector to the effect that such transfer is not in
violation of the 1933 Act.
ARTICLE V
Covenants of Vector
5.1 Conduct of Business. From the date hereof until the
Closing, except as permitted by this Agreement, reflected in the Exhibits
hereto or as otherwise consented to by the Buyer in writing, which consent
shall not be unreasonably withheld, Vector shall:
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(a) Carry on its business only in the ordinary course, in
substantially the same manner in which it previously has been conducted;
(b) Maintain its real and personal property in as good
condition and repair as of the date hereof, except for ordinary wear and tear;
(c) Perform in all material respects all of its material
obligations under all contracts to which Vector is a party;
(d) Use reasonable efforts to preserve intact its present
business organization and to keep available the services of its present
officers and employees;
(e) Not amend its charter or By-Laws;
(f) Not take any action or engage in any transaction
which would cause any of the representations made by Vector herein to be untrue
as of the Closing Date or would cause Vector to be in breach of the terms and
conditions of this Agreement;
(g) Maintain its books of account in its usual regular
and ordinary manner;
(h) Comply with all registration, filing and reporting
requirements of the 1934 Act;
(i) Use its best efforts to maintain the listing of the
Common Shares on the National Association of Securities Dealers Automated
Quotation System;
(j) Not declare or pay any dividend or other distribution
with respect to any class or series of its capital stock;
(k) Not issue any share of its capital stock, except upon
the exercise of any currently outstanding option, warrant, convertible security
or similar right which is described in Exhibit G hereto;
(l) Not increase, decrease, or exchange any of its
outstanding Common Shares for a different number or class of securities through
reorganization, reclassification, share dividend, share split, or similar
change in the capitalization of Vector; or
(m) Not issue any option, warrant, convertible security
or similar right.
5.2 Access and Information. Vector shall give to the
Buyer and its representatives full access at all reasonable times prior to the
Closing to the properties, books and records of
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Vector and to furnish such information and documents in its possession relating
to Vector as the Buyer may reasonably request.
5.3 Information Following Closing. For a period of five
years after the Closing, Vector shall furnish Buyer, without charge, such of
the following documents as may be requested by Buyer:
(i) Within 90 days after the end of each fiscal year, three
copies of financial statements certified by independent certified
public accountants, including a balance sheet, statement of
operations, statement of shareholders' equity and statement of cash
flows of Vector, with supporting schedules, prepared in accordance
with generally accepted accounting principles, as and at the end of
such fiscal year and for the 12 months then ended;
(ii) As soon as practicable after they have been filed with
the Commission, three copies of each annual and interim financial and
other report or communication filed with the Commission;
(iii) Two copies of each press release and every material
news item prepared by Vector or which is released by Vector; and
(iv) Such additional documents and information with respect
to Vector and its affairs as the Buyer may from time to time
reasonably request.
ARTICLE VI
Conditions to Each Party's Obligation to Close
In addition to those specific conditions set forth in Articles
VII and VIII below, the obligations of the Buyer and Vector to consummate the
transactions described herein shall be subject to the following:
(a) No government regulatory body or agency shall have
instituted court action or legal proceedings seeking preliminary or permanent
injunctive relief prohibiting purchase of the Shares, the Option or the Option
Shares.
(b) The performance of all conditions precedent to
Closing set forth in Articles VII and VIII below.
(c) From the date of this Agreement to the Closing Dare,
there shall have been no material adverse change (i) in the business or
properties of Vector, or (ii) in the financial condition of Vector, and the
property, business and operations of Vector shall have not been materially and
adversely affected due
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to any fire, accident or other casualty or by any act of God, whether or nor
insured.
ARTICLE VII
Conditions to Vector's Obligation to Close
Vector's obligation to complete the transactions provided for
herein shall be subject to the performance by the Buyer of all its agreements
to be performed hereunder on or before the Closing, and to the further
conditions that:
(a) The representations and warranties of the Buyer
contained in Article IV hereof are true and correct in all material respects as
of the Closing with the same effect as if made on and as of such date and the
officers of the Buyer shall so certify thereto.
(b) At the Closing, the Buyer shall furnish an officer's
certificate in favor of Vector which shall provide (i) that the Buyer is an
existing corporation under the laws of the Bahamas and is in good standing as a
corporation organized in the Bahamas, (ii) that the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been authorized by all necessary action, corporate or otherwise, by the
Buyer, and (iii) that the consummation of the transactions contemplated by this
Agreement do not conflict with or result in a breach of any terms, condition or
provision of the Memorandum and Articles of Association of the Buyer or any
note, indenture, mortgage, deed of trust or other agreement or instrument known
to such officer to which the Buyer is a party or by which the Buyer or any of
its property is bound.
ARTICLE VIII
Conditions to Buyer's Obligation to Close
The Buyer's obligation to complete the transactions provided
for herein shall be subject to the performance by Vector of all agreements to
be performed hereunder on or before the Closing, and to the further conditions
that:
(a) The representations and warranties of Vector
contained in Article III and the covenants of Vector contained in Article V
hereof are true and correct and have been performed or satisfied in all
material respects as of the Closing with the same effect as if made or
performed on and as of such date and Vector shall so certify to the Buyer.
(b) There shall have been no material adverse change in
the operating results or financial condition of Vector since September 30,
1994, except as described in written schedules or
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exhibits which are attached to this Agreement and Vector shall so certify in
writing to the Buyer.
(c) The Buyer shall have received from Vector's counsel,
an opinion dated the Closing Date, in form and substance satisfactory to the
Buyer and its counsel.
(d) Vector shall have performed and complied with all the
terms and conditions required by this Agreement and the Registration Rights
Agreement to be performed or complied with by it on or before the Closing.
(e) The Buyer shall have received resolutions of the
Board of Directors of Vector, certified by Vector's secretary or any assistant
secretary, approving the execution, delivery and performance of this Agreement,
the Registration Rights Agreement and the Option Agreement.
(f) The Buyer shall have received from Vector's
management a satisfactory projection regarding the employment of the funds to
be invested hereunder.
ARTICLE IX
Termination, Amendment and Waiver
9.1 Termination. This Agreement and each agreement
contemplated hereby may be terminated at any time prior to the Closing:
(a) Mutual Consent. By the mutual written consent of the
Buyer and Vector.
(b) Breach. By Vector if there has been a material
breach of any representation, warranty or agreement on the part of the Buyer
set forth in this Agreement, or by the Buyer if there has been a material
breach of any representation, warranty, covenant or agreement on the part of
Vector set forth in this Agreement.
(c) No Consummation. By either Vector or the Buyer if
the Purchase Transaction shall not have been consummated on or before January
31, 1996, unless extended by mutual agreement of the parties.
(d) Litigation. By the Buyer if any litigation or
proceeding has been instituted with a view of restraining or prohibiting
consummation of the transaction contemplated by this Agreement.
9.2 Effect of Termination. In the event of termination
of this Agreement or any agreement contemplated hereby, this Agreement or any
such other agreement shall
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forthwith become void and there shall be no ability or obligation hereunder or
thereunder on the part of any party hereto.
9.3 Amendment. This Agreement may be amended by the
parties hereto at any time before or after approval hereof. This Agreement or
any agreement contemplated hereby may not be amended except by an instrument in
writing signed on behalf of each of the parties thereto.
ARTICLE X
Investment Banking Fees
Vector and the Buyer each represent that, except as described
in this Article X, neither has employed any broker or agent or entered into any
agreement for the payment of any fees or compensation to any other person, firm
or corporation in connection with this transaction.
10.1 Fairness Opinion. Vector has retained the firm of
CoView Capital, Inc. ("CoView") for the purpose of obtaining an opinion that
the transactions contemplated hereby are fair to Vector from a financial point
of view. The parties agree that Vector shall be responsible for the payment of
all fees and expenses which become due and owing to CoView in connection with
the fairness opinion described in this Section 10.1.
10.2 Consulting Agreement. Prior to the date hereof, Vector
entered into a Consulting Agreement with Broadleaf Limited (the "Consultant")
pursuant to which Consultant has and will continue to perform certain financial
consulting services on behalf of Vector. The parties agree that Vector shall
be responsible for the payment of all fees and expenses which become due and
owing to the Consultant in connection with the Consulting Agreement described
in this Section 10.2.
ARTICLE XI
Indemnification and Contribution
11.1 Indemnity. Subject to the conditions set forth below,
Vector agrees to indemnify and hold harmless the Buyer, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls the Buyer within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act, against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Article XI, but not be limited to, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred,
arising out of,
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resulting from, based upon, or in connection with any breach of any
representation, warranty, covenant, or agreement of Vector contained in this
Agreement. The foregoing agreement to indemnify shall be in addition to any
liability Vector may otherwise have, including liabilities arising under this
Agreement. The Buyer agrees to indemnify and hold harmless Vector, its
officers, directors, partners, employees, agents, and counsel and each person,
if any, who controls Vector within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Article XI, but not be limited to, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred,
arising out of, resulting from, based upon, or in connection with any breach of
any representation, warranty, covenant, or agreement of Buyer contained in this
Agreement.
Except as otherwise agreed by the parties in Article X hereof,
(i) Vector shall indemnify the Buyer for any broker's or finder's fees which
may become payable as a result of any promise or contract which may have been
made by Vector to or with any such broker or finder and (ii) the Buyer shall
indemnify Vector for any broker's or finder's fees which may become payable as
a result of any promise or contract which may have been made by the Buyer to or
with any such broker or finder.
