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CUSIP No. 90328P100 13D Page 9 of 8 Pages
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______)*
U.S. ELECTRICAR, INC.
Common Stock, no par value
CUSIP No.: 90328P100
D.H. Kim
--------
Hyundai Motor Company
140-2 Kye-Dong, Chongro-Ku
Seoul 110-173 Korea
011 822 746 1114
J.T. Choo
---------
Hyundai Electronics Industries Co., Ltd.
San 136-1, AMI-R1 Rubal-EUB
Ichon-S1, KYOUNGKI-DO 467-860 Korea
011-82-336-30-2611
February 27, 1997
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
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CUSIP No. 90328P100 13D Page 1 of 8 Pages
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(1) Names of Reporting Persons. S.S. or I.R.S. Identification Nos. of Above
Persons
Hyundai Motor Company
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(2) Check the Appropriate Box if a Member (a) /X/
of a Group (See Instructions) (b) / /
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(3) SEC Use Only
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(4) Source of Funds (See Instructions)
WC
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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(6) Citizenship or Place of Organization
Republic of Korea
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Number of Shares (7) Sole Voting Power
Beneficially Owned 8,400,000
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting Power
None
--------------------------------------------------
(9) Sole Dispositive Power
8,400,000
--------------------------------------------------
(10) Shared Dispositive Power
None
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
8,400,000
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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(13) Percent of Class Represented by Amount in Row (11)
5.9%
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(14) Type of Reporting Person (See Instructions)
CO
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CUSIP No. 90328P100 13D Page 2 of 8 Pages
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(1) Names of Reporting Persons. S.S. or I.R.S. Identification Nos. of Above
Persons
Hyundai Electronics Industries Co., Ltd.
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(2) Check the Appropriate Box if a Member (a) /X/
of a Group (See Instructions) (b) / /
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(3) SEC Use Only
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(4) Source of Funds (See Instructions)
WC
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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(6) Citizenship or Place of Organization
Republic of Korea
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Number of Shares (7) Sole Voting Power
Beneficially Owned 3,600,000
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting Power
None
--------------------------------------------------
(9) Sole Dispositive Power
3,600,000
--------------------------------------------------
(10) Shared Dispositive Power
None
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
3,600,000
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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(13) Percent of Class Represented by Amount in Row (11)
2.5%
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(14) Type of Reporting Person (See Instructions)
CO
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CUSIP No. 90328P100 13D Page 3 of 8 Pages
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ITEM 1. SECURITY AND ISSUER
This statement relates to the Common Stock no par value per share (the
"Common Stock") of U.S. Electricar, Inc., a California corporation (the
"Company") which has its principal executive offices at 5 Thomas Mellon Circle,
Suite 254, San Francisco, CA 94134.
ITEM 2. IDENTITY AND BACKGROUND
(a) The names of the persons filing this statement are Hyundai Motor
Company, a Korean corporation ("HMC") and Hyundai Electronics
Industries Co., Ltd., a Korean corporation ("HEI"). Each of HEI and
HMC is herein called a "Purchaser".
(b) The address of the principal business and principal office of HMC is:
Hyundai Motor Company
140-2 Kye-Dong, Chongro-Ku
Seoul 110-173 Korea
The address of the principal business and principal office of HEI is:
Hyundai Electronics Industries Co., Ltd.
San 136-1, AMI-R1 Rubal-EUB
Ichon-S1, KYOUNGKI-DO 467-860 Korea
(c) HMC is in the business of manufacture and sale of vehicles. HEI
is in the business of manufacture and sale of semiconductors.
(a)-(c), (f) The name, business address, present principal occupation
or employment, the name, principal business and address of any corporation or
other organization in which such employment is conducted and the citizenship of
each executive officer and each person carrying out a function similar to that
of a director in a United States corporation of each of the Purchasers are set
forth in Schedule I hereto.
(d)-(e) During the last five years, neither of the Purchasers nor,
to the best of their knowledge, any of their respective executive officers,
persons carrying out a function similar to that of a director in a United States
corporation or controlling persons has been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) or has been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
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CUSIP No. 90328P100 13D Page 4 of 8 Pages
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The sources and amounts of funds used to pay for the Purchased Shares (as
defined below) were as follows:
HMC: working capital $2,520,000; and
HEI: working capital $1,080,000.
ITEM 4. PURPOSE OF TRANSACTION
(a)-(j) HMC agreed to purchase an aggregate of 12,000,000 shares (the
"Purchased Shares") of the Company's Common Stock from the Company pursuant to a
Common Stock Purchase Agreement dated February 27, 1997 (the "Stock Purchase
Agreement"), which is attached as Exhibit 1 hereto. On February 27, 1997, an
Addendum to the Stock Purchase Agreement was executed which provided that HEI be
a party to the Stock Purchase Agreement (the "Addendum"). The Addendum is
attached as Exhibit 2. The closing of the transaction is anticipated to be held
in March 1997.
The purpose of the acquisition of the Purchased Shares by each of the
Purchasers is for investment. However, the Company has agreed to assist the
Purchasers at Purchasers' election in seeking representation on the Board of
Directors of the Company. The Purchasers can elect to request such assistance
at any time during the term of the License Agreement dated as of February 27,
1997 (the "License Agreement") which is attached as Exhibit 3 hereto. As of the
date hereof, the Purchasers have not exercised such right.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Purchasers may be deemed to beneficially own (as that term is
defined in Rule 13d-3) an aggregate of 12,000,000 shares of Common Stock,
representing 8.4% of the total number of shares of Common Stock outstanding
consisting of:
(i) 8,400,000 shares of Common Stock which HMC has the right to
acquire pursuant to the Stock Purchase Agreement; and
(ii) 3,600,000 shares of Common Stock which HEI has the right to
acquire pursuant to the Stock Purchase Agreement.
(b) Each Purchaser has sole voting and dispositive power with respect to
Common Stock beneficially owned by it, as stated in Item 5(a) hereof.
(c) Except as described in Item 5(a) hereof with respect to the purchase
right to acquire the Purchased Shares pursuant to the Stock Purchase Agreement,
neither of the Purchasers nor, to the best of their knowledge, any of their
respective executive officers, persons carrying out a function similar to that
of a director in a United States corporation or controlling persons have
effected any transactions in shares of Common Stock during the past sixty days.
(d) None.
(e) Not applicable.
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CUSIP No. 90328P100 13D Page 5 of 8 Pages
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Except as described herein, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between or among each
Purchaser and any other person with respect to any securities of the Company,
finder's fees, joint ventures, put or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1: Form of Common Stock Purchase Agreement dated February 27, 1997 by
and between the Company and HMC.
Exhibit 2: Form of Addendum to Stock Purchase Agreement dated February 27, 1997
by and between the Company and the Purchasers.
Exhibit 3: Form of License Agreement dated February 27, 1997 by and between the
Company and the Purchasers.
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CUSIP No. 90328P100 13D Page 6 of 8 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Hyundai Motor Company
Dated: March 19, 1997 By: /s/ D.H. Kim
---------------------- ---------------------------------
Its: Manager
--------------------------------
Hyundai Electronics Industries
Co., Ltd.
Dated: March 19, 1997 By: /s/ J.T. Choo
---------------------- ---------------------------------
Its: Manager
--------------------------------
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CUSIP No. 90328P100 13D Page 7 of 8 Pages
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SCHEDULE I
1. HEI. The following table sets forth the name of each executive
officer of HEI and each person carrying out a function in HEI similar to that of
a director in a United States corporation. The positions(s) stated with HEI for
each individual constitutes that individual's present principal occupation or
employment. Each is a citizen of the Republic of Korea. The business address
of each individual is San 136-1, Ami-ri, Bubal-eub, Ichon-Kun, Kyoungki-do,
Korea.
Name Office Held
- -------------------- ----------------
Joo Young Chung Honoral Chairman, Member - Board of Directors
Mong Hun Chung Chairman, Member - Board of Directors
Young Hwan Kim President, Member - Board of Directors
Dong Sik Kim Vice President, Member - Board of Directors
Gea Whan Oh Vice President, Member - Board of Directors
Young Yul Na Vice President, Member - Board of Directors
Jan Jin Yoon Vice President, Member - Board of Directors
Jong Seob Park Vice President, Member - Board of Directors
Tae Sung Byun Vice President, Member - Board of Directors
Dong Guk Jang Vice President, Member - Board of Directors
Byung Hoon Kim Managing Director, Member - Board of Directors
Hea Chung Song Director, Member - Board of Directors
Dong Woo Lee Director, Member - Board of Directors
2. HMC: The following table sets forth the name of each executive officer
of HMC and each person carrying out a function in HMC similar to that of a
director in a United States corporation. The position(s) stated with HC for
each individual constitutes that individual's present principal occupation or
employment. Each is a citizen of the Republic of Korea. The business address
of each individual is 140-2, Kye-dong, Chongro-ku, Seoul, Korea.
