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LOAN AND SECURITY AGREEMENT
DATED: April 4, 1996
BY AND BETWEEN
NATURAL GAS VEHICLE SYSTEMS, INC.,
A Delaware Corporation,
Borrower
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PAUL S. DOPP,
Lender
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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 April 4, 1996, by and between
NATURAL GAS VEHICLE SYSTEMS, INC., a Delaware corporation, having its principal
place of business at 5580 Cherry Avenue, Long Beach, California 90805 (together
with its successors and assigns, hereinafter referred to as the "Borrower") and
PAUL S DOPP, residing at 58 Lyons Place, Basking Ridge, New Jersey 07920
(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 SIX HUNDRED THOUSAND DOLLARS ($600,000.00)
(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
SIX HUNDRED THOUSAND DOLLARS ($600,000.00)(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.
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"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 that certain three-roller "Leifeld" flow forming
machine, Model Number Leico St-65-132-CNC, 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.
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"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 December 31, 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 May 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 December 31, 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 may make to the Borrower in the future, the
Collateral granted by the Borrower hereunder shall serve to collateralize
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any and all other Indebtedness of the Borrower to the Lender, whether presently
existing or hereafter arising; 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 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 Fee. As additional consideration for the making of
the Loan, Borrower shall pay to Lender a fee in the amount of $30,000.00. Said
fee shall be paid to the Lender by the Borrower by the Borrower's issuance to
Lender 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
the Lender in the amount of the aforesaid fee. In addition, Borrower shall pay
the reasonable legal fees and disbursements of Robinson, St. John and Wayne,
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 Robinson, St. John and Wayne in the
amount of such fees and disbursements.
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
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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
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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.
Section 4.11. Financials. The audited financial statements of the Borrower
dated December 31, 1994, and the unaudited monthly financial statements of the
Borrower dated January 31, 1996 and February 29, 1996, attached hereto as
Exhibits 4.11(A), (B) and (C) respectively (1) fairly and accurately present the
financial position and results of operations of the as of and for the periods
indicated, and (2) reflect all of the Borrowers' material liabilities as of such
date.
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
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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 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
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(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 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
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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) 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
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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.
(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.
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(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.
(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
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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.
(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
-12-
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 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
-13-
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 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 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 AFORESAID 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
-14-
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.
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/ John N. Bacon
-----------------------------
John Bacon, President
Lender:
PAUL S. DOPP
By: /s/ Paul S. Dopp
-----------------------------
-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.
-18-
[Letterhead of KPMG Peat Marwick LLP]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Natural Gas Vehicle Systems Inc.:
We have audited the accompanying consolidated balance sheets of Natural Gas
Vehicle Systems Inc. and subsidiaries as of December 31, 1994 and 1993 and the
related consolidated statements of operations, shareholders' equity (deficiency)
and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. We do not audit the financial statements of NGV
Technology Center LLP, a 50% owned subsidiary, which statements reflect total
assets and revenues constituting 13 percent and 17 percent, respectively, of the
related consolidated totals as of and for the year ended December 31, 1994.
Those statements were audited by other auditors whose report has been furnished
to us, and our opinion, insofar as it relates to the amounts included for NGV
Technology Center LLP, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Natural Gas Vehicle Systems Inc.
and subsidiaries as of December 31, 1994 and 1993 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 2 to the
consolidated financial statements, the Company's recurring losses from
operations raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ KPMG Peat Marwick LLP
February 20, 1995
Exhibit 4.11(A)
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1994 and 1993
Assets 1994 1993
------------ ------------
Current assets:
Cash $ 132,236 671,367
Accounts receivable, net of allowance
for doubtful accounts of $120,950 and
$243,001 as of December 31, 1994 and 1993, respectively 1,503,611 1,470,870
Due from related parties (note 9) 90,389 621,224
Inventories (note 4) 1,905,094 2,709,238
Other current assets 325,443 231,474
------------ ------------
Total current assets 3,956,773 5,704,173
Property and equipment, net (note 5) 4,710,898 4,528,539
Other assets 243,867 393,884
------------ ------------
$ 8,911,538 10,626,596
============ ============
Liabilities and Shareholders' Equity (Deficiency)
Current liabilities:
Notes payable to bank (note 6) $ 355,000 150,000
Current portion of long-term debt (note 7) 115,085 140,656
Note payable - other (note 9) 175,000 80,000
Note payable to related parties (note 9) 200,000 --
Accounts payable 2,087,995 1,694,524
Accrued expenses 1,608,576 801,778
Accrued restructuring costs (note 14) 300,000 --
------------ ------------
Total current liabilities 4,841,656 2,866,958
------------ ------------
Long-term debt, less current portion (note 7) 3,102,269 3,214,543
Long-term notes payable to related parties (note 9) 2,015,769 --
Minority interests 1,142,182 853,314
Shareholders' equity (deficiency) (note 10):
Preferred stock, $5 par value. Authorized
50,000 shares; none issued and outstanding -- --
Common stock, $.01 par value. Authorized
20,000,000 shares; issued and outstanding
3,576,584 and 3,520,834 shares as of
December 31, 1994 and 1993, respectively 35,765 35,208
Additional paid-in capital 13,873,768 13,489,326
Accumulated deficit (16,099,871) (9,832,753)
------------ ------------
Net shareholders' equity (deficiency) (2,190,338) 3,691,781
Commitments (note 13)
------------ ------------
$ 8,911,538 10,626,596
============ ============
See accompanying notes to consolidated financial statements.
NATURAL GAS VEHICLE SYSTEMS INC
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 1994 and 1993
1994 1993
------------ ------------
Net sales (note 9) $ 8,938,296 9,424,055
Operating costs and expenses (note 9):
Cost of sales 10,178,860 8,870,511
Research and development 713,875 806,721
Selling 935,375 702,286
General and administrative 3,546,922 2,574,895
Restructuring charge (note 14) 482,100 --
------------ ------------
Loss from operations (6,918,836) (3,530,358)
------------ ------------
Other income (expense):
Interest income earned from related parties 13,509 32,566
Interest expense, net (375,205) (234,772)
Other income (expense), net (1,976) 15,088
------------ ------------
(363,672) (187,118)
------------ ------------
Loss before income taxes
and minority interests (7,282,508) (3,717,476)
Income taxes (note 8) -- --
------------ ------------
Loss before minority interests (7,282,508) (3,717,476)
Minority interests in net losses of subsidiaries 1,015,390 714,977
------------ ------------
Net loss $ (6,267,118) (3,002,499)
============ ============
See accompanying notes to consolidated financial statements.
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1994 and 1993
1994 1993
----------- -----------
Cash flows from operating activities:
Net loss $(6,267,118) (3,002,499)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 648,041 663,534
Minority interests in net loss of subsidiaries (1,015,390) (714,977)
Allowance for doubtful accounts (122,091) 232,427
Changes in assets and liabilities:
Accounts receivable 89,350 (728,861)
Due from related parties 530,835 (621,224)
Inventories 804,144 266,427
Other current assets (93,969) (203,309)
Other assets 150,017 (151,727)
Accounts payable 393,471 (952,667)
Accrued expenses 806,798 575,102
Accrued restructuring costs 300,000 --
Due to Caithness/NCF Company -- (282,333)
----------- -----------
Net cash used in operating activities (3,775,912) (4,920,150)
----------- -----------
Cash flows from investing activities - purchase of
property and equipment (830,400) (1,124,624)
----------- -----------
Cash flows from financing activities:
Proceeds from sales of common stock 384,999 3,537,412
Proceeds from issuance of notes
payable - related parties 2,215,769 --
Proceeds from issuance of long-term debt -- 3,044,082
Contribution by minority interests 1,304,258 812,697
Borrowings from banking 365,000 150,000
Proceeds from issuance of notes payable-other 95,000 80,000
Payment on long term debt (160,000) (7,336)
Payments on borrowings from notes payable to bank (137,845) (768,000)
Payment on note payable - other -- (200,000)
----------- -----------
Net cash provided by financing activities 4,067,181 6,648,855
----------- -----------
Net increase (decrease) in cash (539,131) 604,081
Cash at beginning of year 671,367 67,286
----------- -----------
Cash at end of year $ l32,236 671,367
=========== ===========
Supplemental disclosures of cash flow
information - cash paid during the year
for interest $ 51,000 134,000
=========== ===========
See accompanying notes to consolidated financial statements.
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994 and 1993
(1) Business
Natural Gas Vehicle Systems, Inc. and subsidiaries (the Company)
manufactures cylinders and distributes other products used in the
conversion of gasoline-powered vehicles to natural gas-powered vehicles.
The Company also sets up joint ventures with utility companies to convert
vehicles to using natural gas fueled engines and perform laboratory testing
of vehicular emissions.
(2) Basis of Presentation
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered
recurring losses from operations and expects to continue to incur losses
for the foreseeable future due to the significant costs incurred in
connection with manufacturing and marketing its products. In addition, the
Company intends to conduct research and development activities to develop
new technology applications. Management's plans are to reorganize and
streamline its existing operations and seek additional financing from
outside sources. Success of future operations is dependent upon, among
other things, the Company's ability to execute its plan. The Company is
subject to all of the risks inherent in new business enterprises and the
likelihood of the success of the Company must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with a new business. These matters raise
substantial doubt about the Company's ability to continue as a going
concern. The accompanying consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
(3) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Natural Gas
Vehicle Systems Inc. (NGVSI), its wholly owned subsidiary, NGV Development,
Inc., its 50%-owned joint ventures, NGV Technology Centers, LLP. (NGV
Technology Center) and NGV Ecotrans Technology Center (NGV Ecotrans), and
its 33.33%-owned joint venture, NGV Southeast Technology Center (NGV
Southeast) (collectively, "Company"). The Company consolidates its
investments in joint ventures because management believes that the Company
exercises control through its ownership. Further, the joint ventures
purchase substantially all products from the Company. All material
intercompany accounts and transactions have been eliminated in
consolidation.
Inventories
Inventories are stated at the lower end of cost (first-in, first-out) or
market.
1
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization
are computed using the straight-line method over the estimated useful lives
of the assets as follow:
Machinery and equipment 10 to 15 years
Furniture and fixtures 3 to 5 years
Tools and dies 5 years
Leasehold improvements Shorter of estimated useful life or lease term
Trucks 5 years
Income Taxes
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109 (SFAS No 109),
"Accounting for Income Taxes." Under the asset and liability method of SFAS
No. 109, deferred income taxes reflect the impact of "temporary
differences" between assets and liabilities for financial reporting purpose
as such amounts are measured by tax laws and regulations.
Reclassifications
Certain reclassifications have been made to the 1993 financial statements
in order to conform with the current year's presentation.
