================================================================================
LOAN AND SECURITY AGREEMENT
DATED: As of July 1, 1996
BY AND BETWEEN
NATURAL GAS VEHICLE SYSTEMS, INC.,
A Delaware Corporation,
Borrower
-And-
XXXX X. XXXX,
Lender
================================================================================
THIS LOAN AND SECURITY AGREEMENT (together with any written amendments,
supplements or modifications hereof or hereto from time to time, hereinafter
referred to as this "Agreement"), is dated as of the 1st day of July, 1996, by
and between NATURAL GAS VEHICLE SYSTEMS, INC., a Delaware corporation, having
its principal place of business at 0000 Xxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxxxx
00000 (together with its successors and assigns, hereinafter referred to as the
"Borrower") and XXXX X XXXX, residing at 00 Xxxxx Xxxxx, Xxxxxxx Xxxxx, Xxx
Xxxxxx 00000 (together with his heirs and assigns, hereinafter referred to as
the "Lender").
WITNESSETH
WHEREAS, the Borrower has requested that the Lender provide it with a loan
in the principal amount of FOUR HUNDRED THOUSAND DOLLARS ($400,000.00)
(hereinafter referred to as the "Loan"); and
WHEREAS, the Lender has agreed to make the Loan in accordance with the
terms and provisions of this Agreement and evidenced by that certain Promissory
Note dated on the Closing Date (hereinafter defined) in the principal amount of
FOUR HUNDRED THOUSAND DOLLARS ($400,000.00)(hereinafter referred to as the
"Note").
NOW, THEREFORE, in consideration of the Lender's willingness to make the
Loan to the Borrower, and the Borrower's willingness to perform the duties of
payment and performance set forth in this Agreement, as well as the mutual
promises and covenants set forth herein, and desiring to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I - DEFINITIONS
In this Agreement, unless a different meaning clearly appears from the
context, the following terms shall have the meanings herein specified:
"Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time and any successor statute or
statutes.
"Borrower" shall have the meaning provided in the Preamble of this
Agreement.
"Business Day" shall mean any day excluding Saturday, Sunday and any day
which shall be in New Jersey a legal holiday or a day on which banking
institutions are authorized or required by law-or other government action to
close.
"Closing Date" shall mean the date on which this Agreement is executed and
delivered by the Lender and the Borrower.
-1-
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute, and all regulations, pronouncements or
rulings issued in connection therewith.
"Collateral" means the 1992 Autospin 15" CNC Cylinder Necking Machine lathe
Model A.S.T. 13-80 with H.P. Electro Lodgic CNC Control and all attachments,
substitutions, parts and supplies pertaining thereto, owned by the Borrower.
"Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Event of Default" shall have the meaning provided in Section 7.1 of this
Agreement.
"Fiscal Year" means, with respect to the Borrower, each twelve month period
ending on the 31st day of each December arising during the term of the Loan.
"GAAP" shall mean United States generally accepted accounting principles as
in effect from time to time.
"Indebtedness" includes all items that in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet as at the date as of which debt is to be determined, or to which
reference should be made by footnotes thereto, but also includes reimbursement
obligations, guaranties, endorsements (other than endorsements for collection or
deposit in the ordinary course of business), and other contingent obligations in
respect of, or to purchase or otherwise acquire or advance funds on account of
or otherwise service, obligations of others.
"Interest Rate" means twelve percent (12%) per annum.
"Lien" shall mean any mortgage, security interest, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same effect an
any of the foregoing and the filing of any financing statement or similar
instrument under the UCC or comparable law of any jurisdiction, domestic or
foreign.
"Loan Documents" means this Agreement, together with all Schedules hereto,
the Note, and all other documents or instruments executed and/or delivered by
either Borrower or Lender, or both, hereunder or thereunder or in connection
herewith or therewith from time to time.
"Material Adverse Effect" shall mean a material adverse effect upon (i) the
business, operations, properties, assets, prospects or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a whole, or the
ability of the Borrower to perform, or of the Lender to enforce, any of the
Obligations.
-2-
"Obligations" means (A) the full and timely payment of all amounts due
under the Note and the other Loan Documents, when and as same shall become due
in accordance with the terms hereof and thereof; and (B) the due and timely
performance of all obligations and observance of all covenants of the Borrower
thereunder and under the Note; and (C) the full and timely payment by Borrower
of all amounts due under any document, instrument, or agreement executed in
connection therewith.
"Person" shall mean and include any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or agency, department or instrumentality thereof.
"Subsidiary" of any Person shall mean and include (i) any corporation, 50%
or more of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries, or (ii) any partnership, association, joint
venture or other entity in which such Person, directly or indirectly through
Subsidiaries, is either a general partner or has a 50% or more equity interest
at the time.
"Termination Date" shall mean the earlier of November 30, 1996 or the date
of the Lender's written notice to the Borrower that a Default or Event of
Default has occurred under any of the Loan Documents.
"UCC" shall mean the Uniform Commercial Code as in effect in any relevant
jurisdiction from time to time.
ARTICLE II - THE LOAN
Section 2.1. The Loan. Subject to the terms and conditions hereof, the
Lender agrees to make the Loan to the Borrower on the Closing Date. The
principal amount of the Loan, together with accrued interest thereon at the rate
set forth hereinabove, shall be repaid in the following manner:
a. Commencing on August 1, 1996, and continuing thereafter on the first
(1st) day of each succeeding calendar month (hereinafter the "Monthly Payment
Date"), through and including November 1, 1996, the Borrower shall make payments
of interest only, at the rate described hereinabove on the unpaid principal
amount of the Loan.
b. Thereafter on November 30, 1996 (hereinafter referred to as the "Balloon
Payment Date") the Borrower shall make a final monthly payment consisting of the
entire principal amount of the Loan together with accrued interest thereon
calculated based on the rate of interest described above from the previous
Monthly Payment Date through and including the Balloon Payment Date.
Section 2.2. Cross Collateral/Cross Default. The Borrower acknowledges and
agrees that, in consideration of the Loan and such other financial
accommodations as the Lender has made in the past and/or may make to the
Borrower in the future, the Collateral granted by the Borrower hereunder shall
-3-
serve to collateralize any and all other Indebtedness of the Borrower to the
Lender, whether presently existing or hereafter arising, including without
limitation, that certain debt in the principal amount of $600,000.00 evidenced
by that certain Promissory Note dated April 4, 1996 executed by the Borrower for
the benefit of Lender and pursuant to the terms of that certain Loan and
Security Agreement dated April 4, 1996 by and between the Borrower and the
Lender (hereinafter referred to as the "April Debt"); and the parties further
agree that: (i) an "Event of Default" within the meaning of any loan agreement,
note, security agreement or other document or instrument relating to the April
Debt or any other Indebtedness of the Borrower to the Lender, whether presently
existing or hereafter arising, shall constitute an "Event of Default" hereunder
and under the Loan Documents; and (ii) that an "Event of Default" hereunder or
under any of the Loan Documents, or any other documents or instrument executed
and delivered by the Borrower to the Lender in connection therewith, shall
constitute an "Event of Default" within the meaning of any such other loan
agreement, note, security agreement or other document or instrument.
