CONVERSION AGREEMENT
THIS AGREEMENT, dated as of the 29th day of August, 1996 between Heuristic
Development Group, Inc., a Delaware corporation (hereinafter called the
"Company") and Nautilus Group Japan Ltd., a Delaware corporation (hereinafter
called "NGJ")
WHEREAS, the Company has entered into a letter of intent (the "Letter") for
a proposed initial public offering of its securities (the "IPO") through X. X.
Xxxxx Investment Banking Corp. ("Xxxxx"), as underwriter; and
WHEREAS, the Letter contains as a condition to the IPO that the Company
effect a recapitalization which includes the conversion of all of its
outstanding shares of Series A Preferred Stock, $.01 par value (the "Preferred
Stock") into Common Stock, $.01 par value (the "Common Stock"); and
WHEREAS, the Letter contains as as further condition to the IPO that the
Company not have any outstanding indebtedness on its books other than as
contemplated by the Letter and subsequent discussions between the Company and
Xxxxx; and
WHEREAS, NGJ holds 600 shares of Preferred Stock, plus accrued and unpaid
dividends, representing all of the Company's outstanding shares of Preferred
Stock; and
WHEREAS, at the date heeof, the Company had a total of $783,143.66 of
outstanding indebtedness , including accrued interest, owed to NGJ (the "NGJ
Debt"); and
WHEREAS, the Company and NGJ believe it is their mutual best interests
for the IPO contemplated by the Letter to go forward.
NOW, THEREFOR, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is hereby agreed as follows:
1. Conversion of Preferred Stock. Effective on the closing date of the
IPO (the "Closing Date"), all shares of Preferred Stock held by NGJ
shall be converted into 175,792.48 shares of Common Stock (on a
post-split basis.)
2. Conversion of Debt. Effective on the Closing Date, the NGJ Debt shall
be converted into 190,721.99 shares of Common Stock (on a post-split
basis), representing a conversion rate of $4.40 per share.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HEURISTIC DEVELOPMENT GROUP, INC.
By:/s/ Xxxxxxx X. Xxxxxxx
-------------------------
Chief Operating Officer
NAUTILUS GROUP JAPAN, LTD.
By: /s/ Xxxxxxx X. Xxxx
-------------------------
Chief Operating Officer
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