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CUSIP No. 90328P100 13D Page 8 of 8 Pages
Name Office Held
- ---------------- --------------------
Se Yung Chung Honorary Chairman, Member - Board of Directors
Mong Gyu Chung Chairman, Member - Board of Directors
Sung Won Chun Vice Chairman, Member - Board of Directors
Byung Jae Park President, Member - Board of Directors
Soo Joong Kim Vice President, Member - Board of Directors
Chung Goo Lee Vice President, Member - Board of Directors
Yoo Il Lee Vice President, Member - Board of Directors
Sang Joon Han Vice President, Member - Board of Directors
Soo Il Lee Executive Managing Director, Member - Board of Directors
Dal Ok Chung Executive Managing Director, Member - Board of Directors
Yang Soo Kim Executive Managing Director, Member - Board of Directors
Bang Joo Lee Executive Managing Director, Member - Board of Directors
Jung Youn Choi Executive Managing Director, Member - Board of Directors
Noi Myung Kim Executive Managing Director, Member - Board of Directors
Kook Jin Yoon Executive Managing Director, Member - Board of Directors
Pan Gon Kim Executive Managing Director, Member - Board of Directors
Jong Il Kim Executive Managing Director, Member - Board of Directors
Myung Goon Lee Executive Managing Director, Member - Board of Directors
Chai Won Kim Executive Managing Director, Member - Board of Directors
<PAGE>
U.S. ELECTRICAR, INC.
REGULATION S
COMMON STOCK PURCHASE AGREEMENT
FEBRUARY ____, 1997
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES
ACT"), OR UNDER ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY
NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS
DEFINED IN REGULATION S) WITHOUT REGISTRATION UNDER THE SECURITIES
ACT, AND AS REQUIRED BY BLUE SKY LAWS IN EFFECT AS TO SUCH TRANSFER,
UNLESS AN EXEMPTION FROM SUCH REGISTRATION UNDER STATE AND FEDERAL LAW
IS AVAILABLE.
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THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES
ACT"), OR UNDER ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY
NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS
DEFINED IN REGULATION S) WITHOUT REGISTRATION UNDER THE SECURITIES
ACT, AND AS REQUIRED BY BLUE SKY LAWS IN EFFECT AS TO SUCH TRANSFER,
UNLESS AN EXEMPTION FROM SUCH REGISTRATION UNDER STATE AND FEDERAL LAW
IS AVAILABLE.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT is made effective for reference
purposes only as of February ___, 1997, by and between U.S. Electricar, Inc., a
California corporation (the "Corporation") and HYUNDAI MOTOR COMPANY whose
signature appears on the signature page to this Agreement (the "Investor").
R E C I T A L
The Investor desires to purchase from the Corporation, and the Corporation
desires to sell to the Investor, certain common stock shares of the Corporation,
on the terms and conditions hereinafter set forth.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereby
agree as follows:
1. PURCHASE AND SALE OF SHARES/EXECUTION OF TECHNICAL AGREEMENT.
a. SALE AND ISSUANCE OF SHARES. Subject to the terms and conditions
of this Agreement, the undersigned Investor agrees to purchase at the Closing
(as defined below) and the Corporation agrees to sell and issue to the Investor
at the Closing, that number of common stock shares (the "Shares") set forth
under Schedule 1 of the signature page attached to this Agreement at the price
set forth under Schedule 1 of the signature page attached to this Agreement (the
"Purchase Price"). All monetary references in this Agreement are to United
States of America dollars.
b. PAYMENT AND DELIVERY. The Investor shall purchase the Shares by
making payment to U.S. Electricar, Inc. in cash by check or wire transfer of
funds of the Purchase Price delivered to the Corporation on, or before, the date
set forth on Schedule 1 attached to the signature page hereto (the "Closing").
c. MANUFACTURING, TECHNICAL ASSISTANCE AND DISTRIBUTION LICENSE
AGREEMENT. Contemporaneously with Investor's purchase of the Shares, Investor
and the Corporation shall enter into a Manufacturing, Technical Assistance and
Distribution License Agreement in form and substance as shall be mutually agreed
upon by the parties as evidenced by their execution thereof in consideration of
Investor's payment to the Corporation in cash at the Closing of that sum as set
forth on Schedule 1, and the payment obligations set forth in said Agreement.
2. DELIVERY OF SHARES. Upon the Investor's delivery of the Purchase
Price in full and a fully executed and completed original of this Agreement to
the Corporation, and after the Corporation determines that all applicable
securities laws have been satisfied, the Corporation will deliver to the
Investor at the address indicated on Schedule 1 within five (5) business days
after the Closing a share certificate for the Shares dated as of the Closing.
As of the Closing, the Investor shall be deemed the owner of the Shares.
Investor shall provide the Corporation with instructions for registration and
delivery of the Shares as set forth on Schedule 1. Any instructions for
registration of the Shares in a name other than that of the Investor shall
require such registered owner to affirm Investor's warranties and
representations set forth herein.
<PAGE>
3. CORPORATION'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Corporation hereby represents, warrants and covenants to the Investor as
follows:
a. CORPORATE ORGANIZATION AND STANDING. The Corporation is a
corporation duly organized, validity existing and in good standing under the
laws of the State of California. The Corporation has the requisite corporate
power to carry on its business as presently conducted, and as proposed or
contemplated to be conducted in the future, and to enter into and carry out the
provisions of this Agreement and the transactions contemplated hereby. The
Corporation is duly qualified to do business in the jurisdictions where it is
currently doing business.
b. AUTHORIZATION. All corporate action on the part of the
Corporation, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Corporation and the
performance of all of the Corporation's obligations hereunder has been taken.
This Agreement, when executed and delivered by the Corporation, shall constitute
a valid and binding obligation of the Corporation, enforceable in accordance
with its terms, except as may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable. The Corporation is, and at all times during the offer
and sale of the Shares, will be a "reporting issuer" as that term is defined
under Regulation S.
c. NO BREACH. The issue and sale of the Shares by the Corporation
does not and will not conflict with and does not and will not result in a breach
of any of the terms of the Corporation's incorporating documents or any
agreement or instrument to which the Corporation is a party. The consummation
of the transactions or performance of the obligations contemplated by this
Agreement will not result in a breach of any term of, or constitute a default
under, any statute, indenture, mortgage, or other agreement or instrument or any
order, writ, judgment or decree to which the Corporation or any of its
subsidiaries is or are a party or by which any of them is or are bound.
d. PENDING OR THREATENED CLAIMS. Except as disclosed in Exhibit A
("Risk Factors"), attached hereto and incorporated herein by this reference,
neither the Corporation nor any of its subsidiaries is a party to any action,
suit or proceeding which could materially affect its business or financial
condition, and no such actions, suits or proceedings are contemplated or have
been threatened.
e. NO PREEMPTIVE RIGHTS. There are no preemptive rights of any
shareholder of the Corporation with respect to the Shares.
f. AUTHORIZED SHARES. The Corporation has sufficient authorized and
unissued shares of its common stock to provide for the issuance and delivery of
the Shares as provided under this Agreement.
g. COMPLIANCE WITH REGULATION S. The Corporation represents and
warrants that it has complied, and covenants that until the end of the
applicable Regulation S restricted period it will comply with all of the
requirements of Rule 903(a), (b) and (c)(3) of Regulation S applicable to the
Corporation with respect to the offer and sale of the Shares, including but not
limited to the requirement not to engage in any "directed selling efforts" (as
defined in Regulation S) in the United States with respect to the Shares.
4. INVESTOR REPRESENTATIONS AND WARRANTIES. The Investor represents and
warrants to the Corporation that:
a. ACCOUNT/REGULATION S. The Investor is acquiring the Shares for
investment for its own account, and not with a view to, or for resale in
connection with, any distribution thereof, and it has no present intention of
selling or distributing any of the Shares. The Investor understands that the
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act") by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment as expressed herein. The Investor
understands that the Corporation is relying on the rules and regulations
governing offers and sales made outside the United States to non-"U.S. Persons"
pursuant to Regulation S under the Securities Act.
b. ACCESS TO DATA. The Investor has had an opportunity to discuss
the Corporation's business, management and financial affairs with its management
and to obtain any additional information which the Investor has deemed necessary
or appropriate for deciding whether or not to purchase the Shares, including an
opportunity to
<PAGE>
receive, review and understand the disclosures and information regarding the
Corporation's financial statements, capitalization and other business
information as set forth in Corporation's filings with the Securities and
Exchange Commission through December 16, 1996, all incorporated herein by
reference, together with all exhibits referenced therein as well as the
Corporation's Private Placement Memorandum dated January 2, 1996 prepared for
the Corporation's trade creditors. Attached hereto as Exhibit B and
incorporated herein by reference is the Corporation's approximate Pro-Form
Capitalization as of the date hereof. The Investor acknowledges that no other
representations or warranties, oral or written, have been made by the
Corporation or any agent thereof except as set forth in this Agreement.
c. NO FAIRNESS DETERMINATION. The Investor is aware that no
federal, state or other agency has made any finding or determination as to the
fairness of the investment, nor made any recommendation or endorsement of the
Shares.