Section 2.3. Method and Place of Payment. (A) Except as otherwise
specifically provided in Section 2.1 hereof; all payments under this Agreement
and the Note shall be made to the Lender on the date when due and shall be made
in lawful money of the United States of America in immediately available funds
to the Lender's office.
(B) Whenever any payment to be made hereunder or under the Note shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable at the applicable rate during
such extension or, at the election of the Borrower, the Borrower may make such
payment on the last Business Day preceding such non-Business Day and the
applicable interest payments shall be calculated with respect to such Business
Day.
(C) All payments made by the Borrower hereunder and under the other Loan
Documents shall be made irrespective of, and without any reduction for, any set
off or counterclaims.
Section 2.4. Payment of Legal Fee. As additional consideration for the
making of the Loan, Borrower shall pay to the reasonable legal fees and
disbursements of counsel to Lender, by issuance to said firm of by overnight
express delivery service immediately after receipt by the Borrower of the
proceeds of the Loan of a business check payable to the order of counsel to
lender in the amount of such fees and disburesements.
ARTICLE III - THE COLLATERAL
Section 3.1. The Collateral. As collateral security for the due and
punctual payment of the Note and the performance by the Borrower of all of its
Obligations to the Lender under this Agreement and each of the Loan Documents;
and as collateral security for the Borrower's repayment of all sums due, and
performance of all acts required, under any other loan and security agreement,
note, or other document or instrument relating to any other Indebtedness of the
Borrower to the
-4-
Lender, whether presently existing or hereafter arising, the Borrower hereby
grants to the Lender a first priority, security interest and lien in and to the
Collateral.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement, the Borrower
makes the following representations and warranties as of the Closing Date which
shall survive the execution and delivery of this Agreement and the Note.
Section 4.1. Corporate Status. The Borrower (i) is a duly organized and
validly existing corporation in good standing under the laws of the jurisdiction
of its organization, (ii) has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged or
presently proposes to engage, and (iii) has duly qualified and is authorized to
do, business and is in good standing as a foreign corporation in every
jurisdiction in which it owns or leases real property or in which the nature of
its business requires it to be so qualified.
Section 4.2. Power and Authority. The Borrower has the corporate power and
authority to execute, deliver and carry out the terms and provisions of the Loan
Documents and has taken any necessary corporate action to authorize the
execution, delivery and performance by it of such Loan Documents. The Borrower
has duly executed and delivered each such Loan Document, and each such Loan
Document constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally, and by general principles of equity.
Section 4.3. No Violation. Neither the execution, delivery or performance
by the Borrower of the Loan Documents, (i) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality, or (ii) will conflict or be
inconsistent with or result in any breach of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of the Borrower (except pursuant
hereto) pursuant to the terms of any indenture, mortgage, deed of trust,
agreement or other instrument to which the Borrower is a party or by which it or
any of its property or assets is bound or to which it may be subject, or (iii)
will violate any provision of the Certificate of Incorporation and By-Laws of
the Borrower.
Section 4.4. Litigation. There are no actions, suits or proceedings pending
or threatened (i) with respect to the Loan Documents, (ii) the making or the
borrowing of the Loan contemplated in the Loan Documents, or (iii) that could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
Section 4.5. Security Interest and Lien. This Agreement creates, as
security for the Obligations, a valid and enforceable security interest in and a
Lien on the Collateral, in favor of the
-5-
Lender, and subject to no other security interest and Lien other than those set
forth on Schedule 1 hereto. The security interest in and Lien on the Collateral
in favor of the Lender are superior to and prior to the rights of all third
parties except as set forth on Schedule 1 hereto. No further recordings or
filings are or will be required in connection with the creation, perfection or
enforcement of such security interest and Lien.
Section 4.6. Tax Returns and Payments. The Borrower has filed all tax
returns required to be filed by it and has paid all taxes and assessments
payable by it which have become due, other than those not yet delinquent or
those that are reserved against in accordance with GAAP which are being
diligently contested in good faith by appropriate proceedings.
Section 4.7. No Default. The Borrower is not in default under or with
respect to any agreement, instrument or undertaking to which it is a party or by
which it or any of its property is bound.
Section 4.8. Licenses, etc. The Borrower has obtained and holds in full
force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals which are necessary or useful for the
operation of its businesses as presently conducted.
Section 4.9. Compliance with Law. The Borrower is in compliance with all
laws, rules, regulations, orders, judgments, writs and decrees.
Section 4.10. No Liens. No Lien exists upon any of the Collateral except
for the prior Liens listed on Schedule 1 granted by the Borrower to the Persons
listed thereon.
ARTICLE V - COVENANTS
Section 5.1. Information Covenants, The Borrower will furnish to the
Lender:
(A) Notice of Default or Litigation. Promptly and in any event within two
(2) Business Days after the Borrower obtained knowledge thereof, notice of (i)
the occurrence of any Default or Event of Default, (ii) any litigation or
governmental proceeding pending or threatened against the Borrower which could
reasonably be expected to result in a Material Adverse Effect, and (iii) any
other event, act or condition which could reasonably be expected to result in a
Material Adverse Effect.
(B) Monthly Financials. As soon as available and in any event within thirty
(30) days after the end of each of monthly period, a balance sheet of the
Borrower as of the end of such period, and financial statements of the Borrower
for such period, all in reasonable
-6-
detail and all prepared in accordance with GAAP consistently applied and
certified by the chief financial officer of the Borrower;
(C) Annual financial statements. As soon as available the audited financial
statements and balance sheets of the Borrower for fiscal year ending December
31, 1995 all in reasonable detail and all prepared in accordance with GAAP
consistently applied and certified by the chief financial officer of the
Borrower;
(D) Other Information. From time to time, such other information or
documents (financial or otherwise) as the Lender may reasonably request.
Section 5.2. Maintenance of Insurance. The Borrower shall at all times
during the term of this Agreement, maintain insurance on the property and assets
of the Borrower with insurance companies then having a "Best's" rating of A+ or
better or by companies otherwise satisfactory to the Lender, and in all cases
licensed to do business in the State of California in such amounts, in such
manner, and against such loss, damage or liability (including liability to third
parties), as is customary with companies in the same or similar business and
located in the same or similar areas. In all cases, insurance shall include:
(i) Public liability insurance insuring against any and all liability or
claims of liability arising out of, occasioned by, or resulting from
any accident or otherwise resulting in or about any premises occupied
by the Borrower, or resulting from any business activities conducted
by the Borrower, in a minimum amount of $1,000,000.00.
