As filed with the Securities and Exchange Commission on July 23, 1996
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
MANSUR INDUSTRIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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FLORIDA 3599 65-0226813
<S> <C> <C>
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
<TABLE>
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<S> <C>
PAUL I. MANSUR
CHIEF EXECUTIVE OFFICER
MANSUR INDUSTRIES INC.
8425 S.W. 129TH TERRACE 8425 S.W. 129TH TERRACE
MIAMI, FLORIDA 33156 MIAMI, FLORIDA 33156
(305) 232-6768 (305) 232-6768
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL INCLUDING AREA CODE, OF AGENT FOR SERVICE)
EXECUTIVE OFFICES)
</TABLE>
---------------
WITH COPIES TO:
---------------
GARY M. EPSTEIN, ESQ. LAWRENCE B. FISHER, ESQ.
GREENBERG, TRAURIG, HOFFMAN, ORRICK, HERRINGTON & SUTCLIFFE
LIPOFF, ROSEN & QUENTEL, P.A. 666 FIFTH AVENUE
1221 BRICKELL AVENUE NEW YORK, NEW YORK 10103
MIAMI, FLORIDA 33131 (212) 506-5000
(305) 579-0500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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==================================================================================================================================
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED PER SECURITY(1) PRICE(1) FEE
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value 977,500 Shares(2) $8.00 per Share $7,820,000 $ 2,696.55
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Common Stock, $.001 par value 150,000 Shares(3) $6.75 per Share $1,012,500 $ 349.14
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Representative's Warrants 85,000 Warrants(4) $.001 per Warrant $ 85 (5)
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Common Stock, $.001 par value 85,000 Shares(6) $9.60 per Share $ 816,000 $ 281.38
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Total Registration Fee...............................................................................................$ 3,327.07
==================================================================================================================================
<FN>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
(2) Includes 127,500 Shares subject to the Underwriters' over-allotment
option.
(3) To be issued upon conversion of $1,012,500 in principal amount of
Convertible Redeemable Notes due June 10, 1997.
(4) To be issued to the Representative, as set forth on the cover page of the
Prospectus comprising a portion of this Registration Statement.
(5) No fee due pursuant to Rule 457(g).
(6) Issuable upon exercise of the Underwriter's Warrants, together with such
indeterminate number of shares of Common Stock as may be issuable by
reason of the anti-dilution provisions contained therein.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
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MANSUR INDUSTRIES INC.
CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
Showing Location in Prospectus of Information
Required by Items of Form S-1.
ITEM NUMBER AND HEADING IN
FORM S-1 REGISTRATION STATEMENT LOCATION IN PROSPECTUS
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1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus...................Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus..................Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors
and Ratio of Earnings to
Fixed Charges..............................Prospectus Summary; Risk Factors
4. Use of Proceeds.................................Prospectus Summary; Use of Proceeds;
Management's Discussion and Analysis of
Financial Condition and Results of Operations
5. Determination of Offering Price.................Outside Front Cover Page; Underwriting
6. Dilution . . ...................................Dilution
7. Selling Security Holders........................Not Applicable
8. Plan of Distribution............................Outside Front Cover Page; Inside Front Cover
Page; Underwriting
9. Description of Securities to be
Registered.................................Prospectus Summary; Capitalization; Dividend
Policy; Description of Capital Stock; Shares
Eligible for Future Sale
10. Interests of Named Experts
and Counsel ...............................Not Applicable
11. Information with Respect to the
Registrant.................................Outside Front and Inside Front Cover Pages;
Prospectus Summary; Risk Factors; Dividend
Policy; Capitalization; Selected Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of Operations;
Business; Management; Certain Transactions;
Principal Shareholders; Description of Capital
Stock; Shares Eligible for Future Sale;
Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................Not Applicable
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
- ----------
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED JULY 23, 1996
850,000 SHARES
MANSUR INDUSTRIES INC.
COMMON STOCK
The shares of Common Stock, $.001 par value ("Common Stock"), offered
hereby are offered by Mansur Industries Inc. (the "Company"). Prior to this
offering, there has been no public market for the Common Stock and there can be
no assurance that any such market will develop. It is anticipated that the
initial public offering price will be between $7.00 and $8.00 per share. For
information regarding the factors considered in determining the initial public
offering price of the Common Stock, see "Underwriting." The Company has made an
application to include the Common Stock on the Nasdaq Small Cap Market under the
symbol "MANS."
--------------------
SEE "RISK FACTORS" ON PAGES 5 TO 10 FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- --------------------------------------------------------------------------------
Per Share...... $ $ $
- --------------------------------------------------------------------------------
Total(3)....... $ $ $
================================================================================
(1) Does not include compensation payable to the Representative in the form of
a nonaccountable expense allowance equal to 3% of the gross proceeds of
this offering. In addition, see "Underwriting" for information concerning
indemnification and contribution arrangements with and other compensation
payable to the Underwriters.
(2) Before deducting estimated expenses of $465,750 payable by the Company,
which includes the nonaccountable expense allowance payable to the
Representative.
(3) The Company has granted the Underwriters a 45-day option to purchase up to
127,500 additional shares of Common Stock upon the same terms and
conditions as set forth above, solely to cover over-allotments, if any. If
such over-allotment option is exercised in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $_______,
$______ and $_______, respectively. See "Underwriting."
-------------------
The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by the Underwriters, and
subject to approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify this offering and to reject any order in whole or in part. It is expected
that delivery of the shares of Common Stock offered hereby will be made against
payment on or about ____________, 1996 at the offices of First Allied
Securities Inc., New York, New York.
-------------------
FIRST ALLIED SECURITIES INC.
____________, 1996
<PAGE>
[Photos/Art]
The following text appears as a caption: MANSUR. The Company's line of
self-contained, recycling industrial parts washers incorporate innovative,
proprietary and patented waste minimization technologies and represent a
significant advance over currently available machinery and processes.
Artistic depictions of the following appear here: The Company's Series 500
SystemOne washers, the Company's multiprocess Jet and Immersion Washers and
the Company's Series 300 SystemOne Mini Washer.
The following text appears as a caption: MANSUR versus INDUSTRY
An artistic depiction of the Company's Series 500 SystemOne Washer appears here.
The following text appears in a caption: The Company's products allow the use
and re-use of the cleaning solvent by removing all the contaminants from the
solvent within the cleaning unit itself, minimizing the volume of waste
by-product and providing pure solvent to the customer on demand, without the
costly and dangerous storage and transportation of hazardous waste.
An artistic depiction of a large recycling plant and the recycling process
employed by the Company's competitors appears here.
The following text appears as a caption: Under the most common current practice,
the cleaning solvent becomes contaminated (and less effective) with repeated use
and it must be stored until pickup, when pure solvent is delivered and
contaminated solvent is generally shipped to regional refining facilities
(typically a four to six week cycle).
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
--------------------
THE COMPANY WILL FURNISH ITS SHAREHOLDERS WITH ANNUAL REPORTS CONTAINING
AUDITED FINANCIAL STATEMENTS CERTIFIED BY AN INDEPENDENT AUDITING FIRM.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE NOTED, THE INFORMATION IN THIS
PROSPECTUS ASSUMES (I) THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION (THE
"OVER-ALLOTMENT OPTION") TO PURCHASE UP TO 127,500 SHARES OF COMMON STOCK HAS
NOT BEEN EXERCISED, (II) THAT THE REPRESENTATIVE'S WARRANTS TO PURCHASE 85,000
SHARES OF COMMON STOCK HAVE NOT BEEN EXERCISED, AND (III) THAT $1,012,500 IN
PRINCIPAL AMOUNT OF CONVERTIBLE NOTES (THE "CONVERTIBLE NOTES") ISSUED IN A
PRIVATE FINANCING COMPLETED BY THE COMPANY IN JUNE 1996 HAS BEEN CONVERTED INTO
150,000 SHARES OF COMMON STOCK SIMULTANEOUSLY WITH THE CLOSING OF THIS OFFERING.
SEE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "UNDERWRITING."
THE COMPANY
GENERAL
Mansur Industries Inc. (the "Company") has developed and obtained patent
protection with respect to a full line of self-contained, recycling industrial
parts washers that incorporate innovative, proprietary waste minimization
technologies and represent a significant advance over currently available
machinery and processes. Focusing on waste minimization rather than its removal
and recovery, the Company believes that its equipment will have a major impact
on the industrial parts cleaning industry and will have a broad appeal to
customers, because its equipment, unlike the machines now in use, facilitates
efficient and economical compliance with environmental regulations, minimizes
waste disposal requirements, enhances cleaning solution utilization, and
increases worker safety and productivity.
Most machinery and equipment require oil lubrication to function properly.
Removal of lubrication oils from tools and parts during automotive, aviation,
marine and general industrial maintenance, service and repair operations is
typically effected through the use of mineral spirit solvents which become
contaminated in the cleaning process. Under the most common current practice,
the solvent becomes more contaminated (and less effective) with repeated use,
and, when it is saturated with oil, sludge and other contaminants as a result of
the cleaning process (and frequently classified as a hazardous waste under
federal and state regulations), it must be stored on site until pick-up, when
pure solvent is delivered and the contaminated solvent is, generally, shipped to
regional refining facilities. This off-site recycling program is typically
scheduled on four to sixteen week cycles and involves both the utilization of
progressively more contaminated solvent for cleaning operations until the
solvent is too contaminated for use, and thereafter, the on-site storage of the
hazardous solution until the periodic waste recovery service. By contrast, the
Company's products allow the use and re-use of the solvent by removing all the
contaminants from the solvent within the cleaning unit itself, minimizing the
volume of waste by-product and providing pure solvent to the customer on demand,
without the costly and dangerous storage and transportation of hazardous waste.
Moreover, the small amount of waste by-product yielded in the distillation
process utilized by the Company's products can typically be recycled and/or
disposed of together with the customer's used motor oil, which is generally not
classified as a hazardous waste. Substantially all of the Company's target
customers have established systems for the handling, transportation, recycling
and disposal of used motor oil. The Company's products have been extensively
tested and proven effective by independent engineering concerns and testing
laboratories.
While the Company intends to exploit its current full line of industrial
washers, and to continue its research and development of new products, it has
initially focused its attention on its General Parts Washer, marketed as
SystemOne(TM) (the "SystemOne(TM) Washer"). The SystemOne(TM) Washer consists of
a washing sink mounted on top of a metal cabinet in which the distillation and
recovery apparatus is contained. The equipment allows the solvent to be used,
treated and re-used, on demand, without requiring off-site processing. The
Company has concluded extensive testing by independent laboratories
-1-
<PAGE>
and at various commercial sites and is currently conducting test marketing in a
local area within close proximity to its facilities. Demonstrator models were
placed in 38 selected automotive repair facilities of national, fleet,
industrial and commercial accounts. Notwithstanding the absence of a formal
marketing program during the test period, the Company has, as of the date of
this Prospectus, received orders from a number of facilities in which the
machines were placed, including Florida Detroit Diesel MTU (46 Units); Kelly
Tractor Company and Pantropic Power Products, South Florida Caterpillar dealers
(48 Units); United States Postal Service (2 Units); Southern Sanitation, a
subsidiary of Waste Management, Inc. (5 Units); Broward County Mass Transit (25
Units); and a number of South Florida automobile dealerships (an aggregate of 54
Units). The Company commenced commercial sales and delivery of units in July
1996 at an approximate price per unit of $2,700.
The initial market for the Company's industrial cleaning product line
includes automotive, aviation, marine and general industrial maintenance,
service and repair operations. The Company believes that domestic expenditures
in connection with industrial parts cleaning machines exceeds $1.0 billion
annually, and that the anticipated monthly cost to the customer for the
Company's products typically will not exceed, and is intended to be well below,
the monthly cost of the non-recycling machines now in use. Additional
competitive advantages provided by the Company's products include practical and
cost effective compliance with demanding regulations of the Environmental
Protection Agency; elimination of routine waste disposal costs; significant
improvements in cleaning productivity; minimized cleaning solution purchases;
and reduction of equipment down time for routine machine maintenance.