d. KNOWLEDGE AND EXPERIENCE. The Investor has such knowledge and
experience in financial and business matters, including investments in other
start-up companies, that it is capable of evaluating the merits and risks of the
investment in the Shares, and it is able to bear the economic risk of such
investment. Further, the individual executing this Agreement has such knowledge
and experience in financial and business matters that he is capable of utilizing
the information made available to him in connection with the offering of the
Shares, of evaluating the merits and risks of an investment in the Shares and of
making an informed investment decision with respect to the Shares, including
assessment of the Risk Factors attached hereto as Exhibit A and incorporated
herein by reference.
e. LIMITED PUBLIC MARKET. The Investor is aware that there is
currently a very limited "over-the-counter" public market for the Corporation's
registered securities and that the Corporation became a "reporting issuer" under
the Securities Exchange Act of 1934, as amended, on January 27, 1995. There is
no guarantee that a more established public market will develop at any time in
the future. The Investor understands that the Shares are all unregistered and
may not presently be sold in even this limited public market. The Investor
understands that the Shares cannot be readily sold or liquidated in case of an
emergency or other financial need. The Investor has sufficient liquid assets
available so that the purchase and holding of the Shares will not cause it undue
financial difficulties.
f. INVESTMENT EXPERIENCE. The Investor is an "accredited investor"
as that term is defined in Regulation D promulgated by the Securities and
Exchange Commission. The term "Accredited Investor" under Regulation D refers
to:
(i) A person or entity who is a director or executive officer
of the Corporation;
(ii) Any bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to Section 15 of
the Exchange Act; insurance company as defined in Section 2(13) of the
Securities Act; investment company registered under the Investment Company Act
of 1940; or a business development Corporation as defined in Section 2(a)(48) of
that Act; Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decision made solely by
persons that are accredited investors;
(iii) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(iv) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Shares
offered, with total assets in excess of $5,000,000;
<PAGE>
(v) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds $1,000,000;
(vi) Any natural person who had an individual income in excess
of $200,000 during each of the previous two years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;
(vii) Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Shares offered, whose
purchase is directed by a person who has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment; or
(viii) Any entity in which all of the equity owners are
accredited investors.
As used in this Section 4(f), the term "net worth" means the excess of total
assets over total liabilities. For the purpose of determining a person's net
worth, the principal residence owned by an individual should be valued at fair
market value, including the cost of improvements, net of current encumbrances.
As used in this Section 4(f), "income" means actual economic income, which may
differ from adjusted gross income for income tax purposes. Accordingly, the
undersigned should consider whether it should add any or all of the following
items to its adjusted gross income for income tax purposes in order to reflect
more accurately its actual economic income: Any amounts attributable to
tax-exempt income received, losses claimed as a limited partner in any limited
partnership, deductions claimed for depletion, contributions to an IRA or Keogh
retirement plan, and alimony payments.
5. RESTRICTIONS ON TRANSFER RE REGULATION S.
a. NOT A "U.S. PERSON." The Investor hereby certifies that (i) it
is not a "U.S. Person" as defined under Rule 902, Section (o) of Regulation S
promulgated under the Securities Act (a copy of which is attached hereto as
Schedule 2) and is not acquiring the Shares for the account or benefit of any
U.S. Person, and (ii) it is acquiring the Shares in an "offshore transaction" as
defined under Section (i) of such Rule 902 (a copy of which is attached hereto
as Schedule 3).
b. TRANSFER RESTRICTIONS. The Investor shall not attempt to have
registered any transfer of the Shares not made in accordance with the provisions
of Regulation S and the Corporation shall be required during the Regulation S
restricted period to refuse to register any transfer of the Shares that is not
made in accordance with the provisions of Regulation S, unless such refusal is
prohibited by foreign law. In addition to any other restrictions on transfer
set forth in this Agreement, the Investor agrees to transfer the Shares only (i)
in accordance with the provisions of Regulation S, pursuant to registration
under the Securities Act, or pursuant to an available exemption from
registration, and (ii) in accordance with any applicable state securities laws.
Unless so registered or exempt therefrom, such transfer restrictions shall
include but not be limited to and the Investor warrants and represents the
following:
(i) The Investor shall not sell the Shares publicly or
privately, or through any short sale, or other hedging transaction to any U.S.
Person, whether directly or indirectly, or for the account or benefit of any
such U.S. Person for the restricted period mandated by Regulation S after the
purchase of the Shares unless registered or exempt from registration;
(ii) Any other offer or sale of the Shares shall be made only if
(A) during the restricted period any subsequent purchaser certifies in writing
that it is not a U.S. Person and is not acquiring the Shares for the account or
benefit of any U.S. Person, or (B) after the restricted period the Shares are
purchased in a transaction that did not require registration under the
Securities Act and applicable Blue Sky laws; and
(iii) Any transferee of the Shares who acquires the Shares during
the Regulation S restricted period shall agree in writing to resell the Shares
only in accordance with the provisions of Regulation S, pursuant to registration
under the Securities Act, or pursuant to an available exemption from
registration.
c. RESTRICTIONS ON RESALES IN THE UNITED STATES. The Investor
understands and acknowledges that the Securities Act prohibits resales of
securities in the United States except pursuant to an effective registration
statement or an exemption from registration for which the Shares and the
Investor holding such Shares qualifies. The Investor understands and
acknowledges the requirements for qualifying for an exemption from registration
afforded
<PAGE>
by Section 4 of the Securities Act and that there can be no assurance that the
Investor will be able to qualify for such an exemption from registration.
6. PUBLIC OFFERING LOCK-UP. For one period of up to one-hundred-eighty
(180) days (the "Stand-off Period"), Investor shall not transfer or sell its
Shares to any person or entity if requested by the Corporation upon at least
thirty (30) days prior written notice given, on, or after, the termination of
the Regulation S restricted period hereunder in contemplation of a public
registration. Notwithstanding the foregoing, this right may be exercised only
one time by the Corporation.
7. RESTRICTIVE LEGENDS. Each certificate evidencing the Shares which
the Investor may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event (unless no longer required in the opinion of the counsel for the
Corporation) shall be imprinted with legends substantially in the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE OFFERED OR SOLD WITHOUT REGISTRATION UNDER THE ACT
UNLESS THE CORPORATION RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO
THE CORPORATION, THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
OR SUCH REGISTRATION IS NOT REQUIRED PURSUANT TO REGULATION S UNDER
THE ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ALSO BE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER DURING A "STAND-OFF PERIOD" OF UP TO
180 DAYS AS PROVIDED IN THAT CERTAIN FEBRUARY ____, 1997, AGREEMENT
BETWEEN THE ORIGINAL HOLDER HEREOF AND THE CORPORATION. THE
CORPORATION WILL NOTIFY THE TRANSFER AGENT OF THE STARTING DATE OF ANY
SUCH STAND-OFF PERIOD AND WILL ISSUE STOP-TRANSFER INSTRUCTIONS
APPLICABLE TO THE STAND-OFF PERIOD. WHENEVER THE TRANSFER AGENT HAS
RECEIVED NO SUCH STOP TRANSFER INSTRUCTIONS FROM THE CORPORATION, THE
TRANSFER AGENT IS HEREBY AUTHORIZED AND DIRECTED TO CONCLUSIVELY
PRESUME THAT NO STAND-OFF PERIOD IS IN EFFECT TO PREVENT THE TRANSFER
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE. IMMEDIATELY AFTER
THE EXPIRATION DATE OF ANY STAND-OFF PERIOD (WHICH SHALL FALL NOT
LATER THAN 180 DAYS AFTER THE STARTING DATE), THIS RESTRICTIVE LEGEND
AND ANY RELATED STOP TRANSFER INSTRUCTIONS GIVEN BY THE CORPORATION TO
THE TRANSFER AGENT SHALL BE OF NO FURTHER FORCE OR EFFECT, AND THE
TRANSFER AGENT IS HEREBY AUTHORIZED AND DIRECTED, AT ANY TIME ON OR
AFTER THE EXPIRATION DATE OF THE STAND-OFF PERIOD, TO ISSUE A NEW
CERTIFICATE WITHOUT THIS LEGEND IN EXCHANGE FOR THIS LEGENDED
CERTIFICATE UPON SURRENDER BY AND AT THE REQUEST OF THE HOLDER WITHOUT
FURTHER AUTHORIZATION FROM THE CORPORATION.
The Corporation shall be entitled to enter stop transfer notices on its transfer
books with respect to the Shares during the Regulation S restricted period and
the Stand-off Period.
8. RELIANCE. The Investor is aware that the Corporation is relying on
the accuracy of the above representations to establish compliance with Federal
and State securities laws. If any such warranties or representations are not
true and accurate in any respect as of the Closing, Investor shall so notify the
Corporation in writing immediately and shall be cause for rescission by the
Corporation at its sole election. The Investor shall indemnify the Corporation
and its affiliates, legal counsel and agents against all losses, claims, costs,
expenses and damages or liabilities, including reasonable attorneys' fees, which
such parties may suffer or incur caused or in connection with or arising out of,
directly or indirectly, from their reliance on such warranties and
representations.