(ii) Property damage and broad form fire and extended coverage insurance in
an amount not less than 100% of the full replacement cost of its
principal place of business located in Long Beach, California, without
depreciation and as to the Collateral and all of its other assets in
an amount not less than $1,000,000.00 of primary coverage without
deduction for depreciation or obsolescence, and insurance insuring
against such other hazards, casualties and contingencies as the Lender
may require;
(iii) Necessary worker's compensation insurance and any insurance that may
be required by law; and
(iv) Business interruption insurance.
Such insurance coverage may be affected under overall blanket or excess
coverage policies of the Borrower and shall be for amounts sufficient to prevent
the Borrower from being co-insurers within the terms of such policy. Each
insurance policy maintained pursuant to this Section 5.2 other than public
liability and working compensation insurance policies shall name the Lender as
loss payee
-7-
and additional insured, and Borrower shall provide an ACCORD Certificate of
Insurance to Lender within fifteen (15) days of the Closing Date which evidences
such loss payee and additional insured status in favor of Lender. At least
thirty (30) days prior to the expiration of any such policy, the Borrower shall
furnish evidence satisfactory to the Lender that such policy has been renewed or
replaced.
In the event of any loss or damage to or taking or condemnation of
Collateral, the proceeds of any insurance policy or condemnation award covering
the same shall, as to their disposition, be and become the sole property and
asset of the Lender, which shall have sole dominion and control thereof, and at
the option of the Lender, shall be applied (1) to pay for the cost of making
such repairs, restorations, reconstructions or replacements of the Collateral
involved as are necessary to repair, restore or reconstruct said assets to
substantially their condition immediately prior to such event or to a condition
of at least equivalent value; or (2) prepay all or, to the extent that proceeds
are insufficient to prepay all, to prepay a portion of the principal balance of
the Loan together with all accrued interest thereon. Any such prepayment of the
Note shall be applied first to accrued interest and then to principal. In the
event of a public liability occurrence, the proceeds of any insurance policy
covering the same shall be applied toward satisfaction of any liability
resulting from such occurrence.
Section 5.3. Certain Meetings. So long as the principal indebtedness
evidenced by the Note shall be outstanding, Borrower shall invite Lender to
attend every meeting of the Finance Committee and the Board of Directors of the
Borrower and shall provide Lender with the same notice as provided to Board or
Committee members for such purpose. In connection therewith, Lender shall
execute and deliver for the benefit of the Corporation such undertakings and
agreements as to confidentiality with respect to matters discussed or materials
disclosed at any such meetings as may be requested from time to time by
Borrower.
ARTICLE VI - NEGATIVE COVENANTS
The Borrower covenants and agrees that on and after the Closing Date until
the Obligations have been indefeasibly paid in full:
Section 6.1. Restriction on Fundamental Changes. Borrower will not, and
will not permit any Subsidiary to: (A) make any substantial change in its
present business or engage in any activities apart from its present business;
(B) dissolve, merge or consolidate with or into any corporation or otherwise
change its identity or corporate structure; (C) sell, lease, transfer, or
otherwise dispose of all or any substantial part of its assets (except in the
ordinary course of business), whether now owned or hereafter acquired; or (D)
change its corporate name or the use of any trade names; or (E) change its chief
executive office; or (F) change the location of the Collateral.
Section 6.2. Leases; Capital Expenditures; Investments. Borrower shall not,
and will not permit any Subsidiary to: (A) create, incur, assume, or suffer to
exist any lease obligation other than lease obligations incurred in the ordinary
course of business of Borrower and its Subsidiaries; (B)
-8-
make any investment in, or make any loan or advance to, any person, partnership,
or corporation, including officers, stockholders, or directors of Borrower; (C)
purchase or otherwise invest in or hold securities, nonoperating real estate, or
other nonoperating assets, except direct obligations of the United States of
America or certificates of deposit or equivalent securities issued by Lender; or
(D) purchase or acquire obligations owed by others.
Section 6.3. Certain Restrictions. The Borrower shall not, and shall not
permit any Subsidiary or any Person controlling the Borrower to enter into any
agreement (other than the Loan Documents) which restricts the ability of the
Borrower or any Subsidiary to: (A) enter into amendments, modifications or
waivers of the Loan Documents, (B) sell, transfer or otherwise dispose of its
assets, (C) create, incur, assume or suffer to exit any Lien upon any of its
property, (D) create, incur, assume, suffer to exist or otherwise become liable
with respect to any Indebtedness, or (E) pay any dividend.
Section 6.4. Year; Fiscal Quarter. The Borrower shall not, and shall not
permit any of its Subsidiaries to, change its Fiscal Year or any of its fiscal
quarters,
ARTICLE VII - EVENTS OF DEFAULT
Section 7.1. Events of Default. Each of the following events, acts,
occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation or law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(A) Failure to Make Payments. The Borrower shall default in the payment
when due of any interest or principal on the Loan or in the payment when due of
any other amounts owing hereunder.
(B) Breach of Representation or Warranty. Any representation or warranty
made by the Borrower herein or in any other Loan Document or in any certificate
or statement delivered pursuant hereto or thereto shall prove to be false or
misleading in any material respect on the date as of which made or deemed made.
(C) Default Under Other Agreements. (i) The Borrower shall default in the
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) of any amount owing in respect of any
Indebtedness (other than the Obligations), or the Borrower shall default in the
performance or observance of any obligation or condition with respect to any
Indebtedness, or any other event shall occur or condition shall exist, if the
effect of such default, event or condition is to accelerate the maturity of any
Indebtedness, or any such Indebtedness shall become or be declared to be due and
payable prior to its stated maturity other than as a result of a regularly
scheduled payment; or (ii) any default or event of default shall occur under any
Agreement to which the Borrower is a party.
-9-
(D) Bankruptcy, etc. (i) The Borrower shall commence a voluntary case
concerning itself under the Bankruptcy Code; or (ii) an involuntary case is
commenced against the Borrower and the petition is not controverted within ten
(10) days, or is not dismissed within thirty (30) days, after commencement of
the case; or (iii) custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of, all or substantially all of the Collateral or other
property of the Borrower or the Borrower commences any other proceedings under
any reorganization, arrangement, adjustment of debt, relief for debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower or there is
commenced against the Borrower any such proceeding which remains undismissed for
a period of thirty (30) days; or (iv) any order of relief or other order
approving any such case or proceeding is entered; or (v) the Borrower is
adjudicated insolvent or bankrupt; or (vi) the Borrower suffers any appointment
of any custodian or the like for its or any substantial part of its property to
continue undischarged or unstayed for a period of thirty (30) days; or (vii) the
Borrower makes a general assignment for the benefit of creditors; or (viii) the
Borrower shall fail to pay, or shall state that it is unable to pay, or shall be
unable to pay, its debts generally as they become due; or (ix) the Borrower
shall call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts; or (x) the Borrower shall by any act or failure to act
consent to, approve of or acquiesce in any of the foregoing; or (xi) any
corporate action is taken by the Borrower for the purpose of effecting any of
the foregoing.