(4) Inventories
Inventories at December 31, 1994 and 1993 are summarized as follows:
1994 1993
---------- ---------
Raw materials $ 106,941 804,631
Work in process 349,760 357,508
Finished goods 1,448,393 1,547,099
---------- ---------
$1,905,094 2,709,238
========== =========
2
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5) Property and Equipment
Property and equipment at December 31, 1994 and 1993, at cost, consists of
the following:
1994 1993
---------- ---------
Machinery and equipment $5,469,438 4,284,236
Furniture and fixtures 310,187 307,145
Tools and dies 278,691 419,888
Leasehold improvements 289,354 324,519
Trucks 86,923 86,923
Construction in progress 103,000 403,880
---------- ---------
6,537,593 5,826,591
Less accumulated depreciation
and amortization (1,826,695) (1,298,052)
---------- ---------
$4,710,898 4,528,539
========== =========
(6) Notes Payable to Bank
Notes payable to bank consists of NGVSI's note payable of $245,000 and NGV
Technology Center's promissory note of $110,000 as of December 31, 1994.
The Company has a credit agreement with its bank that provides for a
revolving line of credit of $245,000 collateralized by a $250,000 standby
letter of credit provided by a shareholder and all of the assets the
Company. Borrowings under the revolving line of credit bear interest at
prime rate (prime rate was 8.5% at December 31, 1994) and are secured by
100% of the outstanding borrowings under the line of credit of $245,000.
As part of the credit agreement, the Company granted warrants to its bank.
Such warrants are exercisable into 32,000 shares of preferred stock at $5
per share and 16,000 shares of common stock at $5 per share. The warrants
expire in August 1997. The value of the warrants was not considered
material when issued. The credit agreement expires on May 31, 1995.
NGV Technology Center has a promissory note of $110,000 with a bank bearing
interest at prime rate (prime rate was 8.5% at December 31, 1994) plus 2%,
secured by accounts receivable and inventory. This note is payable in
monthly installments of $10,000, due on November 15, 1995.
3
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) Long-term debt
Long-term debt as of December 31, 1994 and 1993 is summarized as follows:
1994 1993
----------- ---------
Senior subordinated convertible note
annual interest at 7%, payable
quarterly, convertible into 133,333
shares of the Company's common stock
at $750 per share, due in three equal
installments of $333,333 in March
2001, 2002 and 2003 $ 1,000,000 1,000,000
Senior subordinated convertible note
bearing annual interest at 7%,
payable quarterly, convertible into
266,667 shares of the Company's
common stock at $7.50 per share, due
in three equal installments of
$666,667 in March 2001, 2002 and
2003. This note is senior to the
$1,000,000 note 2,000,000 2,000,000
Contracts payable in semiannual
installments of $50,000 with a final
installment of $37,500, due
August 1996 187,500 315,268
Other 29,854 39,931
----------- ---------
3,217,354 3,355,199
Less current installments 115,085 140,656
----------- ---------
$ 3,102,269 3,214,543
=========== =========
The $1,000,000 note holder has warrants to purchase 133,333 shares of
common stock at $7.50 per share. The warrants are subject to certain
adjustments. No value has been attributed to the warrants outstanding as
the impact on the results of operations is considered immaterial to the
Company.
(8) Income Taxes
Due to the Company's net operating losses, there is no income tax benefit
or expense for the years ended December 31, 1994 and 1993.
At December 31, 1994, the Company had net operating loss carryforwards of
approximately $13,200,000 expiring through 2009. The ultimate realization
of the net operating loss carryforward will be subject to certain
limitations due to any changes in the Company's ownership and will be
dependent upon the Company attaining future taxable earnings.
No benefit has been recorded in the consolidated financial statements for
net operating losses as the entire carryforward has been offset by a
valuation allowance.
4
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
If certain substantial changes in the Company's ownership should occur,
there would be an annual limitation on the amount of the tax loss
carryforward which can be utilized, which could result in a part of such
losses expiring before they are used.
(9) Related Party Transactions
The Company is affiliated with certain entities through common ownership.
There notes payable outstanding to related parties as of December 31, 1993.
Notes payable to related parties as of December 31, 1994 are summarized as
follows:
Promissory note to Caithness Composites, bearing
interest at prime rate (8.5% at December 31, 1994)
plus 3%, due on December 31, 1997 $1,225,914
Promissory note to Caithness NCF L.P. bearing interest
at prime rate plus 3%, due on December 31, 1997 499,799
Promissory note to NCF Industries bearing interest at
prime rate plus 3%, due on December 31, 1997 145,028
Promissory note to Clock Spring Inc., bearing interest
at prime rate plus 3%, due on December 31, 1997 145,028
Promissory note to shareholder, bearing interest at
13%, due on demand 150,000
Promissory note to shareholder and officer, bearing
interest at 8.5%, due on demand 50,000
----------
2,215,769
Less current portion 200,000
----------
$2,015,769
==========
The prime rate was 8.5% at December 31, 1994.
Amounts receivable from related parties at December 31, 1994 and
1993 were as follows:
1994 1993
------- -------
Caithness/NCF Company $ 1,868 64,663
Clock Spring Company 88,521 556,561
------- -------
$90,389 621,224
======= =======
5
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
These amounts receivable are attributable to an allocation of general and
administrative expenses shared by NGVSI and Clock Spring Company, an
affiliated company through common ownership, (Clock Spring) based on
certain established criteria. Clock Spring moved its operations to Houston,
Texas during 1994. The allocated amounts to Clock Spring Company as of
December 31, 1994 and 1993 were as follows;
1994 1993
-------- -------
Administrative $208,000 565,800
Rent 58,800 52,200
-------- -------
$266,800 638,000
======== =======
The Company paid certain fees to shareholders and employees under
established royalty agreements. Royalties paid for the years ended December
31, 1994 and 1993 totaled approximately $186,000 and $236,000,
respectively.
NGVSI converted accounts receivable due from NGV Technology Center LLP in
the amount of $92,833 to a capital contribution during 1994.
Econofuel, partner of NGV Technology Center LLP, converted a $50,000 and
note and accrued lease obligations of $22,808 into a capital contribution
to NGV Technology Center LLP. An affiliated company of Econofuel converted
accrued lease payments in the amount of $93,500 to contributed capital to
NGV Technology Center LLP during 1993.
NGV Technology Center LLP had sales of natural gas conversion kits to
affiliates of Econofuel during the year totaling $230,911 and $336,435 for
the years ended December 31, 1994 and 1993, respectively. At December 31,
1994, NGV Technology Center LLP had accounts receivable and other
receivables of $18,272 and $53,931, respectively, from Econofuel and its
affiliates and accounts payable of $41,840 to Econofuel and its affiliates.
These amounts were $137,349 and $26,949 for accounts receivable and other
receivables, respectively, and accounts payable of $49,620 as of December
31, 1993. Such receivables have been included in accounts receivable in the
accompanying consolidated balance sheets. NGV Technology Center LLP leases
its facilities from an affiliate of Econofuel, which resulted in rental
expense for the years ended December 31, 1994 and 1993 of $102,000 and
$50,000, respectively. This lease expires on April 30, 1995.
NGVSI contributed as in-kind, equity contributions inventory totaling
$115,934 to NGV Southeast during 1994, while its partners, Sonat NGV
Technology, Inc. (Sonat) and Georgia Energy Company (GEC), each made cash
contributions of $215,000. NGV Southeast had a demand note to Sonat of
$175,000 at December 31, 1994 bearing interest at prime rate. This note is
included in the accompanying consolidated balance sheet as note payable
other. NGV Southeast had sales of natural gas vehicle conversions to
affiliates of GEC during 1994 totaling $173,000.
6
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
NGV Southeast subleased an office to Atlanta Gas Company, parent of a joint
venture partner of NCV Southeast, for a monthly rent of $2,500 under a
noncancelable sublease which expires September 30, 1995.
NGVSI contributed as in-kind, equity contributions lab equipment of
$400,000 to NGV Ecotrans during 1994, while its partner, Ecotrans
Aftermarket Corporation (EAC), made cash contributions of $801,450. The
sales made by NGV Ecotrans to Southern California Gas Company, the parent
of EAC, totaled $374,000 and $141,000 for the years ended December 31, 1994
and 1993, respectively.
(10) Stock Option Plan
The Company has a nonqualified stock option plan for key employees,
including directors, and executive officers of the Company. The exercise
price of the options is established at the discretion of the Board of
Directors. The plan provides that the options are exercisable based on
vesting schedules, generally over a five year period. The options expire
ten years from the date of grant.
The Board of Directors has set aside 500,000 shares of the Company's common
stock for issuance under the plan. During 1994 and 1993, the Board of
Directors granted 210,000 and 205,000 options, respectively, to certain
employees at an exercise price of $5 to $6 per share. There were no options
exercised in 1994 or 1993, but 42,500 options were canceled during 1994. At
December 31, 1994, there were 365,500 options outstanding, all of which are
exercisable.
(11) 401(k) Plan
The Company has a retirement plan under Section 401(k) of the Internal
Revenue Code (the 401(k) plan). The terms of the 401(k) plan provide that
employees over 21 years of age who were employed as of August 1, 1992 shall
be eligible to participate in the p1an. All employees who are hired after
August 1, 1992 shall be eligible to participate in the plan if they are 21
over years of age and have completed three consecutive months of
eligibility service during which the employee has 250 or more hours of
service or one year of eligibility service.
There were no Company contributions during 1994 or 1993.
(12) Deferred Compensation
The Company deferred a certain percentage of compensation to its key
employees beginning September 18, 1993 and ceased deferring such
compensation in November 1994, except for officers of the Company. No
deferred compensation has been paid to active employees or officers.
Repayment will be dependent upon the Company attaining net income for two
consecutive quarters or obtaining substantial outside financing, as
defined. The deferred compensation will accrue interest at the prime rate.
Upon notification of the Company's intention to pay deferred compensation,
employees may elect to purchase the Company's stock at $7.50 a share or
receive payments from the Company in six monthly installments. In addition,
the Company will grant
7
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
the employees options to purchase an additional share of the Company's
stock at an option price of $7.50 per share for each $15 of compensation
deferred. The shares of common stock that have been reserved for issuance
of options under the compensation deferral program are included in the
500,000 shares referred to in the stock option plan. See note 10.
As of December 31, 1994 and 1993, deferred compensation was $331,000 and
$92,000, respectively, which is included in accrued expenses in the
accompanying consolidated financial statements.
(13) Commitments
The Company and the join venture lease their facilities and various office
equipment under operating leases which expire through May 1998. Some annual
rental payments are subject to adjustments based on the consumer price
index.
Future minimum rental commitments under three operating leases are
summarized as follows:
Year ending December 31:
1995 $532,000
1996 299,000
1997 22,000
1998 2,000
--------
$855,000
========
Rent expenses incurred by the Company and its subsidiaries totaled
approximately $625,000 and $570,000 during 1994 and 1993, respectively.
(14) Restructuring Charge
During 1994, the Company implemented a plan to consolidate facilities and
reorganize its operations. As a result, the Company recorded a one-time
restructuring charge of $482,100 related to severance and relocation costs
and the disposal of certain equipment. As of December 31, 1994 an accrual
of $300,000 remains for the settlement of certain of these costs.
8
NATURAL GAS VEHICLE SYSTEMS INC.