11.2 Notice of Proceeding. If any action is brought against
Vector, the Buyer or any of their officers, directors, employees, agents or
counsel, of any controlling persons (an "Indemnified Party" or, collectively,
"Indemnified Parties"), in respect of which indemnity may be sought against the
other party (the "Indemnifying Party") pursuant to the foregoing paragraph,
such Indemnified Party or Parties shall promptly notify the Indemnifying Party
in writing of the institution of such action (but the failure so to notify
shall not relieve the Indemnifying Party from any liability it may have) and
the Indemnifying Party shall promptly assume the defense of such action
including the employment of counsel satisfactory to such Indemnified Party or
Parties and payment of expenses. Such Indemnified Party or Parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties, unless the employment of such counsel shall have been authorized in
writing by the Indemnifying Party in connection with the defense of such action
or the Indemnifying Party shall not have promptly employed counsel satisfactory
to the Indemnified Party or Parties to have charge of the defense of such
action or such Indemnified Party or Parties shall have reasonably concluded
that there may be one or more legal defenses available to it or them or other
indemnified parties which are different from or additional to those available
to the Indemnifying Party, in any of which events
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such fees and expenses shall be borne by the Indemnifying Party and the
Indemnifying Party shall not have the right to direct the defense of such
action on behalf of the Indemnified Party or Parties. Anything in this
paragraph to the contrary notwithstanding, the Indemnifying Party shall not be
liable for any settlement of any claim or action effected without its written
consent.
11.3 Contribution. To provide for just and equitable
contribution if (i) an Indemnified Party makes a claim for indemnification
pursuant to the language set forth in Sections 11.1 and 11.1 above, but it is
found in a final judicial determination, not subject to further appeal, that
such indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
Indemnified Parties seek contribution under the 1933 Act, the 1934 Act, or
otherwise, then the parties shall contribute to any and all losses,
liabilities, claims, damages and expenses whatsoever to which any of them may
be subject, in accordance with the relative fault of the parties in connection
with the facts which result in such losses, liabilities, claims, damages and
expenses. No persons guilty of a fraudulent misrepresentation within the
meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation.
ARTICLE XII
Notices
Any notice given under this Agreement shall be deemed to have
been given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, by receipt confirmed facsimile
transmission, or by tested Telex, telegram or cable addressed as follows:
If to Vector: Vector Aeromotive Corporation
7601 Centurion Parkway
Jacksonville, Florida 32256
Attention: President
With a copy to: T. Malcolm Graham
Kirschner, Main, Petrie, Graham,
Tanner & Demont
One Independent Drive, Suite 2000
Jacksonville, Florida 32201
Fax No. (904) 358-2199
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If to the Buyer: V'Power Corporation
Sandringham House
82 Shirley Street
Nassau, New Providence
The Bahamas
With a copy to: Harold S. Nathan, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Fax No. (212) 858-1500
or to any other address or addresses which may hereafter be designated by any
party by notice given in such manner. All notices shall be deemed to have been
given as of the date of receipt.
ARTICLE XIII
Confidentiality
In connection with this Agreement, the Buyer acknowledges that
it has received from Vector certain proprietary information, trade secrets,
financial statements and supporting information, together with statistics,
analyses, compilations, studies and other documents or records prepared by any
person including the Buyer, its agents, advisors, affiliates or representatives
(collectively, "Representatives") which contain or otherwise reflect or are
generated from such information (collectively, the "Confidential Material").
The Buyer agrees that the Confidential Material has not and will not be used
other than in connection with the purchase of the Shares, the Option and the
Option Shares. The Buyer has and will make all necessary and appropriate
efforts to safeguard the Confidential Material from disclosure to anyone other
than as permitted hereby. Without the prior written consent of Vector, the
Buyer will not, except as required by law, and will direct its representatives
not to, disclose to any person the fact that the Confidential Material has been
made available to the Buyer or that the Buyer has inspected any portion of the
Confidential Material. The term "person" as used herein shall be broadly
interpreted to include without limitations any corporation, company,
partnership and individual or group.
In the event that the Buyer or any of its Representatives is
requested or required (by oral question or request for information of documents
in legal proceedings, interrogatories, subpoena, civil investigative demand or
similar process) to disclose any information supplied to the Buyer in the
course of its dealings with Vector or its Representatives, it is agreed that
the Buyer will provide Vector with prompt notice of any request or requirement
so that either the Buyer or Vector or both of them may seek an appropriate
protective order and/or, by
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<PAGE> 27
mutual written agreement, waive the Buyer's compliance with the provisions of
this Agreement. It is further agreed that if, in the absence of a protective
order or receipt of a waiver, the Buyer or any of its Representatives is
nonetheless, in the reasonable written opinion of its counsel, compelled to
disclose information concerning Vector to any court or else stand liable for
contempt or suffer other censure, the Buyer or such Representative may disclose
such information to such court. In any event, the Buyer will not oppose action
by, and will cooperate with, Vector to obtain an appropriate protective order
or other reliable assurance that confidential treatment will be accorded to
such information.
The term "Confidential Material" does not include information
(i) which was known to the Buyer or that the Buyer had in its possession prior
to the disclosure of confidential information by Vector hereunder, (ii) which
becomes generally available to the public other than as a result of a
disclosure by the Buyer or its Representatives, (iii) which becomes available
to the Buyer on a non-confidential basis from a source other than Vector or its
Representatives, provided that such source is not bound by a confidentiality
agreement with Vector or its Representatives or otherwise prohibited from
transmitting the information to the Buyer by a contractual, legal or fiduciary
obligation, or (iv) which otherwise becomes known to the Buyer in a manner
which does not violate the proprietary rights of Vector.
Any of the Confidential Material shall be the property of
Vector and, upon request of Vector, all such Confidential Material shall be
returned to Vector or furnished to Vector without the Buyer retaining any copy
thereof.
It is further understood and agreed that money damages would
not be a sufficient remedy for any breach of this Article XIII by the Buyer or
its Representatives. Vector shall be entitled to seek injunctive and any other
such relief as may be necessary to enforce the terms of this Article XIII in
the event of a breach by the Buyer or its Representatives. Injunctive relief
shall not be deemed to be exclusive remedy for the Buyer's breach of this
Article XIII, but shall be in addition to all of the remedies available at law
or equity to Vector.
ARTICLE XIV
Counterparts
This Agreement may be executed in any number of counterparts,
each of which when executed and delivered shall be an original, but all of such
counterparts shall constitute one and the same instrument.
-23-
<PAGE> 28
ARTICLE XV
Merger Clause and Costs, Fees and Expenses
This Agreement supersedes all prior agreements and
understandings between the parties, and may not be changed or terminated
orally, and no attempted change, termination or waiver of any of the provisions
hereof shall be binding unless in writing and signed by the parties hereto.
Vector shall pay its own expenses and Buyer's expenses incident to the
preparation, execution and delivery of this Agreement and the consummation of
the transactions described herein including, without limitation, all fees of
counsel, accountants and other professional fees and expenses.
ARTICLE XVI
Severability
In the event that any provision of this Agreement is
determined to be partially or wholly invalid, illegal or unenforceable, then
such provision shall be deemed to be modified or restricted to the extent
necessary to make such provision valid, binding and enforceable or, if such a
provision cannot be modified or restricted in a manner so as to make such
provision valid, binding and enforceable, then such provision shall be deemed
to be excised from this Agreement and the validity, binding effect and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired in any manner.
ARTICLE XVII
Benefit
The terms and conditions of this Agreement shall inure to the
benefit of, and shall be binding upon, the successors and assigns of the
parties hereto, and the persons and entities referred to in Article XI who are
entitled to indemnification or contribution and their respective successors,
legal representatives and assigns and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement, the Option Agreement or the
Registration Rights Agreement or any provision herein or therein contained.
ARTICLE XVIII
Waiver
The failure of any party to insist upon the strict performance
of any of the provisions of this Agreement shall not
-24-
<PAGE> 29
be considered as a waiver of any subsequent default of the same or similar
nature. Time is of the essence in this Agreement.
ARTICLE XIX
Headings
The headings for the sections of this Agreement are inserted
for convenience in reference only and shall not constitute a part hereof.
ARTICLE XX
Survival
The respective agreements, representations, warranties,
covenants and other statements of the Buyer and Vector set forth in this
Agreement shall survive and remain in full force and effect for a period of one
(1) year from the Closing, regardless of any investigation or inspection made
on behalf of the Buyer or Vector.
ARTICLE XXI
Governing Law
This Agreement shall be governed by and construed according to
the laws of the State of New York, without giving effect to conflict of laws.
-25-
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
THE BUYER:
V' POWER CORPORATION
By:
--------------------------------
VECTOR:
VECTOR AEROMOTIVE CORPORATION
By:
--------------------------------
-26-
<PAGE> 31
TABLE OF ATTACHMENTS
<TABLE>
<S> <C> <C>
ANNEX SECTION REFERENCE ARTICLE AND DESCRIPTION
----- ----------------- -----------------------
I Section 1.3(a) Registration Rights Agreement
II Section 1.3(b) Option Agreement
EXHIBIT
- -------
SECTION REFERENCE ARTICLE AND DESCRIPTION
----------------- -----------------------
A Article III(e) Material Changes or Commitments
in Vector's Business
B Article III(f) Material Agreements
C Article III(g) Litigation
D Article III(h) Authorization
E Article III(i) Dividends, Distributions,
Distributions and other material
changes of the Company
F Article III(j) Commitments to issue Common
Shares; Cancellation of Certain
Common Shares
G Article III(k) Infringement Exceptions and
License Agreement
H Article III(l) Material Claims
I Article III(n) Environmental Liabilities
J Article III(q) Leasehold Exceptions
K Article III(q) Real Property Leaseholds
L Article III(s) Machinery and Equipment/Leases
M Article III(u) Insurance Policies
N Article III(v) Labor Relations
O Article III(w) Inventory Qualifications
P Article III(x) Receivable Exceptions
Q Article III(z) Miscellaneous Company Information
R Article III(dd) Stop Orders
</TABLE>
-27-
<PAGE> 32
EXHIBIT A
Ref: Article III(e)
MATERIAL CHANGES OR COMMITMENTS IN VECTOR'S BUSINESS
No change has occurred in the overall nature of Vector's
business. However, the following changes in business strategy have been
adopted:
A. The number of Vector's full-time employees
and consultants is approximately 70.
B. Vector has prepared a business plan that
outlines Vector's pian of operation through
December 31, 2000. Vector has provided a
copy of such business plan to Buyer.
No change has occurred in the financial condition of Vector
except:
A. Vector has experienced continued ongoing
losses in the normal course of business.