(E) Security. The security interest or Lien granted by the Borrower to the
Lender shall for any reason cease to be in full force and effect, or shall cease
to give the Lender the Liens, rights, powers and privileges purported to be
created thereby including, without limitation, a perfected. priority security
interest in, and Lien on, all of the Collateral in accordance with the terms
thereof.
(F) Judgment. One or more judgments or decrees in an aggregate amount of
$25,000 or more shall be entered by a court or courts of competent jurisdiction
against the Borrower (other than any judgment as to which, and only to the
extent, a reputable insurance company has acknowledged coverage without
reservation of such claim in writing) and (i) any such judgments or decrees
shall not be stayed, discharged, paid, bonded or vacated within thirty (30)
days, or (ii) enforcement proceedings shall be commenced by any creditor on any
such judgments or decrees.
(G) If in the Lender's reasonable judgment, the value of the Collateral so
substantially deteriorates or diminishes, that the Lender reasonably deems the
Obligations to be inadequately secured and Borrower, within two (2) days of
notice by the Lender, neither (i) provides additional collateral, nor (ii)
reduces the amount of the Obligation. Which action, in either such event, is
satisfactory to the Lender.
(H) Any loss, theft, or destruction of, or damage to, any substantial
portion of the Collateral for which there is either no insurance coverage or for
which, in the opinion of Lender, there is insufficient insurance coverage.
(I) Occurrence of any Material Adverse Change in the business operations,
properties or financial condition of Borrower or any Subsidiary.
-10-
(J) Any levy, seizure or attachment upon any collateral by any third party.
(K) Borrower shall in any material respect fail to comply with any statute,
rule, regulation, ordinance, order or any law or judicial decree regarding
Borrower or is premises or assets.
Section 7.2. Rights and Remedies.
(A) Upon the occurrence of any Event of Default, the principal balance of
the Loan and any and all accrued interest thereon and any and all accrued fees
and other Obligations shall automatically become immediately due and payable,
all without presentment, demand, or protest or other requirements of any kind.
(B) Borrower agrees that if an Event of Default hereunder or under the Note
or under any Loan Document shall have occurred and be continuing, then, in
addition to any other rights and remedies provided for herein or which may
otherwise be available, the Lender may without any further demand, advertisement
or notice (except as expressly provided for below or as may be required by
mandatory provisions of law), exercise all the rights and remedies of a secured
party under the UCC (whether or not the UCC applies to the affected Collateral),
and in addition: (i) may apply the moneys, if any, then held by or on behalf of
it as part of the Collateral to the Obligations, and (ii) may sell or otherwise
dispose of the Collateral, or any part thereof, as hereinafter provided. Upon
ten (10) days prior written notice to the Borrower, which notice Borrower
acknowledges is sufficient, proper, and commercially reasonable, sell, lease or
otherwise dispose of the Collateral, at any time and from time to time, in whole
or in part, at public or private sale, without advertisement or notice of sale,
all of which are hereby waived and apply the proceeds of any such sale: (x)
first, to the expenses of the Lender in preparing the Collateral for sale,
selling and the like, including, without limitation, reasonable attorneys' fees
and expenses incurred by the Lender (including fees and expenses of any
litigation incident to the foregoing); (y) second, to the complete satisfaction
of all of the Obligations together with all interest accrued thereon; and (z)
then, to pay any excess to the Borrower. Borrower hereby waives the benefit of
any marshalling statute or similar legal doctrine and agree that the Lender may
exercise its rights against the Collateral and apply the proceeds thereof to any
of the Obligations in any order which the Lender, in its sole discretion, deems
appropriate.
Upon the occurrence and during the continuance of an Event of Default, the
Lender shall have the right, at the expense of the Borrower, to enforce
collection of any amounts payable under any agreement, instrument or other
obligation, to instruct the obligor or obligors on any such agreement,
instrument or obligation to make any payment required by the terms of such
instrument or agreement directly to the Lender and require payment to the Lender
of all such amounts, and to adjust, settle or compromise the amount or payment
thereof in the same manner and to the same extent as the Borrower might have
done. Upon the occurrence and during the continuance of an Event of Default, the
Borrower shall, upon the instruction of the Lender, instruct the obligor or
obligors on each such agreement, instrument or obligation to make any such
payment to the Lender.
-11-
(C) The Borrower agrees to pay all costs of the Lender (including, without
limitation, attorneys' fees, expenses and disbursements) incurred in connection
with the collection of the Obligations and the enforcement by the Lender of its
rights hereunder.
Section 7.3. Remedies Cumulative; No Waiver. Each and every right, power
and remedy hereby given to the Lender shall be in addition to every other right,
power and remedy specifically given under this Agreement or under any other Loan
Document now or hereafter existing at law or in equity, or by statute, and each
and every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by the Lender. All such rights, powers
and remedies shall be cumulative and the exercise or the beginning of exercise
of one shall not be deemed a waiver of the right to exercise of any other or
others. No delay or omission of the Lender in the exercise of any such right,
power or remedy and no renewal or extension of any of the Obligations shall
impair any such right, power or remedy or shall be construed to be a waiver of
any Default or Event of Default or an acquiescence thereto.
Section 7.4. Discontinuance of Proceedings. In case the Lender shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason, then and in every such case,
the Borrower and the Lender shall be restored to their former positions and
rights hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the Lender
shall continue as if no such proceeding had been instituted.
ARTICLE VIII - MISCELLANEOUS
Section 8.1. No Agreement as to Future Borrowing. The Lender expressly
acknowledges and agrees that the Borrower's performance of its Obligations
hereunder or under any Loan Document shall not give rise to any claim by the
Lender or any third-party based on contract, implied contract, reliance or any
other foundation in law or in equity that the Borrower shall be obligated to
consummate or engage in negotiations for any borrowing or other transaction with
the Lender, International Asset Recovery ("IAR"), any respective successor,
assign or subsidiary of the Lender or IAR, or other third-party.