AND SUBSIDIARIES
Consolidated Statements Of Shareholders' Equity (Deficiency)
Years ended December 31, 1994 and 1993
Net
Common Stock Additional shareholders'
------------------------- paid-in Accumulated equity
Shares Amount capital deficit (deficiency)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1992 3,000,000 $ 30,000 9,957,122 (6,830,254) 3,156,868
Issuance of common stock 520,834 5,208 3,532,204 -- 3,537,412
Net loss -- -- -- (3,002,499) (3,002,499)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1993 3,520,834 35,208 13,489,326 (9,832,753) 3,691,781
Issuance of common stock 55,750 557 384,442 -- 384,999
Net loss -- -- -- (6,267,118) (6,267,118)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1994 3,576,564 $ 35,765 13,873,768 (16,099,871) (2,190,338)
=========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
NGV SYSTEMS INC.
================
FINANCIAL STATEMENTS
====================
For the One Month Period Ending: JANUARY 31ST 1996
==================================================
Note: Budget and Prior year restated to account for
consolidation under the equity method
Exhibit 4.11(B)
EXECUTIVE SUMMARY - CONSOLIDATED NGV SYSTEMS INC.
=================================================
COMPARATIVE CONSOLIDATED INCOME STATEMENT
=========================================
MONTH For The One Month Period Ending: JANUARY 31st 1996
================================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
668.8 116.1% 976.0 117.6% 726.3 117.6% Gross Sales
92.5 16.1% 146.4 17.6% 108.5 17.6% Discounts/Allowances
-------- -------- -------- -------- -------- --------
576.3 100.0% 829.6 100.0% 617.8 100.0% Net Sales
499.8 86.7% 679.7 81.9% 490.2 79.3% Cost of Sales @ Standard
-------- -------- -------- -------- -------- --------
76.5 13.3% 149.9 18.1% 127.6 20.7% Gross Profit @ Standard
0.4 0.1% (8.3) -1.0% 7.5 1.2% Production Variances
101.5 17.6% 15.9 1.9% 99.1 16.0% Unabsorbed Overhead
-------- -------- -------- -------- -------- --------
(25.4) -4.4% 142.3 17.2% 21.0 3.4% Gross Profit (Loss)
32.3 5.6% 68.8 8.3% 39.4 6.4% R&D Expenses
66.6 11.6% 97.7 11.8% 72.7 11.8% Selling Expenses
101.2 17.6% 123.0 14.8% 111.6 18.1% Gen. & Admin.
-------- -------- -------- -------- -------- --------
200.1 34.7% 289.5 34.9% 223.7 36.2% Total Period Costs
-------- -------- -------- -------- -------- --------
(225.5) -39.1% (147.2) -17.7% (202.7) -32.8% Operating Inc/(Loss)
(1.9) -3.0% (2.0) -0.2% (1.5) -0.2% Other Inc/(Exp)
(11.1) -1.9% (10.3) -1.2% (44.6) -7.2% Interest Inc/(Exp)
-------- -------- -------- -------- -------- --------
(238.5) -41.4% (159.5) -19.2% (248.8) -40.3% Inc/(Loss) before Tech Ctrs
(80.8) -14.0% (72.5) -8.7% 10.0 1.6% Tech Center Income (Losses)
38.1 6.6% 34.0 4.1% (4.2) -0.7% Minority Interest in Tech Ctr.
4.6 0.8% 4.6 0.6% 4.6 0.7% Eliminations between NGVS
and Tech Ctrs
-------- -------- -------- -------- -------- --------
(276.6) -48.0% (193.5) -23.3% (238.4) -38.6% Inc/(Loss) after Min Interest
======== ======== ======== ======== ======== ========
YEAR TO DATE
=====================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Gross Sales 668.8 116.1% 976.0 117.6% 726.3 117.6%
Discounts/Allowances 92.5 16.1% 146.4 17.6% 108.5 17.6%
-------- -------- -------- -------- -------- --------
Net Sales 576.3 100.0% 829.6 100.0% 617.8 100.0%
Cost of Sales @ Standard 499.8 86.7% 679.7 81.9% 490.2 79.3%
-------- -------- -------- -------- -------- --------
Gross Profit @ Standard 76.5 13.3% 149.9 18.1% 127.6 20.7%
Production Variances 0.4 0.1% (8.3) -1.0% 7.5 1.2%
Unabsorbed Overhead 101.5 17.6% 15.9 1.9% 99.1 16.0%
-------- -------- -------- -------- -------- --------
Gross Profit (Loss) (25.4) -4.4% 142.3 17.2% 21.0 3.4%
R&D Expenses 32.3 5.6% 68.8 8.3% 39.4 6.4%
Selling Expenses 66.6 11.6% 97.7 11.8% 72.7 11.8%
Gen. & Admin. 101.2 17.6% 123.0 14.8% 111.6 18.1%
-------- -------- -------- -------- -------- --------
Total Period Costs 200.1 34.7% 289.5 34.9% 223.7 36.2%
-------- -------- -------- -------- -------- --------
Operating Inc/(Loss) (225.5) -39.1% (147.2) -17.7% (202.7) -32.8%
Other Inc/(Exp) (1.9) -3.0% (2.0) -0.2% (1.5) -0.2%
Interest Inc/(Exp) (11.1) -1.9% (10.3) -1.2% (44.6) -7.2%
-------- -------- -------- -------- -------- --------
Inc/(Loss) before Tech Ctrs (238.5) -41.4% (159.5) -19.2% (248.8) -40.3%
Tech Center Income (Losses) (80.8) -14.0% (72.5) -8.7% 10.0 1.6%
Minority Interest in Tech Ctr. 38.1 6.6% 34.0 4.1% (4.2) -0.7%
Eliminations between NGVS 4.6 0.8% 4.6 0.6% 4.6 0.7%
and Tech Ctrs
-------- -------- -------- -------- -------- --------
Inc/(Loss) after Min Interest (276.6) -48.0% (193.5) -23.3% (238.4) -38.6%
======== ======== ======== ======== ======== ========
Note: elimination adjustments made to prior year and budget
PAGE: 1
EXECUTIVE SUMMARY - CONSOLIDATED NGV SYSTEMS INC.
=================================================
COMPARATIVE INCOME STATEMENT
============================
MONTH For The One Month Period Ending: JANUARY 31st 1996
================================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
668.8 116.1% 976.0 117.6% 726.3 117.6% Gross Sales
92.5 16.1% 146.4 17.6% 108.5 17.6% Discounts/Allowances
-------- -------- -------- -------- -------- --------
576.3 100.0% 829.6 100.0% 617.8 100.0% Net Sales
499.8 86.7% 679.7 81.9% 490.2 79.3% Cost of Sales @ Standard
0.8 0.1% Labor variance
3.2 0.5% Overhead Variance
0.4 0.1% (8.3) -1.0% 3.5 0.6% Material variance
-------- -------- -------- -------- -------- --------
0.4 0.1% (8.3) -1.0% 7.5 1.2% Total Variances
169.1 29.3% 191.6 23.1% 201.7 32.6% Manufacturing Ovrhd
22.5 3.9% 24.2 2.9% 40.2 6.5% Maintenance
(15.1) -2.6% (27.1) -3.3% (30.6) -5.0% Applied Labor
(75.0) -13.0% (172.8) -20.8% (112.2) -18.2% Absorbed Overhead
-------- -------- -------- -------- -------- --------
101.5 17.6% 15.9 1.9% 99.1 16.0% Unabsorbed Overhead
-------- -------- -------- -------- -------- --------
601.7 104.4% 687.3 82.8% 596.8 96.6% Total Cost of Sales
-------- -------- -------- -------- -------- --------
(25.4) -4.4% 142.3 17.2% 21.0 3.4% Gross Profit(Loss)
32.3 5.6% 68.8 8.3% 39.4 6.4% R&D Expenses
66.6 11.6% 97.7 11.8% 72.7 11.8% Selling Expense
101.2 17.6% 123.0 14.8% 111.6 18.1% Gen. & Admin.
-------- -------- -------- -------- -------- --------
200.1 36.7% 289.5 34.9% 223.7 36.2% Total Period Costs
-------- -------- -------- -------- -------- --------
(225.5) -39.1% (147.2) -17.7% (202.7) -32.8% Operating Inc/(Loss)
(1.9) -0.3% (2.0) -0.2% (1.5) -0.2% Other Inc/(Exp)
(11.1) -1.9% (10.3) -1.2% (44.6) -7.2% Interest Inc/(Exp)
-------- -------- -------- -------- -------- --------
(238.5) -41.4% (159.5) -19.2% (248.8) -40.3% Net Income (Losses)
======== ======== ======== ======== ======== ========
YEAR TO DATE
=====================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Gross Sales 668.8 116.1% 976.0 117.6% 726.3 117.6%
Discounts/Allowances 92.5 16.1% 146.4 17.6% 108.5 17.6%
-------- -------- -------- -------- -------- --------
Net Sales 576.3 100.0% 829.6 100.0% 617.8 100.0%
Cost of Sales @ Standard 499.8 86.7% 679.7 81.9% 490.2 79.3%
Labor variance 0.8 0.1%
Overhead Variance 3.2 0.5%
Material variance 0.4 0.1% (8.3) -1.0% 3.5 0.6%
-------- -------- -------- -------- -------- --------
Total Variances 0.4 0.1% (8.3) -1.0% 7.5 1.2%
Manufacturing Ovrhd 169.1 29.3% 191.6 23.1% 201.7 32.6%
Maintenance 22.5 3.9% 24.2 2.9% 40.2 6.5%
Applied Labor (15.1) -2.6% (27.1) -3.3% (30.6) -5.0%
Absorbed Overhead (75.0) -13.0% (172.8) -20.8% (112.2) -18.2%
-------- -------- -------- -------- -------- --------
Unabsorbed Overhead 101.5 17.6% 15.9 1.9% 99.1 16.0%
-------- -------- -------- -------- -------- --------
Total Cost of Sales 601.7 104.4% 687.3 82.8% 596.8 96.6%
-------- -------- -------- -------- -------- --------
Gross Profit(Loss) (25.4) -4.4% 142.3 17.2% 21.0 3.4%
R&D Expenses 32.3 5.6% 68.8 8.3% 39.4 6.4%
Selling Expense 66.6 11.6% 97.7 11.8% 72.7 11.8%
Gen. & Admin. 101.2 17.6% 123.0 14.8% 111.6 18.1%
-------- -------- -------- -------- -------- --------
Total Period Costs 200.1 36.7% 289.5 34.9% 223.7 36.2%
Operating Inc/(Loss) (225.5) -39.1% (147.2) -17.7% (202.7) -32.8%
Other Inc/(Exp) (1.9) -0.3% (2.0) -0.2% (1.5) -0.2%
Interest Inc/(Exp) (11.1) -1.9% (10.3) -1.2% (44.6) -7.2%
-------- -------- -------- -------- -------- --------
Net Income (Losses) (238.5) -41.4% (159.5) -19.2% (248.8) -40.3%
======== ======== ======== ======== ======== ========
PAGE: 2
EXECUTIVE SUMMARY - NGV DEVELOPMENT COMPANY
===========================================
INCOME STATEMENT (INCLUDING TECH CENTERS)
=========================================
MONTH For The One Month Period Ending: JANUARY 31st 1996
================================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Other NGVD expenses
1.9 JV (Losses) Inc. Austin
(18.3) JV (Losses) Inc. Atlanta
(80.8) (72.5) 26.1 JV (Losses) Inc. Ecotrans
-------- -------- -------- -------- -------- --------
(80.8) (72.5) 10.0 Income/(Loss)
======== ======== ======== ======== ======== ========
38.1 34.0 (4.2) Minority Interest
YEAR TO DATE
=====================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Other NGVD expenses
JV (Losses) Inc. Austin 1.9
JV (Losses) Inc. Atlanta (18.3)
JV (Losses) Inc. Ecotrans (80.8) (72.5) 26.1
-------- -------- -------- -------- -------- --------
Income/(Loss) (80.8) (72.5) 10.0
======== ======== ======== ======== ======== ========
Minority Interest 38.1 34.0 (4.2)
NOTE: RESERVES WERE MADE IN 1995 FOR LOSSES OF $150K FOR AUSTIN
AND $25K FOR ATLANTA AFTER MINORITY INTEREST
EXECUTIVE SUMMARY - NGV SYSTEMS, INC. ELIMINATIONS
==================================================
For The One Month Period Ending: JANUARY 31st 1996
================================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
4.6 4.6 4.6 Gen. & Admin.