B. Vector's cash position has weakened as a
direct result of the continued losses
described above. As of December 26, 1995,
Vector had cash and cash equivalents of
approximately $204,000.
<PAGE> 33
EXHIBIT B
Ref: Article III(f)
MATERIAL AGREEMENTS
Please refer to Vector's reports filed under the 1934 Act
since September 30, 1994, and the financial statements included therein and the
footnotes thereto, for a description of certain material agreements which are
referenced in paragraph III(f) of the Share Purchase Agreement.
In addition, Vector has entered into the following material
agreements:
A. Commercial Sublease, by and between Vector,
as sublessee, and Lamborghini USA, Inc., as sublessor
B. Engine Development Program and Engine
Purchase Agreement, by and between Vector and
Automobili Lamborghini S.p.A.
C. Lease Agreement, by and between Vector and
Clay County Port. Inc.
D. Agreement for corporate relations services
with Corporate Relations Group, Inc.
E. Consulting Agreement with Broadleaf, Inc.
Richard J. Aprahamian, a Director and Secretary of Vector, is
a shareholder in Aprahamian & Ducote, P.C., which furnishes legal services to
the Company.
<PAGE> 34
EXHIBIT C
Ref: Article III(g)
LITIGATION
Attached hereto is the summary of litigation appearing in
Vector's Form 10-K for the fiscal year ended September 30, 1994 and Vector's
Forms 10-Q for the periods ending December 31, 1994 and March 31, June 30 and
September 30, 1995. Vector is not a party to any other pending or, to the best
of its knowledge, threatened litigation.
<PAGE> 35
ITEM 3. LEGAL PROCEEDINGS
The Company and Gerald A. Wiegert are parties to certain legal
proceedings which arose principally in connection with the termination of Mr.
Wiegert as the Company's Chairman, President and Chief Executive Officer. The
Company is also a party to certain legal proceedings against persons who acted
with Mr. Wiegert in defiance of the Company's Board of Directors. The history
and current status of the Company's dispute with Mr. Wiegert and others is
described below.
TERMINATION OF MR. WIEGERT
On March 22, 1993, the Board held a special meeting (the
"Meeting") for the purpose of considering whether to remove Mr. Wiegert from
his positions as Chairman, President and Chief Executive Officer of the Company
and whether to terminate in all other respects his employment by the Company.
On the day of the Meeting, Mr. Wiegert took various steps intended to frustrate
the holding of the Meeting. These steps included changing all locks on
entrances to the Company's facilities; posting guards at entrances to the
Company's facilities; and prohibiting certain Company employees from entering
the Company's offices. Also on the day of the Meeting, Mr. Wiegert advised
certain Board members that they would be denied entrance to the Company's
office, which had been designated as the location for the Meeting. As a result
of Mr. Wiegert's conduct, the place of the Meeting was changed. All directors,
including Mr. Wiegert, were advised in writing of the new Meeting place.
The Meeting was attended by three of the four members of the
Board, Mr. Wiegert being the only member absent. All Board members present at
the meeting approved the removal of Mr. Wiegert as Chairman, President and
Chief Executive Officer of the Company and the termination of his employment by
the Company. Other action taken by the Board included the creation of a three
member executive committee (the "Committee"), consisting initially of John F.
Pope, George J. Fencl and Baduraman Dorpi P. The Committee was established to
oversee management of the Company until such time as Mr. Wiegert's successor
was appointed.
Upon being advised of the action taken by the Board at the
Meeting, Mr. Wiegert refused to relinquish physical control of the Company's
facilities; continued to prohibit Board members and certain employees of the
Company from entering the facilities and held himself out to the public as the
Chairman, President and Chief Executive Office of the Company.
LITIGATION AGAINST MR. WIEGERT
In order to gain undisputed access and control over the
Company's facilities, assets and business operations, on March 24, 1993, the
Company filed an action in the Superior Court of
<PAGE> 36
California, Los Angeles County captioned as Vector Aeromotive Corporation v.
Gerald A. Wiegert, requesting declaratory relief and a temporary restraining
order. The relief sought by the Company would have, among other things,
required that Mr. Wiegert vacate the Company's facilities and cease to hold
himself out as an officer of the Company. At a hearing held on March 26, 1993,
the court ordered Mr. Wiegert to show cause at a hearing to be held on April 6,
1993, why the requested relief should not be granted. At the April 6 hearing,
the court denied the Company's request for a restraining order or preliminary
injunction, and Mr. Wiegert's self-help assertion over the Company's
facilities, assets and business operations continued.
On May 12 1993, the Company filed an amended complaint with
the Los Angeles County Superior Court. The amended complaint contains ten
separate claims for relief, including claims based on breach of fiduciary duty;
breach of employment agreement; conversion of Company assets; and fraud. In
general, these claims are based on allegations that Mr. Wiegert, through a
variety of devices and transactions, has converted for his own benefit or the
benefit of his family members cash, assets and business opportunities belonging
to the Company. The amended complaint also seeks an order enjoining Mr.
Wiegert from engaging in certain business transactions on behalf of the Company
as well as a declaratory judgment that the Board's termination of Mr. Wiegert
on March 22, 1993 is valid.
On June 14, 1993, the court granted an order enjoining Mr.
Wiegert from entering into certain transactions on the Company's behalf and
ordering that the Company's books, records and facilities be made available to
the Board. In connection with such order, which was clarified on July 20,
1993, the Company was required to post a surety bond in the amount $150,000,
which it did on July 14, 1993. The surety bond was released in connection with
the September 14, 1993 order described below.
On September 14, 1993, the court granted the Company's motion
for summary judgment on the declaratory judgment claim contained in the amended
complaint. Specifically, the court entered an order (i) declaring that the
Board properly exercised its authority to remove Mr. Wiegert as an officer of
the Company; (ii) enjoining Mr. Wiegert from any further dealing with the
property or interests of the Company; and (iii) calling for an orderly transfer
of day-to-day management of the Company to the Board. To date, the Company
believes that Mr. Wiegert has complied with the September 14, 1993 court order
by refraining from participation in Company affairs and by transferring
day-to-day management of the Company to the Board.
Although the court granted summary judgment in favor of the
Company on its claim for declaratory relief and undisputed, physical control of
the Company has been returned to the Board, all other claims contained in the
Company's amended complaint, as
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<PAGE> 37
described above, are pending. These claims seek monetary damages in an amount
to be proven at trial. Mr. Wiegert has asserted various claims against the
Company, including claims for unpaid rent on the Company's former principal
facility, which was leased by the Company from Mr. Wiegert; breach of
employment agreement; and for the return of business assets which Mr. Wiegert
alleges are owned by him rather than by the Company. These claims have been
asserted in a separate action filed in the Superior Court of California for Los
Angeles County on September 27, 1993 captioned Gerald A. Wiegert v. Vector
Aeromotive Corporation. Mr. Wiegert's complaint was dismissed by the court
because it contained claims which should have been asserted as cross-claims
within the Company's original action against Mr. Wiegert.
In February, 1994, Mr. Wiegert filed a cross-complaint against
the Company, its directors, and its outside securities counsel alleging, among
other things, breach of employment contract; breach of covenant of good faith
and fair dealing; intentional and negligent misrepresentation; interference
with contractual advantage and business interest; negligent and intentional
infliction of emotional distress; and libel, and slander. The Company has
challenged the legal sufficiency of the cross-complaint, including subsequent
amendments thereof, resulting in elimination of all claims except the claims
concerning breach of employment contract by the Company, unpaid rent,
conversion, libel and slander. The Company plans to file a motion for summary
judgment for the purpose of eliminating Mr. Wiegert's causes of action for
conversion, libel, slander and conspiracy. In another action filed by Mr.
Wiegert as general partner of Vector Car entitled Vector Car. v. Vector
Aeromotive Corporation, et al., Mr. Wiegert alleges that the Company assumed a
Vector Car debt owed to him of approximately $325,000 and that the Company is
obligated to Vector Car under the terms of a $250,000 promissory note payable
to Vector Car. The Company intends to vigorously defend this action.
The court previously appointed a Receiver for the purpose of
reviewing the dispute concerning ownership of certain business assets. The
Receiver conducted an evidentiary hearing on the dispute on July 1, 1994, and
determined that except for insignificant items of property, Mr. Wiegert owns no
interest in the business assets of the Company. The court accepted the
Receiver's report and issued an appropriate order. The remaining actions
between the Company and Mr. Wiegert are expected to be tried in 1995.
The Company received a Notice of Claim dated May 19, 1994 from
the Labor Commissioner indicating that Mr. Wiegert filed a claim with the Labor
Commissioner seeking from the Company a total of $93,414.00 for wages for a
six-week period ending September 14, 1993 and accrued vacation pay. The
Company believes that Mr. Wiegert's claim is duplicative of his cross-complaint
against the Company discussed above. The Company and Mr. Wiegert appeared for
an initial conference before the Labor
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<PAGE> 38
Commissioner on June 28, 1994 and the Labor Commissioner dismissed the case.
The Company has discovered that Mr. Wiegert has filed an
application with the United States Patent and Trademark Office to register
"Avtech" as a trademark. In December 1994, the Company filed a Notice of
Opposition with the Trademark Trial and Appeal Board with respect to such
application. The Trademark Trial and Appeal Board has instituted a proceeding
with respect to the matter. Mr. Wiegert has until January 15, 1995 to file a
response, and the Company is preparing to take discovery in the matter.
LITIGATION BY AND AGAINST OTHERS
Subsequent to the Company's initiation of the lawsuit
described above, five related civil lawsuits have been filed in the Superior
Court of California for Los Angeles County. In Vector Aeromotive Corporation
v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (Case Number BC092389), the
Company alleges that subsequent to March 22, 1993, Mr. Wiegert and David
Kostka, the Company's former Secretary, acting in cooperation with certain
representatives of Merrill Lynch, opened "money-market" accounts which were
used to deposit and disburse funds of the Company. The Company contends that
Merrill Lynch undertook these activities knowing or under duty to discover that
the Board of Directors' resolutions on which Merrill Lynch acted in
establishing such accounts were invalid and unauthorized. In a related action,
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Vector Aeromotive Corporation
(Case No. BC085474), Merrill Lynch interplied those funds which remained in the
accounts. In September, 1993, the funds then remaining in the account were
released to the Company pursuant to court order. Having received the remaining
funds in the account, the Company seeks damages in an amount to be proved at
trial. This action was recently ordered to arbitration and the Company has
submitted a claim to the National Association of Securities Dealers, Inc.