Section 8.2. Payment of Expenses. The Borrower shall pay all reasonable
out-of-pocket costs and expenses of the Lender in connection with the
negotiation, preparation, execution and delivery of the Loan Documents and the
documents and instruments referred to therein, the creation, perfection or
protection of the Lender's Lien in the Collateral (including, without
limitation, reasonable fees and expenses for lien searches and filing and
recording fees), any amendment, waiver or consent relating to any of the Loan
Documents (including, without limitation, reasonable fees and expenses for lien
searches and filing and recording fees), any amendment, waiver of consent
relating to any of the Loan Documents (including, without limitation, as to each
of the foregoing, the reasonable fees and disbursements of counsel to the Lender
any other consultants, advisors and attorneys retained by the
-12-
Lender, including such counsel as shall be an employee of the Lender or an
affiliate of the Lender) and of the Lender in connection with the preservation
of rights under, and enforcement of, the Loan Documents and the documents and
instruments referred to therein or in connection with any restructuring or
rescheduling of the Obligations (including, without limitation, the fees and
disbursements of counsel for the Lender).
Section 8.3. Notices. Any demand or notice required or permitted to be
given hereunder shall be deemed effective when deposited in the United States
mail, and sent by first-class, postage prepaid, by overnight courier, or by
hand, addressed in each case to Lender or to Borrower at their respective
address herein, or to such other address as either party shall designate for
itself in writing to the other party.
Section 8.4. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Borrower, the Lender, all future holders of the
Note and their respective successors, heirs and assigns, except that neither
party to this Agreement may assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the other party.
Section 8.5. Amendments and Waivers. The provisions of this Agreement or
any other Loan Document may only be amended, supplemented, modified, waived,
discharged or terminated by an instrument in writing (and not orally) signed by
all parties hereto.
Section 8.6. Certain Performances. If Borrower fails to perform any
agreement contained herein, the Lender may upon the occurrence and continuance
of any Event of Default itself perform, or cause performance of, such agreement,
and the expenses of the Lender incurred in connection therewith shall be payable
by the Borrower on demand. It is expressly agreed, anything contained herein or
in any other Loan Document to the contrary notwithstanding, that the Borrower
shall remain liable to perform all of the obligations assumed by it with respect
to the Collateral and the Lender shall not have any obligations or liabilities
with respect to any Collateral by reason of or arising out of this Agreement,
nor shall the Lender be required or obligated in any manner to perform or
fulfill any of the Obligations of the Borrower under or with respect to any
Collateral. The Lender shall not have any duty to take any steps to preserve
rights against prior parties with respect to any instruments or chattel paper.
Section 8.7. Law; Submission to Jurisdiction.
(A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND ANY ACTION FOR ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF MAY BE BROUGHT IN THE
-00-
XXXXXX XX XXX XXXXX XX XXX XXXXXX XX OF THE UNITED STATES OF AMERICA FOR THE
DISTRICT OF NEW JERSEY, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
APPELLATE COURTS FROM ANY THEREOF, THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN THE PREAMBLE ABOVE,
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFOREMENTIONED ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, NOTHING HEREIN SHALL EFFECT THE RIGHT OF THE LENDER OR ANY
HOLDER OF THE NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY
OTHER JURISDICTION.
Section 8.8. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instruments.
Section 8.9. Effectiveness. This Agreement shall become effective on the
date on which all of the parties hereto shall have signed a counterpart hereof
and shall have delivered the same to the Lender.
Section 8.10. Headings Descriptive. The headings of the several Sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
Section 8.11. Marshalling Recapture. The Lender shall not be under any
obligation to marshal any assets in favor of the Borrower or any other party or
against or in payment of any or all of the Obligations. To the extent the Lender
receives any payment by or on behalf of the Borrower, which payment or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid, and is repaid, by the Lender to such
Borrower or its estate, trustee, receiver, custodian or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment or repayment, the obligation or part thereof which
has been paid, reduced or satisfied by the amount so repaid shall be reinstated
by the amount so repaid and shall be included within the Obligations of the
Borrower to the Lender as of the date such initial payment, reduction or
satisfaction occurred.
-14-
Section 8.12. Severability. In case any provision in or obligation under
this Agreement or the Note or the other Loan Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality, and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 8.13. Survival. All indemnities set forth herein, including without
limitation as set forth in Section 7.2, shall survive the execution and delivery
of this Agreement and the Note and the making and repayment of the Loan
hereunder.
Section 8.14. Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT
OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING
HEREUNDER OR THEREUNDER.
-15-
IN WITNESS WHEREOF, the Parties hereto have duly executed and delivered
this Agreement as of the date first above written.
Borrower:
NATURAL GAS VEHICLE SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------
Xxxx Xxxxx, President
Lender:
XXXX X. XXXX
/s/ Xxxx X. Xxxx
----------------------------------
-16-
SCHEDULE 1
SECURITY INTEREST AND LIENS
Borrower granted a security interest to Caithness Corporation, a Delaware
corporation, in all of the machinery, equipment and accounts receivable of the
Borrower. Simultaneously with the closing of this Loan, Borrower will file a
UCC-2 financing statement with the Secretary of State of California for the
release of the security interest in the Collateral.
-17-
SCHEDULE 2
INDEBTEDNESS
Loan and Security Agreement dated as of March 8, 1996 by and between
Borrower and Caithness Corporation evidencing Borrower's obligation to Caithness
Corporation which obligation is contingent on a draw by Aluminum Company of
America ("ALCOA") on that certain letter of credit issued by the Bank of New
York on account Borrower for the benefit of ALCOA.
Loan and Security Agreement dated as of April 4, 1996 by and between
Borrower and Lender evidencing Borrower's obligation to repay bridge financing
in the amount of $600,000.00 to the Lender.
-18-
PROMISSORY NOTE
$400,000.00 Long Beach, California
July 1, 1996
FOR VALUE RECEIVED, NATURAL GAS VEHICLE SYSTEMS, INC., a corporation duly
organized and validly existing under the laws or the State of Delaware, having
its principal office at 0000 Xxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxxxx 00000
(together with its successors and assigns, hereinafter referred to as the
"Borrower") hereby promises to pay to XXXX X. XXXX, residing at 00 Xxxxx Xxxxx,
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000 (together with his heirs and assigns,
hereinafter refereed to as the "Lender"), or order, the principal sum of FOUR
HUNDRED THOUSAND DOLLARS ($400,000.00), at the times and in the amounts set
forth hereinafter, and in lawful money of the United States of America, together
with accrued and unpaid interest thereon at an interest rate equal to twelve
percent (12%) per annum.
Capitalized terms in this Note shall have the meanings ascribed in that
certain Loan and Security Agreement bearing even date herewith by and between
the Borrower and the Lender (the "Loan and Security Agreement"). This Note is
the "Note" referenced in, and is subject to and is entitled to the benefits, of,
the Loan and Security Agreement.
Interest on the unpaid principal amount of the Loan shall accrue on the
outstanding principal amount of the Loan from the date hereof, at the rate
prescribed hereinabove. All computations of interest shall be made on the basis
of the actual number of days elapsed and a year consisting of 360 days.