The Company has retained experienced executives to head and develop its
sales and marketing organization. In addition to its regional office in Miami,
the Company expects to open four additional service centers in Orlando, Tampa,
Jacksonville and West Palm Beach, Florida during 1996. The Company expects to
pursue a national expansion program, through internal growth utilizing a network
of regional distribution and service centers, as in Florida, through a strategic
alliance with a national distributor, if one is available on favorable terms, or
through a combination of the two. In August, the Company will commence a pilot
program with First Recovery and Valvoline Oil Company, two affiliates of Ashland
Inc., a multinational oil refiner and distributor of automotive related
products, including Valvoline Oil and Ashland 140 Solvent, one of the brands of
mineral spirits solvent used in the Company's SystemOne(TM) Washer. Under the
pilot program, First Recovery will be the exclusive distributor of the
SystemOne(TM) Washer in the Dallas/Ft. Worth and Houston markets. The initial
term of the program is one year. If the arrangement proves successful, the
Company expects to negotiate a broader agreement, possibly including a national
distribution program.
The Company has manufactured all its prototype and test models at its
10,000 square foot research and development ("R&D") facility. The Company's
current manufacturing capabilities include advanced Computer Aided
Design/Computer Aided Manufacturing technology and state of the art
manufacturing machinery. Because the Company's R&D facility can be utilized to
manufacture up to 200 units of the SystemOne(TM) Washer per month, all
manufacturing operations, including design, metal fabrication, robotic welding,
painting and assembly, can be performed in the Company's R&D facility during the
Company's initial roll-out phase. At present, the Company plans to continue to
use its own facility for existing and new product R&D activities and to use
contract manufacturers when a product achieves commercial sales levels. In order
to accommodate increased demand for the SystemOne(TM) Washer, the Company has
entered into an agreement with a contract manufacturer with respect to the
manufacture of at least 3,000 units during the first year thereof. In addition,
the Company has entered into negotiations with a major contract manufacturer
with a 2 million square foot facility and 75 years of experience to provide the
manufacturing capacity needed to meet anticipated future customer demand.
-2-
<PAGE>
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THE OFFERING
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Common Stock Offered............................. 850,000 shares
Common Stock Outstanding After Offering.......... 4,351,309(1)
Use of Proceeds by the Company................... The Company intends to apply the net
proceeds of the offering for the:
development of marketing, sales and
service centers; development of
manufacturing capacity; purchase of raw
materials and inventory; development of
corporate headquarters and research and
development facilities; and working capital
and general corporate purposes. See "Use
of Proceeds."
Risk Factors..................................... This offering involves a high degree of risk
and immediate substantial dilution. See
"Risk Factors" and "Dilution."
Proposed Nasdaq SmallCap Symbol.................. MANS
<FN>
- --------------------
(1) Does not include an aggregate of 375,000 shares of Common Stock reserved for
issuance upon exercise of options available for future grant and future
restricted stock awards under the Company's Incentive Compensation Plan.
See "Underwriting" and "Management--Incentive Compensation Plan."
</FN>
</TABLE>
Mansur Industries Inc. was incorporated in Florida in 1990. The Company's
principal executive office is located at 8425 S.W. 129th Terrace, Miami, Florida
33156, and its telephone number is (305) 232-6768.
-3-
<PAGE>
Summary Financial Data
The summary financial information set forth below should be read in
conjunction with financial statements appearing elsewhere in this Prospectus.
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SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------------- ------------------------
1991(1) 1992 1993 1994 1995 1995 1996
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STATEMENT OF OPERATIONS DATA:
Operating expenses:
General and administrative......$ 8,502 $ 8,971 $ 81,886 $ 268,414 $ 907,393 $ 418,079 $ 622,641
Research and development........ 128,439 31,924 69,256 178,146 393,874 162,732 365,435
--------- ---------- ---------- ---------- ----------- ---------- ------------
Total operating expenses.... 136,941 40,895 151,142 446,560 1,301,267 580,811 988,076
--------- ---------- ---------- ---------- ----------- ---------- ------------
Interest (expense), net.............. -- (16,299) (16,360) (46,312) (17,878) (26,462) (13,094)
Conversion (expense) on redeemable
preferred stock................. -- -- -- -- -- -- (344,631)
Loss on disposition of property and
equipment....................... -- (39,560) (18,000) -- -- -- --
--------- ---------- ---------- ---------- ----------- ---------- ------------
Net (loss)........................... (136,941) (96,754) (185,502) (492,872) (1,319,145) (607,273) (1,345,801)
Dividends on redeemable preferred
stock........................... -- -- (8,328) (53,929) (222,067) (75,066) (147,000)
--------- ---------- ---------- ---------- ----------- ---------- ------------
Net (loss) to common shares..........$(136,941) $(96,754) $(193,830) $(546,801) $(1,541,212) $(682,339) $(1,492,801)
========= ========== ========== ========== =========== ========== ============
Net (loss) per common share(2)....... $(0.07) $(0.05) $(0.10) $(0.27) $(0.66) $(0.34) $(0.53)
========= ========== ========== ========== =========== ========== ============
Weighted average shares
outstanding(2)..................2,000,000 2,000,000 2,000,000 2,000,000 2,335,140 2,000,000 2,799,071
</TABLE>
JUNE 30, 1996
-----------------------------------
ACTUAL AS ADJUSTED(3)
------------ --------------
BALANCE SHEET DATA:
Working capital............................. $(216,966) $5,921,034
Total assets................................ 1,562,712 6,628,212
Total liabilities........................... 1,575,428 502,928
Total stockholders' equity (deficit)........ (12,716) 6,125,284
- --------------------------
(1) Information provided for the period from November 13, 1990 (inception) to
December 31, 1991.
(2) See Note 1 to Notes to Financial Statements for information concerning the
computation of net loss per share.
(3) Adjusted to reflect (i) the issuance of 150,000 shares of Common Stock as
a result of the conversion of the Convertible Notes; and (ii) the sale of
850,000 shares of Common Stock offered hereby at an assumed initial public
offering price of $7.50 per share and the initial application of the
estimated net proceeds therefrom. See "Capitalization" and "Use of
Proceeds."
-4-
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS BEFORE MAKING AN INVESTMENT DECISION.
LIMITED OPERATING HISTORY; SIGNIFICANT AND CONTINUING LOSSES. The Company
was formed in November 1990 and was a development stage company through June 30,
1996. It has only recently commenced the marketing and sale of one of its
product lines on a limited basis, and has a limited operating history upon which
an evaluation of the Company's performance and prospects can be made. The
Company's prospects must be considered in light of the numerous risks, expenses,
delays, problems and difficulties frequently encountered in the establishment of
a new business in an industry characterized by vigorous competition and
regulatory requirements. Since inception, the Company has incurred significant
losses, including losses of $492,872 and $1,319,145, for the years ended
December 31, 1994 and 1995, respectively, and a loss of $1,345,801 for the six
months ended June 30, 1996. Losses are continuing through the date of this
Prospectus. Inasmuch as the Company's operating expenses have increased and can
be expected to continue to increase significantly in connection with the
Company's proposed expansion, including the development of manufacturing
capabilities, the development and establishment of regional sales, service and
technological support centers and a service fleet, the development of a larger
corporate headquarters and research and development facility, and the purchase
of raw materials and inventory, the Company anticipates that losses and negative
operating cash flow will continue until such time, if ever, as the Company is
able to generate sufficient revenues to offset its operating costs and the costs
of continuing expansion. There can be no assurance that the Company will
generate significant revenues or ever achieve profitable operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Financial Statements.
UNCERTAINTY OF MARKET ACCEPTANCE. To date, the Company's products have been
marketed in limited geographic areas and, thus, have achieved only limited
market acceptance. The Company is attempting to market a new product which
relies on a fundamental change in the way parts and tools are cleaned and
solvent utilized, an activity pattern which has been relatively consistent
within the target industries in the past. As is typically the case with an
emerging business concept, demand and market acceptance for newly introduced
products and services are subject to a high level of uncertainty. The Company
has limited marketing experience and limited financial, marketing, personnel and
other resources to undertake extensive marketing activities. The Company's
success will be largely dependent on the Company's ability to position its
products as a preferred method for cleaning parts. The Company believes that
substantially all its target customers currently utilize competitive parts
cleaning equipment. Potential customers may elect to utilize devices or methods
with which they are more familiar or which they believe to be more efficient or
have other advantages over the Company's system. Accordingly, achieving market
acceptance for the Company's products will require substantial marketing efforts
and expenditure of significant funds to educate automotive dealership and repair
facilities and other potential users of the products of the distinctive
characteristics and benefits of the Company's products as well as their
environmental and cost savings advantages. There can be no assurance that the
Company's efforts will result in significant initial or continued market
acceptance for the Company's products or that the Company will succeed in
positioning its products as a preferred method for cleaning parts. See
"Business-Marketing and Servicing Strategy."
INDUSTRY COMPETITION. The parts cleaning industry is characterized by
intense competition, and the industry is dominated by Safety-Kleen, Inc. A
number of other companies provide parts cleaning equipment and services. While
the Company believes that none of its competitors offer a product with the same
features as the Company's products, many customers may view the products as
functionally equivalent, and there can be no assurance that functionally
equivalent products will not become available in the near future. In addition,
there are numerous companies involved in the waste management industry,
-5-
<PAGE>
including waste hauling companies and companies engaged in waste separation,
recovery and recycling, which may have the expertise and resources that would
encourage them to attempt to develop and market products which would compete
with the Company's products or render them obsolete or less marketable.
Safety-Kleen, Inc., as well as most of the companies marketing such waste
disposal services or products or with the potential to do so, are well
established, have substantially greater financial and other resources than the
Company, and have established reputations relating to product design,
development, marketing and support. There can be no assurance that the Company's
financial performance and prospects will not be negatively affected if
Safety-Kleen, Inc. materially lowers the price to customers of its parts
washers, or that the Company will be able to compete successfully. See
"Business-Competition."
RISKS ASSOCIATED WITH RAPID EXPANSION. The Company has achieved limited
growth to date and has limited experience in effectuating rapid expansion or in
managing operations which are geographically dispersed. Expansion of the
Company's operations will be dependent on, among other things, the Company's
ability to achieve significant market acceptance for its products, successfully
locate, establish and operate Service Centers, hire and retain skilled
management, marketing, technical and other personnel, secure adequate sources of
supply on a timely basis and on commercially reasonable terms, successfully
manage growth (including monitoring operations, controlling costs and
maintaining effective quality controls), and maintain a third party leasing
program capable of financing the customer's acquisition of the Company's
products in a timely manner. To date, a substantial portion of the Company's
products have been installed on a test basis in automotive dealership and repair
facilities concentrated in limited geographic markets near the Company's
headquarters. The Company's growth prospects will be largely dependent upon its
ability to achieve greater penetration in these markets as well as significant
penetration in new geographic markets. The Company's prospects could be
adversely affected by declines in the automotive sales, maintenance or service
industries or the economy generally, which could result in reduction or deferral
of capital expenditures by prospective customers. The Company's future growth
will also be dependent upon the Company's ability to achieve a sufficient
installed base of its products. The Company may also seek to expand its
operations through the acquisition of existing companies with customer bases
that would appear to have needs for the Company's product line. There can be no
assurance that the Company will be able to successfully expand its operations.
See "Business-Marketing and Servicing Strategy."