======== ======== ======== ======== ======== ========
YEAR TO DATE
=====================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Gen. & Admin. 4.6 4.6 4.6
======== ======== ======== ======== ======== ========
These eliminations are for organization expenses ($2.7k) charged to Ecotrans by
NGVS and for gain on the sale of a lab ($1.9k) to Ecotrans by NGVS.
PAGE: 3
NGV SYSTEMS INC.
EXECUTIVE SUMMARY - CONSOLIDATED BALANCE SHEET
For the Period Ending: JANUARY 31st 1996
- --------------------------------------------------------------------------------
Actual Budget Prior Year
======== ======== ==========
ASSETS: $(000)
Cash (34.9) 293.3 50.5
Accounts Receivables, Net 913.6 841.4 1,510.5
Prepaid Expenses 43.7 124.0 134.9
Inventory 971.2 937.7 817.0
Other
Standby Letter of Credit 150.0
-------- -------- --------
Total Current Assets 1,893.6 2,346.4 2,512.9
Property, Plant and Equipment 5,200.2 5,245.0 4,924.0
Accumulated Depreciation 2,143.8 2,012.4 1,536.2
-------- -------- --------
Property, Plant & Equipment, Net 3,056.4 3,232.6 3,387.8
Investments in Tech Centers 145.0 166.1 725.6
Other Assets 47.7 190.8 232.2
-------- -------- --------
Total Property and Other Assets 3,249.1 3,589.5
Total Assets 5,142.7 5,935.9 6,858.5
======== ======== ========
LIABILITIES
Notes Payable - Bank 245.0 246.0 245.0
Notes Payable - Others 500.0
Notes Payable - Related Parties 475.0 525.0
Accts & Accrued Payable - Trade 1,373.0 1,650.7 1,844.6
Accts+Accd payables Rel parties
Accrued Wages & Benefits 247.4 363.1 965.3
Accrued Interest 35.6 401.8
Loans Payable - Short Term 87.5 87.5 100.0
Capital Leases - Current 4.8
-------- -------- --------
Total Current Liabilities 2,463.5 2,847.3 4,086.5
Long Term Liabilities
Notes Payable - Related Parties 2,015.8
Due to (from) Inter - Companies
Loans Payable - Long Term 87.5
Capital Leases - Long Term 2.0
Subordinated Debt 3,000.0
-------- -------- --------
Total Liabilities 2,463.5 2,847.3 9,191.8
SHAREHOLDER EQUITY:
Capital 68.2 69.3 35.9
Paid in Capital 23,334.7 23,641.4 13,873.6
Prior Years Retained Earnings (20,447.1) (20,428.7) (16,004.4)
Cur-Year Ret. Earnings 276.6 (193.5) (238.4)
-------- -------- --------
Total Shareholder Equity 2,679.2 3,088.6 (2,333.3)
Total Liabilities/Shareholder Equity 5,142.7 5,935.9 6,858.5
======== ======== ========
- --------------------------------------------------------------------------------
PAGE 4
NGV SYSTEMS INC.
EXECUTIVE SUMMARY - CONSOLIDATED FLOW OF FUNDS
For the One Month Period Ending: JANUARY 31st 1996
$(000's)
- --------------------------------------------------------------------------------
Actual Budget Prior Year
====== ====== ==========
INCOME (LOSS) FROM OPERATIONS (276.6) (193.5)
Non Cash Operating Activities
Depreciation 44.0 52.4
-------- -------- --------
Cash Used By Operations (232.6) (141.1)
(Increase) Decrease In Assets:
Accounts Receivable (387.7) (91.4)
Prepaid expenses 30.8 26.0
Inventory 33.1 (264.7)
Other 6.9 (30.8)
Standby Letter of Credit 350.0 200.0
Increase (Decrease) In Liabilities
Accts+Accd payables Rel. parties
Accts & Accrued Payable - Trade (122.9) 357.3
Accrued Wages & Benefits 38.1 21.1
Accrued Interest 2.6
Capital Leases
-------- -------- --------
Net cash used by operations (281.7) 76.4
Cash flows for Investing Activities:
Capital Expenditures (20.0) (25.0)
Investment In Tech Centers 38.1 34.0
Net Cash Flows From Financing Activities:
Shareholders Equity 17.9
Short Term Notes and Loans..Others
Notes Payable - Bank
Notes Payable - Related Parties 150.0 (116.0)
Subordinated Debt
-------- -------- --------
Net Cash Increase (Decrease) (95.7) (30.6)
Cash at Beginning of Period 60.9 323.9
-------- -------- --------
Cash at End of Period (34.8) 293.3
======== ======== ========
- --------------------------------------------------------------------------------
PAGE 5
NGV SYSTEMS INC.
================
FINANCIAL STATEMENTS
====================
For the Two Month Period Ending: FEBRUARY 29th 1996
===================================================
Note: Budget and Prior year restated to account for
consolidation under the equity method
Exhibit 4.11(C)
EXECUTIVE SUMMARY - CONSOLIDATED NGV SYSTEMS INC.
=================================================
COMPARATIVE CONSOLIDATED INCOME STATEMENT
=========================================
MONTH For The Two Month Period Ending: FEBRUARY 29th 1996
================================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
443.2 117.2% 1,231.7 117.7% 569.4 116.4% Gross Sales
64.9 17.2% 184.8 17.7% 80.2 16.4% Discounts/Allowances
-------- -------- -------- -------- -------- --------
378.3 100.0% 1,046.9 100.0% 489.2 100.0% Net Sales
315.3 83.3% 861.1 82.3% 394.5 80.6% Cost of Sales @ Standard
-------- -------- -------- -------- -------- --------
63.0 16.7% 185.8 17.7% 94.7 19.4% Gross Profit @ Standard
(9.9) -2.6% 7.3 1.5% Production Variances
25.3 6.7% 4.5 0.4% (0.1) -0.0% Unabsorbed Overhead
-------- -------- -------- -------- -------- --------
47.6 12.6% 181.3 17.3% 87.5 17.9% Gross Profit (Loss)
21.9 5.8% 68.5 6.5% 33.7 6.9% R&D Expenses
49.3 13.0% 93.5 8.9% 72.6 14.8% Selling Expenses
82.2 21.7% 119.8 11.4% 111.4 22.8% Gen. & Admin.
-------- -------- -------- -------- -------- --------
153.4 40.5% 281.8 26.9% 217.7 44.5% Total Period Costs
-------- -------- -------- -------- -------- --------
(105.8) -28.0% (100.5) -9.6% (130.2) -26.6% Operating Inc/(Loss)
(0.8) -0.2% (2.0) -0.2% (4.3) -0.9% Other Inc/(Exp)
(12.6) -3.3% (10.3) -1.0% (46.1) -9.4% Interest Inc/(Exp)
-------- -------- -------- -------- -------- --------
(119.2) -31.5% (112.8) -10.8% (180.6) -36.9% Inc/(Loss) before Tech Ctrs
(18.8) -5.0% (13.8) -1.3% (75.0) -15.3% Tech Center Income (Losses)
7.1 1.9% 4.6 0.4% 40.9 -0.7% Minority Interest in Tech Ctr.
4.6 1.2% 4.6 0.4% 4.7 1.0% Eliminations between NGVS
and Tech Ctrs
-------- -------- -------- -------- -------- --------
(126.3) -33.4% (117.4) -11.2% (210.0) -42.9% Inc/(Loss) after Min Interest
======== ======== ======== ======== ======== ========
YEAR TO DATE
=====================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Gross Sales 1,112.0 116.5% 2,207.7 117.6% 1,295.7 117.0%
Discounts/Allowances 157.4 16.5% 331.2 17.6% 188.7 17.0%
-------- -------- -------- -------- -------- --------
Net Sales 954.6 100.0% 1,876.5 100.0% 1,107.0 100.0%
Cost of Sales @ Standard 815.1 85.4% 1,540.8 82.1% 884.7 79.9%
-------- -------- -------- -------- -------- --------
Gross Profit @ Standard 139.5 14.6% 335.7 17.9% 222.3 20.1%
Production Variances (9.5) -1.0% (8.3) -0.4% 14.8 1.3%
Unabsorbed Overhead 126.8 13.3% 20.4 1.1% 99.0 8.9%
-------- -------- -------- -------- -------- --------
Gross Profit (Loss) 22.2 2.3% 323.6 17.2% 108.5 9.8%
R&D Expenses 54.2 5.7% 137.3 7.3% 73.1 6.6%
Selling Expenses 115.9 12.1% 191.2 10.2% 145.3 13.1%
Gen. & Admin. 183.4 19.2% 242.8 12.9% 223.0 20.1%
-------- -------- -------- -------- -------- --------
Total Period Costs 353.5 37.0% 571.3 30.4% 441.4 39.9%
-------- -------- -------- -------- -------- --------
Operating Inc/(Loss) (331.3) -34.7% (247.7) -13.2% (332.9) -30.1%
Other Inc/(Exp) (2.7) -0.3% (4.0) -0.2% (5.8) -0.5%
Interest Inc/(Exp) (23.7) -2.5% (20.6) -1.1% (90.7) -8.2%
-------- -------- -------- -------- -------- --------
Inc/(Loss) before Tech Ctrs (357.7) -37.5% (272.3) -14.5% (429.4) -38.8%
Tech Center Income (Losses) (99.6) -10.4% (86.3) -4.6% (65.0) -5.9%
Minority Interest in Tech Ctr. 45.2 4.7% 38.6 2.1% 36.7 3.3%
Eliminations between NGVS 9.2 1.0% 9.2 0.5% 9.3 0.8%
and Tech Ctrs
-------- -------- -------- -------- -------- --------
Inc/(Loss) after Min Interest (402.9) -42.2% (310.9) -16.6% (448.4) -40.5%
======== ======== ======== ======== ======== ========
Note: elimination adjustments made to prior year and budget
PAGE: 1
EXECUTIVE SUMMARY - CONSOLIDATED NGV SYSTEMS INC.
