-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, N9ZV1JoKGbOvEzx2GAwo1dvUNqFyJlvkeJWfgUGD8vp88WnTaYpMNJCH3GIDAHIu x9KHjO3NNYQV8X9ifIwa2g== 0000950144-95-001372.txt : 19950516 0000950144-95-001372.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950144-95-001372 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VECTOR AEROMOTIVE CORP CENTRAL INDEX KEY: 0000830664 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 330254334 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10559 FILM NUMBER: 95539096 BUSINESS ADDRESS: STREET 1: 400 N MARINE AVE CITY: WILMINGTON STATE: CA ZIP: 90744 BUSINESS PHONE: 310-522-5500 MAIL ADDRESS: STREET 1: 7601 CENTURION PKWY SOUTH CITY: JACKSONVILLE STATE: FL ZIP: 32256 10-Q 1 VECTOR AUTOMOTIVE 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended Commission file number March 31, 1995 000-17303 VECTOR AEROMOTIVE CORPORATION (Exact name of registrant as specified in its charter) NEVADA 33-025-4334 (State of Incorporation) (I.R.S. Employer Identification No.) 7601 CENTURION PARKWAY JACKSONVILLE, FLORIDA 32256 (Address of principal executive offices) (904) 645-0505 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Common Stock, $.01 par value per share; 42,379,699 shares outstanding as of May 12, 1995 2 TABLE OF CONTENTS
PAGE PART I Item 1. Financial Statements 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 8 PART II Item 4. Submission of Matters to a Vote of Security Holders 9 Item 5. Other Information 9 Item 6. Exhibits and Reports on Form 8-K 10
3 Vector Aeromotive Corporation Condensed Balance Sheets (Unaudited)
March 31, December 31, 1995 1994 ----------- ------------- Assets - -------------------------------------------------- Current assets: Cash and cash equivalents $ 4,080,966 $ 7,809 Inventories 466,347 286,347 Prepaid expenses 60,913 12,789 Accounts receivable 15,388 50,000 Other receivable 10,281 232,804 ----------- ----------- Total current assets 4,633,895 589,749 Property and equipment 650,132 567,861 Other assets 137,180 137,180 ----------- ----------- $ 5,421,207 $ 1,294,790 =========== =========== Liabilities and Stockholders' Equity - --------------------------------------------------- Current liabilities: Accounts payable $ 432,206 $ 528,170 Accrued expenses 99,619 114,886 Interest payable 47,207 47,207 Note payable to related party 178,200 178,200 Customer deposits 30,000 65,000 ----------- ----------- Total current liabilities 787,232 933,463 ----------- ----------- Contingencies (Note 6) ----------- ----------- Total liabilities 787,232 933,463 Stockholders' Equity Common stock, par value $.01 per share, 423,796 240,463 600,000,000 shares authorized; issued and outstanding: 42,379,699 in 1995 and 24,046,366 in 1994 Capital in excess of par value 31,630,004 26,211,740 Accumulated deficit (27,419,825) (26,090,876) ----------- ----------- Total stockholders' equity 4,633,975 361,327 ----------- ----------- $ 5,421,207 $ 1,294,790 =========== ===========
See accompanying notes to unaudited condensed financial statements. 1 4 Vector Aeromotive Corporation Condensed Statements of Operations (Unaudited)
Three Months Three Months Ended Ended March 31, 1995 March 31, 1994 -------------- -------------- Sales - - Cost of sales - - Gross profit - - Costs and expenses Salaries and wages $ 111,658 $ 94,676 Rental expense 36,659 83,654 Utilities 845 8,550 Research and development 785,181 83,169 Depreciation and amortization 29,590 30,762 Advertising and promotion 3,153 42,432 Professional fees 194,277 315,605 General and administrative 248,333 393,530 ----------- ----------- Total costs and expenses 1,409,696 1,052,378 ----------- ----------- Operating loss (1,409,696) (1,052,378) Other income (expense) Interest and other income 80,747 34,767 Other expense 0 (14,397) ----------- ----------- Net loss ($1,328,949) ($1,032,008) =========== =========== Net loss per share ($0.03) ($0.05) =========== =========== Weighted average common shares outstanding 39,324,144 24,526,629 =========== ===========
See accompanying notes to unaudited condensed financial statements. 2 5 Vector Aeromotive Corporation Condensed Statement of Shareholders' Equity (Unaudited)
Common Stock ---------------------------- Capital in Excess Accumulated Shares Amount of Par Value Deficit Total ------------------------------------------------------------------------------------- Balance, December 31, 1994 24,046,366 $240,463 $26,211,740 ($26,090,876) $ 361,327 Issuance of shares for cash 18,333,333 183,333 5,316,667 5,500,000 Issuance of option to purchase common stock 500,000 500,000 Stock offering costs (398,403) (398,403) Net loss (1,328,949) (1,328,949) ------------------------------------------------------------------------------------ Balance, March 31, 1995 42,379,699 $423,796 $31,630,004 ($27,419,825) $4,633,975 ====================================================================================
See accompanying notes to unaudited condensed financial statements. 3 6 Vector Aeromotive Corporation Condensed Statements of Cash Flows (Unaudited)
Three Months Three Months Ended Ended March 31, 1995 March 31, 1994 -------------- -------------- Cash flows from operating activities: Net loss ($1,328,949) ($1,032,008) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 29,590 54,611 Increase (decrease) from changes in Inventories (180,000) Other receivable 222,523 Prepaid expenses and other assets (13,512) (114,234) Accounts payable (95,964) (113,315) Accrued expenses (15,267) (360,980) Customer deposits (35,000) ----------- ----------- Net cash from operating activities (1,416,579) (1,565,926) Cash flows used in investing activities: Acquisition of property and equipment (111,861) (134,672) ----------- ----------- Net cash used in investing activities (111,861) (134,672) Cash flows from financing activities: Proceeds from issuance of common stock and warrants 6,000,000 2,380,500 Stock offering costs (398,403) ----------- ----------- Net cash from financing activities 5,601,597 2,380,500 Net increase (decrease) in cash and cash equivalents 4,073,157 679,902 Cash and cash equivalents, beginning of period 7,809 2,378,012 ----------- ----------- Cash and cash equivalents, end of period $ 4,080,966 $ 3,057,914 =========== ===========