9. MISCELLANEOUS.
a. SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
<PAGE>
b. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
c. ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules
attached hereto constitute the entire agreement and understanding between the
parties with respect to the subject matters herein, and supersede and replace
any prior agreements and understandings, whether oral or written between and
among them with respect to such matters. The provisions of this Agreement may
be waived, altered, amended or repealed, in whole or in part, only upon the
written consent of the Corporation and the Investor.
d. TITLES AND SUBTITLES. The titles of the Sections and subsections
of this Agreement are for the convenience of reference only and are not to be
considered in construing this Agreement.
e. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
f. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with laws of the State of California, applicable to
contracts between California residents entered into and to be performed entirely
within the State of California.
g. VENUE. Any action, arbitration, or proceeding arising directly
or indirectly from this Agreement or any other instrument or security referenced
herein shall be litigated or arbitrated, as appropriate, in the County of San
Francisco, State of California.
h. AUTHORITY. If Investor is a corporation, partnership, trust or
estate: (i) the individual executing and delivering this Agreement on behalf of
the Investor has been duly authorized and is duly qualified to execute and
deliver this Agreement on behalf of Investor in connection with the purchase of
the Shares and (ii) the signature of such individual is binding upon Investor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year hereinabove first written.
INVESTOR U.S. ELECTRICAR, INC.
HYUNDAI MOTOR COMPANY
By: By:
------------------ ---------------------
(Signature) (Signature)
- --------------------- ------------------------
(Print Name and Title) (Print Name and Title)
SCHEDULE 1
Purchase Price Per Share:
---------------------------------------
Aggregate Purchase Price
--------------------------------------
Total Number of Shares
---------------------------------------
Purchase Date: March 1, 1997
Name of Registered Owner(s)
- ------------------------------------------------------
of Shares
- ------------------------------------------------------
Address for delivery of Shares
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE>
- -----------------------------------------------
SCHEDULE 2
DEFINITION OF "U.S. PERSON"
"Reg. Section 230.902. As used in Regulation S, the following
terms shall have the meanings indicated:
. . .
(o) U.S. Person.
(1) "U.S. person" means:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or
incorporated under the laws of the United States;
(iii) any estate of which any executor or administrator is a
U.S. person;
(iv) any trust of which any trustee is a U.S. person;
(v) any agency or branch of a foreign entity located in the
United States;
(vi) any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. person;
(vii) any discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in the
United States; and
(viii) any partnership or corporation if:
(A) organized or incorporated under the laws of any foreign
jurisdiction; and
(B) formed by a U.S. person principally for the purpose of
investing in securities not registered under the Act, unless it
is organized or incorporated, and owned, by accredited investors
(as defined in Rule 501(a) under the Act (Section 230.501(a) of
this chapter)) who are not natural persons, estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this section, any
discretionary account or similar account (other than an estate or
trust) held for the benefit or account of a non-U.S. person by a
dealer or other professional fiduciary organized, incorporated, or (if
an individual) resident in the United States shall not be deemed a
"U.S. person."
(3) Notwithstanding paragraph (o)(1) of this section, any estate
of which any professional fiduciary acting as executor or
administrator is a U.S. person shall not be deemed a U.S. person if:
(i) an executor or administrator of the estate who is not a
U.S. person has sole or shared investment discretion with respect
to the assets of the estate; and
(ii) the estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1) of this section, any trust
of which any professional fiduciary acting as trustee is a U.S. person
shall not be deemed a U.S. person if a trustee who is not a U.S.
person has sole or shared investment discretion with respect to the
trust assets, and no beneficiary of the trust (and no settlor if the
trust is revocable) is a U.S. person.
(5) Notwithstanding paragraph (o)(1) of this section, an employee
benefit plan established and administered in accordance with the law
of a country other than the United States and customary practices and
documentation of such country shall not be deemed a U.S. person.
(6) Notwithstanding paragraph (o)(1) of this section, any agency
or branch of a U.S. person located outside the United States shall not
be deemed a "U.S. person" if:
(i) the agency or branch operates for valid business
reasons; and
(ii) the agency or branch is engaged in the business of
insurance or banking and is subject to substantive insurance or
banking regulation, respectively, in the jurisdiction where
located.
<PAGE>
(7) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank,
the Asian Development Bank, the African Development Bank, the United
Nations, and their agencies, affiliates and pension plans, and any
other similar international organizations, their agencies, affiliates
and pension plans shall not be deemed "U.S. persons."
<PAGE>
SCHEDULE 3
DEFINITION OF "OFFSHORE TRANSACTION"
"Reg. Section 230.902. As used in Regulation S, the following
terms shall have the meanings indicated:
. . .
(i) Offshore Transaction.
(1) An offer or sale of securities is made in an "offshore
transaction" if:
(i) the offer is not made to a person in the United States;
and
(ii) either:
(A) at the time the buy order is originated, the buyer is
outside the United States, or the seller and any person acting on
its behalf reasonably believe that the buyer is outside the
United States; or
(B) for purposes of:
(1) Section 230.903, the transaction is executed in, on
or through a physical trading floor of an established
foreign securities exchange that is located outside the
United States; or
(2) Section 230.904, the transaction is executed in, on
or through the facilities of a designated offshore
securities market described in paragraph (a) of this
section, and neither the seller nor any person acting on its
behalf knows that the transaction has been pre-arranged with
a buyer in the United States.
(2) Notwithstanding paragraph (i)(1) of this section, offers and
sales of securities specifically targeted at identifiable groups of
U.S. citizens abroad, such as members of the U.S. armed forces serving
overseas, shall not be deemed to be made in "offshore transactions."
(3) Notwithstanding paragraph (i)(1) of this section, offers and
sales of securities to persons excluded from the definition of "U.S.
person" pursuant to paragraph (o)(7) of this section or persons
holding accounts excluded from the definition of "U.S. person"
pursuant to paragraph (o)(2) of this section, solely in their
capacities as holders of such accounts, shall be deemed to be made in
"offshore transactions."
<PAGE>
EXHIBIT A - RISK FACTORS
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, IN ADDITION TO THE MATTERS SET
FORTH ELSEWHERE IN THIS AGREEMENT, THE FOLLOWING FACTORS.
<PAGE>
EXHIBIT B - APPROXIMATE PRO FORMA CAPITALIZATION
<PAGE>
EXHIBIT A
RISK FACTORS
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, IN ADDITION TO THE MATTERS SET
FORTH ELSEWHERE IN THIS SUBSCRIPTION AGREEMENT, THE FOLLOWING FACTORS.
DEBT RESTRUCTURING. As a result of the Corporation's insolvency in March
1995, the Corporation entered into agreements in March and April 1995 with its
secured creditors and largest unsecured creditor, to restructure debt in the
aggregate amount of approximately $22 million. In addition, in April 1995, an
informal committee of the Corporation's unsecured antecedent trade creditors was
established, and in August 1995, this committee recommended for approval by the
Corporation's creditors and shareholders a voluntary restructuring of the
Corporation's unsecured trade debt ("Debt Restructuring Plan"). In early 1996,
the Corporation's shareholders approved and accepted the terms of the
restructuring plan. The terms of the Debt Restructuring Plan are set forth in
the Private Placement Memorandum dated January 2, 1996, a copy of which has been
delivered to and is available for review by the Purchaser and its counsel upon
request.
Pursuant to the Debt Restructuring Plan, and as of October 31, 1996, the
Corporation believes it has received and approved approximately $11,751,000 or
84% acceptances by its antecedent trade creditors. Outstanding antecedent debt
of approximately $2,254,000 has not been settled. As of January 1997, the
Corporation issued 1,587,473 shares of Series B Convertible Preferred Stock as
payment of $3,175,000 of debt owed to qualified unsecured creditors under the
Corporation's Debt Restructuring Plan. This stock is convertible into
10,583,682 shares of common stock. In addition, the Corporation and its secured
creditors have converted approximately $15,000,000 in debt into approximately
50,000,000 shares of common stock. The Corporation and its secured creditors
may elect, however, to keep the remainder of the secured debt outstanding until
substantially all of this remaining unsecured antecedent trade debt has accepted
the Corporation's Debt Restructuring Plan.
THERE CAN BE NO ASSURANCE THAT THE CORPORATION WILL BE ABLE TO CONTINUE TO
EFFECTUATE THE DEBT RESTRUCTURING. TO THE EXTENT THAT THE CORPORATION IS
UNABLE TO CONTINUE TO EFFECTUATE THE VOLUNTARY RESTRUCTURING OR OTHERWISE
REFINANCE OR CONVERT SUCH DEBT AND ADDITIONAL FUNDING IS NOT AVAILABLE, THE
CORPORATION WOULD BE FORCED TO SEEK PROTECTION UNDER APPLICABLE BANKRUPTCY AND
INSOLVENCY LAWS.