DEPENDENCE ON OFFERING PROCEEDS TO IMPLEMENT PROPOSED EXPANSION; POSSIBLE
NEED FOR ADDITIONAL FINANCING. The Company's capital requirements have been and
will continue to be significant. The Company is dependent on and intends to use
a substantial portion of the proceeds of this offering to implement its proposed
expansion. The Company anticipates, based on currently proposed plans and
assumptions relating to its operations (including the anticipated costs
associated with, and timetable for, its proposed expansion), that the proceeds
of this offering, together with cash flow from operations, will be sufficient to
satisfy its contemplated cash requirements for at least 12 months following the
consummation of this offering. In the event that the Company's plans change, its
third party lease financing arrangement does not function as anticipated, its
assumptions change or prove to be inaccurate or if the proceeds of this offering
or cash flow otherwise prove to be insufficient to fund expansion (due to
unanticipated expenses, delays, problems, difficulties or otherwise), the
Company has plans to restructure its operations to minimize cash expenditures
and/or obtain additional financing in order to support its plan of operations.
The Company has no current arrangements with respect to, or sources of,
additional financing and there can be no assurance that any additional financing
will be available to the Company on acceptable terms, or at all. Although the
Company believes that available third party lease financing may help offset the
Company's cost structure for product rollout, a significant level of demand for
the Company's products will, in all likelihood, initially result in significant
up-front capital expenditures without corresponding cash flow. Any additional
equity financing may involve dilution to the interests of the Company's then
existing shareholders. If adequate funds are not available from additional
sources of financing, the Company's business may be materially adversely
affected. See "Use of Proceeds."
-6-
<PAGE>
RISKS ASSOCIATED WITH PRODUCT FINANCING. The Company has entered into a
third party lease financing arrangement with Oakmont Financial Services
("Oakmont"), pursuant to which Oakmont has agreed to provide third party leasing
services. If the Company breaches certain warranties, Oakmont has the right to
require the Company to repurchase the leased unit from Oakmont. To the extent
that the Company is required to use a portion of the proceeds of this offering
to repurchase units from Oakmont, the Company will have less resources available
to it for other purposes. Oakmont has the right to review the creditworthiness
of proposed lessees and to withhold financing on the basis of its credit review.
While the Company may terminate its agreement with Oakmont if Oakmont
consistently refuses to approve the credit of the Company's proposed lessees,
any such termination, in the absence of alternative financing programs, could
have a material adverse effect on the Company. The Company is not likely to
utilize third party financing with respect to units leased under its pilot
marketing program with First Recovery and Valvoline Oil Company, but will,
instead, use a portion of the proceeds of this offering. See "Use of Proceeds"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
DEPENDENCE ON ENVIRONMENTAL LEGISLATION. In recent years, government
authorities have adopted extensive regulations regulating the storage, handling,
shipment, recycling and/or disposal of hazardous waste, including contaminated
solvent used in industrial parts washers. The Company believes that continuing
initiatives of federal, state and local government authorities and increasing
storage and hauling costs and disposal fees will create incentives for customers
to use the Company's products. Failure by government authorities to continue to
implement such legislation or significant relaxation of such requirements or
enforcement thereof could have a material adverse effect on the Company's
business and prospects. Moreover, while the Company believes that its process
results in pure solvent and a residue that is not classified as hazardous waste,
but may, rather, be disposed of or utilized as used motor oil, there can be no
assurance that environmental agencies will reach the same conclusion. If the
residue is classified as hazardous waste, or if used motor oil itself is
classified as hazardous waste, the Company will lose a significant competitive
advantage. The Company believes that certain of its competitors have attempted
and are continuing their efforts to have used motor oil classified as a
hazardous waste. See "Business-Industry Overview" and "Risk Factors -- Potential
Warranty Expense and Product Liability."
DEPENDENCE ON THIRD-PARTY MANUFACTURING ARRANGEMENTS. The Company will be
dependent on third parties for its components and for the manufacture of a large
portion of its finished units. Although the Company has several alternative
manufacturing sources and believes that additional alternative manufacturing
sources are readily available, failure by its current manufacturers to continue
to supply the Company on commercially reasonable terms, or at all, in the
absence of readily available alternative sources, would have a material adverse
effect on the Company. The Company is substantially dependent on the ability of
its manufacturers, among other things, to satisfy performance and quality
specifications and dedicate sufficient production capacity for components within
scheduled delivery times. See "Business--Manufacturing and Supply."
PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION. The Company holds four
United States patents and has four United States patents pending with respect to
the Company's products. Two of the five pending patents have been allowed by the
U.S. Patent Office and are awaiting issuance. Other parts washing machines which
may not be covered by the Company's patents are currently in commercial
distribution by the Company's competitors. The Company has applied for
international patents in Canada, Mexico, Europe and Japan and anticipates that
it will apply for additional patents as deemed appropriate. The Company believes
that patent protection is important to its business and that it could be
required to expend significant funds in connection with enforcing or defending
its patent rights. There can be no assurance as to the breadth or degree of
protection which existing or future patents, if any, may afford the Company,
that any unissued patent applications will result in issued patents or that
patents will not be circumvented or invalidated. It is possible that the
Company's existing patent rights may not be valid although the Company believes
that neither its products nor processes now infringe or will infringe patents or
violate proprietary rights of others. It is possible that infringement of
existing or future patents or
-7-
<PAGE>
proprietary rights of others may occur. In the event that the Company's products
or processes infringe patents or proprietary rights of others, the Company may
be required to modify the design or obtain a license. There can be no assurance
that the Company will be able to do so in a timely manner, upon acceptable terms
and conditions or at all. Failure to do any of the foregoing could have a
material adverse effect on the Company. In addition, there can be no assurance
that the Company will have the financial or other resources necessary to enforce
or defend a patent infringement, proprietary rights violation action or alleged
infringement or violation action. Moreover, if the Company's products or
processes infringe patents or propriety rights of others, the Company could,
under certain circumstances, become the subject of an immediate injunction and
be liable for damages, which could have a material adverse effect on the
Company. See "Business -Patents, Trademarks and Proprietary Technology."
The Company also relies on trade secrets and proprietary know-how and
employs various methods to protect the concepts, ideas and documentation of its
proprietary information. However, such methods may not afford complete
protection and there can be no assurance that others will not independently
develop such know-how or obtain access to the Company's know-how, concepts,
ideas and documentation. Although the Company has and expects to have
confidentiality agreements with its employees, suppliers and appropriate
vendors, there can be no assurance that such agreements will adequately protect
the Company's trade secrets. Since the Company believes that its proprietary
information is important to its business, failure to protect such information
could have a material adverse effect on the Company. See "Business-Patents,
Trademarks and Proprietary Information."
POTENTIAL WARRANTY EXPENSE AND PRODUCT LIABILITY. The Company
unconditionally warrants its products to be free of material defects for 60
months. In addition the Company warrants to users that if, for any reason, the
residue generated by its System One(TM) Washer cannot be recycled and/or
disposed of as used oil, the Company will pay for any required recovery and
disposal services. Accordingly, the Company could incur significant warranty
expenses as a result of defects in its products or a change in federal or state
regulations pertaining to the disposal of cleaning residue. Since the Company
only recently commenced its planned principal operations, the reserve account it
will establish for warranty expense will be derived without the benefit of
historical figures and actual warranty expenses could exceed the amount which
will be established as a reserve. The Company may also be exposed to potential
product liability claims by its customers and users of its products. The Company
maintains product liability insurance coverage of $5,000,000 in the aggregate
and $5,000,000 per occurrence. The Company believes such insurance provides
adequate coverage for the types of products currently marketed by the Company.
There can be no assurance, however, that such insurance will be sufficient to
cover potential claims or that an adequate level of coverage will be available
in the future at a reasonable cost. A partially insured or completely uninsured
successful claim against the Company could have a material adverse effect on the
Company. See "Business-Sales Financing and Service Programs" and "-Product
Liability and Insurance."
DEPENDENCE ON KEY PERSONNEL. The success of the Company will be largely
dependent on the personal efforts of Pierre Mansur, its Chairman of the Board
and President and the inventor of the Company's products, Paul Mansur, its Chief
Executive Officer, and other key personnel. Although the Company has entered
into employment agreements with Pierre Mansur and Paul Mansur which expire in
September 1997, the loss of the services of either of such individuals or
certain other key employees, could have a material adverse effect on the
Company's business and prospects. The Company has obtained and is the sole
beneficiary of "key-man" life insurance on Pierre Mansur and Paul Mansur each in
the amount of $1,000,000. The success of the Company is also dependent upon its
ability to hire and retain additional qualified marketing, technical and other
personnel. There can be no assurance that the Company will be able to hire or
retain such personnel. See "Management."
CONTROL BY MANAGEMENT. After consummation of this offering, Pierre Mansur
will beneficially own approximately 46% of the Company's outstanding Common
Stock. Accordingly, Pierre Mansur will be in
-8-
<PAGE>
a position to effectively control the Company, including the election of all of
the directors of the Company. See "Management" and "Principal Shareholders."
BROAD DISCRETION IN APPLICATION OF PROCEEDS; POSSIBLE BENEFITS TO RELATED
PARTIES. Approximately $572,000 (11%) of the estimated net proceeds from this
offering has been allocated to working capital and general corporate purposes.
Accordingly, the Company's management will have broad discretion as to the
application of such proceeds. In addition, the Company may use a portion of the
net proceeds allocated to working capital to pay salaries and benefits of
executive officers over the 12 months following the consummation of this
offering to the extent cash flow is insufficient for such purpose. See "Use of
Proceeds."
NO PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE. Prior to this
offering, there has been no public market for the Common Stock, and no assurance
can be given that an active trading market will develop or be sustained after
this offering. Since there has been no trading market, the initial public
offering price of the Common Stock may not bear any relationship to the actual
value of the Common Stock. The initial public offering price was established by
negotiations between the Company and the Representative, is not necessarily
related to the Company's asset value, net worth or other established criteria of
value, and may not be indicative of prices that will prevail in the trading
market. The stock market has experienced significant price and volume
fluctuations that are often unrelated to the operating performance of particular
companies. The market price of the Common Stock, similar to that of securities
of other development stage companies, is likely to be highly volatile. Factors
such as the results of studies and trials by the Company or its competitors,
other evidence of the efficacy of products of the Company or its competitors,
announcements of technological innovations or new products by the Company or its
competitors, changes in governmental regulation, developments in patent or other
proprietary rights of the Company or its competitors, including litigation,
fluctuations in the Company's operating results and changes in general market
conditions could have a significant impact on the future price of the Common
Stock. See "Underwriting."
EFFECTIVE OF ANTI-TAKEOVER LEGISLATION; POSSIBLE ADVERSE EFFECT OF ISSUANCE
OF PREFERRED STOCK ON MARKET PRICE AND RIGHTS OF COMMON STOCK. The State of
Florida has enacted legislation that may deter or frustrate takeovers of Florida
corporations. The Florida Control Share Act generally provides that shares
acquired in excess of certain specified thresholds will not posses any voting
rights unless such voting rights are approved by a majority vote of a
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires supermajority approval by disinterested directors or
shareholders of certain specified transactions between a public corporation and
holders of more than 10% of the outstanding voting shares of the corporation (or
their affiliates). The Company's Articles of Incorporation authorize the
issuance of 1,500,000 shares of "blank check" Preferred Stock ("Preferred
Stock") with such designations, rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, the Board of Directors is
empowered, without shareholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of the holders of the Common Stock. The issuance of
any series of Preferred Stock having rights superior to those of the Common
Stock may result in a decrease in the value or market price of the Common Stock.
Holders of Preferred Stock to be issued in the future may have the right to
receive dividends and certain preferences in liquidation and conversion rights.