The principal amount of the Loan, together with accrued interest thereon at
the rate set forth hereinabove, shall be prepaid in the following manner:
A. Commencing on August 1, 1996, and continuing thereafter on the first
(1st) day of each succeeding calendar month (hereinafter the "Monthly Payment
Date"), through and including December 1, 1996, the Borrower shall make payments
of interest only, at the rate described hereinabove on the unpaid principal
amount of the Loan.
B. Thereafter on November 30, 1996 (hereinafter referred to as the "Balloon
Payment Date") the Borrower shall make a final monthly payment consisting of the
entire principal amount of the Loan together with accrued interest thereon
calculated based on the rate of interest described above from the previous
Monthly Payment Date through and including the Balloon Payment Date.
Borrower shall not have the privilege nor right of prepayment of the
outstanding principal balance hereof.
Payment of all sums evidenced by this Note is secured by a first priority
security interest and Lien upon the Collateral granted by the Borrower to the
Lender under and pursuant to the Loan and Security Agreement. Reference is
hereby made to the Loan and Security Agreement for a more complete description
of the security for the repayment of the Obligations of the Borrower evidenced
hereby.
Upon the occurrence of an Event of Default specified in the Loan and
Security Agreement, the outstanding principal balance hereof, together with
interest thereon shall be immediately due and payable.
No reference herein to the Loan and Security Agreement and no provision of
this Note or any of the other Loan Documents shall alter or impair the
Obligations of the Borrower, which are hereby acknowledged to be absolute and
unconditional, to pay the principal and interest, on or in connection with this
Note, at the place, in the mariner and in the currency herein provided.
In the event any payment required hereunder shall not be received by the
Lender within ten (10) days of demand therefore, or if not otherwise payable on
demand, within ten (10) days of the due date set forth herein, the Borrower
skill, to the extent permitted by law, pay the Lender a late charge of Five
Percent (5%) of the overdue payment (but in no event less than $25.00 nor more
than $2,500.00). Any such late charge payable hereunder shall be immediately due
and payable.
This Note shall be governed by and construed in accordance with the laws of
the State of New Jersey.
The Borrower, and any endorser, guarantor or otherwise, hereby waive
presentment, demand, or protest or other requirements of any kind (including,
without Limitation, valuation and appraisement, diligence, notice of intent to
demand or accelerate and notice of acceleration) in connection with the payment
and enforcement of this Note except as may be expressly set forth in the Loan
and Security Agreement.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER AND THE LENDER
HEREBY IRREVOCABLY WAIVE ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
-2-
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT AND ANY ACTION FOR ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW JERSEY OR OF THE UNITED STATES OF
AMERICA FOR THE DISTRICT OF NEW JERSEY, AND, BY EXECUTION AND DELIVERY OF THIS
NOTE, THE BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND APPELLATE COURTS FROM ANY THEREOF, THE BORROWER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH HEREIN, THE
BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT
BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM,
NOTHING HEREIN SHALL EFFECT THE RIGHT OF THE LENDER OR ANY OTHER HOLDER OF THIS
NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed on the day and year first above written.
ATTEST: NATURAL GAS VEHICLE SYSTEMS, INC.
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx
--------------------------- --------------------------------
Xxxxxx X. Xxxxxx, Chairman & CEO
-3-
THE WARRANTS EVIDENCED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT.
WARRANT CERTIFICATE
100,000 Warrants
issued in consideration of the Holder's payment to the
Corporation of one mil (.001) per Warrant, to Subscribe
for and Purchase Common Stock, $.0l Par Value, of
NATURAL GAS VEHICLE SYSTEMS, INC.
THIS CERTIFIES that, for value received, Xxxx X. Xxxx, an individual
residing at 00 Xxxxx Xxxxx, Xxxxxxx Xxxxx, Xxx Xxxxxx (the "Holder"), or his
registered successors or assigns, is the owner of the number of Warrants set
forth above, each of which entitles the owner thereof to purchase from NATURAL
GAS VEHICLE SYSTEMS, INC., a Delaware corporation (hereinafter referred to as
the "Corporation"), at any time during the period from July 2, 1996 (hereinafter
referred to as the "Issuance Date") through 5:00 P.M., Eastern Standard Time,
June 30, 2001, One fully paid and nonassessable share of common stock, $.01 par
value, of the Corporation, as such stock is constituted on the Issuance Date,
subject to adjustment from time to time pursuant to the provisions hereinafter
set forth, at a price equal to $3.00 per share of common stock (hereinafter
referred to as the "Exercise Price"), subject to the conditions hereinafter set
forth. Notwithstanding any provision hereof to the Contrary, the 100,000
Warrants evidenced hereby shall at all times prior to and immediately after
consummation of a reverse stock split of the outstanding shares of Common stock
of the Corporation proposed by Commonwealth Associates entitle the holder hereof
to purchase 100,000 shares of common stock of the Corporation at the Exercise
Price.
This Warrant Certificate is subject to the following provisions, terms and
conditions:
1. The Warrant evidenced hereby may be exercised by the registered bolder
hereof, in whole or in part, by the surrender of this Warrant Certificate, duly
endorsed (unless endorsement is waived by the Corporation), at the principal
executive office of
the Corporation, 0000 Xxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxxxx 00000 and upon
payment to it by certified or official bank check or checks of the Exercise
Price of the shares of Common Stock purchased. The Corporation agrees that the
shares of Common Stock so purchased shall be deemed to be issued to the
registered holder hereof on the date on which this Warrant Certificate shall
have been surrendered and payment made for such shares as aforesaid. The
certificates for such shares shall be delivered to the registered holder hereof
within a reasonable time, not exceeding five business days, after warrants
evidenced hereby shall have been exercised, and a new Warrant Certificate
evidencing the number of the Warrants, if any, remaining unexercised shall also
be Issued to the registered holder within such time unless such Warrants have
expired. No fractional shares of capital stock of the Corporation, or scrip for
any such fractional shares, shall be issued upon the exercise of any Warrants.
2. The number and kind of shares of Common Stock of the Corporation subject
to each Warrant evidenced hereby, and the Exercise Price, shall be subject to
adjustment as follows:
(a) Upon each adjustment of the Exercise Price as provided herein,
the holder of the Warrant evidenced hereby shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest tenth of a share) obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(b) No fractional shares of Common Stock or scrip shall be issued
upon exercise of the Warrants evidenced hereby. Instead of any fractional shares
of Common Stock which would otherwise be issuable upon exercise of the Warrants
evidenced hereby (or portion hereof), the Corporation shall pay a cash
adjustment in respect of such fractional share of Common Stock in an amount
equal to the same fraction of the then current fair value of a share of Common
Stock, as determined in good faith by the Board of Directors of the Corporation.