=================================================
COMPARATIVE INCOME STATEMENT
============================
MONTH For The Two Month Period Ending: FEBRUARY 29th 1996
================================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
443.2 117.2% 1,231.7 117.7% 569.4 116.4% Gross Sales
64.9 17.2% 184.8 17.7% 80.2 16.4% Discounts/Allowances
-------- -------- -------- -------- -------- --------
378.3 100.0% 1,046.9 100.0% 489.2 100.0% Net Sales
315.3 83.3% 881.1 82.3% 394.5 80.6% Cost of Sales @ Standard
(0.5) -0.1% Labor variance
(1.6) -0.3% Overhead Variance
(9.9) -2.6% 9.4 1.9% Material variance
-------- -------- -------- -------- -------- --------
(9.9) -2.6% 7.3 1.5% Total Variances
159.3 42.1% 200.0 19.1% 205.3 42.0% Manufacturing Ovrhd
22.5 5.9% 23.6 2.3% 41.1 8.4% Maintenance
(22.3) -5.9% (29.7) -2.8% (44.1) -9.0% Applied Labor
(133.9) -35.4% (189.4) -18.1% (202.4) -41.4% Absorbed Overhead
-------- -------- -------- -------- -------- --------
25.3 6.7% 4.5 0.4% (0.1) -0.0% Unabsorbed Overhead
-------- -------- -------- -------- -------- --------
330.7 87.4% 865.6 82.7% 401.7 82.1% Total Cost of Sales
-------- -------- -------- -------- -------- --------
47.6 12.6% 181.3 17.3% 87.5 17.9% Gross Profit(Loss)
21.9 5.8% 68.5 6.5% 33.7 6.9% R&D Expenses
49.3 13.0% 93.5 8.9% 72.6 14.8% Selling Expense
82.2 21.7% 119.8 11.4% 111.4 22.8% Gen. & Admin.
-------- -------- -------- -------- -------- --------
153.4 40.5% 261.8 26.9% 217.7 44.5% Total Period Costs
-------- -------- -------- -------- -------- --------
(105.8) -28.0% (100.5) -9.6% (130.2) -26.6% Operating Inc/(Loss)
(0.8) -0.2% (2.0) -0.2% (4.3) -0.9% Other Inc/(Exp)
(12.6) -3.3% (10.3) -1.0% (46.1) -9.4% Interest Inc/(Exp)
-------- -------- -------- -------- -------- --------
(119.2) -31.5% (112.8) -10.8% (180.6) -36.9% Net Income (Losses)
======== ======== ======== ======== ======== ========
YEAR TO DATE
=====================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Gross Sales 1,112.0 116.5% 2,207.7 117.6% 1,295.7 117.0%
Discounts/Allowances 157.4 16.5% 331.2 17.6% 188.7 17.0%
-------- -------- -------- -------- -------- --------
Net Sales 954.6 100.0% 1,876.5 100.0% 1,107.0 100.0%
Cost of Sales @ Standard 815.1 85.4% 1,540.8 82.1% 884.7 79.8%
Labor variance 0.3 0.0%
Overhead Variance 1.6 0.1%
Material variance (9.5) -1.0% (8.3) -0.4% 12.9 1.2%
-------- -------- -------- -------- -------- --------
Total Variances (9.5) -1.0% (8.3) -0.4% 14.8 1.3%
Manufacturing Ovrhd 328.4 34.4% 391.6 20.9% 407.0 36.8%
Maintenance 44.7 4.7% 47.8 2.5% 81.3 7.3%
Applied Labor (37.4) -3.9% (56.8) -3.0% (74.7) -6.7%
Absorbed Overhead (208.9) -21.9% (362.2) -19.3% (314.6) -28.4%
-------- -------- -------- -------- -------- --------
Unabsorbed Overhead 126.8 13.3% 20.4 1.1% 99.0 8.9%
-------- -------- -------- -------- -------- --------
Total Cost of Sales 932.4 97.7% 1,552.9 82.8% 998.5 90.2%
-------- -------- -------- -------- -------- --------
Gross Profit(Loss) 22.2 -2.3% 323.6 17.2% 108.5 9.8%
R&D Expenses 54.2 5.7% 137.3 7.3% 73.1 6.6%
Selling Expense 115.9 12.1% 191.2 10.2% 145.3 13.1%
Gen. & Admin. 183.4 19.2% 242.8 12.9% 223.0 20.1%
-------- -------- -------- -------- -------- --------
Total Period Costs 353.5 37.0% 571.3 30.4% 441.4 39.8%
Operating Inc/(Loss) (331.3) -34.7% (247.7) -13.2% (332.9) -30.1%
Other Inc/(Exp) (2.7) -0.3% (4.0) -0.2% (5.8) -0.5%
Interest Inc/(Exp) (23.7) -2.5% (20.6) -1.1% (90.7) -8.2%
-------- -------- -------- -------- -------- --------
Net Income (Losses) (357.7) -37.5% (272.3) -14.5% (429.4) -38.8%
======== ======== ======== ======== ======== ========
PAGE: 2
EXECUTIVE SUMMARY - NGV DEVELOPMENT COMPANY
===========================================
INCOME STATEMENT (INCLUDING TECH CENTERS)
=========================================
MONTH For The Two Month Period Ending: FEBRUARY 29th 1996
================================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Other NGVD expenses
(28.7) JV (Losses) Inc. Austin
(34.5) JV (Losses) Inc. Atlanta
(18.8) (13.8) (11.8) JV (Losses) Inc. Ecotrans
-------- -------- -------- -------- -------- --------
(18.8) (13.8) (75.0) Income/(Loss)
======== ======== ======== ======== ======== ========
7.1 4.6 40.9 Minority Interest
YEAR TO DATE
=====================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Other NGVD expenses
JV (Losses) Inc. Austin (26.8)
JV (Losses) Inc. Atlanta (52.8)
JV (Losses) Inc. Ecotrans (99.6) (86.3) 14.6
-------- -------- -------- -------- -------- --------
Income/(Loss) (99.6) (86.3) (85.0)
======== ======== ======== ======== ======== ========
Minority Interest 45.2 38.6 36.7
NOTE: RESERVES WERE MADE IN 1995 FOR LOSSES OF $150K FOR AUSTIN
AND $25K FOR ATLANTA AFTER MINORITY INTEREST
EXECUTIVE SUMMARY - NGV SYSTEMS, INC. ELIMINATIONS
==================================================
For The Two Month Period Ending: FEBRUARY 29th 1996
================================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
4.6 4.6 4.7 Gen. & Admin.
======== ======== ======== ======== ======== ========
YEAR TO DATE
=====================================================================
$(000's)
% To % To Prior % To
Actual Sales Budget Sales Year Sales
-------- -------- -------- -------- -------- --------
Gen. & Admin. 9.2 9.2 9.3
======== ======== ======== ======== ======== ========
These eliminations are for organization expenses ($2.7k) charged to Ecotrans by
NGVS and for gain on the sale of a lab ($1.9k) to Ecotrans by NGVS.
PAGE: 3
NGV SYSTEMS INC.
EXECUTIVE SUMMARY - CONSOLIDATED BALANCE SHEET
For the Period Ending: FEBRUARY 29th 1996
- --------------------------------------------------------------------------------
Actual Budget Prior Year
======== ======== ==========
ASSETS: $(000)
Cash 19.7 153.9 33.2
Accounts Receivables, Net 999.1 1,563.8 1,125.5
Prepaid Expenses 21.1 98.0 114.7
Inventory 1,393.9 1,096.9 829.4
Other
Standby Letter of Credit 150.0
-------- -------- --------
Total Current Assets 2,433.8 3,062.6 2,102.8
Property, Plant and Equipment 5,204.0 5,270.0 5,210.9
Accumulated Depreciation 2,188.2 2,064.7 1,571.8
-------- -------- --------
Property, Plant & Equipment, Net 3,015.8 3,205.3 3,639.1
Investments in Tech Centers 137.9 261.5 739.6
Other Assets 39.0 193.4 222.5
-------- -------- --------
Total Property and Other Assets 3,192.7 3,660.2
Total Assets 5,626.5 6,722.8 6,704.0
======== ======== ========
LIABILITIES
Notes Payable - Bank 245.0 246.0 245.0
Notes Payable - Others 1,300.0
Notes Payable - Related Parties 539.5 525.0
Accts & Accrued Payable - Trade 1,957.9 1,734.3 1,849.9
Accts+Accd payables Rel parties
Accrued Wages & Benefits 202.1 383.6 984.9
Accrued Interest 41.6 445.7
Loans Payable - Short Term 87.5 87.5 100.0
Capital Leases - Current 4.8
-------- -------- --------
Total Current Liabilities 3,073.6 3,751.6 4,155.3
Long Term Liabilities
Notes Payable - Related Parties 2,015.8
Due to (from) Inter - Companies
Loans Payable - Long Term 87.5
Capital Leases - Long Term 1.2
Subordinated Debt 3,000.0
-------- -------- --------
Total Liabilities 3,073.6 3,751.6 9,259.8
SHAREHOLDER EQUITY:
Capital 68.2 69.3 35.9
Paid in Capital 23,334.7 23,641.4 13,873.6
Prior Years Retained Earnings (20,447.1) (20,428.7) (16,016.9)
Cur-Year Ret. Earnings (402.9) (310.9) (448.4)
-------- -------- --------
Total Shareholder Equity 2,552.9 2,971.2 (2,555.8)
Total Liabilities/Shareholder Equity 5,626.5 6,722.8 6,704.0
======== ======== ========
- --------------------------------------------------------------------------------
PAGE 4
NGV SYSTEMS INC.