ADDITIONAL FUNDING. The Corporation's planned expenditures are based
primarily on its internal estimates of future sales and ability to raise
additional financing. If revenues or additional financing do not meet the
Corporation's expectations in any given period of time, the adverse impact on
the Corporation's finances will be magnified by the Corporation's inability to
adjust spending quickly enough to compensate for revenue or financing
shortfalls. Significant additional funding will be required throughout 1997 to
continue operations, and there can be no assurance that the Corporation will be
able to secure such additional financing on favorable terms, or at all. As of
October 31, 1996, the Corporation had cash of $51,000, including $2,000 held in
escrow for antecedent debt and together with its subsidiaries had receivables
which were not more than sixty days past due of approximately $357,000 which the
Corporation believes have a reasonable likelihood of being collected. There is
no guaranty that all or any of the Corporation's remaining unsecured creditors
representing in excess of $2.2 million in debt will agree to the proposed debt
restructuring/repayment plan or any other plan. In connection with the sale,
the Company issued 13 million cashless warrants with an exercise price of $0.30
per share. These warrants can be exercised for no cash if the price of the
Company's common stock is at least double the exercise price for a period of 20
days.
GOING CONCERN/NOL. The Corporation has experienced recurring losses from
operations, use of cash from operations and had an accumulated deficit of
$79,661,000 at October 31, 1996, which deficit as of July 31, 1996, was
approximately $76,990,000. (See "Increasing and Continued Losses" below).
There is no guaranty, however, that any net operating losses will be available
to the Corporation in the future as an offset against future profits. A
substantial portion of the losses are attributable to research, development and
other start-up costs associated with the Corporation's changing business focus
from retail and mail order operations to the production of electric vehicles and
electric power-train systems. Cash flows from future operations may not be
sufficient to enable the Corporation to achieve profitable operations as
previously disclosed in the preceding paragraph. Market conditions and the
1.
<PAGE>
Corporation's financial position may inhibit its ability to achieve profitable
operations. These factors as well as others indicate the Corporation may be
unable to continue as a going concern unless it is able to obtain significant
additional financing and generate sufficient cash flows to meet its obligations
as they come due and sustain its operations. The Corporation estimates that it
will need additional outside financing for at least approximately two more years
to continue funding the development of its products and the growth of its
business before cash from operations is sufficient to fund the Corporation's
business operations. The Corporation estimates that it will need approximately
$8 million in additional outside funding through calendar 1997, without the
payment of past due debts owed to creditors. The Corporation's audited
financial statements included in the Form 10-K for fiscal year 1996 also include
a "Going Concern" qualification from the Corporation's auditors.
INCREASING AND CONTINUED LOSSES. The Corporation was founded in 1976, but
initial sales were very limited and the Corporation was unprofitable as a
manufacturer of solar powered toys. The Corporation has been profitable in only
one year, fiscal year 1986. For the fiscal years ended July 31, 1994, 1995 and
1996, the Corporation had substantial net operating losses of $25,021,000,
$37,565,000 and $9,354,000, respectively, on sales of $5,787,000, $11,625,000
and $4,209,000, respectively. Through the first three months of fiscal 1997,
the Corporation lost an additional $2,671,000 on sales of $527,000. There can
be no assurance that the Corporation will be able to achieve profitability.
SOURCE OF REVENUES. In 1991, the Corporation started to generate a
significant portion of its revenues from the sale of electric vehicles. The
Corporation intends to substantially increase its revenue from the sale of
electric vehicles. However, there can be no assurance that demand for these
products will warrant the Corporation's anticipated expenditures, or that the
Corporation will be successful in engineering and marketing these products or
deriving any sort of profit from such revenues. Due to lack of capital and
other factors, the Corporation has recently reduced its workforce from
approximately seventy employees on December 1, 1996 to a current employee
workforce of fifty-four employees as of January 15, 1997. This action will
significantly impact the Corporation's ability to generate revenue near term.
GENERAL ECONOMIC CONDITIONS. The financial success of the Corporation may
be sensitive to adverse changes in general economic conditions, such as
inflation, unemployment, and consumer demand for the Corporation's products.
These changes could cause the cost of supplies, labor, and other expenses to
rise faster than the Corporation can raise prices. Such changing conditions
also could significantly reduce demand in the market place for the Corporation's
products. The Corporation has no control over any of these changes.
GROWTH STAGE COMPANY; REEVALUATION OF BUSINESS PLANS. Although the
Corporation was originally founded in 1976, many aspects of the Corporation's
business are still in the early growth stage development, and its proposed
operations are subject to all of the risks inherent in a start-up or growing
business enterprise, including the likelihood of continued operating losses.
The likelihood of the success of the Corporation must be considered in light of
the problems, expenses, difficulties, complications and delays frequently
encountered in connection with the growth of an existing business, the
development of new products and channels of distribution, and current and future
development in several key technical fields, as well as the competitive and
regulatory environment in which the Corporation will operate.
In response to the severe cash shortage experienced by the Corporation, in
March 1995, the Corporation initiated steps to restructure its organization and
operations in an effort to stabilize and improve the Corporation's financial
condition. Beginning in March 1995, the Corporation focused its resources on
the production of off-road industrial vehicles and on-road buses and ceased
ordering new inventory for its on-road conversion business; however, the
Corporation intends to finish converting and selling its existing inventory of
on-road vehicles. The Corporation is currently re-evaluating all aspects of its
business, including each of its product lines, in view of its capital
constraints as well as competitive market conditions. To the extent the
Corporation determines to discontinue any of its product lines, potential
sources of revenue from those product lines would be eliminated. In Fall 1996,
the Corporation sold the assets of Industrial Electric Vehicles, Inc., and
ceased production of industrial vehicles domestically. For the first nine
months of Fiscal 1996, industrial vehicle sales were $1.7 million, or
approximately 50% of the Corporation's sales. In December 1996, the Corporation
decided to concentrate its sales activities on two product lines; the first
product line is the drive train system; and the second is the Electrolite
Vehicle.
DEPENDENCE ON KEY PERSONNEL. The success of the Corporation is largely
dependent on its key management and technical personnel, including Roy Kusumoto,
the Corporation's Chief Executive Officer, and Dan Rivers, Don Kang and Abas
Goodarzi, the loss of one or more of whom could adversely affect the
Corporation's business.
2.
<PAGE>
Additionally, in order to successfully implement its anticipated growth, the
Corporation will be dependent upon its ability to hire additional qualified
personnel. There can be no assurance that the Corporation will be able to
retain or hire other necessary personnel. The Corporation does not maintain key
man life insurance on any of its key personnel. The Corporation believes that
its future success will depend in part upon its continued ability to attract,
retain and motivate additional highly skilled personnel, including engineers,
who are in great demand.
INSURANCE AND POTENTIAL LIABILITY. The Corporation maintains insurance,
including insurance relating to personal injury and product liability, in
amounts which the Corporation currently considers adequate. Nevertheless, a
partially or completely uninsured claim against the Corporation, if successful
and of sufficient magnitude, could have a material adverse effect on the
Corporation. In addition, the Corporation's severe cash shortage may adversely
affect its ability to continue to maintain its insurance coverage.
NATURE OF INDUSTRY. The electric vehicle industry is in its infancy.
Although the Corporation believes that it has manufactured more electric
vehicles than any other company in the United States based on its own knowledge
of the industry, there are many large and small companies, both domestic and
foreign, now in, poised to enter or entering this industry. This EV industry is
subject to rapid technological change. Most of the major domestic and foreign
automobile manufacturers (i) have produced design-concept electric vehicles,
and/or (ii) have developed improved electric storage, propulsion and control
systems, and/or (iii) are planning to enter the field. Various non-automotive
companies are also developing improved electric storage, propulsion and control
systems. Demand for and interest in electric vehicles appears to be increasing.
However, growth in the present limited demand for electric vehicles depends upon
(A) future regulation and legislation requiring more use of non-polluting
vehicles, (B) the environmental consciousness of customers and (C) the ability
of electric vehicles to successfully compete with vehicles powered with internal
combustion engines.
UNCERTAINTY OF PRODUCT MARKET AND ACCEPTANCE; CHANGED LEGISLATIVE CLIMATE.
Because vehicles powered by internal combustion engines cause pollution, there
is significant public pressure in Europe and Asia, and enacted or pending
legislation in the United States at the federal level and in certain states, to
promote or mandate the use of vehicles with no tailpipe emissions ("zero
emission vehicles") or reduced tailpipe emissions ("low emission vehicles"). To
date, substantially all zero emission vehicles designed and produced have been
electric vehicles, and most low emission vehicles have been powered by natural
gas or have been hybrid vehicles using two or more powering systems. The
Corporation believes that legislation requiring or promoting zero emission
vehicles or low emission vehicles is necessary to create a significant
commercial market for electric vehicles. There can be no assurance, however,
that further legislation will be enacted or that current legislation will not be
repealed or amended, or that a different form of zero emission or low emission
vehicle will not be invented, developed and produced, and achieve greater market
acceptance than electric vehicles. Following the state and federal elections in
November 1994, the Corporation believes that the changed legislative climate in
the United States may result in extensions, modifications or reductions of
current federal and state legislation, mandates and potential tax incentives
which could adversely affect the Corporation's business prospects if
implemented. In April 1996, California altered its mandate requirements by
extending the implementation date and establishing voluntary compliance.
Additional information regarding the status of legislative mandates and
initiative is available in the Corporation's Form 10K for the fiscal year ended
July 31, 1996 filed with the Securities and Exchange Commission.