See accompanying notes to unaudited condensed financial statements. 4 7 NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Notes to Financial Statements contained in the Company's Annual Report on form 10-K for the year ended September 30, 1994. On October 3, 1994 the Company changed its fiscal year-end from September 30 to December 31. A transition report was filed on Form 10-Q for the period ended December 31, 1994. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. 2. Inventories The components of inventory consist of the following:
March 31, Dec. 31, 1995 1994 --------- -------- Raw material $286,347 $286,347 Finished goods 180,000 - -------- -------- Total $486,347 $286,347 ======== ========
During the first quarter of 1995, the Company repurchased one of its Vector W8 automobiles from Lamborghini USA for cash. 5 8 3. Stock Offering Effective as of January 5, 1995, the Company entered into a Share Purchase Agreement and Option Agreement with V'Power Corporation ("VPC). Pursuant to these agreements, the Company issued VPC on January 15, 1995, 18,333,333 shares of Common Stock for $5.5 million and on April 17, 1995 sold to VPC for $500,000 a twelve-month option to acquire an additional 50 million shares of Common Stock for $.43 per share. Fees for legal, investment banking, consulting and advisory services incurred for the stock offering totaling $398,403, were charged against capital in excess of par. 4. Other Receivable In January, 1995, a settlement was reached for $125,385 regarding the March, 1992 complaint against the Company for breach of contract. The balance of the $357,000 appeal bond was returned to the Company. 5. Commitments In November 1994, the Company and automobili Lamborghini, S. p. A. ("Lamborghini") entered into an agreement whereby Lamborghini would develop and sell to the Company, a suitable engine to power the Avtech in exchange for certain consideration of which will be completed during 1995. In addition, the Company shall pay to Lamborghini the cost of tooling used to manufacture the engine. Upon successful development of the engine suitable for installation and operation, the Company also agreed to purchase a minimum number of engines through 1997 for a pre-determined price (subject to increases in cost of production). The Company may, upon prior written notice to Lamborghini, terminate the agreement at any time. 6. Contingencies On March 22, 1993, the Company's Board of Directors (The Board) determined that Gerald A. Wiegert's (the former President of the Company) employment as an officer and employee of the Company should be terminated. Mr. Wiegert disputed the Board's authority to terminate his employment and refused to relinquish control over the Company's assets and operations. This dispute between the Company, acting through its Board and certain executive officers, and Mr. Wiegert is the subject of an ongoing civil lawsuit which was commenced by the Company on March 24, 1993. 6 9 On September 14, 1993, the company obtained a court order confirming the validity of Mr. Wiegert's termination, and control of the Company's assets and business affairs has been returned to the Board. Significant claims made by the Company against Mr. Wiegert, and by Mr. Wiegert against the Company, seeking monetary damages are pending. In the opinion of management, these claims will not have a material adverse effect on the Company's financial condition. Mr. Wiegert also alleges that the Company has failed to pay principal and accrued interest under two promissory notes allegedly payable by the Company to Vector Car, a partnership controlled by Mr. Wiegert. At March 31, 1994, the Company had recorded amounts due relating to the promissory notes mentioned above totaling $178,200 plus accrued interest of $47,207. This claim is being disputed by the Company. In June 1994, an individual and a company (the "Plaintiffs") filed a complaint against the Company in the Los Angeles County Superior Court. The complaint sets forth six claims for breach of contract, fraud, negligent misrepresentation, breach of implied covenant of good faith and fair dealing, restitution and quantum merit. The complaint alleges that Plaintiffs performed services with respect to a public offering and that under the terms of a finder's agreement, the Plaintiffs are entitled to compensation for services allegedly rendered in connection with the public offering. The Plaintiffs are seeking special damages of $155,000 plus interest from August 19, 1991 and general damages in the sum of $500,000 plus interest from August 19, 1991. The Company believes that it will prevail in its defense of this action. In 1994, Mr. Wiegert, as general partner of Vector Car, filed an action alleging that the Company assumed a Vector Car debt to him, in the approximate sum of $325,000. Vector Car has also alleged that the Company has a promissory note due in the amount of $250,000 to Vector Car. The Company will vigorously defend this action believing that it has performed on all agreements with Vector Car. Mr. Wiegert has filed an application with the United States Patent and Trademark Office to register "Avtech" as a trademark. The Company is opposing Mr. Wiegert's application. 