("NASD") where the dispute will be heard by a three member panel. Merrill
Lynch has filed a motion to dismiss the Company's case before the NASD. The
Company has opposed the motion, but no decision has been rendered.
In Vector Aeromotive Corporation v. Tokai Bank of California
(Case Number BC092534), the Company alleges that Tokai Bank wrongfully, and
with knowledge of the activities of Messrs. Wiegert and Kostka, opened
accounts and allowed Mr. Wiegert to disburse corporate funds for purposes not
authorized by the Board of Directors. The Company seeks recovery from Tokai
Bank of funds wrongfully disbursed to Mr. Wiegert in an amount to be proved at
trial. Tokai Bank has filed a motion for summary judgment in its favor which
has been argued and is under submission for decision by the court.
-4-
<PAGE> 39
In Vector Aeromotive Corporation v. David Kostka (Case Number
BC091267), the Company seeks to recover disbursements made by Messrs. Wiegert
and Kostka through the Merrill Lynch and Tokai Bank accounts described above.
The Company alleges that such accounts were established based on the
certificate of Mr. Kostka as corporate secretary without the Board of
Directors' authorization. Mr. Kostka has filed a cross-complaint for breach of
employment contract and will seek damages therefor of approximately $20,000.00.
In Vector Aeromotive Corporation v. Barash & Hill, et al.
(Case No. BC092390), the Company alleges that the law firm of Barash & Hill,
the law firm of Seyfarth, Shaw, Fairweather & Geraldson, Jerry M. Hill and
Anthony H. Barash committed legal malpractice as a result of the conflicts of
interest which such firms and lawyers encountered in representing the separate
interests of Mr. Wiegert at the expense of the Company and their failure to
return funds belonging to the Company.
Vector Aeromotive Corporation v. Vector Car (Case Number
BC095298) is an action in interpleader commenced by the Company with respect to
certificates for Common Shares of the Company issued in connection with the
Company's purchase of assets from Vector Car, a California limited partnership.
The Company does not expect to incur material expense in connection with this
action and its only interest in such Common Shares is to avoid double payment
for the initial purchase of assets from Vector Car.
On or about March 24, 1991 a complaint was filed in Los
Angeles County Superior Court entitled James R. Negele v. Vector Aeromotive
Corporation, Gerald A. Wiegert, Gerald A. Wiegert d/b/a Vehicle Design Force
and Does 1-25, inclusive. The complaint set forth five claims for relief, only
one of which was directed against the Company for breach of contract. The
complaint was based upon bills submitted by Mr. Negele to Mr. Wiegert for
services which, pursuant to the terms of an alleged agreement between Mr.
Negele and Mr. Wiegert, were payable in capital stock of the Company. The
claim for relief against the Company alleged that the Company received the
benefits of the alleged agreement between Mr. Negele and Mr. Wiegert. This
action was tried in December 1993, and in April 1994, the court ruled in favor
of Mr. Negele, awarding him a judgment of $171,420 plus interest from July 9,
1990. The Company has filed an appeal and posted an appeal bond. The Company
believes that the matter will be settled before the appeal is heard.
On or about June 8, 1994, a complaint was filed against the
Company in Los Angeles Superior Court entitled King & Associates and Thomas E.
King, Jr. v. Vector Aeromotive Corporation, Gerald A. Wiegert and Does 1
through 40 inclusive. The complaint sets forth six claims for breach of
contract, fraud, negligent misrepresentation, breach of implied covenant of
good faith and fair dealing, restitution and quantum merit. The
-5-
<PAGE> 40
complaint is based on a Finder's Agreement allegedly entered into by and
between the Company and King & Associates, Inc. and Thomas E. King, Jr. The
complaint alleges that plaintiffs performed services with respect to a public
offering and that under the Finder's Agreement plaintiffs are entitled to
compensation for such services. The Company alleges that King & Associates,
Inc. and Thomas E. King are not entitled to compensation under the Finder's
Agreement for services allegedly rendered respecting the public offering. King
& Associates and Thomas E. King, Jr. seek special damages of $155,000 plus
interest from August 19, 1991 and general damages in the sum of $500,000.
In James M. Porter v. Vector Aeromotive Corporation, Case No.
0509919-016-236/628, Mr. Porter submitted a claim against the Company before
the Labor Commissioner for unpaid wages penalties and interest. On February
18, 1994, the Labor Commission issued an award in favor of Mr. Porter for a
total of $20,395.17. The Company has filed an appeal.
In June 1994, Thomas E. King, an individual both in his name
and under his "dba," "King and Associates" (the "Plaintiff"), filed a complaint
against the Company in the Los Angeles County Superior Court. The complaint
sets forth six claims for breach of contract, fraud, negligent
misrepresentation, breach of implied covenant of good faith and fair dealing,
restitution and quantum merit. The complaint alleges that Plaintiff performed
services with respect to a public offering and that under the terms of a
finder's agreement, the Plaintiff is entitled to compensation for services
allegedly rendered in connection with the public offering. The Plaintiff is
seeking special damages of $155,000 plus interest from August 19, 1991. The
Company has negotiated a settlement of this case for the sum of $100,000
payable in nine installments.
-6-
<PAGE> 41
EXHIBIT D
Ref: Article III(h)
AUTHORIZATION
The execution, delivery and performance of the Share Purchase
Agreement, Option Agreement and Registration Rights Agreement must be
authorized by (i) a special committee of the Vector Board of Directors (such
committee consists of Richard Aprahamian, and George Fencl) and by the complete
Board of Directors of Vector (consisting of Messrs. Dorpi, Sudjaswin,
Kimberley, Braner, Aprahamian, and Fencl). The special committee and the
entire Board each approved and authorized the foregoing actions as of December
29, 1995.
<PAGE> 42
EXHIBIT E
Ref: Article III(i)
DIVIDENDS, DISTRIBUTIONS, AND OTHER MATERIAL CHANGES
OF THE COMPANY SINCE SEPTEMBER 30, 1994
I. Dividends: NONE
II. Changes to Articles or By-laws: NONE, except for an amendment to
Vector's Articles of Incorporation to increase to 600,000,000,
Vector's authorized common shares.
III. Stock Issued:
<TABLE>
<S> <C>
V'Power Corporation 18,333,333 shares
Corporate Resolutions Group 290,000 shares
Abdo Corporation 150,000 shares
Joseph McKeever 25,000 shares
</TABLE>
IV. Mortgage or Pledge of Assets: NONE
V. Sale of Assets: NONE
VI. Loans, Advances, Guarantees: NONE
VII. Compensation Paid by Officers and Directors Outside of the Ordinary
Course: NONE
VIII. Labor trouble: NONE
IX. Contracts in Excess of $50,000; NONE, other than the agreements
described in Exhibit B to the Share Purchase Agreement.
X. Contracts Outside Ordinary Course of Business: NONE, other than
agreements described in Exhibit B to the Share Purchase Agreement.
XI. Waiver of Material Rights: NONE
<PAGE> 43
EXHIBIT F
Ref: Article III(j)
COMMITMENTS TO ISSUE COMMON STOCK AND
FORFEITURE OF COMMON STOCK
Options to purchase 50,000,000 shares of Common Stock issued
to V'Power Corporation in April, 1995.
1990 "VCAR" warrants to purchase 400,000 shares of Common
Stock were issued in a public offering in November of 1990.
A Warrant to purchase 80,000 shares of Common Stock was issued
to the underwriter of the 1990 offering.
A Warrant to purchase 1,000,000 Shares of Common Stock was
issued to Gerald A. Wiegert in 1990.
Warrants to purchase 5,750,000 shares of Common Stock were
issued in a public offering in August of 1991.
Warrants to purchase 1,000,000 shares of Common Stock were
issued to the underwriter of the 1991 offering.
Warrants to purchase 300,000 shares of Common Stock were
issued in 1992 pursuant to an investment banking agreement.
Warrants to purchase an aggregate of 1,000,000 shares were
issued to certain officers, directors and employees of the Company during 1993.
The Company is committed to issue 175,000 shares of common
stock to two unaffiliated parties as compensation for services rendered during
March through September 1993.
There are a total of 1,000,000 shares of Common Stock reserved
for issuance under the Company's 1994 Omnibus Stock Plan, of which options for
864,000 shares have been granted. There are a total of 612,000 shares of
common stock reserved for issuance under the Company's previously existing
stock option plans, of which 268,000 shares have been granted.
There are a total of 100,000 shares of Common Stock reserved
for issuance under the Company's Directors Stock Ownership Plan, 31,643 of
which have been awarded through the fiscal year ended September 30, 1993.
An Option to purchase 6,000,000 shares of Common Stock at a
price of $.75 per share was issued to the Buyer during 1994.
<PAGE> 44
Options to purchase 500,000 shares of Common Stock were issued
in 1995 to Corporate Resolutions Group Inc. and the Company is committed to
issue 350,000 shares of Common Stock to such firm in return for services.
In November 1988, Gerald A. Wiegert, the Company's former
President entered into an escrow (the "Escrow Agreement") with a bank, the
Company and the underwriter of the Company's initial public offering pursuant
to which 1,028,400 shares of Common Stock of the Company then owned by Mr.
Wiegert were deposited in an escrow account (the "Escrow Account"). The Common
Shares deposited in the Escrow Account were subject to release in annual
increments of 205,680 shares, 342,457 shares and 480,163 shares based upon the
Company achieving net income before taxes of $500,000, $750,000 and $1,500,000
in calendar years 1991, 1992 and 1993, respectively. All of such shares have
been cancelled and are part of the Company's authorized but unissued capital
stock based on the Company's failure to meet the specified earnings
requirements.