EXECUTIVE SUMMARY - CONSOLIDATED FLOW OF FUNDS
For the Two Month Period Ending: FEBRUARY 29th 1996
$(000's)
- --------------------------------------------------------------------------------
Actual Budget Prior Year
====== ====== ==========
INCOME (LOSS) FROM OPERATIONS (402.9) (310.9)
Non Cash Operating Activities
Depreciation 88.4 104.7
-------- -------- --------
Cash Used By Operations (314.5) (206.2)
(Increase) Decrease In Assets:
Accounts Receivable (473.2) (813.8)
Prepaid expenses 53.4 52.0
Inventory (389.6) (423.9)
Other 15.6 (33.4)
Standby Letter of Credit 350.0 200.0
Increase (Decrease) In Liabilities
Accts+Accd payables Rel. parties
Accts & Accrued Payable - Trade 462.0 440.9
Accrued Wages & Benefits (7.2) 41.8
Accrued Interest 8.6
Capital Leases
-------- -------- --------
Net cash used by operations (294.9) (742.6)
Cash flows for Investing Activities:
Capital Expenditures (23.8) (50.0)
Investment In Tech Centers 45.2 (61.5)
Net Cash Flows From Financing Activities:
Shareholders Equity 17.9
Short Term Notes and Loans..Others 800.0
Notes Payable - Bank
Notes Payable - Related Parties 214.5 (116.0)
Subordinated Debt
-------- -------- --------
Net Cash Increase (Decrease) (41.1) (170.0)
Cash at Beginning of Period 60.9 323.9
-------- -------- --------
Cash at End of Period 19.8 153.9
======== ======== ========
- --------------------------------------------------------------------------------
PAGE 5
AGREEMENT FOR OPTION TO PURCHASE STOCK
THIS AGREEMENT FOR OPTION TO PURCHASE STOCK (hereinafter this "Agreement")
dated April 4, 1996, is made by and among Clock Spring, Inc., a Delaware
corporation, with its principal offices at 1114 Avenue of the Americas, 35th
Floor, New York, New York 10036; Caithness Composites, Inc., a Delaware
corporation, with its principal offices at 1114 Avenue of the Americas, 35th
Floor, New York, New York 10036 (Clock Spring, Inc. and Caithness Composites,
Inc. shall hereinafter be collectively referred to as the "Shareholders" and
each individually referred to as a "Shareholder"); Paul S. Dopp, whose address
is 58 Lyons Place, Basking Ridge, New Jersey (hereinafter "Dopp"); and
Lindabury, McCormick & Estabrook, a Professional Corporation, 53 Cardinal Drive,
Westfield New Jersey 07091 ("Lindabury, McCormick & Estabrook").
WITNESSETH
WHEREAS, the Shareholders own common stock in Natural Gas Vehicle Systems,
Inc., a Delaware corporation, (hereinafter the "Company") in the following
amounts:
Clock Spring, Inc. 54,023
Caithness Composites, Inc. 499,106
WHEREAS, provided the Shareholders execute, deliver and perform under this
Agreement, Dopp has agreed to lend the Company SIX HUNDRED THOUSAND DOLLARS
($600,000.00) pursuant to that certain Loan and Security Agreement between Dopp
and the Company dated on even date herewith (hereinafter the "Loan");
WHEREAS, the Shareholders will benefit from the Loan and have agreed to
enter into this Agreement in order to induce Dopp to make the Loan to the
Company;
WHEREAS, the Shareholders and Dopp desire that Lindabury, McCormick &
Estabrook serve as escrow agent hereunder;
NOW THEREFORE, in consideration of the aforestated recitals 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
1.1 "Common Stock" shall mean the Company's $.01 par value common stock.
1.2 "Option" shall mean an option to purchase Common Stock, along with a
pro-rata portion of cash and/or any other assets deposited in the Share Escrow
(hereinafter defined) granted pursuant to the provisions of hereof.
1.3 "Optioned Shares" shall mean 500,000 shares of Common Stock owned by
the Shareholders on a pro-rata basis in the following amounts:
Clock Spring, Inc. 48,834 shares
Caithness Composites, Inc. 451,166 shares
or such other number and/or kind of shares as appropriate as the result of an
adjustment pursuant to Section 4.1 hereof.
1.4 "Option Price" shall mean $1.00 per share of Common Stock or such lower
price per share of Common Stock as may be appropriate as the result of an
adjustment pursuant to Section 4.1 hereof.
ARTICLE II
OPTION
2.1 The Option. Dopp may, at his option, purchase the Optioned Shares,
along with a pro rata portion of cash and/or any other assets deposited in the
Share Escrow (hereinafter defined) in whole or in part at the Option Price and
on the terms and conditions set forth herein; provided, however, that no partial
exercise of the Option hereunder granted to Dopp shall be permitted unless the
aggregate Option Price paid by Dopp in respect of any such partial exercise is
One Hundred Thousand Dollars ($100,000.00) or greater.
2.2 Option Period. The period for the exercise of the Option hereunder
shall be three (3) years from the date hereof (hereinafter the "Option Period").
At the end of the Option Period, this Agreement shall automatically terminate
and the parties shall have no further obligations to one another in connection
with the Option or this Agreement.
2
2.3 Option Exercise. The Option may be exercised at any time within the
Option Period, and shall be exercised by seven (7) days written notice of intent
to exercise the Option (the "Notice Period") delivered to each Shareholder at
its principal offices. Such notice shall be accompanied by payment in full in
cash or other immediately available funds to the Shareholders at said offices in
the amount of the Option Price for the respective number of shares of Common
Stock with respect to which the Option is being exercised. Upon the expiration
of the Notice Period, Lindabury, McCormick and Estabrook shall release the
appropriate portion of the Share Escrow to Dopp in accordance with Section 3.2
hereof.
2.4 Limited Transferability of Option. The Option hereunder shall not be
transferred by Dopp otherwise than by (i) will or the laws of descent and
distribution or (ii) by gift or other transfer to his immediate family member(s)
or grandchildren or trusts created for his or their benefit. During Dopp's
lifetime, the Option shall be exercisable only by him.
2.5 No Pledge of Option. Dopp shall not pledge or otherwise encumber the
Option hereunder for any purpose whatsoever.
ARTICLE III
Share Escrow
3.1 Share Escrow. (a) Dopp and the Shareholders hereby designate and
appoint Lindabury, McCormick & Estabrook, as the escrow agent to hold and
deliver the Optioned Shares and to serve as escrow agent in accordance with the
terms and conditions of this Agreement. Lindabury, McCormick & Estabrook hereby
accepts such designation and appointment. The Shareholders shall concurrently
with the execution and delivery of this Agreement, deposit the Optioned Shares,
with duly executed stock powers endorsed in blank attached, with Lindabury,
McCormick & Estabrook or such account at a financial institution or other escrow
agent designated in accordance with subsection 3.1(g) hereof for the purposes
hereinafter set forth (hereinafter, together with such other securities, cash or
other assets as shall be required to be escrowed as set forth in Section 4.1
hereof, the "Share Escrow").
(b) Dopp and the Shareholders hereby jointly and severally agree to defend,
indemnify and hold Lindabury, McCormick & Estabrook harmless from and against
any and all claims, actions, judgments, losses, liabilities, objections,
damages, charges, costs and expenses of any nature whatsoever, including without
limitation reasonable attorneys' fees and expenses incurred by Lindabury,
McCormick & Estabrook arising directly or indirectly from, out of or incident to
its duties under this Agreement, excepting only those arising out of the
Lindabury, McCormick & Estabrook's gross negligence or intentional or deliberate
3
misconduct. The regular fees of Lindabury, McCormick & Estabrook shall be the
obligation of the Shareholders.
(c) Copies of all notices and other communications by the other parties
hereto to each other, including without limitation, any notice of intent to
exercise the Option under this Agreement pursuant to the terms hereof, shall be
sent to Lindabury, McCormick & Estabrook in writing and in the same manner as
notices and other communications are to be given to the other parties hereto in
accordance with this Agreement. Lindabury, McCormick & Estabrook shall be under
no duty or responsibility to make any inquiry or investigation as to the
accuracy or adequacy of any such notice and shall be entitled to assume
conclusively, the correctness and completeness of any and all information given
in any notice, certificate, request statement or other communication received by
it under this Agreement. The other parties hereto shall hold Lindabury,
McCormick & Estabrook harmless from any act of Lindabury, McCormick & Estabrook
in reliance upon any notice, certificate, request, statement or other
communication believed (after appropriate due diligence) by Lindabury, McCormick
& Estabrook to be genuine and to have been signed by the proper party or
parties.
(d) Lindabury, McCormick & Estabrook shall not be liable for any error of
judgment, or any act done or step taken or omitted by it in good faith, or for
any mistake of fact or law, or for anything which it may do or refrain from
doing in connection herewith, excepting only its own gross negligence or
intentional or deliberate misconduct.
(e) In the event of any disagreement between by or all of the other parties
to this Agreement, or between them or any one of them and any other persons,
resulting in adverse claims or demands being made in connection with the Share
Escrow herein established or in the event that Lindabury, McCormick & Estabrook,
in good faith, is in doubt as to what action it should take hereunder, then
Lindabury, McCormick & Estabrook may, at its option, refuse to comply with any
claims or demands upon it, or refuse to take any other action hereunder, so long
as any such disagreement, claim, demand or uncertainty continues to exist, and
in any such event, Lindabury, McCormick & Estabrook shall not be or become
liable in any way to any person for its failure to act.
(f) Lindabury, McCormick & Estabrook shall be entitled to continue to
refrain from acting until (i) the rights of all parties shall have been fully
and finally adjudicated by a court of competent jurisdiction, or (ii) all
differences shall have been adjusted and all doubts resolved by written
agreement among all interested persons and the escrow agent shall have been so
notified in a writing signed by all such persons.
(g) Lindabury, McCormick & Estabrook may at any time resign hereunder by
giving at least five days' prior written notice thereof to Dopp and the
Shareholders. Upon
4
the effective date of such resignation, the Share Escrow then held by Lindabury,
McCormick & Estabrook hereunder shall be delivered to joint designee of Dopp and
the Shareholders. Upon arranging for such delivery, all obligations of
Lindabury, McCormick & Estabrook hereunder shall cease and terminate. If no such
persons shall have been designated by the date validly set hereunder for
Lindabury, McCormick & Estabrook's resignation, nevertheless, all obligations of
Lindabury, McCormick & Estabrook hereunder shall cease and terminate, provided
that prior thereto it shall have made safe and reasonable deposit of the Share
Escrow held by it with a financial institution designated by Dopp.
(h) Dopp acknowledges that Lindabury, McCormick & Estabrook has acted and
is acting as legal counsel to the Company and the Shareholders in connection
with this Agreement and the transaction contemplated hereby. By acting as escrow
agent hereunder Lindabury, McCormick & Estabrook is merely acting as a
stakeholder and is, therefore, hereby authorized to continue to act as counsel
to the Company and the Shareholders after the date of execution hereof in
connection with transactions other than those arising hereunder.
3.2 Release of Share Escrow. The Optioned Shares shall be endorsed to Dopp
by Lindabury, McCormick & Estabrook and the contents of the Share Escrow,
including, without limitation, the Optioned Shares together with any cash or
other assets placed into the said Share Escrow in accordance with Section 4.1
hereof, shall be released to Dopp upon the proper exercise of the Option in
accordance with the terms and conditions hereof, and further upon confirmation,
satisfactory to Lindabury, McCormick & Estabrook that the appropriate Option
Price reflecting the appropriate number of Optioned Shares for which the Option
has been exercised has been transferred by Dopp to the Shareholders, as provided
for in Article II above. In the event Dopp does not exercise the Option within
the Option Period, the Optioned Shares, together with such other securities,
cash or other assets as shall be required to be escrowed as set forth in Section
4.1 hereof, shall be released from the Share Escrow and returned to the
Shareholders in accordance with their pro-rata interest therein.