7 10 PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION General Development of the Avtech SC Coupe has been the focus of activities during the past quarter. Engine development to satisfy emission and other performance requirements has been continuously undertaken through the design and development contract with automobili Lamborghini in Italy. This work will be concluded on a new prototype vehicle, "EPA2", which will be delivered to Italy on schedule in late May. Chassis and body prototypes have been built to validate the photometric compliance of the lighting systems, the installation of the various sub-systems in the car, and the deployment of the driver and passenger air bag systems. Goals were set at the start of the year to increase the torsional stiffness and simultaneously reduce the weight of the chassis. These goals have been achieved. Based on the plan established at the start of the year, the Company is still in compliance with the prototype build program, leading to a start of production in August with the first vehicles available for sale in October. Results of Operations The Company recorded no automobile sales during the quarter ended March 31, 1995 and 1994. Total costs and expenses for the first quarter of 1995 increased $357,318 or approximately 34% compared to the first quarter of 1994, due to the increased research and development activity. Total costs spent on research and development for the first quarter of 1995 were $785,181 as compared to $83,169 in 1994, an increase of $702,012. Salaries and wages increased by 16,982 or 18% due to recent staffing increases in the administrative department. Rental expense and utilities have decreased $54,700 or 59% in total due to lower costs as a result of relocating the Company's facilities to Florida. 8 11 Professional fees have decreased $121,328 or 38% from the first quarter of 1994 due to the significant amount of legal fees incurred in connection with the Company's litigation with its former President in 1994. General and administrative expenses have decreased by $145,197 or 37% compared to 1994 due to Director's fees totaling approximately $125,000 paid in the first quarter of 1994 to the Company's former Board of Directors. Liquidity and Capital Resources As previously reported, the Company entered into an agreement in January 1995 from which $5.5 million, net of stock offering costs, was received. As of March 31, 1995, the balance of the Company's cash and equivalents is approximately $4 million. Cash used during the first quarter of 1995 was primarily for engineering research and development and tooling. The Company remains on target for production and sale of the Avtech SC Coupe in the fall of this year, and believes that the remaining funds are sufficient to support its planned operations during the remainder of this year. PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders of the registrant was held on March 29, 1995. At the meeting, the shareholders approved by a vote of 15,329,300 for, 82,490 against and 21,310 abstaining the amendment of the registrant's Articles of Incorporation to increase the number of authorized Common Shares of the registrant from 60 million shares to 600 million shares. ITEM 5. OTHER INFORMATION Effective April 18, 1995, pursuant to the previously reported Share Purchase Agreement with V'Power Corporation ("VPC") dated January 5, 1995, the registrant completed the issuance to VPC of a twelve-month option to purchase 50 million of the registrant's Common Shares at a price of $.43 per share. As a result of this transaction, VPC currently beneficially owns approximately 85% of the registrant's outstanding Common Shares. 9 12 ITEM 6, EXHIBITS AND REPORTS ON FORM 8-K Exhibits 3.01 Amendment effective April 13, 1995 to the registrant's Articles of Incorporation. 10.01 Agreed contract between Vector Aeromotive Corporation and automobili Lamborghini, S.p. A. for Engine Development Program and Engine Purchase Agreement. 27.01 Financial Data Schedule. 10 13 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VECTOR AEROMOTIVE CORPORATION By /s/ D. Peter Rose -------------------------------- D. Peter Rose President /s/ Sultaman G. Lubis --------------------------------- Sultaman G. Lubis Chief Financial Officer, Treasurer EX-3.01 2 CERTIFICATE OF AMENDMENT 1 EXHIBIT 3.01 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF VECTOR AEROMOTIVE CORPORATION Pursuant to a written consent signed by all of the members of the board of directors effective on January 30, 1995, Vector Aeromotive Corporation, a corporation organized under the laws of the State of Nevada, by its president and secretary does hereby certify: 1. The name of the corporation is Vector Aeromotive Corporation. 2. The Corporation has received cash or other consideration in connection with the issuance of outstanding shares. 3. That the board of directors of said corporation passed a resolution declaring that the change and amendment in the articles of incorporation hereinafter set forth is advisable, and directed that the change and amendment be submitted to shareholders of the corporation at the next annual meeting of shareholders for approval. 