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<PAGE> 45
EXHIBIT G
Ref: Article III(k)
INFRINGEMENT EXCEPTIONS AND LICENSE AGREEMENT
The Company is engaged in disputes over use of the "Vector"
trademark in:
Korea (Adam Opel Vectra)
Benelux Countries (Adam Opel Vectra)
Australia (Nissan Vectra)
Gerald A. Wiegert claims in litigation with Vector
an ownership interest in the "Avtec" mark and the "Vector" trademark, which
claims the Company is contesting.
<PAGE> 46
EXHIBIT H
Ref: Article III(l)
MATERIAL CLAIMS
NONE, except as noted in Exhibit C.
<PAGE> 47
EXHIBIT I
Ref: Article III(n)
ENVIRONMENTAL LIABILITIES
NONE
<PAGE> 48
EXHIBIT J
Ref: Article III(q)
LEASEHOLD EXCEPTIONS
The Company has already written off all leasehold improvement
valuations on the 400 North Marine Avenue facility in anticipation of moving.
Disputes concerning enforceability of the Company's leases and the Company's
right to possession of the leased premises located in Wilmington, California
are described in Exhibit C.
<PAGE> 49
EXHIBIT K
Ref: Article III(q)
REAL PROPERTY LEASEHOLDS
Vector has no leasehold interests in real property other than
pursuant to the lease and sublease which are identified on Exhibit B.
<PAGE> 50
EXHIBIT L
Ref: Article III(s)
MACHINERY AND EQUIPMENT LEASES
NONE
<PAGE> 51
EXHIBIT M
Ref: Article III(u)
INSURANCE POLICIES
SCC description of insurance coverage attached (Attachment M-1)
<PAGE> 52
ATTACHMENT M-1
SCHEDULE OF YOUR CURRENT INSURANCE A SERVICE OF
Arthur J. Gallagher & Co.
PREPARED FOR Harbor South Tower
Vector Aeromotive Corporation 100 Hancock Street
7601 Centurion Parkway South North Quincy, MA 02171-1787
Jacksonville, FL 32256 (617) 770-2200 - Fax (617) 770-2323
PROPERTY DATE PREPARED: 12/26/95
LOCATION: (IF DIFFERENT FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT OR TERM IN POLICY
COVERAGE LIMITS YEARS EXPIRES COMPANY NUMBER PREMIUM COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL GENERAL LIABILITY 1 11/01/96 AIG 8182269 $68,515 Locations:
Each Occurrence Limit 1,000,000 1. 7601 Centurion
Parkway South,
Jacksonville, FL 32256
Products-Completed Operations 1,000,000 2. 975 Martin Avenue
Aggregate Limit Green Cove Springs
FL 32043
Personal & Advertising Injury 1,000,000
Limit
General Aggregate Limit 2,000,000
Fire Damage Limit 1,000,000
any one fire
Medical Expense Limit 10,000
any 1 person
Self Insured Retention
Per Occurrence/Products and 10,000
Completed Operations Losses
Only
- ------------------------------------------------------------------------------------------------------------------------------------
We present this schedule so you may get an overall picture of your Please examine this schedule with particular reference to
insurance protection. If you have policies from other insurance the amount or limits of your insurance. Today's property
offices we suggest you add them to this list to present the complete values and liability judgements are higher and insurance
picture. should be adjust to cover.
We will be glad to discuss this schedule with you at your convenience.
PAGE 1
</TABLE>
<PAGE> 53
SCHEDULE OF YOUR CURRENT INSURANCE A SERVICE OF
Arthur J. Gallagher & Co.
PREPARED FOR Harbor South Tower
Vector Aeromotive Corporation 100 Hancock Street
7601 Centurion Parkway South North Quincy, MA 02171-1787
Jacksonville, FL 32256 (617) 770-2200 - Fax (617) 770-2323
PROPERTY DATE PREPARED: 1/2/96
LOCATION: (IF DIFFERENT FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT OR TERM IN POLICY
COVERAGE LIMITS YEARS EXPIRES COMPANY NUMBER PREMIUM COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PROPERTY 1 11/01/96 Royal KHT306284 $55,842
Blanket Real and Personal 4,541,000
Property Limit-Per Proposal
Business Income/Extra Expense 6,000,000
AUTOMOBILE/GARAGE LIABILITY 1 11/01/96 AIG 3812395 $ 8,750
Bodily Injury and Property 1,000,000
Damage-Combined Single
Limit
Personal Injury Protection Per Statute
Medical Payments-Per Person 5,000
Uninsured/Underinsured 1,000,000
Motorists-Per Accident
Garagekeepers Legal Liability 250,000
- ------------------------------------------------------------------------------------------------------------------------------------
We present this schedule so you may get an overall picture of your Please examine this schedule with particular reference to
insurance protection. If you have policies from other insurance the amounts or limits of your insurance. Today's property
offices we suggest you add them to this list to present the complete values and liability judgements are higher and insurance
picture. should be adjusted to cover.
We will be glad to discuss this schedule with you at your convenience.
PAGE 2
</TABLE>
<PAGE> 54
SCHEDULE OF YOUR CURRENT INSURANCE A SERVICE OF
Arthur J. Gallagher & Co.
PREPARED FOR Harbor South Tower
Vector Aeromotive Corporation 100 Hancock Street
7601 Centurion Parkway South North Quincy, MA 02171-1787
Jacksonville, FL 32256 (617) 770-2200 - Fax (617) 770-2323
PROPERTY DATE PREPARED: 1/2/96
LOCATION: (IF DIFFERENT FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT OR TERM IN POLICY
COVERAGE LIMITS YEARS EXPIRES COMPANY NUMBER PREMIUM COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WORKERS COMPENSATION 1 11/01/96 AIG 3820484 $212,122
State: FL
Employers Liability-Each 1,000,000
Accident
Employers Liability-Disease 1,000,000
Policy
Employers Liability-Disease 1,000,000
Employee
UMBRELLA LIABILITY 1 11/01/96 AIG TBD $45,000
Each Occurrence Limit 5,000,000
Products/Completed Operations 5,000,000
Aggregate
General Aggregate 5,000,000
SIR 10,000
- ------------------------------------------------------------------------------------------------------------------------------------
We present this schedule so you may get an overall picture of your Please examine this schedule with particular reference to
insurance protection. If you have policies from other insurance the amounts or limits of your insurance. Today's property
offices we suggest you add them to this list to present the complete values and liability judgements are higher and insurance
picture. should be adjusted to cover.
We will be glad to discuss this schedule with you at your convenience.
PAGE 3
</TABLE>
<PAGE> 55
SCHEDULE OF YOUR CURRENT INSURANCE A SERVICE OF
Arthur J. Gallagher & Co.
PREPARED FOR Harbor South Tower
Vector Aeromotive Corporation 100 Hancock Street
7601 Centurion Parkway South North Quincy, MA 02171-1787
Jacksonville, FL 32256 (617) 770-2200 - Fax (617) 770-2323
PROPERTY DATE PREPARED: 1/2/96
LOCATION: (IF DIFFERENT FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT OR TERM IN POLICY
COVERAGE LIMITS YEARS EXPIRES COMPANY NUMBER PREMIUM COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIRECTORS & OFFICERS LIABILITY 1 09/30/96 NRMS 4459281 $119,000
Each Policy Year 5,000,000
Deductible Each Loss 100,000
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
We present this schedule so you may get an overall picture of your Please examine this schedule with particular reference to
insurance protection. If you have policies from other insurance the amounts or limits of your insurance. Today's property
offices we suggest you add them to this list to present the complete values and liability judgements are higher and insurance
picture. should be adjusted to cover.
We will be glad to discuss this schedule with you at your convenience.
PAGE 4
</TABLE>
<PAGE> 56
EXHIBIT N
Ref: Article III(v)
LABOR RELATIONS
None, except as described in Exhibit C.
<PAGE> 57
EXHIBIT O
Ref: Article III(w)
INVENTORY QUALIFICATIONS
NONE
<PAGE> 58
EXHIBIT P
Ref: Article III(x)
RECEIVABLES EXCEPTIONS
NONE
<PAGE> 59
EXHIBIT Q
Ref: Article III(z)
MISCELLANEOUS COMPANY INFORMATION
I. Directors and Officers:
Directors:
Sudjaswin E. L.
Michael J. Kimberley
George Fencl
Richard J. Aprahamian
D. Peter Rose
Officers:
D. Peter Rose - President
Sultaman Lubis - Chief Financial Officer
and Treasurer
Richard J. Aprahamian - Secretary
II. Compensation over $60,000 per year
D. Peter Rose $130,000
Sultaman Lubis $ 78,000
III. Power of Attorney: NONE
<PAGE> 60
EXHIBIT R
Ref: Article III(dd)
STOP ORDERS
The Company was subject to a consent order issued by the State
of New Jersey in 1988.
<PAGE> 61
ANNEX I
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE> 62
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of January __,
1996 between VECTOR AEROMOTIVE CORPORATION, a Nevada corporation (the
"Company"), and V' POWER CORPORATION, a Bahamian Company ("VPC").
The parties agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act of 1933, as amended (the "Securities Act"), and the declaration or ordering
of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the
Shares, as defined under the Share Purchase Agreement, dated as of December 29,
1995, between the Company and VPC (the "Share Purchase Agreement"), and the
Option Shares, as defined under the Option Agreement, which is to be entered
into by the Company and VPC in accordance with paragraph 1.3(b) of the Share
Purchase Agreement in the form which is attached to the Share Purchase
Agreement (collectively, the "Shares"), and (ii) any Common Shares of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, the Shares or the
Option Shares, in each case held by any Holder (as defined in clause (d)
below);
(c) The number of shares of "Registrable Securities then
outstanding" shall be equal to the number of Common Shares of the Company
outstanding which are, and the number of Common Shares of the Company issuable
pursuant to then exercisable or convertible securities which upon issuance
would be, Registrable Securities;
(d) The term "Holder" or "Holders" means VPC and any of
its successors or assigns which hold Registrable Securities; and
(e) The term "Closing Date" is used herein as defined in
Article II of the Share Purchase Agreement.