(c) In case the Corporation shall declare a dividend upon the
.shares of Common Stock payable otherwise than out of earned surplus or
otherwise than in shares of Common Stock or convertible securities of the
Corporation, the Exercise Price in effect immediately prior to the declaration
of such dividend shall be reduced by an amount equal, in the case of a dividend
in cash, to the amount thereof payable per share of Common Stock or, in the case
of any other dividend, to the fair value thereof per
2
share of Common Stock as determined in good faith by the Board of Directors of
the Corporation. For the purposes of the foregoing, a dividend other than in
cash shall be considered payable out of earned surplus only to the extent that
such earned surplus is charged an amount equal to the fair value of such
dividend as determined in good faith by the Board of Directors of the
Corporation. Such reductions shall take effect as of the date on which a record
is taken for the purpose of such dividend, or, if a record is not taken, the
date as of which the holders of shares of Common Stock of record entitled to
such dividend are to be determined.
(d) In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Corporation shall be combined into a smaller number of
shares of Common Stock, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased; provided however that any such
combination into a smaller number of shares effected pursuant to the matter
referred to in the last sentence of the first paragraph of this Warrant shall
not result in either an increase in the Exercise Price hereunder nor a reduction
of the number of shares of common stock which may be acquired by the holder
hereof in accordance with the terms hereof
(e) For purposes of this Warrant Certificate, the term "Common
Stock" shall mean shares of the common stock, $.01 par value, of the
Corporation, and shall also include any shares of capital stock of any class of
the Corporation hereinafter authorized which shall not be limited to a fixed Sum
or percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets Upon the voluntary liquidation,
dissolution or winding-up of the Corporation; provided, however, that the shares
of Common Stock receivable upon exercise of the warrants evidenced hereby shall
include only shares of Common Stock as constituted on the Issuance Date
including any stock into which it may be changed, reclassified or convened.
(f) If and whenever after the Issuance Date the Corporation shall
issue or sell any shares of its Common Stock for a consideration per share less
than the Exercise Price in effect immediately prior to the time of such issue or
sale, or without consideration, (the "Lesser Consideration") then, forthwith
upon each such Issue or sale, the Exercise Price shall be reduced to the price
equal to the Lesser Consideration. No adjustment of the Exercise Price however
shall he made in an amount less than $.001 per share, but any such lesser
adjustment shall be carried forward and shall be made at the
3
time and together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $.001 per share or more. For
purposes of this Paragraph (f) the following additional sub-paragraphs shall
apply:
(i) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any right to subscribe for or
to purchase, or any options for the purchase of Common Stock or any
stock or securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") whether or not such Options or the right
to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus
the aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such options, plus, in the case
of such Options which relate to convertible securities, the
aggregate amount of additional consideration, if any, payable upon
the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such options) shall be less than the
Exercise Price in effect immediately prior to the time of the
granting of such options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options
shall be deemed to have been issued for such price per share as of
the date of granting of such Options and thereafter shall be deemed
to be outstanding. Except as otherwise provided in Sub-Paragraph
(iii) of this Paragraph (f), no adjustment of the Exercise Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the
actual issue of such Common Stock upon conversion or exchange of
such Convertible Securities.
(ii) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any
such Convertible securities are immediately exercisable, and the
price per
4
share for which Common Stock is issuable upon such Conversion or
exchange (determined by dividing (i) the total amount received or
receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the aggregate amount of
additional consideration, if any, payable to the Corporation upon
the conversion or exchange thereof; by (ii) the total maximum number
of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities) shall be less than the Exercise
Price in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock issuable
upon conversion or exchange of all such Convertible Securities shall
be deemed to have been issued far such price per shares of the date
of the issue or sale of such Convertible Securities and thereafter
shall be deemed to be outstanding, provided that (x) except as
otherwise provided in subparagraph (iii) of this Paragraph (f), no
adjustment of the Exercise Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible
Securities, and (y) if any such issue or sale of such Convertible
Securities is made upon exercises of any options to purchase any
such Convertible securities for which adjustments of the Exercise
Price have been or are to be made pursuant to other provisions of
this Sub-Paragraph (ii), no further adjustment of the Exercise Price
shall be made by reason of such issue or sale
(iii) Change in Option Price or Exercise. Rate Upon the
happening of any of the following events, namely, if the purchase
price provided for in any Option referred to in Sub-Paragraph (f) of
this Paragraph (t), the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities
referred to in Sub-Paragraphs (i) or (ii) of this Paragraph (f), or
the rate at which any Convertible Securities referred to in
Sub-Paragraphs (i) or (ii) of this Paragraph (f) are convertible
into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such
event shall forthwith be readjusted to the Exercise Price which
would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold; and on
the expiration of any such Option or the termination of any such
right to convert or exchange such Convertible Securities, the
Exercise Price then in effect hereunder shall forthwith be increased
to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible
5
Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the Common Stock
issuable thereunder shall no longer be deemed to be outstanding. If
the purchase price provided for in any such Option referred to in
Sub-Paragraph (i) of this Paragraph (f) or the rate at which any
convertible Securities referred to in Sub-Paragraphs (i) or (ii) of
this Paragraph (f) are convertible into or exchangeable for, Common
Stock shall be reduced at any time under or by reason of provisions
with respect thereto designed to protect against dilution, then, in
case of the delivery of Common Stock upon the exercise of any such
Option or upon conversion or exchange of any such Convertible
Securities, the Exercise Price then in effect hereunder shall
forthwith be adjusted to such respective amount as would have been
obtained has such Option or Convertible Securities never been issued
as to such Common Stock and had adjustments been made upon the
issuance of the shares of Common Stock delivered as aforesaid, but
only if as a result of such adjustment the Exercise Price then in
effect hereunder is thereby reduced.
(iv) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as
the case may be, Issuable in payment of such dividend or
distribution shall be deemed to have been issued in a subdivision of
outstanding shares as provided in Paragraph (d) immediately
preceding.
(v) Consideration for Stock. In case any shares of Common
Stock, options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions
or concessions paid or allowed by the Corporation in connection
therewith. In case any shares of Common Stock, Options or
Convertible Securities shall he issued or sold for a consideration
other than cash, the amount of the consideration other than cash
received by the corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of
Directors of the Corporation1 without deduction of any expenses
incurred or any underwriting commissions or concessions paid or
allowed by the Corporation in connection therewith. In case any
Options shall be issued in connection with the issue and sale of
other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated
6
to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration.
(vi) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities, or (ii) to subscribe for
or purchase Common Stock, Options or Convertible Securities, then,
such record date shall be deemed to be the date of the issue or sale
of the shares of Common Stock deemed to have been issued or sold
upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held
by or for the account of the Corporation, and the disposition of any
such shares shall be considered an issue or sale of Common Stock for
the purposes of this Paragraph (f).