4. That thereafter, on the 29th day of March, 1995, upon notice given to each shareholder of record entitled to vote on an amendment to the articles of incorporation as provided by law, an annual meeting of the shareholders of the corporation was held, at which meeting, the holders of 15,433,100 Common Shares, representing at least a majority of the voting power, were present in person or represented by proxy; that the number of shares of the corporation outstanding and entitled to vote on the adoption of said amendment was 24,046,366; that 15,275,500 shares, constituting at least a majority of the shares outstanding and entitled to vote thereon, voted in favor of such change and amendment, such change and amendment being as follows: Section 1 of Article V of the Articles of Incorporation is amended in its entirety to read as follows: ARTICLE FOUR Section 1. The total number of shares which the Corporation shall have authority to issue is Six Hundred five Million (605,000,000) shares, of which Six Hundred 2 Million (600,000,000) shall be common shares, par value $.01 per share (hereinafter referred to as "Common Shares"), and Five Million (5,000,000) shares shall be preferred shares, par value $.10 per share (hereinafter referred to as "Preferred Shares"). WE, THE UNDERSIGNED, do make and file these amendments to the articles of incorporation, hereby declaring and certifying that the facts herein are true, and accordingly have hereunto set our hands this 29th that of March, 1995. VECTOR AEROMOTIVE CORPORATION By: Robert A. Braner, President -------------------------------- Robert A. Braner, President By: Richard J. Aprahamian, Secretary -------------------------------- Richard J. Aprahamian, Secretary STATE OF FLORIDA COUNTY OF DUVAL On this 29th day of March, 1995, before me, a Notary Public, personally appeared Robert A. Braner, and Richard Aprahamian, who acknowledged that they executed the above instrument. [Seal] Ellen P. Starr ------------------------------ Notary Public My commission expires ELLEN P. STARR ------------------------------ 2 3 STATE OF NEVADA SECRETARY OF STATE I hereby certify that this is a true and complete copy of the document as filed in this office April 14, 1995 Dean Heller ---------------------------- DEAN HELLER SECRETARY OF STATE By D. Farmer ------------------------- EX-10.1 3 ENGINE DEVELOPMENT PROGRAM 1 EXHIBIT 10.1 ENGINE DEVELOPMENT PROGRAM AND ENGINE PURCHASE AGREEMENT THIS ENGINE DEVELOPMENT PROGRAM AND PURCHASE AGREEMENT ("Agreement") is made as of the 1st day of November, 1994, by and between AUTOMOBILI LAMBORGHINI S.p.A., a corporation ("Lamborghini"), located at 40019 Sant'Agata Bolognese (BO), Via Modena 12, Italy, and VECTOR AEROMOTIVE CORPORATION, a corporation ("Vector"), located at 444 Quay Street, Wilmington, California 90744 USA. RECITALS A. Vector manufactures and sells high performance sports cars and it requires an engine to power its Avtech vehicle ("Avtech"). B. Lamborghini manufactures and sells high end luxury sports cars and high performance Diablo V-12 engines ("Diablo Engine"). C. Vector desires to enter into an engine development program ("Program") with Lamborghini wherein Lamborghini will make modifications to its Diablo Engine and to sell Modified Engines to Vector under the terms and provisions of this Agreement. In consideration for the mutual promises, covenants, and conditions contained herein the parties agree as follows: 1. ENGINE DEVELOPMENT Vector and Lamborghini agree to develop the Modified Engine for use in the Avtech. The Joint Program will include all modification to the Diablo Engine and components for installation into the Avtech, including, but not limited to, the design and development of a new oil sump, inlet manifolds, bell housing, exhaust manifold and catalysts, cooling systems, electrical system, installation pipings, and engine mounting. 2. ENGINE DEFINITION The definition of the engine and its components is described in Exhibit "A" together with the overall plan attached hereto and incorporated herein by reference. Page 1 2 3. PHASES OF PROGRAM Phase 1 Design and drawings plus the assembly of three complete engines. Phase 2 Installation of the engine in the Avtech. Phase 3 Laboratory emission tests. Phase 4 EPA and CARB homologation MY96 and OBDII conformity. The responsibility of Lamborghini and Vector shall be hereinafter designated in this agreement. 4. DESIGN AND DEVELOPMENT TESTING Vector and Lamborghini shall be responsible for performing design, development and testing of the Modified Engine in accordance with the Schedule marked Exhibit "B" attached hereto and incorporated herein by reference. 5. MODIFIED ENGINE DESIGN AND TESTING Lamborghini and Vector shall design and test the Modified Engine. A schedule containing the tasks to be performed, the dates of performance, an explanation of the test, the cars being tested, and the responsibilities of Lamborghini and Vector are set forth on Exhibit "C" attached hereto and incorporated herein by reference. 6. POWERTRAIN TESTING Lamborghini and Vector shall each have engineering responsibilities and test responsibilities respecting the powertrain testing, which shall include EPA, CARB, and OBD II conformity. A schedule of each test to be performed, an explanation of the test, and the assignment of engineering responsibility is set forth on Exhibit "D" attached hereto and incorporated herein by reference. Page 2 3 7. AVTECH FMVSS SCHEDULE Vector shall be responsible for and shall perform the FMVSS tasks according to the schedule set forth on Exhibit "E" attached hereto and incorporated herein by reference. 8. COOPERATION AND COORDINATION/PROGRAM MANAGER The performance by Vector and Lamborghini of their duties shall require extensive coordination and cooperation between Lamborghini and Vector. To facilitate that cooperation and coordination, Vector and Lamborghini shall each appoint a program manager to represent it concerning the Program. Initially, the program managers appointed by the parties are as follows: Lamborghini's Program Manager: Massimo Ceccarani Vector's Program Manager: Colin Spooner The parties shall each have the right to change their program manager upon written notice to the other party. 9. DELIVERY OF VEHICLES To enable Lamborghini to perform its duties under this Agreement, Vector agrees to deliver to Lamborghini the following vehicles on or before the dates set forth beside each vehicle:
Vehicle Date of Delivery ------- ---------------- EPA1 August 20, 1994 EPA2 January 1, 1995 EPA3 February 10, 1995
10. TERM OF PROGRAM The Program shall commence upon execution of this Agreement by Lamborghini and shall be completed on or before ten (10) months thereafter. Page 3 4 11. COST AND PAYMENT OF ENGINE DEVELOPMENT AND CERTIFICATION In consideration for the work to be performed by Lamborghini in connection with the Program, including certification, and all labor and materials, directly or indirectly related to the Program, Vector shall pay to Lamborghini the sum of [*$_____] payable in twelve (12) monthly installments of [*$______] each, with the first payment upon execution of this agreement by Lamborghini and Vector. 12. TOOLING Lamborghini shall produce tooling for machinery which shall be used for the manufacture of the Modified Engine. In consideration for the tooling, Vector shall pay to Lamborghini the agreed cost of tooling, i.e. [*$_______] additional cost for casting tooling will be incurred subsequent to approval after 50 units. Costs to be reviewed prior to setting down the casting tooling. Payment shall be made thirty (30) days after the completion of the tooling. 13. PURCHASE OF MODIFIED ENGINES Upon successful development of the Modified Engine suitable for installation and operation in the Avtech, Vector agrees to purchase a minimum of Modified Engines on the following schedule: June 1, 1995 through September 30, 1995 12 Pre-production Modified Engines. Oct. 1, 1995 through September 30, 1996 48 Modified Engines. Oct. 1, 1996 through September 30, 1997 144 Modified Engines. Vector will place its order for the Modified Engines with its standard purchase order form. 14. ADDITIONAL QUANTITY OF ENGINES Vector shall have the right to purchase from Lamborghini additional Modified Engines prior to September 30, 1997 according to the terms and conditions of this Agreement. *Confidential treatment is sought under Rule 24b-2. Page 4 5 15. PURCHASE PRICE OF MODIFIED ENGINES 15.1 The purchase price of each Modified Engine shall be *$ excluding warranty, product liability, obsolete materials and direct transportation, and each purchase order by Vector must be for a minimum of 50 Modified Engines per year. In case Avtech falls below 50 units per year, Lamborghini has the right to renegotiate the price with the view of increasing the price to offset the lower volume. 15.2 All prices are Automobili Lamborghini ex-factory Sant'Agata and will be set at an exchange rate of LIT 1650/$. Exchange differences will be invoiced by Lamborghini every three months. Packing not included. The price will be reviewed annually to reflect increases in cost. Vector will pay any agreed excess costs for the initial twelve pre-production engines. 15.3 Prices for all Modified Engines are exclusive of all federal, state, and local excise, sales, use and similar taxes. Consequently, in addition to the price specified, the amount of any present or future excise, sales, use, personal property or similar taxes applicable to the sales or use of the Modified Engines shall be paid by the Buyer and shall be additional items on the invoices. 15.4 Vector shall pay all required import duties, licenses, fees and taxes in addition to the prices stated herein. 15.5 Vector and Lamborghini will examine their individual product liability insurer costs with the objective of reducing these costs by amalgamating product liability insurance on the Lamborghini engine with that on the Vector car. The finalized cost of the Lamborghini engine insurance will be charged to Vector plus a 10% admin. charge. 16. INVOICE TERMS 16.1 Payment to Lamborghini for the first 50 engines shall be by way of telegraphic transfer when engines are ready for shipment. Thereafter payment shall be by irrevocable letter of credit cashable upon presentation of bill of lading. Letter of credit drawn up initially for 25% of ordered value increasing to 75% six months prior to engine scheduled ship date, and increasing to 100% two months prior to engine scheduled ship date. 16.2 All payments are to be made in full, on or before the due date, in U.S. dollars to Lamborghini at its address as shown on the face of this Agreement. *Confidential treatment is sought under Rule 24 b-2. Page 5 6 17. SHIPMENT 17.1 Purchase Orders 17.1.1 Shipment of Modified Engines shall be made only against written purchase orders issued by Vector. 17.1.2 The delivery date for Modified Engines to be shipped under this Agreement shall be specified by Vector in the written purchase order transmitted to Lamborghini. Each purchase order shall specify the exact number of Modified Engines to be delivered and shall specify a delivery date which shall be at least ten (10) months after the date of receipt by Lamborghini of such purchase order and which delivery date shall not be beyond the date specified in Paragraph 14 of this Agreement. 17.2 Modification of Delivery Date 17.2.1 Vector shall have the right upon prior written notice six months in advance to Lamborghini to reschedule a delivery date specified in any purchase order issued pursuant to Section 17.1 of this Agreement, but such rescheduling shall be permitted only plus or minus 20% of schedule. And two months in advance plus or minus 5% of schedule. Any changes of schedule outside these parameters will attract a penalty charge which will be calculated on the basis of unrecoverable agreed costs incurred by Lamborghini. 17.2.2 Anything else in this Paragraph 17.2 to the contrary notwithstanding, the Buyer shall not have the right to schedule or reschedule delivery to a date beyond December 31, 1997. 