The issuance of such Preferred Stock could make the possible takeover of the
Company or the removal of management of the Company more difficult, discourage
hostile bids for control of the Company in which shareholders may receive
premiums for their Common Stock and adversely affect the voting and other rights
of the holders of the Common Stock. The Company may in the future issue
additional shares of its Preferred Stock. See "Description of Securities."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS. As of the date of
this Prospectus, 4,351,309 shares of Common Stock are issued and outstanding. Of
such shares, 1,000,000 shares are freely tradeable
-9-
<PAGE>
without restriction or further registration under the Securities Act of 1933, as
amended (the "Securities Act"), unless held by an "affiliate" of the Company.
The remaining 3,351,309 shares of Common Stock are "restricted securities," as
that term is defined under Rule 144 promulgated under the Securities Act. Of
such shares, 2,656,729 shares are currently eligible for sale under Rule 144 and
the remainder will become eligible for sale under Rule 144 at various times
prior to June 1998. No prediction can be made as to the effect, if any, that
sales or shares of Common Stock or the availability of such shares for sale will
have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of Common Stock may be sold in the public
market may adversely affect prevailing market prices for the Common Stock and
could impair the Company's ability to raise capital through the sale of its
equity securities. See "Shares Eligible for Future Sale."
DIVIDENDS. The Company has not paid any cash dividends on its Common Stock
and does not expect to declare or pay any cash dividends in the foreseeable
future. See "Dividend Policy."
DILUTION. The assumed initial offering price of $7.50 is substantially
higher than the net tangible book value per share of Common Stock. Investors
purchasing shares of Common Stock in this offering will incur immediate and
substantial dilution of approximately $6.10 per share of Common Stock from the
assumed initial public offering price. See "Dilution."
INEXPERIENCE OF REPRESENTATIVE. The Representative commenced operations in
1994 and does not have extensive experience as an underwriter of public
offerings of securities. The Representative has acted as the managing
underwriter for three public offerings. The Representative is a relatively small
firm and no assurance can be given that the Representative will participate as a
market maker in the Common Stock. See "Underwriting."
FORWARD -- LOOKING STATEMENTS AND ASSOCIATED RISK. This prospectus contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
statements regarding, among other items (i) the Company's growth strategies,
(ii) the impact of the Company's products and anticipated trends in the
Company's business, and (iii) the Company's ability to enter into contracts with
certain suppliers and strategic partners. These forward-looking statements are
based largely on the Company's expectations and are subject to a number of risks
and uncertainties, certain of which are beyond the Company's control. Actual
results could differ materially from these forward-looking statements as a
result of the factors described herein, including, among others, regulatory or
economic influences. In light of these risks and uncertainties, there can be no
assurance that the forward-looking information contained in this Prospectus will
in fact transpire or prove to be accurate.
-10-
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the shares
of Common Stock offered hereby are estimated to be approximately $5,271,750
based on an assumed initial public offering price of $7.50 per share
(approximately $6,103,688 if the Underwriters' over-allotment option is
exercised in full), after deducting underwriting discounts and commissions and
estimated offering expenses payable by the Company.
<TABLE>
<CAPTION>
APPROXIMATE
APPROXIMATE PERCENTAGE OF NET
APPLICATION OF PROCEEDS DOLLAR AMOUNT PROCEEDS
----------------------- ------------- -----------------
<S> <C> <C>
Development of manufacturing capacity(1)........................... $ 750,000 14%
Development of marketing, sales and service centers and
service fleet(2).......................................... 1,250,000 24
Development of corporate headquarters and research and
development facilities(3)................................. 700,000 13
Purchase of raw materials and inventory(4)......................... 2,000,000 38
Working capital and general corporate purposes..................... 571,750 11
---------- ---
Total............................................ $5,271,750 100%
========== ===
<FN>
- ---------------------------
(1) Represents the estimated cost of developing the Company's manufacturing
capabilities, primarily for research and development, testing and initial
pre-commercial manufacturing operations, including certain property, plant
and equipment costs, set-up costs, hard and soft tooling costs and custom
mold development costs over the next 12 months. See "Business -
Manufacturing and Supply" and "--Research and Development."
(2) Represents the estimated cost of developing sales, service and
technological support centers and a fleet of service vehicles throughout
Florida and the eastern United States over the next 12 months. See
"Business - Marketing and Servicing Strategy."
(3) Represents the estimated cost of developing a larger corporate
headquarters and research and development facility, including the cost of
a client server computer system, over the next 12 months. See "Business -
Research and Development."
(4) Represents the estimated cost of raw materials and finished goods
inventory that may be held by the Company, as well as the cost of units
provided under its pilot marketing program with First Recovery and
Valvoline Oil Company for which the Company will not use third party
financing.
</FN>
</TABLE>
The foregoing represents the Company's best estimate of its allocation of
the net proceeds of this offering based upon the current status of its business
operations, its current plans, and current economic and industry conditions.
Future events, as well as changes in economic or competitive conditions or the
Company's business and the results of the Company's sales and marketing
activities may make shifts in the allocation of funds within or between each of
the items referred to above necessary or desirable.
If the Underwriters exercise the over-allotment option in full, the Company
will realize additional net proceeds of approximately $832,000 which will be
added to the Company's working capital.
The Company anticipates, based on currently proposed plans and assumptions
relating to its operations, that the proceeds of this offering, together with
projected cash flow from operations, will be sufficient to satisfy its
contemplated cash requirements for at least 12 months following the consummation
of this offering. In the event that the Company's plans change or its
assumptions change or prove to be inaccurate or if the proceeds of this offering
or cash flow prove to be insufficient (due to unanticipated expenses or
otherwise), the Company has plans to restructure its operations to minimize cash
expenditures and/or obtain additional financing in order to support its plan of
operations. There can be no assurance that additional financing will be
available to the Company on commercially reasonable terms, or at all.
-11-
<PAGE>
Proceeds not immediately required for the purposes described above will be
invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest-bearing
investments.
-12-
<PAGE>
DILUTION
The difference between the initial public offering price per share of
Common Stock and the pro forma net tangible book value per share after this
offering constitutes the dilution to investors in this offering. Net tangible
book value per share is determined by dividing the net tangible book value of
the Company (total tangible assets less total liabilities) by the number of
outstanding shares of Common Stock.
At June 30, 1996, the net tangible book value of the Company was $(37,170),
or $(.01) per share. After giving effect to the sale of 850,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $7.50 per
share and deducting underwriting discounts and commissions and estimated
expenses of the offering, and assuming the conversion of the Convertible Notes
into 150,000 shares of Common Stock, the pro forma net tangible book value of
the Company as of June 30, 1996 would have been $6,100,830, or $1.40 per share.
This represents an immediate increase in net tangible book value of $1.41 per
share to the existing shareholders and an immediate dilution of $6.10 per share
to new investors. The following table illustrates this dilution, on a per share
basis:
Initial public offering price of Common Stock........ $7.50
Net tangible book value before offering..... $(.01)
Increase attributable to new investors...... 1.41
Pro forma net tangible book value after offering..... 1.40
-----
Total dilution to new investors...................... $6.10
=====
If the Underwriters' over-allotment option is exercised in full, the pro forma
net tangible book value of the Company as of June 30, 1996 will be $6,932,768,
or $1.59 per share. This represents an immediate increase in net tangible book
value of $1.60 per share to the existing shareholders and an immediate dilution
of $5.90 per share to new investors.
The following table summarizes, as of June 30, 1996, the total number of
shares of Common Stock purchased from the Company, the total consideration paid
and the average price per share paid (assuming an initial public offering price
of $7.50 per share) by the existing shareholders and the new investors.
<TABLE>
<CAPTION>
PERCENT OF AVERAGE
SHARES PERCENT OF AGGREGATE TOTAL PERCENT PER
PURCHASED TOTAL SHARES CONSIDERATION CONSIDERATION SHARE
--------- ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Existing Shareholders... 3,501,309 80.5% $4,142,500 39.4% $1.18
New Investors........... 850,000 19.5% 6,375,000 60.6% $7.50
========== ====== ========== ======
Total............. 4,351,309 100.0% 10,517,500 100.0%
</TABLE>
If the Underwriters' over-allotment option is exercised in full, the new
investors will have paid $7,331,250 for 977,500 shares of Common Stock,
representing 63.9% of the total consideration for 21.8% of the total number of
shares outstanding.
-13-
<PAGE>
DIVIDEND POLICY
The Company intends to retain all future earnings for the operation and
expansion of its business and does not anticipate paying any cash dividends on
the Common Stock in the foreseeable future. Any future determination as to the
payment of cash dividends will depend on a number of factors, including future
earnings, results of operations, capital requirements, the financial condition
and prospects of the Company and any restrictions under credit agreements
existing from time to time, as well as such other factors as the Board of
Directors may deem relevant. No assurance can be given that the Company will pay
any dividends in the future.
CAPITALIZATION
Set forth below is the capitalization of the Company at June 30, 1996, and
as adjusted to reflect the Company's issuance of 850,000 shares of Common Stock
in this offering at an assumed initial public offering price of $7.50 per share
and the automatic conversion of the Convertible Notes. See Note 5 of Notes to
Financial Statements.
JUNE 30, 1996
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
DEBT:
Short-term debt......................................$1,012,500 $ 0
Current installments of long-term debt............... 48,786 48,786
Long-term debt, excluding current installments....... 129,014 129,014
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, $1 par value; 1,500,000 shares
authorized; no shares issued and
outstanding................................ 0 0
Common Stock, $.001 par value; 25,000,000 shares
authorized; 3,351,309 and 4,351,309
shares issued and outstanding,
respectively............................... 3,351 4,351
Additional paid in capital.......................... 3,560,948 9,697,948
Deficit accumulated during the
development stage.......................... 3,577,015 3,577,015
---------- ----------
Total stockholders' equity (deficit)........ (12,716) 6,125,284
---------- ----------
Total capitalization ................................$1,177,584 $6,303,084
========== ==========
-14-
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below has been derived from the
financial statements of the Company. The financial statements as of and for the
period from November 13, 1990 (inception) through December 31, 1991 and for the
years ended December 31, 1992, 1993, 1994 and 1995 have been audited by KPMG
Peat Marwick LLP, independent certified public accountants. In the opinion of
the Company, the financial information for each of the six month periods ended
June 30, 1995 and 1996, which is unaudited, includes all adjustments, consisting
only of normal recurring adjustments, which the Company considers necessary for
a fair presentation of its financial position and results of operations for
these periods. The statement of operations data for the six month period ended
June 30, 1996 is not necessarily indicative of the results of operations that
may be expected for the full year. The selected financial data presented below
should be read in conjunction with the Company's financial statements, related
notes, and other financial information contained in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------------------ ---------------------------
1991(1) 1992 1993 1994 1995 1995 1996
------------ ----------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Operating expenses:
General and
administrative ....... $ 8,502 $ 8,971 $ 81,886 $ 268,414 $ 907,393 $ 418,079 $ 622,641
Research and
development .......... 128,439 31,924 69,256 178,146 393,874 162,732 365,435
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating
expenses.......... 136,941 40,895 151,142 446,560 1,301,267 580,811 988,076
----------- ----------- ----------- ----------- ----------- ----------- -----------
Interest (expense), net ..... -- (16,299) (16,360) (46,312) (17,878) (26,462) (13,094)
Conversion (expense) on
redeemable preferred
stock................... -- -- -- -- -- -- (344,631)
Loss on disposition of
property and equipment.. -- (39,560) (18,000) -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net (loss) .................. (136,941) (96,754) (185,502) (492,872) (1,319,145) (607,273) (1,345,801)
Dividends on redeemable
preferred stock ........ -- -- (8,328) (53,929) (222,067) (75,066) (147,000)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net (loss) to common
shares ................. $ (136,941) $ (96,754) $ (193,830) $ (546,801) $(1,541,212) $ (682,339) $(1,492,801)
=========== =========== =========== =========== =========== =========== ===========
Net (loss) per common
share(2) ............... $ (0.07) $ (0.05) $ (0.10) $ (0.27) $ (0.66) $ (0.34) $ (0.53)
=========== =========== =========== =========== =========== =========== ===========
Weighted average shares
outstanding(2) ......... 2,000,000 2,000,000 2,000,000 2,000,000 2,335,140 2,000,000 2,799,071
</TABLE>
JUNE 30, 1996
---------------------------
ACTUAL AS ADJUSTED(3)
----------- --------------
BALANCE SHEET DATA:
Working capital ................................ $ (216,966) $5,921,034
Total assets ................................... 1,562,712 6,628,212
Total liabilities .............................. 1,575,428 502,928
Stockholders' equity (deficit):
Total stockholders' equity (deficit) ...... (12,716) 6,125,284
- -----------------------
(1) Information provided for the period from November 13, 1990 (inception) to
December 31, 1991.