3. If any consolidation or merger of the Corporation with another
corporation after the Issuance Date, or the sale of all or substantially all of
its assets to another corporation shall be effected after the Issuance Date or
in case of any capital reorganization or reclassification of the capital stock
of the Corporation, then, as a condition of such consolidation, merger or sale,
reorganization or reclassification, lawful and adequate provision shall be made
whereby the holder of this Warrant Certificate shall thereafter have the right
to purchase and receive upon the basis and upon the terms and conditions
specified herein and in lieu of the shares of Common Stock immediately
theretofore purchasable and receivable upon the exercise of each Warrant
evidenced hereby, such shares of stock, securities or assets as may be issuable
or payable with respect to or in exchange for a number of outstanding shares of
Common Stock of the Corporation equal to the number of shares of Common Stock
immediately theretofore purchasable and receivable upon the exercise of one
Warrant evidenced hereby had such consolidation, merger, sale, reorganization,
or reclassification not taken place, and in any such case appropriate provision
shall he made with respect to the rights and interest of the registered holder
of this Warrant Certificate to the end that the provisions hereof (including
without limitation provisions for adjustment of the Exercise Price) shall
thereafter be applicable, as nearly as may be, in relation of any shares of
stock, securities or assets thereafter deliverable upon the exercise of the
Warrants evidenced hereby.
7
4. Upon any adjustment of the Exercise Price or the number of shares of
Common Stock subject to the Warrants evidenced hereby, then and in each such
case the Corporation shall give written notice thereof, by first class mail,
postage prepaid, to the holder hereof, which notice shall state the Exercise
Price and/or the number of shares of Common Stock subject to the Warrants
evidenced hereby resulting from such adjustment, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
5. In case at any time:
(i) the Corporation shall declare to the holders of its shares of
Common Stock any cash dividend at a rate in excess of the rate of the last
cash dividend theretofore paid;
(ii) the Corporation shall declare any dividend upon its shares of
Common Stock payable in stock or make any special dividend or other
distribution (other than a cash dividend to the holders of its shares of
Common Stock);
(iii) the Corporation shall offer for subscription pro rata to the
holders of its shares of Common Stock any additional shares of stock of any
Glass or other rights;
(iv) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or consolidation or merger of the
Corporation with, or sale of all or substantially all its assets to,
another corporation; or
(v) there shall be a voluntarily or involuntary dissolution,
liquidation or winding-up of the Corporation;
then, in any one or more of said cases, the Corporation shall give written
notice, by first class mail, postage prepaid, to the Holder hereof, of the date
on which (A) the books of the Corporation shall close or a record shall be taken
for such dividend, distribution or subscription rights, or (B) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place. as the case may be. Such notice
shall also specify the date as of which the holders of shares of Common Stock of
record shall participate in such dividend, distribution or subscription rights
or shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale,
8
dissolution, liquidation, or winding-up, as the case may be. Such written notice
shall be given at least 30 days prior to the action in question and not less
than 30 days prior to the record date or the date on which the Corporation's
transfer books are closed in respect thereto.
6. The Corporation shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of its issue upon the
exercise of the Warrants evidenced hereby as herein provided, such number of
shares of Common Stock as shall then be issuable upon the exercise of the
Warrants evidenced hereby. The Corporation shall not take any action which
results in any adjustment of the Exercise Price if the total number of shares of
Common Stock issued and issuable after such action upon exercise of the Warrants
evidenced hereby would exceed the total number of shares of Common Stock then
authorized by the Certificate of Incorporation of the Corporation.
7. The issuance of certificates of shares for Common Stock upon the
exercise of the Warrants evidenced hereby shall be made without charge to the
holders of such Warrants for any issuance tax in respect thereto; provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Warrants evidenced
hereby.
8. The Corporation will at no time close its transfer books against the
transfer of any shares issued or issuable upon the exercise of the Warrants
evidenced hereby in any manner which interferes with the timely exercise of such
Warrants conversion.
9. The person in whose name this Warrant Certificate is registered shall be
deemed the owner hereof and of the Warrant evidenced hereby for all purposes.
The registered holder of this Warrant Certificate shall not be entitled to any
rights whatsoever as a stockholder of the Corporation except as herein provided.
10. Upon receipt by the Corporation of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant Certificate, and (in case
of loss, theft or destruction) of indemnity reasonably satisfactory to it, and
upon surrender and cancellation of this Warrant Certificate, if mutilated, the
Corporation, upon reimbursement to it of all reasonable expenses incidental
thereto, will make and deliver a new warrant Certificate, of like tenor, in lieu
of this Warrant Certificate.
9
11. This Warrant Certificate and the Warrants evidenced hereby may not be
transferred unless such transfer would not result in a violation of the
provisions of the Securities Act of 1933 (hereinafter referred to as the "Act").
Any transfer of this Warrant Certificate and the Warrants evidenced hereby, in
whole or in part, shall be effected upon surrender of this Warrant Certificate,
duly endorsed (unless endorsement is waived by the Corporation), at the
principal office or agency of the Corporation referred to in paragraph 1.
12. All notices, requests or instructions hereunder shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid as
follows:
(1) if to the Corporation:
Natural Gas Vehicle Systems, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx, President
(2) if to the holder of the Warrants evidenced hereby:
Xxxx X. Xxxx
00 Xxxxx Xxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt.
13. The Corporation shall issue prior, detailed written notice to Holder in
the manner described in Section 14 with regard to the proposed authorization of
any form of security by the Corporation, including without limitation, any form
of common stock or preferred stock, any increase in the authorized amount of any
existing class of stock, or any debt instrument which contains any form of
privilege or right to convert the indebtedness evidenced thereby.
14. This Warrant Certificate is the only certificate issued to Holder
pursuant to that certain Letter of Intent dated July 1 1996 between the
Corporation and the Holder.
IN WITNESS WHEREOF, Natural Gas Vehicle Systems, Inc. has caused this
Warrant Certificate to be signed by its duly authorized officers and this
Warrant Certificate to be dated July 1, 1996.
10
NATURAL GAS VEHICLE SYSTEMS, INC.
By: /s/ Xxxx Xxxxx
------------------------------
Xxxx Xxxxx, President
11
FORM OF EXERCISE
(to be executed by the registered holder hereof)
The undersigned hereby exercises _____ Warrants to subscribe for and
purchase shares of common stock, $.0l par value ("Common Stock"), of Natural
Gas Vehicle Systems, Inc. evidenced by the within Warrant Certificate and
herewith makes payment of the purchase price in full. Kindly issue certificates
for shares of Common Stock in accordance with the instructions given below. The
certificate for the unexercised balance of the Warrants evidenced by the within
Warrants Certificate, if any, will be registered in the name of the undersigned.
Dated:
_________________________________
Instructions for registration of stock
_________________________________
Name (please print)
Social Security or Other Identifying Number:
_________________________________
Address:
_________________________________
Street
_________________________________
City) State and Zip Code
12