17.3 Cancellation of Purchase Order 17.3.1 Prior to shipment, Vector shall have the right to cancel a purchase order issued pursuant to Paragraph 17.1 of this Agreement in its entirety upon written notice to Lamborghini accompanied by the payment to Lamborghini of a cancellation charge calculated as the cost to Lamborghini of stock purchased and value of WIP related to the purchase order canceled. 17.3.2 Vector and Lamborghini will examine ways by which Lamborghini will receive financial assurances (e.g. bank guarantee) from Vector to cover Lamborghini's exposure in the event of cancellation by Vector of the contract for reasons beyond the control of Vector. The result of this examination will be implemented at the end of the initial 15 months of the program. Page 6 7 18. CONTINGENCY Neither party will be liable if performance is delayed or prevented by reasons beyond reasonable control including, but not limited to, acts of God, delays caused by the other party, judicial action, accidents, acts of governmental authority, acts of a public enemy, earthquake, fire, floods, epidemics, storm, quarantine restrictions, strikes, or other labor difficulties including work stoppages caused by jurisdictional and similar disputes, delays of carriers or suppliers, insurrection or riots, acts of sabotage, governmental priorities, freight or transportation embargoes, unusually severe weather, accidents or explosions, war, rebellion, major equipment breakdowns, volunteer or mandatory compliance with any governmental act, regulation or request, inability to obtain or retain approval of federal, state, or local authority required for the construction or shipment of the Modified Engine or for delays of subcontractors or suppliers due to such reasons, acts of omissions or of other causes beyond the other party's control or without the fault or negligence of the other party. 19. TERMINATION 19.1 Termination for convenience Vector may upon prior written notice to Lamborghini terminate this Agreement at any time and for any reason. In the event of any such termination, Vector's liability for such termination shall be cancellation charges calculated at the cost to Lamborghini to stock purchased and value of WIP related to this Agreement. 19.2 Termination for Default Each party may terminate this Agreement for reason of default on the part of the other party and if Vector terminates this agreement due to the default of Lamborghini, Vector shall not be liable for cancellation charge. A party may terminate this Agreement pursuant to this Section 19.2 only if it shall have given the other party at least ninety (90) days prior written notice as to such default and only if such default shall not have been remedied by the other party within such ninety (90) day period and such additional time, if any, is reasonably necessary to cure such default. 20. ACCEPTANCE TESTS AND TECHNICAL ASSISTANCE 20.1 If any of the Modified Engines delivered to Vector hereunder shall, upon delivery, fail to successfully meet the specifications, if any, specified in writing by Vector and agreed to by Lamborghini in connection with this Agreement, then in such event, the Seller, after prompt written or telegraphic facsimile notice of such failure from the Buyer, shall, either: Page 7 8 20.1.1 Provide field service and/or technical personnel necessary to correct the defect within thirty (30) working days from the day following the date of the receipt by Lamborghini of the notice of such failure, or 20.1.2 Rectify the defective Modified Engine in order to correct the defect. 20.1.3 Have defective engine returned to Lamborghini at the discretion of Lamborghini. 20.1.4 Lamborghini shall make available training sessions for Vector's service staff at Vector's cost. 20.2 Lamborghini shall bear the cost and expenses of all repairs made pursuant to this Paragraph 20.1. However, if upon examination of the Modified Engine, Lamborghini shall determine that the malfunction, defect or damage was a result of the action or failure, in whole or in part, of Vector or its personnel or agents, then in such event all costs and expenses incurred by Lamborghini shall be promptly paid by Vector. If Vector disagrees with the findings of Lamborghini, an arbitrator will be mutually appointed and will decide fault and responsibility. 20.3 In the acceptance of Modified Engines delivered hereunder, Lamborghini will perform the then-current versions of its acceptance tests on all Modified Engines delivered under this Agreement. Vector may request notification by Lamborghini one week in advance of each such test and may have a reasonable number of representatives present, at its own expense, to observe performance. 21. PRODUCT DOCUMENTATION Lamborghini shall provide Vector one set of reproducible maintenance documentation excluding only proprietary manufacturing drawings or process specifications. This documentation shall be used solely for the purposes of preparing and updating Vector's maintenance documentation. Lamborghini shall send Vector updated reproducible copies of documentation affected by Lamborghini engineering changes to the equipment. 22. STANDARD PRODUCT WARRANTY Each Modified Engine shall be covered by Lamborghini's standard warranty of one year. And Lamborghini's current warranty rates will apply to all warranty work carried out by Vector. Page 8 9 23. ENGINEERING CHANGES Lamborghini shall notify Vector of any engineering changes affecting the form, fit, or function of Modified Engines to be furnished to Vector hereunder and shall forward such changes to the Buyer. Any such changes shall be approved or rejected by Vector in writing to Lamborghini within thirty (30) days from the date of such notification. If such changes are not rejected in writing within such thirty-day period, the Buyer shall be deemed to have accepted all such changes. 