(2) See Note 1 to Notes to Financial Statements for information concerning the
computation of net loss per share.
(3) Adjusted to reflect (i) the issuance of 150,000 shares of Common Stock as
a result of the conversion of the Convertible Notes; and (ii) the sale of
850,000 shares of Common Stock offered hereby at an assumed initial public
offering price of $7.50 per share and the initial application of the
estimated net proceeds therefrom. See "Capitalization" and "Use of
Proceeds."
-15-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements, including the notes thereto, contained elsewhere in
this Prospectus.
GENERAL
Since its inception in November 1990 the Company has devoted substantially
all of its resources to research and development programs relating to its full
line of self contained, recycling industrial parts washers. The Company was a
development stage company through June 30, 1996, and commenced its planned
principal operations in July 1996. The Company has been unprofitable since its
inception and expects that it will incur significant additional losses at least
through December 31, 1996. From the period from inception through June 30, 1996,
the Company incurred a cumulative net loss of $3,577,015. The Company
anticipates that it will incur losses until such time, if ever, as the Company
is able to generate sufficient revenues to offset its operating costs and the
costs of its continuing expansion. In light of the material uncertainties in
connection with the commencement of the Company's operations, the Company cannot
reasonably estimate the length of time before the Company may generate net
income, if ever.
The Company intends to make its SystemOne(TM) Washer and services available
to the public through a third party leasing program. The Company will recognize
the revenue from the sale of a machine at the time that the equipment is
delivered either to the third party lessor or directly by the Company to the
lessee. A portion of the revenue (currently estimated at 10% of the sale price
per machine) will be accounted for as deferred revenue, and recognized as
revenue in respect of the service portion of the agreement over the term of the
underlying lease. See "Business - Sales Financing and Servicing Programs" for a
description of the Product Financing Agreement the Company has entered into with
Oakmont Financial Services.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995.
The Company did not generate any revenues prior to June 30, 1996.
The Company's general and administrative expenses increased by $204,562 to
$622,641 for the six months ended June 30, 1996 from $418,079 during the
comparable period in 1995. The increase is primarily attributable to the
Company's hiring of additional management, sales and marketing staff in
anticipation of the Company's commencement of its planned principal operations
and the Company's grant of an aggregate of 30,000 shares of Common Stock to
three directors of the Company in exchange for certain consulting services.
The Company's research and development expenses for the six months ended
June 30, 1995 and 1996 were $162,732 and $365,435, respectively. The 125%
increase is primarily a function of the Company's accelerated prototype
development during the latter period, as opposed to the basic and applied
research conducted during the prior period. During 1996, the Company
manufactured and shipped a number of SystemOne(TM) Washers to various facilities
to test market receptivity.
The Company's interest expenses for the six months ended June 30, 1995 and
1996 were $38,259 and $24,179, respectively. The Company's interest expense in
the six months ended June 30, 1996 decreased by 36% relative to the six months
ended June 30, 1995 due to a relative decrease in the indebtedness of the
Company. In the six months ended June 30, 1995 and 1996, the Company earned
interest income of $11,797 and $11,085 on cash deposits.
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In the six months ended June 30, 1995, the Company incurred a conversion
expense of $344,631 in connection with its efforts to induce all the holders of
the Company's Series A Preferred Stock to convert their Series A Preferred Stock
to Common Stock.
As a result of the foregoing, the Company incurred a net loss of $607,273
and $1,345,801 in the six months ended June 30, 1995 and 1996, respectively.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.
The Company's general and administrative expenses for the years ended
December 31, 1994 and 1995 were $268,414 and $907,393, respectively. The
$638,979 increase in general and administrative expenses was a function of the
Company's hiring of additional management and sales staff, increased use of
management consulting, engineering, legal and accounting professionals, purchase
of more comprehensive insurance policies and increased executive compensation.
For the years ended December 31, 1994 and 1995, the Company's research and
development expenses were $178,146 and $393,874, respectively. The $215,728
increase in research and development expenses was a reflection of the Company's
accelerated research and development efforts and an increased focus on
developing prototype products during the latter part of 1995.
The Company's interest expense was $46,312 and $63,528 for the years ended
December 31, 1994 and 1995, respectively. The Company's interest expense
increased by $17,216 as a result of additional interest expenses incurred with
respect to equipment financing secured in September 1994. In the year ended
December 31, 1995, the Company earned interest income of $45,650 on cash
deposits.
Due to the factors described above, the Company incurred net losses of
$492,872 and $1,319,145 in the years ended December 31, 1994 and 1995,
respectively.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993.
The Company's general and administrative expenses were $81,886 in the year
ended December 31, 1993 and $268,414 in the year ended December 31, 1994.
General and administrative expenses increased by $186,528 primarily in response
to increases in the Company's staff and the Company's increased use of
management consulting, engineering, legal and accounting professionals.
For the years ended December 31, 1993 and 1994, research and development
expenses were $69,256 and $178,146, respectively. The Company's expenses for
research and development increased by $108,890 as the Company increased the
scope of its research and development efforts to a number of product lines.
Interest expense for the Company for the years ended December 31, 1993 and
1994 was $16,360 and $46,312, respectively. The Company's interest expense
increased by $29,952 primarily as a result of $10,346 of additional interest
expense with respect to equipment financing secured in September 1994 and
$11,278 of additional interest expense with respect to notes payable.
In the year ended December 31, 1993, the Company recognized a $18,000 loss
on the disposal of property and equipment.
As a result of the foregoing, the Company incurred net losses of $185,502
and $492,872 in the years ended December 31, 1993 and 1994, respectively.
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LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had a working capital deficiency of
$(216,966) and cash and cash equivalents of $640,592. The Company intends to use
the proceeds of this offering and the cash generated from operations, if any, to
finance its proposed plan of operations.
The capital requirements relating to implementation of the Company's
business plan will be significant. Based on the Company's current assumptions
relating to implementation of its business plan (including the timetable of and
the cost associated with development of manufacturing capabilities, a service
fleet, a corporate headquarters, and research and development facilities), the
Company will seek to develop at least four service centers during the 12 months
immediately following this offering. The Company believes that product sales
will commence in the third quarter of 1996 and that the proceeds from the
Convertible Notes are sufficient to fund working capital requirements until
sales of the Company's products reach levels sufficient to fund working capital
requirements. The Company believes that its ability to generate cash from
operations is dependent upon, among other things, demand for its products and
services and the Company's third party leasing arrangement with Oakmont. If the
Company's third party leasing arrangements with Oakmont proves to be
unsuccessful, and the Company is unable to locate another third party willing to
provide comparable third party leasing services, the Company believes that it
will be substantially dependent upon the proceeds of this offering to execute
its proposed plan of operations over the next 12 months. If the Company's plans
change, its assumptions prove to be inaccurate, the capital resources available
to the Company otherwise prove to be insufficient to implement its business plan
(as a result of unanticipated expenses, problems or difficulties, or otherwise)
or in the event this offering is not completed, the Company has plans to
restructure its operations to minimize cash expenditures and/or obtain
additional financing in order to support its plan of operations. In order to
reduce certain of the Company's up-front capital requirements associated with
service center and service fleet development, the Company intends to lease
service center sites and may seek to the extent possible, to lease rather than
purchase certain equipment and vehicles necessary for service center
development. There can be no assurance that the Company will have sufficient
capital resources to permit the Company to fully implement its business plan.
The Company has no current arrangements with respect to, or sources of,
additional financing. There can be no assurance that any additional financing
will be available to the Company on acceptable terms, or at all. If adequate
funds are not available from additional sources of financing, the Company's
business may be materially adversely affected. In addition, any implementation
of the Company's business plan subsequent to the 12 month period immediately
following this offering will require capital resources substantially greater
than the proceeds of this offering or otherwise currently available to the
Company.
The Company's material commitments relate to its obligations to pay the
contract manufacturers of its SystemOne(TM) Washers, make lease payments
pursuant to certain real property and equipment leases and satisfy its financial
obligations under three employment agreements. Upon consummation of this
offering, the Company will not have any outstanding indebtedness. The Company
anticipates that its material commitments will increase significantly upon the
consummation of this offering as a result of the Company's planned expansion.
See "Business-Manufacturing and Supply" and "-Properties" and "Executive
Compensation." Additionally, under certain circumstances, the Company would be
required to acquire the lessor's interest of First Recovery in certain leases
entered into by First Recovery under a pilot marketing program. Because the
Company does not intend to use third-party financing with respect to units
leased under the pilot marketing program with First Recovery and Valvoline Oil
Company, it will be required to use a portion of the proceeds of this offering
to finance those units. See "Business-Marketing and Servicing Strategy."
In August 1994, the Company acquired a Trumpf Model 200 TC Computer
Numerical Controlled Punch Press (the "Punch Press"). The Company financed the
acquisition of the Punch Press pursuant to a finance and security agreement with
The CIT Group/Equipment Financing, Inc. ("CIT"). Pursuant to the terms of the
finance agreement and security agreement, the Company has agreed to pay CIT an
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aggregate of $341,397 in equal monthly payments of $5,690 over five years. The
Company's obligations to CIT are secured by a security interest in the Punch
Press.
As indicated in the accompanying financial statements, as of June 30, 1996,
the Company's accumulated deficit totalled $3,577,015. Since its inception, the
Company has financed its operations through a variety of stock and debt
issuances and conversions and the sale of property. In November 1990, the
Company obtained from Pierre Mansur, its Chairman and President, all rights to
certain ongoing research and development and related patents and patents
pending, as well as certain real estate and equipment, in exchange for 2,000,000
shares of Common Stock. In January 1991, the Company issued $300,000 in
principal amount of its 12% Promissory Notes (the "Promissory Notes"). To raise
additional capital and refinance a portion of the Promissory Notes, in September
1993 the Company issued 580,000 shares of 12% Cumulative Redeemable Preferred
Stock (the "First Series Preferred Stock") in exchange for $380,000 and the
satisfaction of $200,000 in principal amount of the Promissory Notes.
In April 1992, the Company sold the commercial property originally
contributed to the Company in 1990 for $120,000 in cash and a $200,000 purchase
money mortgage ("PMM"), which bore interest at a rate of 12%. In January 1994,
the Company assigned its rights to receive interest with respect to the PMM to
satisfy the Company's obligation to pay interest with respect to the remaining
outstanding Promissory Note. The principal amount of the PMM was paid to the
Company on April 24, 1995.
In November 1994, the Company borrowed $500,000 pursuant to a 12% Secured
Convertible Promissory Note (the "Secured Note") and in April 1995 the Company
issued 490,000 shares of 12% Cumulative Convertible Preferred Stock (the "Series
A Preferred Stock") in exchange for $1,950,000 in cash and the satisfaction of
the Secured Note.