<PAGE> 63
Section 2. Demand Registration.
(a) If at any time on and after the Closing Date, the
Company shall receive a written request from Holders of at least 25% of the
Registrable Securities then outstanding that the Company file a registration
statement under the Securities Act covering the registration of Registrable
Securities held by them, then the Company shall, subject to the limitations of
this Section 2, use its best efforts to effect within 90 days of such request
or as soon as practicable thereafter, the registration under the Securities Act
of all Registrable Securities which such Holders request to be registered,
provided, that the filing of any registration statement which does not result
in the effective registration of all of the Registrable Securities for which a
demand has been made and the continuing effectiveness of such registration for
an uninterrupted period of six (6) months from the initial effective date
thereof, shall not be deemed to fulfill the Company's obligations under this
Section 2(a).
(b) In addition to, and not in limitation of the
foregoing, if the Company shall receive a written request from any of the
Holders aforementioned in Section 2(a) that the Company file one or more
post-effective amendments to the registration statement referred to therein so
as to extend the effectiveness of such registration statement beyond the
six-month period referred to in Section 2(a), then the Company shall use its
best efforts to effect as soon as practicable the filing of any such
post-effective amendment.
(c) In addition to, and not in limitation of the
foregoing Sections 2(a) and 2(b), if at any time on and after the Closing Date
and following the effective date of the registration statement referred to in
Section 2(a), the Company shall receive a written request from Holders of at
least 25% of the Registrable Securities then outstanding that the Company file
a registration statement under the Securities Act covering the registration of
Registrable Securities held by them, then the Company shall, subject to the
limitations of this Section 2, use its best efforts to effect within 90 days of
such request or as soon as practicable thereafter, the registration under the
Securities Act of all Registrable Securities which such Holders request to be
registered, and to file as soon as practicable any and all post-effective
amendments thereto which may be requested by the aforementioned Holders.
(d) If the Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.
The Holders shall (together with the Company as provided in Section 3) enter
into an underwriting agreement in customary form with a mutually acceptable
underwriter or underwriters. Notwithstanding any other provision of this
Section 2, if the managing underwriter advises the Holders in writing that
marketing factors require a
-2-
<PAGE> 64
limitation of the number of shares to be underwritten, then the number of
shares of Registrable Securities of the Holders that may be included in the
underwriting shall be so limited pro rata.
(e) The Company shall be obligated to effect one
registration pursuant to Section 2(a) in accordance with the terms thereof.
The Company shall be obligated to file as many post-effective amendments
pursuant to Section 2(b) and to effect as many registrations pursuant to
Section 2(c) as may be requested by Holders in accordance therewith.
Section 3. "Piggyback" Rights. For a period of three years
from the Closing Date, and if (but without any obligation to do so) the Company
proposes to register any of its Common Shares under the Securities Act in
connection with the public offering of such Common Shares for cash proceeds
payable in whole or in part to the Company (other than with respect to a
Registration Statement filed on Form S-8 or Form S-4 or such other similar form
then in effect under the Securities Act), the Company shall, at such time,
promptly give the Holders written notice of such registration (at the
respective addresses of the Holders appearing in the Company's records). Upon
the written request of any Holder given within 20 days after giving of such
notice by the Company, the Company shall, subject to the provisions of Section
7, cause to be registered under the Securities Act all of the Registrable
Securities that such Holder has requested to be registered; provided, however,
if the managing underwriter of the public offering of shares proposed to be
registered by the Company advises the Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
number of shares of Registrable Securities of the Holders that may be included
in the underwriting shall be so limited pro rata.
Section 4. Registration Procedure. Whenever required under
this Agreement to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as is reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become and remain effective and
maintain the qualifications referred to in Section 4(d) below for such period
as may be necessary for the selling Holders to dispose of the Registrable
Securities being offered for sale.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act.
(c) Furnish to the Holders of the Registrable Securities
covered by such registration statementsuch number of
-3-
<PAGE> 65
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such jurisdictions as
shall be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
jurisdiction but the Company may be required to file a consent to service
substantially in the form of the Uniform Consent to Service of Process Form
U-2.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering. Each
selling Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
(f) Notify each holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
(g) Furnish to each Holder requesting registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
-4-
<PAGE> 66
Section 5. Furnish Information. The selling Holders shall
promptly furnish to the Company in writing such reasonable information
regarding themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
Section 6. Expenses of Registration. All expenses, other
than underwriting discounts, relating to Registrable Securities incurred in
connection with registration, filing or qualification pursuant to Section 2(a)
and Section 3 of this Agreement, including (without limitation) all
registration, filing and qualification fees, printers' bills, mailing and
delivery expenses, accounting fees, and the fees and disbursements of counsel
for the Company and the Holders shall be borne by the Company. All of the
foregoing expenses relating to the Registrable Securities incurred in
connection with registration, filing or qualification pursuant to Section 2(b)
or 2(c) of this Agreement shall be borne by the Holders requesting the relevant
post-effective amendment or registration.
Section 7. Indemnification and Contribution. In the event
any Registrable Securities are included in a registration statement under this
Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such holder, and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934 (the "Exchange
Act"), against any losses, claims, damages, or liabilities (joint or several)
to which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse each such Holder,
officer or director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 7(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon an
-5-
<PAGE> 67
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, preliminary prospectus or final prospectus
or any amendment or supplement thereto in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person; provided,
further, however, that if any losses, claims, damages or liabilities arise out
of or are based upon any untrue statement, alleged untrue statement, omission
or alleged omission contained in any preliminary prospectus, and made in
reliance upon and in conformity with written information furnished by such
Holder expressly for use therein, which did not appear in the final prospectus,
the Company shall not have any such liability with respect thereto to such
Holder, any person who controls such Holder within the meaning of the
Securities Act, or any director of such Holder, if such Holder delivered a copy
of the preliminary prospectus to the person alleging such losses, claims,
damages or liabilities and failed to deliver a copy of the final prospectus, as
amended or supplemented if it has been amended or supplemented, to such person
at or prior to the written confirmation of the sale to such person, provided
that such Holder had an obligation to deliver a copy of the final prospectus to
such person; and
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities in such registration
statement or any of its directors or officers or any person who controls such
Holder or underwriter, against any losses, claims, damages or liabilities
(joint or several) to which the Company or any such director, officers,
controlling person, or underwriter or controlling person, or other such Holder
or director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if the untrue
statement or omission or alleged untrue statement or omission in respect of
which such loss, claim, damage or liability is asserted was made in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer, controlling person, underwriter or controlling
person, or other Holder, officer, director, or controlling person in connection
-6-
<PAGE> 68
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 7(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action, if such settlement is effected without the
consent of the Holder (which consent shall not be unreasonably withheld);
provided, further, that the maximum liability of any selling Holder under this
Section 7(b) in regard to any registration statement shall in no event exceed
the amount of the net proceeds received by such selling Holder from the sale of
securities under such registration statement; provided, further, however, that
if any losses, claims, damages or liabilities arise out of or are based upon an
untrue statement, alleged untrue statement, omission or alleged omission
contained in any preliminary prospectus which did not appear in the final
prospectus, such seller shall not have any such liability with respect thereto
to the Company, any person who controls the Company within the meaning of the
Securities Act, any officer of the Company who signed the registration
statement or any director of the Company, if the Company delivered a copy of
the preliminary prospectus to the person alleging such losses, claims, damages
or liabilities and failed to deliver a copy of the final prospectus, as amended
or supplemented if it has been amended or supplemented, to such person at or
prior to the written confirmation of the sale to such person, provided that the
Company had an obligation to deliver a copy of the final prospectus to such
person.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties. An indemnified party shall have the right to
retain its own counsel, however, the fees and expenses of such counsel shall be
at the expense of the indemnified party, unless (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party,
(ii) the indemnifying party has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional
to those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related
-7-
<PAGE> 69
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for all indemnified parties). The failure to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party under this Agreement.
(d) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities or actions in respect thereof
referred to therein, then each indemnifying party shall in lieu of indemnifying
such indemnified party contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
actions in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand, and selling Holders, on the other, in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or actions as well as any other relevant equitable
considerations, including the failure to give any required notice. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company, on the one hand, or by such selling Holders on the other, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto acknowledge
and agree that it would not be just and equitable if contribution pursuant to
this subparagraph (d) were determined by pro rata allocation (even if all of
the selling Holders were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subparagraph (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or actions in respect thereof referred to above in this
subparagraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subparagraph (d), the amount the selling Holders shall be required to
contribute shall not exceed the amount, if any, by which the total price at
which the securities sold by each of them were offered to the public exceeds
the amount of any damages which they would have otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission, or other violation of law. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of
fraudulent misrepresentation.
-8-
<PAGE> 70
Section 8. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the original parties hereto and each person
who becomes a party hereto, and their respective heirs, personal
representatives, successors and assigns.
(b) Notices. Except as otherwise provided herein, any
notice, consent or request to be given in connection with any term or provision
of this Agreement shall be deemed to have been given sufficiently if sent by
hand, registered or certified mail, postage prepaid, facsimile transmission or
courier (next day delivery), to the Company or to VPC at its address as
designated in, or from time to time pursuant to, Article XII of the Share
Purchase Agreement.
(c) Integration. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereby and no party shall be bound by, nor shall any party be deemed to have
made, any covenants, representations, warranties, undertakings or agreements
except those contained in such entire Agreement. The section and paragraph
headings contained in this Agreement are for the reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same agreement.
(e) Amendment. This Agreement may be amended, changed,
waived or terminated only in writing by the Company and VPC.
(f) Governing Law. This Agreement and the rights and
remedies of the parties hereto shall be governed by and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement has been executed effective
as of the date first above written.
VECTOR AEROMOTIVE CORPORATION
By:
---------------------------------
V' POWER CORPORATION
By:
---------------------------------
-9-
<PAGE> 71
ANNEX II
FORM OF OPTION AGREEMENT
<PAGE> 72
THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED PURSUANT TO THE PROVISIONS OF THAT ACT OR IF, IN
THE OPINION OF COUNSEL TO THE SELLER, AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAILABILITY OF
WHICH MUST BE ESTABLISHED TO THE SATISFACTION OF VECTOR.