23.1 Lamborghini reserves the right to make changes in design and improvements in the Modified engine without any obligation to install these changes in any of its Modified Engines theretofore manufactured. 24. REPLACEMENT PARTS 24.1 Lamborghini agrees to supply critical replacement parts for all Modified Engines delivered hereunder. Prices for such replacement parts shall be those prices in effect at the time such replacement parts are ordered. Prices will be ex-factory Sant'Agata, Italy. In particular, Vector will hold in stock a basic engine. 24.2 Lists Lamborghini shall provide Vector with a list of recommended replacement parts when requested by Vector in writing. 24.3 Delivery of replacement parts 24.3.1 Lamborghini shall deliver replacement parts within sixty (60) days from the receipt of an order for such parts. 24.3.2 Lamborghini shall use its best efforts to ship replacement parts within seventy-two (72) hours (exclusive of Saturdays, Sundays and holidays) of the receipt of an emergency order for such parts for the Modified Engines, provided that Vector has agreed to maintain and has maintained an adequate level of replacement parts based on levels mutually agreed upon. 25. PATENT INDEMNITY AND PATENT RIGHTS Lamborghini shall defend any suit or proceeding brought against Vector insofar as such suit or proceeding is based on a claim that any Modified Engine or replacement part manufactured and supplied by Lamborghini to Vector hereunder constitutes direct infringement of any duly issued United States patent, provided that Lamborghini is promptly informed and furnished a copy of each communication, notice or other action relating to the alleged infringement Page 9 10 and is given authority, information and assistance (at Lamborghini's expense) necessary to defend or settle said suit or proceeding. Lamborghini shall not be obligated to defend or be liable for costs and/or damages if the infringement arises out of compliance with Vector's specifications or designs, or form a combination with, an addition to, or a modification of the Modified Engine after delivery by Lamborghini. 25.1 The seller shall not be liable for any collateral, incidental or consequential damages arising out of patent infringement. If infringement is alleged prior to completion of delivery of any Modified Engine, Lamborghini may, without being in breach of this Agreement, decline to make further deliveries of such Modified Engine. 25.2 The foregoing states the sole and exclusive liability of Lamborghini for patent infringement and is in lieu of all warranties, express or implied, in regard thereto. 26. CONTINUITY OF SUPPLY 26.1 Lamborghini shall use its best efforts to maintain under conditions providing adequate protection against fire and other hazards, a complete and current duplicate set of "Requisite Documentation" which term as used herein shall include all documentation, drawings, specifications, bills of material, parts lists, manufacture and assembly routines, instructions and all other requisite information in sufficient detail to permit an experienced manufacturer of items similar to Modified Engine and replacement parts sold hereunder to manufacture and assemble the Modified Engine and replacement parts to be supplied by Lamborghini under this agreement. 26.2 It is understood and agreed, without limiting in any respect Lamborghini's obligations to furnish Modified Engines and replacement parts in accordance with this agreement, that in the event Vector is not in default of any provision of this Agreement and Lamborghini shall fail to supply the required Modified Engines and replacement parts within one hundred and twenty (120) days of written notice of default from the Buyer, Lamborghini shall, upon Vector's written request either (a) make such arrangements as it deems necessary to ensure the continuity of the supply of Modified Engines and replacement parts to Vector at a price not greater than the price set forth in this Agreement, or (b) licenses Vector or Vector's designee to manufacture and assemble the Modified Engines and replacement parts; provided, however, that the terms of any such license to Vector or Vector's designee shall be that Vector or such designee shall have the right to manufacture and assemble the Modified Engines and replacement parts solely for Vector and only for such time as Lamborghini or Lamborghini's designee is unable to deliver such Modified Engines and replacement parts Page 10 11 under the terms of this Agreement. Any such licenses shall provide that Vector shall pay to Lamborghini, as compensation therefore, the sum of $1,000 for all Modified Engines and replacement parts so manufactured and assembled. Vector or its designee shall not manufacture or assemble any Modified Engines or replacement parts for any person or entity other than Vector and shall so manufacture and assemble only to the extent to supply the number of Modified Engines and replacement parts which were to be supplied pursuant to this Agreement. 