To minimize the Company's dividend obligations, in May 1995 the Company
issued a notice of redemption with respect to the First Series Preferred Stock
and, subsequently, all of the outstanding shares of First Series Preferred Stock
and accrued interest thereon were converted into an aggregate 656,729 shares of
Common Stock.
In May 1996, the Company issued 20,000 shares of Common Stock in
satisfaction of the remaining outstanding $100,000 in principal amount of the
Promissory Notes.
In June 1996, the Company issued 628,180 shares of Common Stock in exchange
for all of the Series A Preferred Stock and accrued dividends thereon.
Pursuant to a revolving line of credit dated June 1, 1990, Mr. Paul Mansur
advanced the Company an aggregate of $150,000 (the "Debt") between June 1, 1990
and May 31, 1996. On December 31, 1994 and December 31, 1995, the Company paid
Mr. Paul Mansur $34,814 and $12,000, respectively, in satisfaction of interest
owed with respect to the Debt. On May 31, 1996, the Company paid Mr. Paul Mansur
$150,000 and $5,000 in satisfaction of the outstanding principal balance of and
the interest owed with respect to the Debt.
In June 1996, the Company issued (the "Private Financing") $1,012,500 in
principal amount of Convertible Notes, bearing interest at the rate of 4% per
annum through September 30, 1996 and thereafter until maturity at the rate of
12% per annum, and convertible into Common Stock at a conversion price of $6.75
per share. Pursuant to the provisions of the Convertible Notes, the entire
outstanding principal amount thereof will be automatically converted into
150,000 shares of Common Stock upon the consummation of this offering. Each of
Environmental Technologies BVI, Limited, a consulting firm of which Dr. Jan
Hedberg, a director of the Company, is Managing Director, Mr. Joseph E. Jack, a
director of the Company, and Mr. Elias F. Mansur, a director of the Company,
acquired Convertible Notes in the principal amount of $101,250, and, upon
consummation of this offering, each of them will receive 15,000 shares of the
Company's Common Stock pursuant to the automatic conversion thereof.
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BUSINESS
GENERAL
The Company has developed and obtained patent protection with respect to a
full line of self-contained, recycling industrial parts washers that incorporate
innovative, proprietary waste minimization technologies and represent a
significant advance over currently available machinery and processes. Focusing
on waste minimization rather than its removal and recovery, the Company believes
that its equipment will have a major impact on the industrial parts cleaning
industry and will have a broad appeal to customers, because its equipment,
unlike the machines now in use, facilitates efficient and economical compliance
with environmental regulations, minimizes waste disposal requirements, enhances
cleaning solution utilization, and increases worker safety and productivity.
Most machinery and equipment require oil lubrication to function properly.
Removal of lubrication oils from tools and parts during automotive, aviation,
marine and general industrial maintenance, service and repair operations is
typically effected through the use of mineral spirit solvents which become
contaminated in the cleaning process. Under the most common current practice,
the solvent becomes more contaminated (and less effective) with repeated use,
and, when it is saturated with oil, sludge and other contaminants as a result of
the cleaning process (and frequently classified as a hazardous waste under
federal and state regulations), it must be stored on site until pick-up, when
pure solvent is delivered and the contaminated solvent is, generally, shipped to
regional refining facilities. This off-site recycling program is typically
scheduled on four to sixteen week cycles and involves both the utilization of
progressively more contaminated solvent for cleaning operations until the
solvent is too contaminated for use, and thereafter, the on-site storage of the
hazardous solution until the periodic waste recovery service. By contrast, the
Company's products allow the use and re-use of the solvent by removing all the
contaminants from the solvent within the cleaning unit itself, minimizing the
volume of waste by-product and providing pure solvent to the customer on demand,
without the costly and dangerous storage and transportation of hazardous waste.
Moreover, the small amount of waste by-product yielded in the distillation
process utilized by the Company's products can typically be recycled and/or
disposed of together with the customer's used motor oil, which is generally not
classified as a hazardous waste. Substantially all of the Company's target
customers have established systems for the handling, transportation, recycling
and disposal of used motor oil. The Company's products have been extensively
tested and proven effective by independent engineering concerns and testing
laboratories.
STRATEGY
The Company's strategy is to focus initially on the manufacture, marketing
and sale of its SystemOne(TM) Washer because of the anticipated size of the
market for the product. The Company anticipates that the product should be able
to achieve fairly rapid market penetration because of its technological,
economic and environmental advantages and its relatively low price point
compared to competitive equipment. Once the manufacturing and marketing programs
for the SystemOne(TM) Washer are fully implemented, it will commence marketing
its other products for which it has continued its research and development. The
Company hopes to rapidly penetrate the industrial parts cleaning market by
entering into large quantity contracts with target customers which have already
established a national or regional presence, and are able to exploit more fully
the economic and environmental benefits of the Company's products.
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The Company expects to pursue a national expansion program, through
internal growth utilizing a network of regional distribution and service
centers, through a strategic alliance with a national distributor, if one is
available on favorable terms, or through a combination of the two. The Company
is carrying out an internal growth program in Florida, where, in addition to its
regional service center in Miami, it plans to establish at least four additional
centers during the 12 months immediately following this offering, in Orlando,
Tampa, Jacksonville and West Palm Beach. In August, the Company will commence a
test of a strategic marketing alliance by entering into a pilot program with
First Recovery and Valvoline Oil Company, two affiliates of Ashland Inc., a
multinational oil refiner and distributor of automotive related products,
including Valvoline Oil and Ashland 140 Solvent, one of the brands of mineral
spirits solvent used in the Company's SystemOne(TM) Washer. Under the pilot
program, First Recovery will be the exclusive distributor of the SystemOne(TM)
Washer in the Dallas/Ft. Worth and Houston markets. The initial term of the
program is one year. If the arrangement proves successful, the Company expects
to negotiate a broader agreement, possibly including a national distribution
program.
The Company expects to continue its emphasis on research and development
even after its initial products are commercialized. The Company believes that
its technology and its emphasis on waste minimization should yield product
advances with broad market applications beyond the Company's current target
market.
INDUSTRY OVERVIEW
The Company believes the chemical industrial parts cleaning industry has
grown primarily in response to the demand for means of removing lubrication oils
and other contaminants from tools and parts during automotive, aviation, marine
and general industrial maintenance, service and repair operations. Based on
financial and trade journal reports, the Company believes that in 1996
businesses in the United States incurred more than $1 billion in expenses to
clean industrial parts using chemical cleaning techniques. Industrial parts
cleaning machines are used by automotive, aviation and maritime service, repair
and rebuilding facilities, gas stations, transmission shops, parts
remanufacturers, machine shops, and general manufacturing operations of every
size and category requiring parts cleaning.
The Company believes that the level of demand for the different types of
industrial parts cleaning machines and services is and will continue to be a
function of, among other things: (1) the effectiveness of the technology; (2)
the cost of the machines and service; (3) the time and costs associated with
documenting compliance with applicable environmental and other laws; (4) the
safety and environmental risks associated with the machine and service; (5)
customer service; and (6) the difficulty in handling the regulated substances
used and/or generated by competitive machines.
PRODUCTS AND SERVICES
The Company product line includes a variety of self-contained recycling
industrial cleaning and washing equipment, all of which incorporate proprietary
waste minimization technology with respect to which the Company has obtained or
applied for patent protection. The Company expects that all the products listed
below will be available for commercial exploitation at various times prior to
December 31, 1998. All of the Company's products utilize technology that (i)
provides continuously recycled cleaning solution during the cleaning process,
(ii) eliminates the necessity for continual replacement and disposal of
contaminated cleaning solution and residues and (iii) facilitates practical and
cost effective compliance with environmental laws and regulations. The Company
anticipates that it will offer its various parts washing products to commercial
users at prices which range from $2,000 to $25,000 per unit.
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SYSTEMONE(TM) WASHER.
The first of the Company's products to be available in commercial
quantities is the SystemOne(TM) Washer. The SystemOne(TM) Washer line provides
users with pure mineral spirit solvent for parts and tools cleaning purposes,
utilizing a low-temperature vacuum distillation process to recycle the used
solvent within the SystemOne(TM) Washer, so that the solvent may be reused, on
demand, without any need for off-site processing. The SystemOne(TM) Washer
minimizes the volume of waste by-product and eliminates the need for storage and
disposal of the hazardous waste solvent necessitated by the most widely-used
current treatment method.
The Company's SystemOne(TM) Washer consists of one or two washing sinks
mounted at standing level on top of a metal cabinet; a hinged lid on top of the
washing sink to minimize evaporation of solvent; a five gallon primary solvent
holding tank; a distillation unit which contains a residue reservoir; and a 30-
gallon secondary solvent holding tank. The SystemOne(TM) Washer utilizes a
manually operated hose and scrubber which directs the flow of solvent to the
part being cleaned.
The distillation unit separates the solvent from the contaminants that
accumulate in the solvent as a result of use by heating the solvent solution in
a vacuum to a temperature at which the solvent, but not the residue, vaporizes;
and then, cooling the solvent vapor so that the vapor condenses and is converted
back into a liquid. The distilled solvent is channeled to the secondary solvent
holding tank for future use. Accordingly, the solvent may be repeatedly used,
distilled and reused without need for off-site distillation or processing. The
residue is collected and held in the residue reservoir until final disposal.
With respect to SystemOne(TM) Washers which are used in accordance with
their intended purpose, the Company believes that the residue may be legally
recycled and/or disposed of in the same manner that used oil is recycled and/or
disposed of. See "-Government Regulations." The Company believes that
substantially all of its target customers currently have established systems for
the handling, transportation, recycling and disposal of used oil. In those
instances in which the residue may not be recycled as used oil, the residue, but
not the distilled solvent, shall be periodically picked up, recycled and/or
disposed of by a third party. The Company warrants to users that if, for any
reason, the residue generated by its SystemOne(TM) Washer cannot be recycled
and/or disposed of as used oil, the Company will pay for any required recovery
and disposal services. The Company does not intend to be in the business of
handling, transporting, recycling and/or disposal of residue. If it is required
under its warranty to pay for recovery and disposal, it intends to retain a
third party to provide the required services.
The Company has also developed and obtained patent protection with respect
to a general parts washer which utilizes an aqueous based cleaning solution. The
Company is in the process of evaluating when it will commence the commercial
production and marketing of its aqueous based parts cleaner.
The target market for SystemOne(TM) Washers are automotive, aviation and
maritime service, repair and rebuilding facilities, gas stations, transmission
shops, parts remanufacturers, machine shops, and general manufacturing
operations of every size and category requiring small parts cleaning.
The Company anticipates that the SystemOne(TM) Washer will require service
approximately four times a year for replacement of solvent lost to evaporation
or spillage and general maintenance requirements. See "Marketing and Services
Strategy" for additional information regarding the servicing of the
SystemOne(TM) washers.
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OTHER PRODUCTS.
MULTIPROCESS POWER SPRAY WASHER is currently manufactured and marketed on a
limited basis, and integrates three processes in one self-contained machine; a
power spray wash process, a recycling/reclamation process and a thermal
oxidation process. The Power Spray Washer is able to accommodate large and bulky
parts or units that are too large for the SystemOne(TM) Washer. The target
market for power spray washers are automotive, aviation and maritime
maintenance, repair and rebuilding facilities, parts remanufactures, machine
shops, transmission shops, and all facets of general manufacturing requiring
maintenance and repair of mechanical equipment.
MULTIPROCESS SPRAY GUN WASHER is scheduled for commercial introduction in
late 1996. It incorporates the Company's recycling/reclamation capabilities for
paint thinner recovery. The target market for spray gun washers are automotive,
aviation and maritime paint shops and all general manufacturing operations that
utilize paint. The Company anticipates that the auto paint industry will
represent a substantial market. The MultiProcess Spray Gun Washer facilitates
compliance with rigorous environmental disposal regulations for the paint
industry.