3.3 Rights to Optioned Shares in Share Escrow. Dopp shall not be entitled
to the privileges of stock ownership in respect of any shares issuable upon
exercise of this Option, unless and until such shares have been released from
the Share Escrow and issued to Dopp as fully paid shares. Subject to the terms
of this Agreement, the Shareholders shall maintain all rights, including voting
rights and any and all other rights vested in them, by virtue of their
respective shareholder status in the Company, until such time as the Optioned
Shares are released from the Share Escrow and transferred to Dopp.
5
ARTICLE IV
Miscellaneous
4.1 Adjustments, Dividends and Corporate Reorganizations. If the
outstanding shares of Common Stock subject to this Option are increased or
decreased, or are changed into or exchanged for a different number or kind of
shares or securities, as a result of one or more reorganizations, mergers,
recapitalization, stock splits, reverse stock splits, stock dividends or the
like (such increase or decrease, change or exchange hereinafter referred to as a
"Corporate Transaction") appropriate adjustments shall be made in the number
and/or kind of shares or securities for which this Option may thereafter be
exercised and the Option Price in effect immediately prior to such Corporate
Transaction shall be proportionately reduced; in the case of a Corporate
Transaction resulting in the conversion of the Optioned Shares into a greater
number of shares of Common Stock or other securities, and conversely, in case of
a Corporate Transaction resulting in the conversion of the Optioned Shares into
a lesser number of shares of Common Stock or other securities, the Option Price
in effect immediately prior to such Corporate Transaction shall be
proportionately increased; provided, however, no adjustment to the Option Price
shall be made under this paragraph in respect of shares deposited in the Share
Escrow which are not shares of voting Common Stock. No fractional share of stock
shall be issued under this Option or in connection with any such adjustment.
Such adjustment will be made by depositing the securities issued to the
Shareholders as the result of any such Corporate Transaction in the Share Escrow
in exchange for the share certificates deposited in the Share Escrow pursuant to
Article III hereof, and each Shareholder hereby covenants and warrants to Dopp
that it shall take such steps as shall be necessary to cause such securities
issued to it from time to time as the result of any such Corporate Transaction
to be immediately deposited into the Share Escrow (or such other escrow as may
be established pursuant to Section 3.1 (g) hereof) as herein required.
Further, in the event the Shareholders receive, or are entitled to receive
any dividends, distributions, or other payments in respect of the Optioned
Shares, otherwise than out of earned surplus, whether in cash, by issuance of
additional securities of Company of whatever class, or in kind, any such
property shall be deposited in the Share Escrow immediately upon Shareholder's
receipt or constructive receipt thereof, and each Shareholder hereby covenants
and warrants to Dopp that it shall take such steps as shall be necessary to
cause such property to be immediately deposited into the Share Escrow (or such
other escrow as may be established pursuant to Section 3.1 (g) hereof) as herein
required. Any such property as shall be deposited into the Share Escrow shall be
conveyed to Dopp, pro rata, at the time the Optioned Shares, or any portion
thereof, are released to Dopp as required in Section 3.2 hereof Lindabury,
McCormick and Estabrook shall invest any cash received into the Share Escrow in
an insured, interest bearing trust account at Summit Bank, Princeton, New
Jersey, for the benefit of the Shareholders and/Dopp as the case may be.
6
4.2 Requirements of Law and of Stock Exchanges. By entering into this
Agreement, Dopp represents and agrees for himself and his transferees by will or
the laws of descent and distribution that, unless a registration statement under
the Securities Act of 1933 is in effect as to shares purchased upon the exercise
of this Option, (i) any and all shares so purchased shall be acquired for his
personal account and not with a view to or for sale in connection with any
distribution, and (ii) each notice of the exercise of any portion of this Option
shall be accompanied by a representation and warranty in writing, signed by the
person entitled to exercise the same, that the shares are being so acquired in
good faith for his personal account and not with view to or for sale in
connection with any distribution.
4.3 Singular, Plural; Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender.
4.4 Governing Law. This Agreement shall be governed and interpreted in
accordance with the laws of the State of New Jersey including choice of law
rules.
4.5 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.
4.6 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 a copy thereof to Dopp.
4.7 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.
4.8 Severability. In case any provision in or obligation under this
Agreement 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.
4.9 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO 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.
7
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
CLOCK SPRING,INC.
By: /s/ Christopher T. McCallion
--------------------------------
Christopher T. McCallion,
Senior Vice President
CAITHNESS COMPOSITES, INC.
By: /s/ Christopher T. McCallion
--------------------------------
Christopher T. McCallion
Senior Vice President
PAUL S. DOPP
/s/ Paul S. Dopp
--------------------------------
LINDABURY, McCORMICK ESTABROOK
By:/s/ J. Ferd Convery III
--------------------------------
J. Ferd Convery III
8
SECRETARY'S CERTIFICATE
I, J. Ferd Convery, III, hereby certifies as follows:
1. I am the Secretary of Natural Gas Vehicle Systems, Inc. (the "Company")
and as such am responsible for maintaining the minutes of the meetings of the
Board of Directors of the Company.
2. On March 6, 1996, a meeting of the Board of Directors of the Company was
held in New York, New York at which a quorum was present. At said meeting the
Board of Directors unanimously resolved that the Company borrow an amount up to
$600,000.00 from Paul S. Dopp payable not later than December 31, 1996 at a rate
of interest equal to 12% per annum (the "Loan").
3 . The Board further resolved to pledge the three roller "Leifeld" flow
forming machine, Model Number Leico ST65-132 CNC as collateral for the Loan.
/s/ J. Ferd Convery, III
--------------------------------
J. Ferd Convery, III
April 4, 1996
PROMISSORY NOTE
$600,000.00 Long Beach, California
April 4, 1996
FOR VALUE RECEIVED, NATURAL GAS VEHICLE SYSTEMS, INC., a corporation duly
organized and validly existing under the laws of the State of Delaware, having
its principal office at 5580 Cherry Avenue, Long Beach, California 90805
(together with its successors and assigns, hereinafter referred to as the
"Borrower") hereby promises to pay to PAUL S. DOPP, residing at 58 Lyons Place,
Basking Ridge, New Jersey 07920 (together with his heirs and assigns,
hereinafter referred to as the "Lender"), or order, the principal sum of SIX
HUNDRED THOUSAND DOLLARS ($600,000.00), 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 May 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 December 31, 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 manner 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
shall, 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.
-2-
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.
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 HEREAFTFR
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.
_____________________________ By:_______________________________
John Bacon, President
-3-
TO THE EXTENT PERMITTED BY APPLICABLE LAW, 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.
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 HEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PRE-PAID, 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.
By: /s/ John Bacon
- ----------------------------- ---------------------------------
John Bacon, President
-3-
[LETTERHEAD OF LINDABURY, McCORMICK & ESTABROOK]
April 4, 1996
Paul S. Dopp
58 Lyons Place
Basking Ridge, New Jersey
RE: Natural Gas Vehicle Systems, Inc. $600,000.00 Loan
Dear Mr. Dopp:
This opinion is being rendered to you at your specific request in
connection with that certain promissory note dated as of April 4, 1996 in the
principal amount of $600,000.00 (the "Note") issued by the Borrower to you and
the Loan and Security Agreement dated as of April 4, 1996 (the "Loan Agreement")
by and between the Borrower and you. Capitalized terms used in our opinion and
not defined herein shall have the respective meanings indicated in the Loan
Agreement.
We are acting as counsel to the Borrower. In this capacity, we are
generally familiar with the affairs of the Borrower. In connection with the
foregoing transactions, we have also examined such mailers, documents,
certificates of officers of the Borrower, and certificates of public officials
and have considered such questions of law as we have deemed relevant and
necessary for the purposes of this opinion. In such examinations, we have
assumed the genuineness of all signatures, the authenticity of documents
submitted to us as originals, and the conformity to originals of all documents
submitted to us as certified, conformed and photostatic copies. In rendering the
opinion set forth herein, we have relied without investigation upon, and assumed
as true and correct, the representations, warranties and statements as to
factual matters contained in, and made pursuant to the Loan Documents.
Based upon the foregoing, we are of the opinion that:
(a) The Loan Agreement is a valid security agreement and creates a valid
security interest in the Collateral. The Loan Agreement, as a security
agreement, and the financing statement attached hereto as an Exhibit meet all
formal requirements of applicable provisions
of the Uniform Commercial Code as enacted and in force in the State of New
Jersey. The said financing statement has been forwarded for filing in the office
of the Secretary of State of the State of California. The filing of the said
financing statement will perfect your security interest in the Collateral, and,
based solely upon our review of Uniform Commercial Code searches against the
Borrower conducted by Prentice Hall Infosearch at our request, your security
interest, when perfected, shall constitute a first priority lien on the
Collateral.
We are licensed to practice in the State of New Jersey and not in
California. The opinion hereinabove set forth is rendered to you with respect to
the laws of the State of New Jersey and we express no opinion herein with
respect to matters governed by the laws of any other jurisdiction.
Very truly yours,
LINDABURY, McCORMICK & ESTABROOK
/s/ LINDABURY, McCORMICK &
ESTABROOK
STANDARD FORM
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT - FORM UCC-1
[ILLEGIBLE]
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to
the Uniform Commercial Code:
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and address(es)
Natural Gas Vehicle Systems, Inc.
5580 Cherry Av., Long Beach CA 90805
Debtor's Trade Names:
CNG Cylinder Company
NGV Systems, NGV Technology Company
- --------------------------------------------------------------------------------
2. Secured Party(ies) and address(es)
Paul S. Dopp
58 Lyons Road
Basking Ridge NJ 07920
- --------------------------------------------------------------------------------
3. Maturity date (if any):
For Filing Officer (Date, Time, Number, and Filing Office)
- --------------------------------------------------------------------------------
Federal Tax ID No. 33-0515639
- --------------------------------------------------------------------------------
4. This financing statement covers the following types (or items) of property:
Debtor hereby grants the Secured Party a security interest in the three
roller "Leifeld" flow forming machine, Model Number Leico ST65/132-CNC
- --------------------------------------------------------------------------------
5. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
This statement is filed without the debtor's signature to perfect as security
interest in collateral. (check [X] if so)
[_] already subject to a security interest in another jurisdiction when it was
brought into this state.
[_] which is proceeds of the original collateral described above in which a
security interest was perfected:
- --------------------------------------------------------------------------------
Filed with:
Secretary of State
of California
- --------------------------------------------------------------------------------
Check [X] if covered: [_] Proceeds of Collateral are also covered. [_] Products
of Collateral are also covered. No. of additional sheets presented: ______
- --------------------------------------------------------------------------------
Natural Gas Vehicle Systems, Inc. _________________________________________
By:/s/ John N. Bacon Pres. By:
--------------------- ----- ------------------------------- -----
Signature(s) of Debtors Title Signature(s) of Secured Party(ies) Title
John Bacon
- --------------------------------------------------------------------------------
(1) Filing Officer Copy - Alphabetical
STANDARD FORM - FORM UCC-1.
(For Use in Most States)
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to
the Uniform Commercial Code:
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and address(es)
Natural Gas Vehicle Systems, Inc.