26.3 Vector agrees not to disclose to any other persons any of the proprietary and confidential information disclosed to it by Lamborghini, and will safeguard any such proprietary and confidential information received to the same extent that it safeguards its own proprietary information. Vector agrees to disseminate any confidential and proprietary information of Lamborghini within its own company only to the extent necessary for the contemplated purpose of this Agreement. Vector will defend, and hold harmless Lamborghini for this unauthorized use or disclosure of Lamborghini's confidential and proprietary information. Notwithstanding the above provisions, Vector shall not be liable for disclosure of the proprietary and the confidential information of Lamborghini: (a) After the information becomes public knowledge, or (b) If Vector receives the information from another source who is not bound to protect the information through a confidentiality agreement. In all cases, the Requisite Documentation delivered by Lamborghini to Vector shall remain the sole and exclusive property of Lamborghini. 27. PACKING The Modified Engines and replacement parts shall be packed in the manner in which Lamborghini normally ships such engines and replacement parts for itself and other customers. Any additional handling or preparation for shipment specified by Vector shall be at Vector's expense and subject to acceptance to Lamborghini. 28. LIMITATION OF LIABILITY In no event will Lamborghini or its suppliers or subcontractors of any tier be liable to Vector, in contract or in tort, for any special, incidental, or consequential damages, including but not limited to loss of use, loss of revenue, loss of use of revenue, loss of anticipated profits, costs of capital, and claims of customers. The provisions of this Paragraph will apply, notwithstanding any other provisions of this contract or of any other contract. Page 11 12 29. MODIFICATION IN EQUIPMENT DELIVERED If Vector reconstructs or makes changes in any Modified Engines or replacement parts delivered to it hereunder, Lamborghini will not be liable for warranty claims which may arise. 30. INSURANCE PROVIDED BY VECTOR Vector will provide and maintain insurance (including Transit Insurance, with ocean marine coverage if necessary) or the equivalent thereof, providing protection against physical loss or damage during transit to and subsequently upon arrival at Vector's site to all Modified Engines and replacement parts furnished hereunder, and Lamborghini will be covered as additional insured. Such insurance will be for the full limits of the value of the Modified Engines and replacement parts then at risk, and any deductible amounts will be for the account of Vector. 31. MISCELLANEOUS 31.1 There are no representations or agreements between the parties hereto, other than contained in this Agreement. All negotiations are merged into this Agreement and this Agreement constitutes the entire understanding of the parties and cannot be modified, except by a writing signed by the parties. 31.2 It is expressly agreed that the validity performance and construction of this Agreement will be governed by the internal laws of the State of Florida. Any controversy or claim arising out of or relating to this Agreement, or any breach thereof, shall be settled by arbitration in accordance with the rules then obtaining of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof. 31.3 This Agreement is not assignable by the Buyer without the prior written consent of the Seller. Any attempt of the Buyer to affect such an assignment without such consent shall be void. 31.4 If any provision of this Agreement is or becomes, at any time or for any reason, unenforceable or invalid, no other provision of this Agreement shall be affected thereby, and the remaining provisions of this Agreement shall continue with the same effects as if such unenforceable or invalid provisions shall not have been inserted in this Agreement. 31.5 No Waiver by a party of its rights to enforce any provisions hereof after any default on the part of the other party shall be deemed a waiver of such party's right to enforce each and all of the provisions hereof upon any further or other Page 12 13 default on the party of the other party. The acceptance of payment hereunder shall not be, or be construed to be, a waiver of any breach of any term, covenant or condition of this Agreement. 31.6 Any notice (tender or delivery) to be given hereunder by either party to the other may be effected by personal delivery in writing or by registered or certified mail, postage prepaid, return receipt requested. Mailed notices shall be addressed by written notice in accordance with this paragraph. To Seller: Massimo Ceccarani Gianfranco Venturelli Automobili Lamborghini S.p.A. 40019 Sant'Agata Bolognese (BO) Via Modena 12, Italy To Buyer: Tim Enright, Chief Operating Officer Colin Spooner, Project Engineer Vector Aeromotive Corporation 7601 Centurion Parkway South Jacksonville, FL 32256 31.7 This Agreement sets forth the entire agreement of the parties with respect to its subject matter as of its date and supersedes all prior and contemporaneous negotiations. Page 13 14 31.8 The headings and captions contained in this Agreement shall not be considered to be a part hereof for purposes of interpreting or applying this Agreement, but are for convenience only. LAMBORGHINI: Automobili Lamborghini S.p.A. a corporation By: Gianfranco Venturelli ------------------------------------- Gianfranco Venturelli Title: ----------------------------------- General Manager & Director VECTOR: Vector Aeromotive Corporation a Nevada Corporation By: Sultaman G. Lubis -------------------------------------- Sultaman G. Lubis Title: ----------------------------------- Chief Financial Officer & Treasurer Page 14 EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF VECTOR AEROMOTIVE CORP. FOR THE THREE MONTHS ENDED MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS SEP-30-1995 JAN-01-1995 MAR-31-1995 4,080,966 0 25,699 0 466,347 4,633,895 1,299,207 649,073 5,421,207 787,232 0 423,796 0 0 4,210,179 5,421,207 0 0 0 0 1,409,696 0 0 (1,328,949) 0 (1,328,949) 0 0 0 (1,328,949) (0.03) 0
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