CONVERSION AGREEMENT
THIS AGREEMENT is made as of the 20th day of November, 1996, by and
between NATURAL GAS VEHICLE SYSTEMS, INC., a Delaware corporation with offices
at 0000 Xxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxxxx 00000 (the "Company"); and
EQUITABLE RESOURCES ENERGY COMPANY, a West Virginia corporation with offices at
420 Boulevard of the Allies, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 ("Equitable").
RECITALS
WHEREAS, Equitable is the holder of that certain demand secured promissory
note dated November 20, 1995 (the "Note"), bearing annual interest at 10%,
executed and delivered by the Company in the original principal amount of
$300,000; and
WHEREAS, the Company and Equitable desire to convert all indebtedness due
under the Note into Common Stock of the Company at a conversion price equal to
the initial public offering price per share (the "IPO Price") of the Company's
common stock, $.01 par value ("Common Stock"), in a public offering of
securities of the Company (an "IPO");
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. Conversion. In the event that the Company shall have a registration
statement declared effective by the Securities and Exchange Commission with
regard to securities of the Company being sold in an IPO (such date being
hereinafter referred to as the "Effective Date"), the Company shall promptly
notify Equitable of such IPO and Equitable shall surrender the Note to the
Company on the closing date of the IPO (the "Closing Date") at the place and
time specified for such closing. Within five (5) business days after the Closing
Date, the Company shall issue and deliver to Equitable, registered in
Equitable's name, a certificate or certificates for the Conversion Shares (as
hereinafter defined). The Conversion Shares, when issued and delivered in
accordance with this Agreement, will be validly issued, fully-paid and
non-assessable shares of Common Stock of the Company, free and clear of any
mortgage, deed of trust, pledge, lien, security interest or any charge or
encumbrance of any nature. The Company has duly reserved for issuance from the
authorized but unissued Common Stock of the Company such number of shares
thereof sufficient for issuance under this Agreement.
2. Conversion Shares. The "Conversion Shares" shall be that number of
shares of Common Stock of the Company equal to the quotient obtained by dividing
the amount of aggregate indebtedness of the Company to Equitable under the Note
as of the Closing Date, including all obligations for the repayment of principal
thereunder together with all accrued and unpaid interest through such Closing
Date (the "Indebtedness"), by the IPO Price. Any fractional shares resulting
from such calculation shall be eliminated by rounding such fractional share
interest up to the nearest whole number of shares of Common Stock.
3. Investment Purpose. Any acquisition of Conversion Shares by Equitable
hereunder will be for investment purposes only, for its own account, and not
with a view to the further distribution thereof. Equitable acknowledges that the
Conversion Shares will not have been registered under the Securities Act of
1933, as amended (the "Act"), or the securities laws
of any state and may not be offered or sold by Equitable unless subsequently
registered under said Act and all applicable securities laws or unless
exemptions from the registration requirements thereof are available for the
transaction. The certificates representing the Conversion Shares shall bear a
legend reflecting the foregoing restrictions on transfer.
4. Cancellation of Note. Upon the surrender of the Note to the Company and
the issuance of the Conversion Shares in accordance with the terms of this
Agreement, the Note and all indebtedness thereunder shall be deemed cancelled as
of the Closing Date.
5. Lock-up Agreement. In connection with the IPO, Equitable hereby agrees
that, for a period of eighteen (18) months following the Effective Date (the
"Lock-up Period"), it will not, directly or indirectly, offer, sell, offer to
sell, contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose of any shares of Common Stock or other capital stock of the Company,
or any securities convertible into, or exercisable or exchangeable for, any
shares of Common Stock or other capital stock of the Company (collectively, the
"Securities"), without the prior written consent of Commonwealth Associates, as
representative of the several underwriters for the IPO; provided, however, that
(a) Equitable may make private sales or bona fide gifts of Securities during the
Lock-up Period if the proposed transferee agrees to be bound by the restrictions
contained in this Section 5 and (b) the restrictions contained in this Section 5
shall not apply to Equitable with respect to the laws of descent and
distribution.
6. Assignment. The respective rights and obligations of Equitable and the
Company under this Agreement shall not be assignable by either Equitable or the
Company without the prior written consent of the other, provided, however, that
any such assignment shall not release Equitable from its obligations hereunder.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing herein
express or implied is intended to confer upon any person, other than the parties
hereto and their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
7. Notices. Any notice, consent, request, claim, demand, instruction or
other communication required, contemplated, or permitted to be given hereunder
by Equitable or the Company shall be in writing and shall be delivered either by
personal delivery, private courier service or postage pre-paid, registered or
certified mail, return receipt requested, addressed:
If to Equitable, to:
Equitable Resources Energy Company
420 Boulevard of the Allies
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
If to the Company, to:
Natural Gas Vehicle Systems, Inc.
0000 Xxxxxx Xxxxxx
0
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, President
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
or to such other address as either party may from time to time designate by
notice to the other. Notice by courier or registered or certified mail shall be
effective on the date it is officially recorded as delivered to the intended
recipient by return receipt or the date of attempted delivery where delivery is
received by the intended recipient. Notice by personal delivery shall be deemed
to have been delivered to and received by the addressee, and shall be effective,
on the date of personal delivery.
8. Termination. This Agreement shall terminate and be null and void with
no further legal effect in the event that the IPO shall not have been
consummated by February 15, 1997.
9. Entire Agreement; Modification. This Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings, whether oral or written.
This Agreement shall not be modified, amended or terminated except by written
agreement of the parties. Captions appearing in this Agreement are for
convenience only and shall not be deemed to explain, limit, or amplify the
provisions hereof.
10. Waiver. The terms, covenants, representations, warranties and
conditions of this Agreement may be waived only by a written instrument executed
by the party waiving compliance. The failure of a party at any time to require
performance of any provisions hereof shall, in no manner, affect the right at a
later date to enforce the same. No waiver by a party of any condition, or breach
of any provision, term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such
condition or the breach of any other provision, term, covenant, representation
or warranty of this Agreement.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
12. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ATTEST: EQUITABLE RESOURCES ENERGY
COMPANY
/s/ Xxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------- --------------------------
Xxxxx X. Xxxxx, Xx. Name: Xxxxxxx X. Xxxxxxxxx
Assistant Corporate Secretary Title: Treasurer
ATTEST: NATURAL GAS VEHICLE SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------- --------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman & CEO
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