MULTIPROCESS IMMERSION WASHER is scheduled for commercial introduction in
1997. It integrates an immersion wash process, a recycling/reclamation process
and a thermal oxidation process in one self-contained machine. The MultiProcess
Immersion Washer is designed for cleaning of complex parts containing
substantial integral and highly inaccessible passages requiring a total
immersion washing. The primary target market for immersion washers are radiator
rebuilding shops as well as automotive, aviation and maritime maintenance,
repair and rebuilding facilities, parts remanufactures, machine shops,
transmission shops, and all facets of general manufacturing requiring
maintenance and repair of mechanical equipment.
MINIDISPOSER is scheduled for commercial introduction in 1998. It is a
compact and portable mini-thermal oxidizer developed as a practical and
efficient means for the disposal of contaminants by thermal oxidation within a
unit measuring only one cubic foot. The MiniDisposer will be marketed both as
optional equipment with the SystemOne(TM) Washer and as a stand alone
mini-thermal oxidizer. The Company believes that the size and scope of the
market for the MiniDisposer is substantial and diversified and includes
industrial, commercial and consumer applications that generate small contaminant
waste by-products. The Company continues to explore potential markets in
medical, restaurant and other commercial and consumer applications.
COMPETITION
The industrial parts cleaning industry is highly competitive and dominated
by a large company, Safety-Kleen Inc. ("Safety-Kleen"), which has substantially
greater financial and other resources than the Company. Safety-Kleen services
the parts cleaning industry through a "closed-loop" recycling system in which
contaminated solvent is removed for recycling and fresh solvent is delivered on
a periodic basis. There can be no assurance that Safety-Kleen will not develop
or acquire technology similar to or different from the Company's that would
allow it to provide an on-site recycling service. To the best of the Company's
knowledge, no other company is currently commercially marketing a recycling
parts washer with comparable characteristics. There can be no assurance that
Safety-Kleen or other competitors will not acquire or develop patent rights with
respect to a recycling parts washer which are competitively superior to the
Company's patent rights. See "-Patents, Trademarks and Proprietary Technology."
The Company believes that certain of its target customers have attempted to
enhance the capabilities of their existing industrial parts washers by acquiring
machines capable of distilling solvent used in and removed from the parts
washers. Although there are a wide variety and types of such
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machinery currently available to the public, the Company believes its
SystemOne(TM) Washers provide superior service at a lower cost.
The Company believes that Safety-Kleen services a significant portion of
the parts washing machines currently in use. Based upon market studies conducted
by the Company, the Company believes that no other competitor accounts for more
than 2% of the industrial parts washer market in the State of Florida or the
United States.
According to Safety-Kleen's Annual Report on Form 10-K for the year ended
December 31, 1995 (the "Safety-Kleen Annual Report"), Safety-Kleen was the
world's largest provider of parts washing services and one of the world's
largest collectors and re-refiners of used oil. According to the Safety-Kleen
Annual Report, at December 31, 1995, Safety-Kleen had Shareholders' Equity of
approximately $433.0 million and, in the year ended December 31, 1995,
Safety-Kleen had aggregate revenues of approximately $859.0 million, including
revenues of approximately $240.0 million from its automotive/retail parts
cleaning service and $119 million from its industrial parts cleaning service,
and served its customers in North America and Europe through a network of 235
branch facilities. At December 31, 1995, Safety-Kleen was providing services for
approximately 493,000 parts washers for customers in the United States, of which
approximately 375,000 were owned by Safety-Kleen and 118,000 were owned by its
customers.
The Company believes that its SystemOne(TM) Washer will compete favorably
with its competitors on the basis of, among other things, (1) the effectiveness
of the technology; (2) cost; (3) the time and cost associated with documenting
compliance with applicable environmental and other laws; (4) the safety and
environmental risks associated with the machines and service; (5) customer
service; and (6) the difficulty in handling the regulated substances used and/or
generated by competitive machines.
GOVERNMENT REGULATION
The Company believes that federal and state laws and regulations have been
instrumental in shaping the industrial parts washing industry. Federal and state
regulations dictate and restrict to varying degrees what types of cleaning
solvents may be utilized, how a solvent may be stored and utilized, and the
manner in which contaminated solvents may be generated, handled, transported,
recycled and disposed of.
Although the federal and state laws and regulations discussed below
regulate the behavior of the Company's customers, and not the Company, the
Company believes that customer demand for its SystemOne(TM) Washer is partially
a function of the legal environment in which the Company's customers conduct
business. The Company's SystemOne(TM) Washer was designed to help minimize the
cost of complying with existing federal and state environmental laws and
regulations. Any changes, relaxation or repeal of the federal or state laws and
regulations which have shaped the industrial parts washing industry may
significantly affect demand for the Company's products and the Company's
competitive position.
REGULATION OF SOLVENT TYPES. Federal and state regulations have restricted
the types of solvents that may be utilized in industrial parts cleaning
machines. Prior to December 1995, methyl chloroform was a widely used cleaning
solvent. The Clean Air Act of 1990 mandated the elimination of methyl chloroform
by December 1995.
REGULATION OF HANDLING AND USE OF SOLVENTS. Stoddard solvents, more
commonly known as mineral spirits and solvent naphtha, are the cleaning solvents
typically used in the industrial parts washers of the Company's closest
competitors. The Company intends to use mineral spirits with a minimum of 140
degrees fahrenheit ignitable limits in its SystemOne(TM) Washer. Such mineral
spirits do not exhibit the
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ignitability characteristic for liquid hazardous wastes as defined in the
Resource Conservation and Recovery Act of 1976, as amended, and the implementing
regulations of that statute adopted by the United States Environmental
Protection Agency (the "EPA") (collectively, "RCRA"). Certain machines of the
Company's competitors use mineral spirits with lower ignitable limits, which
may, after use, render such mineral spirits subject to regulation as a hazardous
waste. The Company believes that the ability to recycle the mineral spirits used
in its SystemOne(TM) Washer provides an economic benefit to the Company's
customers by allowing them to avoid the expenses and potential liability
associated with the disposal of such solvent as a hazardous waste. See
"Government Regulation -Regulation of Generation, Handling, Transportation and
Disposal of Contaminated Solvents."
Federal, state and many local governments have adopted regulations
governing the handling, transportation and disposal of such solvents. On the
federal level, under the Hazardous Materials Transportation Act (HMTA), the
United States Department of Transportation has promulgated requirements for the
packaging, labeling and transportation of mineral spirits in excess of specified
quantities. The Company does not intend to transport mineral spirits in
quantities that would trigger the HMTA requirements.
Relative to the handling and disposal of mineral spirits, many states and
local governments have established programs requiring the assessment and
remediation of hazardous materials that have been improperly discharged into the
environment. Liability under such programs is possible for unauthorized release
of mineral spirits in violation of applicable standards. Civil penalties and
administrative costs may also be imposed for such violations.
REGULATION OF GENERATION,TRANSPORTATION, TREATMENT, STORAGE AND DISPOSAL OF
CONTAMINATED SOLVENTS. The generation, transportation, treatment, storage and
disposal of contaminated solvents is regulated by the federal and state
governments.
At the federal level, the Resource Conservation and Recovery Act authorized
the EPA to develop specific rules and regulations governing the generation,
transportation, treatment, storage and disposal of hazardous wastes as defined
by the EPA. The EPA's definition of hazardous waste appears under Chapter 40 CFR
Part 261. The Company believes that none of the residue by-products, the used
solvent before distillation or the solvent recycled in a SystemOne(TM) Washer
used in accordance with its intended purpose and instructions is subject to
regulation as a "hazardous waste." In contrast, the Company believes that the
mixture of solvent and contaminants which is periodically recovered from the
machines of many of its competitors is subject to regulation as "hazardous
waste."
The Company believes that the ability to recycle and dispose of its residue
by-product as used oil rather than as a hazardous waste is economically
attractive to the Company's customers for a number of reasons. The Company
believes that substantially all of its target customers currently have
established systems for the handling, transportation, recycling and/or disposal
of used oil. Accordingly, the classification of the residue as used oil would
enable the Company's customers to: (1) dispose of or recycle the residue at no
significant additional cost; and (2) avoid certain costs associated with
establishing and disposing of wastes in compliance with a hazardous waste
disposal system.
Even if the residue by-product was required to be handled, transported,
recycled and/or disposed of as a hazardous waste, the fact that the
SystemOne(TM) Washer effects a substantial reduction in the volume of waste
product requiring disposal would still serve to minimize disposal costs.
The Company believes that solvent which has been used and is being held in
a SystemOne(TM) Washer prior to distillation is not a "waste" and is not subject
to regulation as a hazardous waste.
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<PAGE>
RCRA establishes the basic framework for federal regulation of hazardous
waste. RCRA governs the generation, transportation, treatment, storage, and
disposal of hazardous waste. In contrast to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), which is discussed
below, RCRA is designed to anticipate and prevent harm to human health and the
environment, rather than to respond to the release of hazardous wastes.
RCRA requires that facilities that generate, treat, store or dispose of
hazardous wastes comply with certain operating and permitting standards. RCRA
provides standards for permitting, maintenance and operation of facilities
handling hazardous wastes, including requirements for testing and maintenance of
equipment, contingency plans and emergency procedures, secondary containment,
recordkeeping and reporting to government agencies. The recordkeeping and
reporting requirements of RCRA are significant. Before transportation and
disposal of hazardous wastes off-site, generators of such waste must package and
label their shipments consistent with detailed regulations and prepare a
manifest to be filed with the appropriate governmental agency identifying the
material and stating its destination. The transporter must deliver the hazardous
waste in accordance with the manifest and to a facility with an appropriate RCRA
permit (a "TSD Facility"). Failure to comply with the manifesting requirements
may result in the imposition of civil and/or criminal penalties. Many states and
local governments have adopted regulatory programs which parallel the RCRA
regulatory system, many of which programs are in certain ways more restrictive
and burdensome than the RCRA system.
With regard to regulation of "used oil", the EPA ruled in 1992 that used
oil is not a hazardous waste under RCRA. Like the RCRA regulations pertaining to
hazardous wastes, the EPA's used oil regulations provide standards for
permitting, the maintenance and operation of used oil facilities, including
requirements for testing and maintenance of equipment, contingency plans and
emergency procedures, secondary containment, recordkeeping and reporting.
However, there are some material differences between RCRA's regulation of
hazardous waste and used oil. In contrast to hazardous wastes, used oil need not
be processed solely at sites with treatment, storage and disposal permits. In
addition, the generators of used oil are not required to file a shipping
manifest with government agencies with respect to each shipment of used oil.
Many state and local governments have adopted regulatory programs which parallel
the EPA's program for regulating used oil, many of which programs are in certain
ways more restrictive or burdensome than the EPA's program. For instance,
certain state and local governments continue to regulate used oil as a hazardous
waste.
CERCLA, as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), sets forth national policy and procedures for containing and
removing releases of hazardous substances, and identifying and remediating sites
contaminated with hazardous substances. CERCLA created an $8.5 billion fund (the
"Superfund"), financed from taxes on petroleum and various chemicals, to be
administered by the EPA to fund cleanup of hazardous waste sites. SARA
significantly expanded the scope of hazardous waste cleanup and imposed more
stringent cleanup requirements. The Superfund's most notable objective, however,
is to provide criteria and financial assistance for site cleanups and to impose
liability on parties responsible for such contamination - namely, owners and
operators of vessels or facilities from which such releases occur, and persons
who generated, transported, or arranged for the transportation of hazardous
substances to a facility from which a release or threatened release occurs.
Most states, including Florida, have created programs similar to Superfund.