OPTION AGREEMENT
OPTION AGREEMENT, dated as of January __, 1996, by and between
V' POWER CORPORATION, a Bahamian corporation (the "Optionee"), on the one hand,
and VECTOR AEROMOTIVE CORPORATION, a Nevada corporation ("Vector") on the
other.
WHEREAS, effective as of December 29, 1995, the Optionee and
Vector entered into a Share Purchase Agreement (the "Purchase Agreement")
pursuant to which, among other things, the Optionee is to receive the right
(the "Option") to purchase up to 50,000,000 Common Shares, par value $.01 per
share (the "Option Shares") of Vector pursuant to the terms of an option
agreement; and
WHEREAS, this option agreement (the "Option Agreement")
constitutes the option agreement described in the Purchase Agreement;
NOW, THEREFORE, in consideration of the agreements set forth
below, the parties here agrees as follows:
1. The Option. Subject to the terms and conditions
hereof, the Optionee is hereby granted the Option, at any time or from time to
time commencing on the date of Option Agreement and at or before 5:00 P.M.,
Eastern Time, on ___________, 1997 (such one year period hereinafter the
"Option Exercise Period"), but not thereafter, to subscribe for and purchase
any and all of the Option Shares for a price of $.45 per Option Share purchased
(the "Option Exercise Price"). If the rights represented hereby shall not be
exercised during the Option Exercise Period, this Option shall become and be
void without further force or effect, and all rights represented hereby shall
cease and expire.
2. Exercise of Option. During the Option Exercise
Period, the Optionee may exercise this Option upon presentation and surrender
of this Option and upon payment of the Option Exercise Price for the Option
Shares to be purchased to Vector at the principal office of Vector. Upon
exercise of this Option, the form of election hereinafter provided must be duly
executed and the instructions for registration of the Option Shares acquired by
such exercise must be completed and delivered with
<PAGE> 73
this Option to Vector. In the event of the exercise of this Option in part
only, Vector shall cause to be delivered to the Optionee a new Option of like
tenor to this Option in the name of the Optionee evidencing the right of the
Optionee to purchase the number of Option Shares purchasable hereunder as to
which this Option has not been exercised. On exercise of this Option, unless
(i) Vector receives an opinion from counsel satisfactory to it that such a
legend is not required in order to assure compliance with the Securities Act of
1933, as amended (the "1933 Act"), or any applicable state securities laws, or
(ii) the Option Shares are registered under the 1933 Act, each certificate for
Option Shares issued hereunder shall bear a legend reading substantially as
follows:
This option has not been registered under the
Securities Act of 1933, as amended, and may be offered and
sold only if registered pursuant to the provisions of that Act
or if, in the opinion of counsel to the seller, an exemption
from registration thereunder is available, the availability of
which must be established to the satisfaction of Vector.
The foregoing legend may be removed with respect to any Option Shares sold upon
registration or sold pursuant to an exemption from registration including the
exemption, for sales made in accordance with Rule 144 promulgated under the
1933 Act, provided Vector receives an opinion from counsel satisfactory to it
that such legend may be removed.
3. Assignment. Subject to the terms contained herein,
this Option may be assigned by the Optionee in whole or in part by execution by
the Optionee of the form of assignment attached hereto. In the event of any
assignment, Vector, upon request and upon surrender of this Option by the
Optionee at the principal office of Vector accompanied by payment of all
transfer taxes, if any, payable in connection therewith, shall transfer this
Option on the books of Vector. If the assignment is in whole, Vector shall
execute and deliver a new Option or Options of like tenor to this Option to the
appropriate assignee expressly evidencing the right to purchase the aggregate
number of Option Shares purchasable hereunder; and if the assignment is in
part, Vector shall execute and deliver to the appropriate assignee a new Option
or Options of like tenor expressly evidencing the right to purchase the portion
of the aggregate number of Option Shares as shall be contemplated by any such
assignment, and shall concurrently execute and deliver to the Optionee a new
Option of like tenor to this Option evidencing the right to purchase the
remaining portion of the Option Shares purchasable hereunder which have not
been transferred to the assignee.
-2-
<PAGE> 74
4. Transfer of Option. The Optionee, by acceptance
hereof, agrees that, before any transfer is made of all or any portion of this
Option, the Optionee shall give written notice to Vector ar least 15 days prior
to the date of such proposed transfer, which notice shall specify the identity,
address and affiliation, if any, of such transferee. No such transfer shall be
made unless and until Vector has received an opinion of counsel for Vector or
for the Optionee stating that no registration under the 1933 Act or any state
securities law is required with respect to such disposition or a registration
statement has been filed by Vector and declared effective by the Securities and
Exchange Commission covering such proposed transfer and the Option and/or the
Option Shares have been registered under appropriate state securities laws.
5. Share Dividends, Reclassification, Reorganization
Provisions.
(a) If, prior to the expiration of this Option by
exercise or by its terms, Vector shall issue any of its Common Shares as a
share dividend or subdivide the number of outstanding Common Shares into a
greater number of shares then, in either of such cases, the Option Exercise
Price per share purchasable pursuant to this Option in effect at the time of
such action shall be proportionately reduced and the number of Option Shares
purchasable pursuant to this Option shall be proportionately increased; and
conversely, if Vector shall reduce the number of outstanding Common Shares by
combining such shares into a smaller number of shares then, in such case, the
Option Exercise Price per share purchasable pursuant to this Option in effect
at the time of such action shall be proportionately increased and the number of
Option Shares at that time purchasable pursuant to this Option shall be
proportionately decreased. If Vector shall, at any time during the life of
this Option, declare a dividend payable in cash on its Common Shares and shall
at substantially the same time offer to its shareholders a right to purchase
new Common Shares from the proceeds of such dividend or for an amount
substantially equal to the dividend, all Common Shares so issued shall, for the
purpose of this Option, be deemed to have been issued as a share dividend. Any
dividend paid or distributed upon Common Shares in shares of any other class of
securities convertible into Common Shares shall be treated as a dividend paid
in Common Shares to the extent that Common Shares are issuable upon the
conversion thereof.
(b) If, prior to the expiration of this Option by
exercise or by its terms, Vector shall be recapitalized by reclassifying its
outstanding Common Shares, or Vector or a successor corporation shall
consolidate or merge with or convey all or substantially all of its or any
successor corporation's property and assets to any other corporation or
corporations (any such corporation being included within the meaning of the
term "successor corporation" used above in the event of any consolidation or
merger of any such corporations with, or the
-3-
<PAGE> 75
sale of all or substantially all of the property of any such corporation, to
another corporation or corporations), the Optionee shall thereafter have the
right to purchase, upon the basis and upon the terms and conditions and during
the time specified in this Option, in lieu of the Option Shares theretofore
purchasable upon the exercise of this Option, such shares, securities or assets
as may be issued or payable with respect to, or in exchange for, the number of
Option shares theretofore purchasable upon the exercise of this Option had such
recapitalization, consolidation, merger or conveyance not taken place and, in
any such event, the rights of the Optionee to an adjustment in the number of
Option shares purchasable upon the exercise upon this Option as herein provided
shall continue and be preserved in respect of any shares, securities or assets
which the Optionee becomes entitled to purchase.
(c) If, (i) Vector shall take a record of holders
of its Common Shares for the purpose of entitling them to receive a dividend
payable otherwise than in cash, or any other distribution in respect of the
Common shares (including cash), pursuant to, without limitation, any spin-off,
split-off, or distribution of Vector's assets; or (ii) Vector shall take a
record of the holders of its Common Shares for the purpose of entitling them to
subscribe for or purchase any shares of any class or to receive any other
rights; or (ii) in the event of any classification, reclassification or other
reorganization of the securities which Vector is authorized to issue,
consolidation or merger by Vector with or into another corporation, or
conveyance of all or substantially all of the assets of Vector; or (iv) in the
event of any voluntary or involuntary dissolution, liquidation or winding up of
Vector; then, and in any such case, Vector shall mail to the Optionee, at least
30 days prior thereto, a notice stating the date or expected date on which a
record is to be taken for the purpose of such dividend, distribution or rights,
or the date on which such classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up, as
the case may be, will be effected. Such notice shall also specify the date or
expected date, if any is to be fixed, as to which holders of Common Shares of
record shall be entitled to participate in such dividend, distribution or
rights, or shall be entitled to exchange their Common Shares or securities or
other property deliverable upon such classification, reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up, as the case may be.
(d) If Vector, at any time while this Option
shall remain unexpired and unexercised in whole or in part, shall sell all or
substantially all of its property, dissolve, liquidate or wind up its affairs,
the Optionee may thereafter receive upon exercise hereof, in lieu of each
Option Share which it would have been entitled to receive, the same kind and
amount of any securities or assets as may be issuable, distributable or payable
upon any such sale, dissolution, liquidation or winding
-4-
<PAGE> 76
up with respect to each Common Shares of Vector purchased upon exercise of this
Option.
6. Reservation of Shares Issuable on Exercise of Option.
At all times during the Option Exercise Period, Vector will reserve and keep
available out of its authorized Common Shares, solely for issuance upon the
exercise of this Option, such number of Common Shares and other securities as
from time to time may be issuable upon exercise of this Option.
7. Request to Transfer Agent. On exercise of all or any
portion of this Option, Vector shall, within ten days of the receipt of good
and clean funds for the purchase of any or all of the Option Shares, advise its
Transfer Agent and Registrar of the required issuance of the number of Option
Shares and the names in which such shares are to be registered pursuant to the
exercise form attached hereto. Vector shall also execute and deliver any and
all such further documents as may be requested by the Transfer Agent and
Registrar for the purpose of effecting the issuance of Option shares upon
payment therefor by the Optionee or any assignee.
8. Loss, Theft, Destruction or Mutilation. Upon receipt
by Vector of evidence satisfactory to it (in the exercise of its reasonable
discretion) of the ownership of and the loss, theft, destruction or mutilation
of this Option, and the purchase by the Optionee of a lost security bond (or,
if acceptable to Vector, the provision of a satisfactory indemnity from the
Optionee) in an amount equal to or exceeding the total value of the Option
Shares to be purchased hereunder, Vector will execute and deliver, in lieu
thereof, a new Option of like tenor.