COMPETITION. There are many companies, including several major automobile
companies and electronics firms, actively engaged in the research and
development of electric vehicles. Many have far greater resources and marketing
abilities than the Corporation. Although the Corporation believes it has sold
more electric vehicles than any other company in the United States, there can be
no assurance that the Corporation will retain this advantage or be able to
compete in the future with the companies in or entering the electric vehicle
market. The major automobile manufacturers have a distinct advantage over the
Corporation if they decide to compete with the Corporation in the
retrofit/conversion EV business, should the Corporation continue in this
business. Their vast resources would pose a distinct disadvantage to the
Corporation. Direct competition from the "Big Three" could possibly inhibit the
Corporation from obtaining the vehicles it needed without additional cost. The
Corporation, believes, however, that the niche fleet market which it has
targeted is presently too small for the large automobile manufacturers to pursue
on a competitive basis with the Corporation.
DEPENDENCE ON SUPPLIERS/OUTSIDE PARTIES. Certain components used in the
Corporation's electric vehicles are available only from a limited number of
sources. If such sources are unable or unwilling for any reason to manufacture
and sell these unique components, the Corporation at the present time would have
no other supplier. Additionally, the Corporation intends to develop close
relationships with other suppliers of propriety components, such as batteries,
which the Corporation will integrate into its retrofitted and OEM electric
vehicles. The
3.
<PAGE>
Corporation's reliance on these limited source suppliers could cause shortages
of certain key components, or the inability to find comparable replacements at
any cost or time could significantly impair the Corporation's financial
performance and relationships with its customers.
RAPID TECHNOLOGICAL CHANGE. The Corporation's existing products are
designed for use with, and are dependent upon, existing electric vehicle
technology. As technologies change, and subject to the Corporation's limited
available resources, the Corporation plans to upgrade or adapt its products in
order to continue to provide products with the latest technology. However,
there can be no assurance that the Corporation will be able to avoid
technological obsolescence of its products or that the Corporation's research
and development efforts will be able to adapt to changes in or create the
necessary "leading-edge" technology to stay competitive. Further proprietary
technology development by others could prohibit the Corporation from using its
own technology.
MINIMAL BARRIERS TO ENTRY. Although the Corporation has certain
distribution arrangements with suppliers of subcomponents, and trademarks and
proprietary propulsion system technology pursuant to its recent acquisition of
the assets of Systronix Corporation, the Corporation believes it has created
little or no barrier to entry for competitors other than the time and
significant expense required to assemble and develop similar production and
design capabilities. Competitors of the Corporation may enter into exclusive
arrangements with current or potential suppliers for the Corporation, thereby
potentially giving such competitors a competitive edge which the Corporation
might not be able to overcome.
NO DIVIDENDS. To date, the Corporation has not paid any dividends on its
Common Stock or Preferred Stock and does not intend to declare any dividends in
the foreseeable future on its Stock.
PREFERRED STOCK PREFERENCES. The Corporation's Series A and Series B
Preferred Stock has preference over the Common Stock with respect to the payment
of dividends and the distribution of assets in the event of a liquidation or
dissolution of the Corporation. In addition, the Board of Directors of the
Corporation also has the authority to issue additional preferred stock in one or
more series and to fix the voting and other powers, designations, dividends,
preferences and relative participation, optional, conversion, exchange,
redemption and other special rights and qualifications, limitations or
restrictions thereon of any such series of preferred stock. Such rights could
adversely affect the existing or future rights of the units of Common Stock with
respect to the existing Series A Preferred Stock and as to any new series of
Preferred Stock. In connection with the restructuring of the Corporation's
unsecured debt, the Corporation shall issue shares of Series B Preferred Stock
that will have certain preferences over the Common Stock and the Series A
Preferred Stock with respect to dividends and the distribution of assets in the
event of a liquidation or dissolution. See Risk Factors -- Debt Restructuring.
SHARES ELIGIBLE FOR FUTURE SALE. No prediction can be made as to the
effect, if any, that substantial and significant sales of new shares of Common
Stock or the availability of such shares for sale will have on the market prices
prevailing from time to time. Nevertheless, the possibility that substantial
amounts of Common Stock may be sold in the future may adversely affect
prevailing prices for the Corporation's Common Stock and could impair the
Corporation's ability to raise capital through the sale of its equity
securities. As of January 31, 1997, the Corporation had issued and outstanding
approximately 131,000,000 shares, of which over 1,000,000 shares are free
trading with the remainder restricted pursuant to Rule 144 or Regulation S.
LEVERAGE; CASH FLOW. Any indebtedness being assumed by the Corporation in
connection with its financing activities poses significant risks to potential
investors, particularly in view of the Corporation's loss history. The ability
of the Corporation to generate sufficient cash flow to make payments with
respect to any debt of the Corporation will depend upon the future performance
of the Corporation, which will be subject to factors beyond the Corporation's
control. No assurance can be given that the Corporation will be able to fund
its working capital needs and to satisfy its principal and interest requirements
from internally generated funds.
CREDITOR CLAIMS AND LITIGATION [SHAREHOLDER] CLAIMS. The informal
Creditors Committee of the Corporation recommended in 1995 a voluntary
moratorium on pursuing unsecured claims (a copy of which is available for review
by the Purchaser and its counsel upon request). There is no guarantee, however,
that this moratorium will continue. In addition, certain unsecured creditors
representing approximately $650,000 in principal and interest have nevertheless
filed or threatened to file lawsuits if they are not paid. Judgments have been
awarded to unsecured creditors who filed lawsuits for claims representing an
aggregate of approximately $450,000 in principal and interest. On September 30,
196, a suit was filed by Anthony Vicari in proper against the Corporation in San
Francisco Superior Court, alleging that plaintiff and defendant entered into an
oral agreement whereby defendant agreed to give plaintiff $1,000,000 and 80,000
shares of defendant's stock as compensation for seeking and
4.
<PAGE>
arranging a joint business venture agreement with a Mexican company. The
complaint seeks compensatory damages in an unspecified amount, punitive damages,
attorneys' fees and costs, specific performance under the oral agreement, and an
aware of 80,000 shares of stock. The Corporation was served on January 16,
1997, and has just begun to investigate this matter and has retained counsel.
5.
<PAGE>
ADDENDUM
Hyundai Motor Company ("HMC")
and
Hyundai Electronics Industries Co., Ltd. ("HEI")
and
U.S. Electricar, Inc. ("USE")
February 27, 1997
Regarding the 12 April 1996 Agreement between HMC and USE (hereinafter the
"Agreement"), it is agreed that all references to HMC may mean either HMC
exclusively or HMC and HEI.
Specially due to the participation of HEI, each party agrees the amendment to
the Agreement as follows:
1) with respect to the purchase of 12,000,000 shares of USE, the break-down
and the price shall be as follows:
HMC 8,400,000 shares (70%) at a price of US$0.30.
HEI 3,600,000 shares (30%) at a price of US$0.30.
2) HMC and HEI shall pay royalty as follows:
HMC US$ 1,295,000 of the paid-up royalty and US$ 105,000 of the running
royalty.
HEI US$ 555,000 of the paid-up royalty and US$ 45,000 of the running
royalty.
The running royalty shall be paid on or before the anniversary of the
Effective Date of the License Agreement, through and including the
sixth anniversary of the License Agreement.
<PAGE>
Addendum
Page -2-
All other terms and conditions of the 12 April 1996 Agreement remain in full
force and effect.
Hyundai Motor Company
By:
------------------------------------------
Y. I. Lee/Vice President
Hyundai Electronics Industries Co., Ltd.
By:
------------------------------------------
J. S. Lee/Executive Managing Director
U.S. Electricar, Inc.
By:
------------------------------------------
Roy Kusumoto/President & C.E.O.
<PAGE>
LICENSE AGREEMENT
This License Agreement is entered into on this ____ day of February, 1997, by
and between U.S. Electricar, Inc., a California corporation (hereinafter
referred to as "Licensor"), and Hyundai Motor Company and Hyundai Electronics
Industries Co., Ltd. (hereinafter jointly referred to as "Licensee").
WITNESSETH:
WHEREAS, Licensor has acquired or developed considerable technical information
and expertise relating to the design, assembly, manufacture and sale of the
Panther-TM- Systems; and
WHEREAS, Licensee desires to secure from Licensor the right to use such
technical information and expertise in order to develop, manufacture, assemble,
sell and distribute the Panther-TM- Systems; and
WHEREAS, it is the mutual intent of the parties to set forth the terms and
conditions under which Licensor will permit Licensee to use said technical
information.
NOW, THEREFORE, the parties hereby agree as follows:
I. DEFINITIONS
(A) "Licensed Panther-TM- Systems" as used herein shall mean Propulsion Systems
for Electric Vehicles which are or will be developed by Licensor during the term
of this License Agreement, including upgrades to said systems developed by
Licensor, all of which may be assembled by Licensee, or Licensee's designated
manufacturer, in accordance with the Technical Data. Notwithstanding the
foregoing, Licensor may customize a propulsion system exclusively for a customer
other than Licensee using Technical Data and the Licensed Panther-TM- Systems
("Customized System").
(B) "Licensed Component(s)" as used herein shall mean such parts of the
Licensed Panther-TM- Systems as are designed and manufactured by Licensor at its
plants and identified in Exhibit A attached hereto, all of which Licensed
Components may be manufactured by Licensee in accordance with the Technical
Data.