5580 Cherry Av., Long Beach CA 90805
Debtor's Trade Names:
CNG Cylinder Company
NGV Systems, NGV Technology Company
- --------------------------------------------------------------------------------
2. Secured Party(ies) and address(es)
Paul S. Dopp
58 Lyons Road
Basking Ridge NJ 07920
- --------------------------------------------------------------------------------
3. Maturity date (if any):
For Filing Officer (Date, Time, Number, and Filing Office)
9610060375
[BAR CODING]
FILED
SACRAMENTO, CA
APR 08, 1996 AT 1117
BILL JONES
SECRETARY OF STATE
- --------------------------------------------------------------------------------
Federal Tax ID No. 33-0515639
- --------------------------------------------------------------------------------
4. This financing statement covers the following types (or items) of property:
Debtor hereby grants the Secured Party a security interest in the three
roller "Leifeld" flow forming machine, Model Number Leico S165/132-CNC
4/8-4/12 #2
- --------------------------------------------------------------------------------
This statement is filed without the debtor's signature to perfect as security
interest in collateral. (check [X] if so)
[_] already subject to a security interest in another jurisdiction when it was
brought into this state.
[_] which is proceeds of the original collateral described above in which a
security interest was perfected:
- --------------------------------------------------------------------------------
Filed with:
Secretary of State
of California
- --------------------------------------------------------------------------------
Check [X] if covered: [_] Proceeds of Collateral are also covered. [_] Products
of Collateral are also covered. No. of additional sheets presented: ______
- --------------------------------------------------------------------------------
Natural Gas Vehicle Systems, Inc. _________________________________________
By:/s/ John N. Bacon Pres. By:
--------------------- ----- ------------------------------- -----
Signature(s) of Debtors Title Signature(s) of Secured Party(ies) Title
John Bacon
- --------------------------------------------------------------------------------
(2) Filing Officer Copy - Numerical
(For Use in Most States)
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to
the California Uniform Commercial Code
- --------------------------------------------------------------------------------
1. FILE NO. OR ORIG. FINANCING STATEMENT
9607161041
- --------------------------------------------------------------------------------
1A. DATE OF FILING OF ORIG. FINANCING STATEMENT
3/8/96
- --------------------------------------------------------------------------------
1B. DATE OF ORIG. FINANCING STATEMENT
- --------------------------------------------------------------------------------
1C. PLACE OF FILING ORIG. FINANCING STATEMENT
- --------------------------------------------------------------------------------
2. DEBTOR (LAST NAME FIRST)
NATURAL GAS VEHICLE SYSTEMS, INC.
- --------------------------------------------------------------------------------
2A. SOCIAL SECURITY NO., FEDERAL TAX NO.
33-0515639
- --------------------------------------------------------------------------------
2B. MAILING ADDRESS
5580 Cherry Avenue
- --------------------------------------------------------------------------------
2C. CITY, STATE
Long Beach CA
- --------------------------------------------------------------------------------
2D. ZIP CODE
90805
- --------------------------------------------------------------------------------
3. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST)
- --------------------------------------------------------------------------------
3A. SOCIAL SECURITY NO., FEDERAL TAX NO.
- --------------------------------------------------------------------------------
3B. MAILING ADDRESS
- --------------------------------------------------------------------------------
3C. CITY, STATE
- --------------------------------------------------------------------------------
3D. ZIP CODE
- --------------------------------------------------------------------------------
4. SECURED PARTY
NAME CAITHNESS CORPORATION
MAILING ADDRESS 1114 Avenue of the Americas
CITY New York STATE NY ZIP CODE 10036
- --------------------------------------------------------------------------------
4A. SOCIAL SECURITY NO., FEDERAL TAX NO. OR BANK TRANSIT AND A.B.A. NO.
- --------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY)
NAME
MAILING ADDRESS
CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
5A. SOCIAL SECURITY NO., FEDERAL TAX NO. OR BANK TRANSIT AND A.B.A. NO.
- --------------------------------------------------------------------------------
6.
A[_] CONTINUATION-The original Financing Statement between the foregoing
Debtor and Secured Party bearing the file number and date shown above is
continued. If collateral is crops or timber, check here [_] and insert
description of real property on which growing or to be grown in Item 7
below.
---------------------------------------------------------------------------
B[X] RELEASE-From the collateral described in the Financing Statement bearing
the file number shown above, the Secured Party releases the collateral
described in Item 7 below.
---------------------------------------------------------------------------
C[_] ASSIGNMENT-The Secured Party certifies that the Secured Party has assigned
to the Assignee above named, all the Secured Party's rights under the
Financing Statement bearing the file number shown above in the collateral
described in Item 7 below.
---------------------------------------------------------------------------
D[_] TERMINATION-The Secured Party certifies that the Secured Party no longer
claims a security interest under the Financing Statement bearing the file
number shown above.
---------------------------------------------------------------------------
E[_] AMENDMENT-The Financing Statement bearing the file number shown above is
amended as set forth in Item 7 below. (Signature of Debtor required on all
amendments.)
---------------------------------------------------------------------------
F[_] OTHER
- --------------------------------------------------------------------------------
The Secured Party releases its security interest in the three-roller
"Leifeld" flow forming machine, Model Number Leico ST65/132-CNC.
- --------------------------------------------------------------------------------
9. This Space for Use of Filing Officer
(Date, Time, Number, and Filing Office)
96100C0533
[BAR CODING]
FILED
SACRAMENTO, CA
APR 08, 1996 AT 1320
BILL JONES
SECRETARY OF STATE
- --------------------------------------------------------------------------------
(Date) April 3rd 1996
_________________________________________
By:____________________________________________________________________________
SIGNATURE(S) OF DEBTORS (TITLE)
CAITHNESS CORPORATION
_______________________________________________________________________________
By: /s/ Murray Buttner Senior V.P.
----------------------------------------------------------------------------
SIGNATURE(S) OF SECURED PARTY(IES) Murray Buttner (TITLE)
- --------------------------------------------------------------------------------
Return Copy to 4/8 4/12 #3
NAME P6-0000-785-0
ADDRESS Please return copy to:
CITY AND CT CORPORATION SYSTEM - UCC Services
STATE 1201 K Street, Ste. 1980
Sacramento, CA 95814
(2) Filing Officer Copy - Acknowledgement Requested to note date and hour of
filing on this copy and return to
the above party.
STANDARD FORM-FILING FEE UNIFORM COMMERCIAL CODE-FORM UCC-2
Approved by the Secretary of State
AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT (hereinafter referred to as
the "Amendment") is made and entered into as of the 1st day of July, 1996, by
and between NATURAL GAS VEHICLE SYSTEMS, INC., a Delaware corporation, whose
principal place of business is located at 5580 Cherry Avenue, Long Beach,
California 90805 (together with its successors and assigns, hereinafter referred
to as the "Borrower") and PAUL S. DOPP, residing at 58 Lyons Place, Basking
Ridge, New Jersey 07920 (together with his heirs and assigns, hereinafter
referred to as the "Lender").
RECITALS OF FACT AND PURPOSE:
A. Pursuant to a certain Loan and Security Agreement dated as of April 4,
1996 (hereinafter referred to as the "Agreement"), the Lender provided Borrower
with a loan in the principal amount of SIX HUNDRED THOUSAND DOLLARS
($600,000.00) (the "Loan").
B. The Loan is presently evidenced by a certain Promissory Note dated April
4, 1996, in the principal amount of $600,000.00.
C . The parties have agreed that the maturity date under the Agreement be
changed from December 31, 1996 to November 30, 1996.
NOW, THEREFORE, in consideration of the foregoing recitals of fact and the
mutual promises and covenants set forth herein, and the payment of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is acknowledged. and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Capitalized terms used but not specifically defined in this Amendment
shall have the meanings ascribed to them in the Agreement, unless a different
meaning is clearly required by the context hereof.
2. The definition of "Termination Date" shall be amended to state
"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".
3. Section 2.1(a) of the Agreement is hereby amended by the deletion
therefrom of all references to the date "December 1, 1996," and the replacement
thereof by references to the date "November 1, 1996."
4. Section 2.1(b) of the Agreement is hereby amended by the deletion
therefrom of all references to the date "December 31, 1996," and the replacement
thereof by references to the date "November 30, 1996."
5. From and after the execution hereof, all references to the "Loan and
Security Agreement" or the "Agreement," whether or not defined as such, in the
Agreement or in any of the Loan Documents, shall be deemed to be references to
the Loan and Security Agreement, as amended by this Amendment.
6. This Amendment has been duly executed and validly delivered by the
parties hereto, and constitutes the legal, valid, and binding obligations of the
parties hereto enforceable against them in accordance with its terms.
7. Except to the extent inconsistent with this Amendment (in which case the
terms and provisions hereof shall prevail), the terms and provisions of the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first written above.
NATURAL GAS VEHICLE SYSTEMS INC.
By: /s/ John Bacon
-----------------------------
John Bacon, President
PAUL S. DOPP
/s/ Paul S. Dopp
--------------------------------
Page 2
AMENDMENT TO
PROMISSORY NOTE
THIS AMENDMENT TO PROMISSORY NOTE (hereinafter referred to as the
"Amendment") is made and entered into as of the 1st day of July, 1996, by
NATURAL GAS VEHICLE SYSTEMS, INC., a Delaware Corporation, whose principal place
of business is located at 5580 Cherry Avenue, Long Beach, California 90805
(together with its successors and assigns, hereinafter referred to as the
"Borrower") for the benefit of PAUL S. DOPP, (together with his heirs and
assigns, hereinafter referred to as the "Lender") residing at 58 Lyons Place,
Basking Ridge, New Jersey 07920.
RECITALS OF FACT AND PURPOSE
A. Pursuant to a certain Loan and Security Agreement dated as of April 4,
1996, the Lender provided Borrower with a loan in the principal amount of SIX
HUNDRED THOUSAND DOLLARS ($600,000) (the "Loan").
B. The Loan is presently evidenced by a certain Promissory Note dated April
4, 1996, in the principal amount of $600,000 (the "Note").
C. The parties have agreed that the maturity date under the Note be
changed from December 31, 1996 to November 30, 1996.
NOW, THEREFORE, in consideration of the foregoing recitals of fact and the
mutual promises and covenants set forth hereinafter and the payment by the
Borrower to the Lender of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, and
intending to be legally bound hereby, the parties agree as follows:
1. Capitalized terms which are used but not defined herein shall have the
meanings ascribed to them in the Term Note, unless a different meaning is
clearly required by the context hereof.
2. Paragraph A of the Note is hereby amended by the deletion therefrom of
all references to the date "December 1, 1996", and the replacement thereof by
references to the date "November 1, 1996".
3. Paragraph B of the Note is hereby amended by the deletion therefrom of
all references to the date "December 31, 1996", and the replacement thereof of
references to the date "November 30, 1996".
4. Except to the extent expressly amended hereby (in which case, the terms
of this amendment shall prevail), the various terms of provisions of the Note
shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Amendment on the day and year first written above.
NATURAL GAS VEHICLE SYSTEMS INC.
By: /s/ John Bacon
----------------------------
John Bacon, President
PAUL S. DOPP
/s/ Paul S. Dopp
----------------------------