9. Optionee Not a Shareholder. The Optionee or any
other holder of this Option shall, as such, not be entitled by reason of
ownership of this Option to any rights whatsoever of a shareholder of Vector.
10. Transfer Taxes. The Optionee or its assignee(s) will
pay all taxes in respect of the issue or transfer of this Option or the Option
Shares issuable upon exercise hereof.
11. Mailing of Notice. All notices and other
communications from Vector to the Optionee or from the Optionee to Vector shall
be mailed by first class, certified mail, postage prepaid, or sent by receipt
confirmed facsimile transmission, to the address furnished to each party in
writing by the other party.
12. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon exercise of this Option.
With respect to any fraction of a share called for upon the exercise hereof,
Vector shall issue to the Optionee at no extra cost another whole share for any
fraction which is one-
-5-
<PAGE> 77
half or greater, and the Optionee shall forfeit the fractional share that is
less than one-half of a share.
13. Common Shares Defined. Whenever reference is made in
this Option to the issue or sale of Common Shares, the term "Common Shares"
shall mean the voting Common Shares of Vector of the class authorized as of the
date hereof and any other class of stock ranking on a party with such Common
Shares.
14. Registration Rights. The Optionee and Vector
acknowledge their execution of a Registration Rights Agreement between the
parties which provides, among other things, for certain registration rights
which are for the benefit of the Optionee and any assignee(s). Vector's
agreements with respect to the registration rights will continue in effect
regardless of the exercise or surrender of this Option by either the Optionee
or any assignee(s).
15. Opinion of Legal Counsel. As a condition to the
payment by Optionee of the Purchase Price specified in the Purchase Agreement,
Vector shall deliver to Optionee at the Closing an opinion of its legal counsel
in form and substance satisfactory to the Optionee and its counsel.
16. Governing Law. This Option shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Option
Agreement on the day and year first above written.
VECTOR:
VECTOR AEROMOTIVE CORPORATION
By:
--------------------------
OPTIONEE:
V' POWER CORPORATION
By:
--------------------------
-6-
<PAGE> 78
FORM TO BE USED TO EXERCISE OPTION:
EXERCISE FORM
The undersigned hereby elects irrevocably to exercise the
within Option and to purchase ____________ Common Shares of Vector Aeromotive
Corporation, called for hereby, and hereby makes payment of $________________
(at the rate of $.45 per share) in payment of the Option Exercise Price
pursuant hereto. Please issue the shares as to which this Option is exercised
in accordance with the instructions given below.
------------------------------
Signature
Date:
--------------------
INSTRUCTIONS FOR REGISTRATION OF SHARES:
Register Shares in name of:
-----------------------------------------------------
(Print)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM TO BE USED TO ASSIGN OPTION:
ASSIGNMENT
For value received, _____________________________ does hereby sell, assign and
transfer unto ___________________ the right to purchase _____________ Common
Shares of Vector Aeromotive Corporation, evidenced by the within Option, and
does hereby irrevocably constitute and appoint Vector Aeromotive Corporation
and/or its Transfer Agent as attorney to transfer the same on the books of
Vector Aeromotive Corporation with full power of substitution in the premises.
-----------------------------------
Signature
Signature Guaranteed
Date:
------------------- -----------------------------------
NOTICE: The signature to the form to exercise or form to assign must
correspond with the name as written upon the face of the within Option in every
particular without alteration or enlargement or any change whatsoever, and must
be guaranteed by a bank, other than a savings bank, or by a trust company or
by a firm having membership on a registered national securities exchange.
<PAGE> 1
EXHIBIT 99.2
780 Third Avenue - Suite 3104
New York, New York 10017
CoView Capital, Inc. 212-750-0011 Fax: 212-750-7234
- ------------------------------------------------------------------------------
December 28, 1995
Vector Aeromotive Corporation
7601 Centurion Parkway South
Jacksonville, FL 32256
Attn: Richard J. Aprahamian, Esq.
D. Peter Rose - President
Dear Sirs:
CoView Capital, Inc. ("CoView") has been asked to render an opinion
(the "Opinion") as to the fairness, with respect to Vector Aeromotive
Corporation ("Vector" or the "Company") and its current security holders, of a
private placement of 10,000,000 shares of common equity and a 12 month option
to purchase up to 50,000,000 shares of common equity for $0.45 per share for
total consideration of $5 million (in aggregate the "Private Placement"), to be
purchased by the Company's controlling shareholder V' Power Corporation ("V'
Power") on or before January 31, 1996. This Opinion shall be used for the
exclusive purpose of providing Vector's Management and Directors with an
opinion as to the fairness of the Private Placement with respect to the Company
as of December 28, 1995, and at the time it was authorized and approved on
November 21, 1995, and not for any other purpose.
CoView Capital is an investment banking firm and a member of the
National Association of Securities Dealers (NASD), and is regularly engaged to
provide financial advisory services including merger and acquisition
assignments, valuations, private placements, and fairness opinions.
In rendering our Opinion, we have among other things, reviewed the following:
- - The Company's Form 10-K for the years 1994, 1993, 1992, and 1991.
- - The Company's Form 10-Q for the quarter ending September 30, 1995.
- - The Company's Notice of Annual Meeting of Shareholders dated March 29,
1995 and May 12, 1994.
- - The Vector Business Plan dated February 15, 1995.
<PAGE> 2
Vector Aeromotive Corporation
December 28, 1995
Page - 2 -
- - An updated Vector Business Plan dated December 7, 1995. The Business
Plan is based on a model created by Prof. Krish Bhaskar of MIRU SA
and covers the years 1996 - 2011. The model provides detailed
projections of potential Sales, Income, Capital Expenditures and Cash
Flow.
- - Price and volume history of the Company's common stock.
- - The Letter of Intent dated November 21, 1995 between Vector and V'
Power Corporation outlining the proposed terms and conditions of the
Private Placement.
- - A draft of the Share Purchase Agreement dated December 29, 1995 by and
between V' Power and Vector.
- - A draft of the Option Agreement by and between V' Power and Vector.
- - A draft of the Registration Rights Agreement between V' Power and
Vector.
- - Company correspondence with potential investors other than V' Power.
- - Rates of return required by various investment and venture capital
firms.
- - Press releases issued by the Company during 1995.
- - All Company news compiled by Bloomberg L.P.
- - An article about Vector appearing in the November 6, 1995 issue of
Newsweek.
- - Various articles about Lamborghini, including those in the October 24,
1994 issue of Business Week, the November 25, 1994 and the June 23,
1995 issues of the Jacksonville Business Journal, the December 29,
1994 issue of the Fort Lauderdale Sun-Sentinel, and the June 12, 1995
issue of Fortune.
- - Various articles about Ferrari, Bugatti, Lotus, and Aston Martin,
including those in the March 15, 1994, March 19, 1994 and August 11,
1994 issues of Financial Times, the July 12, 1995 and October 30, 1995
issues of The Reuter Business Report, and the August 31, 1994 issue of
The Baltimore Sun.
- - Various industry reports and statistics in the 1994 and 1995 issues of
Automotive News.
<PAGE> 3
Vector Aeromotive Corporation
December 28, 1995
Page - 3 -
- - The Standard and Poor's Auto Industry Survey issues dated August 17,
1995 and April 27, 1995.
- - Various on-line database information concerning the automobile
industry and exotic cars.
- - Automotive industry investment research issued by several leading
investment firms during 1995.
- - Ward's Automotive Yearbook for the years 1994, 1993, 1992, 1991, and
1990.
In addition, we:
- - Met with certain of the Company's senior management at the Company
headquarters in Jacksonville, Florida to discuss Vector's current
financial condition, operations, future prospects, and financial
projections.
- - Visited the Company's manufacturing facility in Green Cove Springs,
Florida and met with key manufacturing and operations personnel.
- - Held extensive telephone conversations with Prof. Bhaskar concerning
the Company's Business Plan.
- - Recreated Prof. Bhaskar's Sales, Income, and Cash Flow model to better
understand the impact of a change in variables on future cash flow and
profitability.
- - Compared the financial and stock market information for the Company
with similar information for certain other companies whose securities
are publicly traded.
CoView has relied upon, without independent verification or
investigation, the accuracy and completeness of all financial and other
Company-provided information and certain publicly available information. We
have also relied upon the reasonableness and accuracy of all internal Company
financial projections, forecasts, estimates, and analyses (collectively the
"Projections"). We have not independently verified the reasonableness and
accuracy of data and information used in preparing the Projections including
current market data, market conditions, and production schedules. We have also
not independently verified the reasonableness and accuracy of any information
which may have been provided by Vector Aeromotive's engineering, production,
sales staff, management and consultants.
<PAGE> 4
Vector Aeromotive Corporation
December 28, 1995
Page - 4 -
Vector's management has informed us that the Company faces a critical
cash shortage and will not be able to meet its financial obligations should the
Private Placement not be promptly consummated. In addition, Vector's
management has informed us that, to date, efforts to secure financing from
alternative sources have been unsuccessful.
Our Opinion is based upon analyses of the above listed information in
light of our assessment of general economic, financial and market conditions as
they exist and can be evaluated by us as of the date hereof. Our Opinion does
not address the effects of any adjustments or changes that may be made in the
issue resulting from subsequent negotiations or subsequent economic, financial
and market developments.
CoView Capital will receive a fee for its services to Vector in
connection with the Private Placement upon the delivery of this Opinion. In
addition, Vector has agreed to indemnify CoView Capital for certain liabilities
arising from the delivery of this Opinion.
Based upon and subject to the foregoing, and in light of the
particular circumstances currently applicable to the Company, it is our
opinion, as of the date hereof, that the Private Placement, taken as a whole,
is fair, from a financial point of view, to the Company as of December 28,
1995, and at the time it was authorized and approved on November 21, 1995.
/s/ CoView Capital, Inc.
------------------------
CoView Capital, Inc.