(C) "Licensed Item(s)" as used herein shall mean Licensed Panther-TM- Systems
and Licensed Component(s).
(D) "Technical Data" as used herein shall mean such technical data and any
patents relating thereto, assembly, subassembly and parts drawings, and
applicable material specifications,
Page 1 of 8
<PAGE>
stamping, casting and forging drawings, labor and tool routing sheets, process
specifications, drawings of special tools, fixtures, dies, jigs, gauges and
patterns, and production and inspection procedures as are designed or created by
Licensor and used by it in the development and assembly of Licensed Panther-TM-
Systems, and the manufacture of Licensed Components, and which are specified in
Exhibits A and B attached hereto and incorporated herein by this reference.
(E) "Korea" as used herein means the territory of Korea.
II. GRANT
Subject to the terms and conditions of this License Agreement, Licensor hereby
grants to Licensee license to use Technical Data in the manufacture and assembly
of Licensed Panther-TM- Systems, and the manufacture and assembly of Licensed
Components for use in such Licensed Items, for the following purposes:
1) Use within motor vehicles built by Licensee or built by subsidiaries
owned more than fifty percent (50%) by Licensee (hereinafter referred to as
"Licensee Motor Vehicles"), or for use as spare parts for such Licensee Motor
Vehicles;
2) The manufacturing and distributing licenses to the Licensed Panther-
TM- Systems shall also be exclusive to HMC for the territory of Korea; and
3) Motor vehicles manufactured pursuant to this Article II may be
exported to any other country.
III. OWNERSHIP OF TECHNICAL DATA AND LICENSED ITEMS
(A) During the term of this License Agreement, the Technical Data and the
Licensed Items shall remain owned by Licensor. In addition to any other rights
it may have, Licensor expressly retains the right to customize a propulsion
system exclusively for a customer other than Licensee, provided that:
(B) Nothing in this License Agreement shall be deemed to constitute a transfer
of title, or any interest other than a license, in the Technical Data or the
Licensed Items.
(C) Any improvements, enhancements, and/or modifications made by Licensee to
the Technical Data or the Licensed Items shall be the property of Licensee.
Licensor shall have a fully-paid, worldwide, non-exclusive license to use,
manufacture, sell, distribute and sublicense such improvements, enhancements,
and/or modifications. The obligations of Licensee to provide Licensor with
information regarding any improvements, enhancements or modifications to the
technology is expressly understood to be ongoing. In furtherance of this
obligation, Licensee will
Page 2 of 8
<PAGE>
meet at least quarterly with Licensor to review the status of transfer of
technical data, as well as progress on improvements, updates or upgrades
thereto.
(D) Any improvements, enhancements, and/or modifications made by Licensor to
the Technical Data shall be the property of Licensor. Licensee shall have such
license rights in the improvements, enhancements, and/or modifications made by
Licensor as have been granted to Licensee in Article II above. The obligations
of Licensor to provide Licensee with information regarding any improvements,
enhancements or modifications to the technology is expressly understood to be
ongoing. In furtherance of this obligation, Licensor will meet at least
quarterly with Licensee to review the status of transfer of technical data, as
well as progress on improvements, updates or upgrades thereto
(E) The parties agree to cooperate with and to assist each other in protecting
the intellectual property rights to the Technical Data, the Licensed Items, and
any improvements, enhancements, and/or modifications made thereto by Licensee or
Licensor, including assistance in filing for patent protection worldwide. The
parties agree that this is one of the material terms of this License Agreement,
and each recognizes the importance of protecting the intellectual property and
providing assistance in filing for patent protection worldwide. Each party
further agrees that these obligations are expressly understood to be ongoing
throughout the term of this License Agreement.
IV. DISCLOSURE OF TECHNICAL DATA
(A) Licensor shall supply the Technical Data to Licensee as requested by
Licensee during the term of this License Agreement. Unless the parties shall
otherwise agree, the Technical Data shall be supplied in written form at the
office of Licensor located in Torrance, California. In addition, Licensor shall
also supply to Licensee identification listings of basic manufacturing and
inspection equipment for use by the latter in connection with the development,
assembly and manufacture of Licensed Items.
(B) In no event shall Licensor disclose or supply any Technical Data to
Licensee on or after the date of termination of this License Agreement. All
Technical Data to be supplied under the terms of this License Agreement shall be
in the language and the system of measures used by Licensor.
(C) The Technical Data is confidential. Licensee shall preserve and protect
the confidential nature of the Technical Data, and accordingly shall not
disclose the Technical Data to third parties without the written consent of
Licensor. Said consent will not, however, be required in order to disclose the
Technical Data to the following parties, provided that, in each case, said
parties shall agree in writing that (i) the Technical Data will only be used to
develop, assemble, and manufacture Licensed Items under this License Agreement,
and (ii) the Technical Data shall not be disclosed to third parties.
Page 3 of 8
<PAGE>
1. To those of their respective employees necessary to enable Licensee
and/or Licensee's designated manufacturer to manufacture and assemble Licensed
Panther-TM- Systems and Licensed Components.
2. To suppliers of Licensee and/or Licensee's designated manufacturer to
the extent necessary to enable such suppliers to deliver to Licensee and/or
Licensee's designated manufacturer the materials and components required to
manufacture and assemble Licensed Components and Licensed Panther-TM- Systems.
3. To subcontractors and sub-subcontractors of Licensee and/or Licensee's
designated manufacturer to the extent necessary to enable such subcontractors
and sub-subcontractors to perform work required to manufacture and assemble
Licensed Components and Licensed Panther-TM- Systems.
The disclosures permitted under (1), (2) and (3) above of this Article IV shall
not relieve Licensee, or permitted third parties under this License Agreement,
of the obligation to maintain the Technical Data in confidence.
(D) Notwithstanding the foregoing, the obligation provided for in this Article
IV shall not apply to any information: 1) which is already known to Licensee at
the time of disclosure; or 2) which becomes lawfully known to the public through
sources other than Licensee; and 3) which is received by Licensee from a third
party where the disclosure by the third party is not in violation of any law or
contract.
V. TECHNICAL ASSISTANCE
(A) Licensor shall use its reasonable efforts to furnish, upon written request
of Licensee, the services of engineers, and/or technicians ("technicians") in
Korea to assist Licensee in acquiring knowledge and training relating to the
development or assembly of Licensed Panther-TM- Systems and manufacture of
Licensed Components in accordance with the Technical Data (hereinafter referred
to as "Technical Assistance"). Such technicians shall be made available to
Licensee for reasonable periods of time throughout the term of this License
Agreement. Subject to the agreement on the terms of visit, Licensee agrees to
pay for the out-of-pocket expenses incurred by such technicians in providing
said services, such expenses to include airfare, room and board.
(B) Licensor shall permit a reasonable number of Licensee's employees to visit
the plants of Licensor for reasonable training periods to enable Licensee's
employees to gain knowledge with respect to the assembly of Licensed Panther-TM-
Systems and the manufacture of Licensed Components in accordance with the
Technical Data and training program. Licensor and Licensee shall consult and
agree upon the number of Licensee's employees to visit and the duration of the
visits, it being understand that the aggregate duration of all such visits
during any one (1) year
Page 4 of 8
<PAGE>
shall not exceed sixty (60) man-days unless Licensor shall otherwise agree. All
salaries, costs and expenses of Licensee's technicians for such periods of
training shall be paid by Licensee.
(C) All employees or other representatives of either party hereto, while at the
premises of the other party, shall comply with all the then regularly
established and existing rules and regulations of such other party.
VI.INDEMNITIES
(A) Licensor shall not be liable to Licensee for any claim by any third party
for personal injury or property damages based on breach of warranty or products
liability allegedly due to a defect in a motor vehicle manufactured by HMC and
using the Technical Data or Technical Assistance transferred under this
Agreement. Specifically, Licensor shall not be liable for claims of personal
injury or damage to property based on the design, manufacture, or assembly of
Hyundai motor vehicles utilizing the Technical Data or Technical Assistance.
Nevertheless, with respect to a claim made where the claim is based solely on an
alleged defect in the Technical Data or Technical Assistance, Licensor shall
defend and indemnify Licensee with respect to such claim. If a claim is made
where the claim is based on both: (i) an alleged defect in the Technical Data
or Technical Assistance; and (ii) an alleged defect in the design, materials or
workmanship produced by Licensee; then each party shall bear its own costs of
suit and its allocable share of any damages.
(B) Licensor warrants and represents that (i) it is the Licensor and proprietor
of all right, title and interest in and to the Technical Data; (ii) it has the
right and authority to enter into this Agreement and to license the Technical
Data to Licensee in accordance with the terms hereof, and as of the date hereof,
has no actual knowledge of any claim that the Technical Data infringes any
copyright, patent, trade secret or other proprietary rights of any third party,
and (iii) the performance of the terms of this Agreement and of Licensor's
duties to Licensee hereunder will not breach any separate agreement or
arrangement by which Licensor is bound.
(C) Licensor hereby agrees to defend, indemnify and hold Licensee, its
directors, shareholders, agents, officers, employees, authorized assignees and
successors in interest harmless from and against any claims, suits, losses,
damages, judgments, fines, costs, expenses, obligations, recoveries and
deficiencies, including penalties, interests, and reasonable attorney fees, and
all liability that Licensee may incur or suffer resulting from any claim of
infringement of any patent, copyright, trademark, trade secret or any other
intellectual property right of any third party by the Technical Data or
resulting from its use under this Agreement.
(D) Where indemnification is required or appears probable pursuant to
paragraphs (A) and (C) herein, the Licensee shall provide prompt written notice
to the Licensor, and cooperate reasonably and
Page 5 of 8
<PAGE>
at the Licensor's expense with the Licensor. Licensee shall not settle any
claim hereunder, without the Licensor's prior approval. The foregoing rights to
indemnification are contingent upon the Licensee: (i)promptly notifying the
Licensor in writing; (ii) allowing the Licensor, at Licensor's expense, to
direct the defense or settlement of such claim or suit; and (iii) giving to the
Licensor, at the Licensor's expense, reasonable information and assistance for
such defense or settlement, including providing such witnesses for testimony as
may reasonably be required.
(E) The indemnity provisions herein shall continue throughout the term of this
Agreement and shall survive any termination or expiration of this Agreement.
VII. ROYALTIES
In consideration for the rights granted to Licensee hereunder, Licensee agrees
to pay a fee to Licensor in the total sum of $2 million. At Licensor's request,
$1.85 million of said fee shall be paid by Licensee to Licensor within ____ days
of the Effective Date of this License Agreement. The remaining $150,000 portion
of said $2 million fee shall be paid on a periodic installment basis as follows:
a $25,000 payment by Licensee to Licensor on or before the anniversary of the
Effective Date of this License Agreement, through and including the sixth
anniversary of this License Agreement, for a total of $150,000 in installment
payments (6 x $25,000).
VIII. BOARD MEMBERSHIP
Licensor hereby agrees to take such steps as may be required to appoint a person
designated by Licensee to the Board of Directors of Licensor or as an Observer
to said Board, as Licensee may elect in its sole discretion, such appointment to
be effective within ______ days of the execution of this Agreement. Licensor
also hereby agrees, during the term of the Agreement, to provide Licensee
(either through Licensee's designee serving on the Licensor's Board of Directors
or otherwise upon the Licensee's written request to the Licensor) with prompt
delivery of, or access to, the Licensor's corporate, business, accounting and
financial information and documents, including but not limited to all
information and documents made available or discussed at meetings of the
Licensor's Board of Directors, all documents and reports filed or proposed to be
filed by the Licensor with any executive, legislative, administrative or
judicial office or agency; and all corporate minutes, articles of incorporation,
bylaws, contracts, agreements, shareholder lists, correspondence, press
releases, financial statements, books and records, and other documents of the
Licensor (collectively "Information"); provided, however, that Licensee shall
hold in strict confidence all Information which has not yet been made generally
available to the public and shall not engage, directly or indirectly, in any
transaction involving securities of the Licensor while in possession of
Information which is material and has not yet been made generally available to
the public.
Page 6 of 8
<PAGE>
IX. TRADEMARKS AND PUBLICITY
(A) Nothing in this License Agreement shall be construed to authorize the use
by Licensee of any trademarks or other distinctive marks or signs owned by
Licensor unless prior approval in writing is received from Licensor. Licensee
shall only utilize its own trademarks. Licensee may, if it so elects, affix to
any Licensed Item made by Licensee under this License Agreement such marks as
the parties may agree upon in writing.
(B) Notwithstanding anything contained in this License Agreement to the
contrary, the parties shall have the right to use the trademarks of the other
parties in connection with announcements regarding the relationship of the
parties. No such announcement shall be made, however, without the prior consent
of the other party. Consent of the other party shall be deemed to have been
given if a written copy of the notice is provided to the other party, and such
party does not object in writing to such announcement. Neither party shall
unreasonably withhold its consent to such announcements.
X. FAILURES AND DELAYS IN PERFORMANCE
Neither Licensor nor Licensee shall be liable in damages or otherwise for any
delay or default in performance under this License Agreement where such delay or
default is due to any cause beyond its control or is caused by war, strikes,
other labor trouble, shortage of labor or material, riots, fires, floods, public
calamity, transportation difficulties, or by an act or omission of any
governmental authority.
XI. TERM AND TERMINATION
(A) This License Agreement shall be effective from the date when this License
Agreement is signed by the parties hereto ("Effective Date") and continue in
effect until December 31, 2010.
(B) Without limiting any other rights either party may have, it is specifically
understand that:
1) In the event of either party's dissolution, or the liquidation of
either party's assets, or the filing of a voluntary petition in bankruptcy, or
the filing of an involuntary petition in bankruptcy that is not dismissed within
sixty (60) days after filing; or
2) In the event either party breaches any material term hereunder more
than twice in any twelve (12) month period and the defaulting party has received
written notice of each breach; then the other party shall have the right, at
its sole option and upon written notice to the bankrupt and/or defaulting
party, to terminate this License Agreement immediately.
(C) The parties agree and acknowledge that this License Agreement constitutes,
and throughout its term shall continue to be, an executory contract under which
Licensor is a licensor of a right to
Page 7 of 8
<PAGE>
intellectual property, pursuant to 11 U.S.C. Section 365(n), and therefore that
this License Agreement is, in the event of a future bankruptcy filing against
Licensor, subject to the provisions of 11 U.S.C. Section 365(n), and
accordingly, in such event, Licensee would have the rights and privileges
enumerated in 11 U.S.C. Section 365(n).
XII. CONSEQUENCES OF TERMINATION
Upon termination of this License Agreement for any reason, except breach of its
terms by Licensee, Licensee shall have a permanent, fully-paid license to the
Technical Data, under the same terms as set forth in Article II, without any
additional payments. Licensor shall retain title and ownership to the Technical
Data. If Licensee breaches the License Agreement, all Technical Data shall be
returned to Licensor. Licensee shall have no rights to improvements,
enhancements, or modifications to the Technical Data or Licensed Items made by
Licensor subsequent to the termination of this License Agreement.
XIII. ASSIGNMENT AND SUBLICENSE RIGHTS
Except as otherwise provided in this License Agreement, Licensee shall not
assign or sublicense its rights under this License Agreement.
Licensee may appoint subcontractors as its subcontractors to undertake the
manufacture or assembly of Licensed Components.
XIV. DISCLAIMER OF AGENCY
This License Agreement shall not constitute Licensee as the legal representative
or agent of Licensor, nor shall Licensee have the right or authority to assume,
create or incur any liability or any obligation of any kind, express or implied,
against, or in the name of, or on behalf of, Licensor.
XV. GENERAL PROVISIONS
(A) Title and Subtitles. The titles of the Articles and Paragraphs of this
License Agreement are for the convenience of reference only, and are not to be
considered in construing this License Agreement.
(B) Counterparts. This License Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Page 8 of 8
<PAGE>
(C) Entire Agreement. This License Agreement is the entire agreement between
the parties hereto with respect to the subject matter hereof, and supersedes all
documents and correspondence with respect to such subject matter prior to the
date hereof. No amendment to this License Agreement shall be effective unless
in writing and signed by all parties hereto.
(D) Waiver. The failure of a party to insist on the strict performance of any
provision of this License Agreement or to exercise any right, power, or remedy
upon a breach hereof shall not constitute a waiver of any provision of this
License Agreement or limit the party's right thereafter to enforce any provision
or exercise any right.
(E) Notice. Any notice, payment, report or other communication required or
permitted to be given by one party to any other party by this License Agreement
shall be in writing and either (i) served personally on the other party, (ii)
sent by express, registered or certified first class mail, postage prepaid,
addressed to the other party or parties at its/their address indicated next to
their signatures below, or to such other address as any addressee shall have
theretofore furnished to the other parties by like notice, (iii) delivered by
commercial courier to the other party, or (iv) sent by facsimile with the
original sent by express mail. Such notice shall be deemed received on the
second day after transmittal if sent by one day courier together with a
transmission of such notice by facsimile if the recipient has the capability to
notice a facsimile at its address, and if sent by other methods shall be deemed
received upon receipt.
(F) Governing Law. This License Agreement has been entered into in California,
and shall be governed by the laws of the State of California, United States of
America.
(G) Arbitration. All disputes arising in connection with this License
Agreement shall be finally settled under the rules of Conciliation and
Arbitration of the International Chamber of Commerce ("ICOC") by one or more
arbitrators appointed in accordance with ICOC rules. The place of arbitration
shall be the country of the respondents.
IN WITNESS WHEREOF, the parties have executed this License Agreement as of the
date first above stated.
Hyundai Motor Company
By:
Hyundai Electronics & Industries Co., Ltd.
By:
Page 9 of 10
<PAGE>
U.S. Electricar, Inc.
By:
* NOTE:
"Exhibit A" means the drawing tree of Licensed Panther-TM- Systems.
"Exhibit B" means the "Technical Data List" which will be attached to this
License Agreement.
Page 10 of 10