These state programs are principally designed to help finance the state's share
of remediation costs of sites under the federal Superfund and to finance
cleanups at state sites that are not considered a priority for remediation under
the federal program.
The CERCLA definition of hazardous substances provides a major exception
for petroleum, including used oil if recycled. However, liability under CERCLA
is possible if petroleum products are
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<PAGE>
released that contain hazardous substances as additives or that are tainted with
hazardous substances during their use and disposal.
The Company believes that the demand for its SystemOne(TM) Washer is
enhanced as a result of certain federal and state environmental laws and
regulations. Although the demand for industrial parts cleaning machines and
services may be substantial in certain international markets, the level of
demand for the Company's SystemOne(TM) Washer may not be substantial in certain
countries as a result of permissive regulatory systems which allow the use of
less environmentally stringent cleaning and waste disposal methods.
MANUFACTURING AND SUPPLY
The Company manufactures certain of its SystemOne(TM) Washers at its 10,000
square foot manufacturing facility located in Miami, Florida, at which all
manufacturing operations, including design, metal cutting, bending and welding,
painting and assembly can be performed. The Company has acquired all of the
machinery necessary to manufacture SystemOne(TM) Washers. The Company believes
that it can produce up to 200 SystemOne(TM) Washers a month at its manufacturing
facility. The Company has secured third parties capable of manufacturing the
balance of the SystemOne(TM) Washers needed to meet anticipated customer demand
for the next 12 months. The Company intends to secure additional manufacturing
capacity as the need arises.
On May 7, 1996, the Company entered into an agreement (the "Supply
Agreement") with a supplier (the "Supplier") pursuant to which the Supplier
agreed to supply to the Company, at the Company's election, between 3,000 and
5,000 SystemOne(TM) Washers at established prices and in accordance with a
delivery schedule. The Supply Agreement delivery schedule provides for the
monthly delivery of a minimum of 100, 200, 300 and 400 SystemOne(TM) Washers in
the quarters commencing August 1996, November 1996, February 1997 and May 1997,
respectively, and for the monthly delivery of a maximum of 500 SystemOne(TM)
Washers after December 1996. The Supply Agreement provides for adjustments in
the established pricing schedule based upon certain reductions in the cost of
production and/or increases in the cost of sheet metal.
The Company has ordered a prototype SystemOne(TM) Washer manufactured by
the Supplier and has paid the first of three $50,000 payments toward a $150,000
advance (the "Advance"), which amount will be credited against future purchases
under the Supply Agreement at a rate of $50 per SystemOne(TM) Washer. The Supply
Agreement provides that the Supplier will, based upon the Company's
specifications and drawings, manufacture the SystemOne(TM) Washers in its
factory and manufacture such items exclusively for the Company. According to the
Supply Agreement, the Supplier is expressly responsible for all sheet metal
fabrication, painting, assembling and quality assurance testing associated with
the manufacture of SystemOne(TM) Washers.
The Supply Agreement requires the Company to provide the Supplier with all
of the components and raw materials, except for sheet metal, necessary to
manufacture SystemOne(TM) Washers. In addition, the Supply Agreement requires
the Company to acquire and provide to the Supplier for use all of the hard
tooling required to manufacture the SystemOne(TM) Washers.
The Supply Agreement provides that the Company may unilaterally terminate
the contract in whole or in part for cause or for convenience. In the event the
Supply Agreement is terminated by the Company for convenience, the Supplier will
be entitled to reimbursement of the costs it has incurred through the date of
termination and, if such termination occurs prior to the delivery of 3,000
SystemOne(TM) Washers, the Supplier will be entitled to payment for
SystemOne(TM) Washers produced through the date of termination and retain any
unapplied amount of the Advance.
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The Company has retained the right to secure other contract manufacturers
of SystemOne(TM) Washers. Although, at present, the Company seeks to avoid the
transaction and opportunity costs associated with identifying, securing and
training another SystemOne(TM) Washer manufacturer, the Company does not believe
that it is dependent upon the Supplier to manufacture SystemOne(TM) Washers and
that other manufacturers are readily available. The Company has entered into
negotiations with a major contract manufacturer with a 2 million square foot
facility and 75 years of experience to provide the manufacturing capacity needed
to meet anticipated future customer demand. No assurances can be given that the
Company and the major contract manufacturers will ever enter into a binding
contract.
The SystemOne(TM) Washer is an assembly of raw materials and components all
of which the Company believes are readily obtainable in the United States of
America. The Company does not believe that it nor the Supplier is dependent upon
any of their respective current suppliers to obtain the raw materials and
components necessary to assemble and manufacture SystemOne(TM) Washers.
The Company is capable of manufacturing its other products in the amounts
required for testing and test marketing in its own manufacturing facility.
MARKETING AND SERVICING STRATEGY
In order to create awareness of its products and test the demand for them,
commencing in December 1995, the Company placed an aggregate of 47 SystemOne(TM)
Washers in 38 automotive dealerships, municipal and private fleet maintenance
facilities, repair facilities and other users of parts cleaning equipment in
South Florida. The demonstrator units were provided at no charge. The test
program was conducted primarily to enable the Company to gauge the demand for
its products. Notwithstanding the absence of a formal marketing program during
the test period, the Company has, to date, received orders from a number of
facilities in which the machines were placed, including Florida Detroit Diesel
MTU (46 Units); Kelly Tractor Company (23 units) and Pantropic Power Products
(25 units), the South Florida Caterpillar dealers; United States Postal Service
(2 units); Southern Sanitation, a subsidiary of Waste Management, Inc. (5
units); Broward County Mass Transit (25 units); and a number of South Florida
automobile dealerships (an aggregate of 54 units). The Company commenced
commercial sales and delivery of units in July 1996 at an approximate price per
unit of $2,700.
In a parallel marketing strategy, to test the viability of the strategic
marketing alliance concept for its products, in August 1996 the Company will
commence a pilot program with First Recovery and Valvoline Oil Company, two
affiliates of Ashland Oil, pursuant to which First Recovery will serve as the
exclusive distributor for the SystemOne(TM) Washer in the Dallas/Ft. Worth and
Houston markets. The program, whose initial term is one year, but is cancelable
by either party on 60 days notice, sets forth a schedule for the purchase of
1,000 units by First Recovery during the first year. First Recovery is obligated
to provide routine service to customers. Upon termination of the program, First
Recovery will have the option to require the Company to assume the leases it has
entered into with its customers and to pay First Recovery, on a discounted
basis, the profit it would have realized under such leases. If First Recovery
does not exercise that option, it will have the additional option, for one year
after termination of the program, to lease up to four times the number of units
it leased under the program, but only to its existing customers. Subject to its
assessment of First Recovery's performance, the Company will consider entering
into a more extensive distribution agreement.
The Company also intends to expand the geographic scope of its operations
through its internal marketing operations, initially focusing on Florida and
then expanding to other regions. In addition to its sales and service operations
in Miami, the Company intends to establish sales, service and technical support
service centers in Orlando, Tampa, Jacksonville and West Palm Beach, Florida
during 1996 to support its proposed operations in Florida. The Company will
market and service the SystemOne(TM) Washers it places with customers with its
own marketing, service and technical support personnel. The
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Company believes it will retain at least 15 marketing, service and technical
support personnel to support its proposed operations in Florida over the next 12
months.
The Company intends to continue to generate consumer awareness of its
SystemOne(TM) Washer through the efforts of its sales force, general
advertisements in trade publications, and participation in trade conventions.
SALES FINANCING AND SERVICING PROGRAMS
Initially, the Company intends to make its SystemOne(TM) Washers available
to the public through a third party leasing program. The Company entered into an
agreement (the "Product Financing Agreement") with Oakmont Financial Services
("Oakmont") on May 28, 1996 pursuant to which Oakmont agreed to provide third
party leasing services. Pursuant to the Product Financing Agreement, the Company
is to provide Oakmont certain information with respect to each proposed customer
for which a third party lease is sought, including credit information with
respect to each proposed lessee. Oakmont may reject a lease application if, in
its sole discretion, the proposed transaction does not comply with Oakmont's
then applicable criteria. If Oakmont elects to provide lease financing, Oakmont
will purchase the SystemOne(TM) Washer in the manner and for an amount agreed to
by the Company and Oakmont from time to time, upon Oakmont's receipt of required
documentation.
The Product Financing Agreement provides that, upon the customer's
satisfaction of all of its lease payment obligations to Oakmont, the Company
may, at its option, repurchase the subject equipment from Oakmont at a cash
purchase price equal to the fair market value of the subject equipment plus
applicable sales tax. The Product Financing Agreement states that the fair
market value of a SystemOne(TM) Washer shall be determined by the mutual
agreement of the Company and Oakmont or, if such an agreement is not reached, by
an appraiser selected by mutual agreement of the Company and Oakmont.
Under the Product Financing Agreement, the Company has agreed, for a fee,
to utilize a reasonable and non-discriminatory approach to assist Oakmont in
reselling any SystemOne(TM) Washers with respect to which a customer has failed
to discharge its payment obligations to Oakmont. The Product Financing Agreement
states that Oakmont does not have recourse against the Company for customer
failures to discharge their obligations to Oakmont unless the Company has
breached and failed to cure certain warranties. In such event, the Product
Financing Agreement requires the Company to purchase from Oakmont the
SystemOne(TM) Washer and Oakmont's rights under the financing agreements with
the customer for an amount equal to the sum of all lease payments then due and
owing under the lease, all lease payments payable from the date of default to
the end of the lease term and twenty percent of the equipment cost, less any
applicable deposit which may be retained by Oakmont. Where required by
applicable law, the foregoing amounts are required to be calculated using the
discounted present value of the subject lease payments.
The Product Financing Agreement provides for a term of one year, which
automatically renews for successive one-year terms. Under the Product Financing
Agreement, either the Company or Oakmont may terminate the agreement with or
without cause upon 60 days notice, without affecting the rights and obligations
of either party with respect to previous sales. In addition, if Oakmont declines
any five lease applications within a 30-day period, which lease applications are
accepted and funded by a third party on terms declined by Oakmont, the Company
may, upon 10 days notice, terminate the Product Financing Agreement.
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<PAGE>
PATENTS, TRADEMARKS AND PROPRIETARY TECHNOLOGY
The Company holds United States patents relating to its SystemOne(TM)
Washer, Power Spray Washer, Spray Gun Washer and Immersion Washer and
anticipates that it will apply for additional patents it deems appropriate. The
Company has applied for international patents in Canada, Japan, Europe and
Mexico.
The Company's patent with respect to its SystemOne(TM) Washer was issued on
September 27, 1994 and will expire on September 26, 2011. The Company has three
patents pending with respect to its SystemOne(TM) Washer, one of which was
allowed by the U.S. Patent Office on April 2, 1996 and is awaiting issuance. The
Company's patent with respect to its Power Spray Washer was issued on January
11, 1994, and expires on January 10, 2011. The Company's patent with respect to
its Spray Gun Washer was issued on February 14, 1995, and expires on February
13, 2012. The Company's patent with respect to its Immersion Washer was issued
on May 21, 1996 and expires on May 20, 2013. The Company's patent with respect
to its MiniDisposer was allowed by the U.S. Patent Office on June 26, 1996 and
is awaiting issuance.
The Company believes that patent protection is important to its business.
There can be no assurance as to the breadth or degree of protection which
existing or future patents, if any, may afford the Company, that any patent
applications will result in issued patents, that patents will not be
circumvented or invalidated or that the Company's competitors will not commence
marketing self-contained washers with similar technology. It is possible that
the Company's existing patent rights may not be valid although the Company
believes that its patents and products do not and will not infringe patents or
violate proprietary rights of others. It is possible that infringement of
existing or future patents or proprietary rights of others may occur. In the
event the Company's products or processes infringe patents or proprietary rights
of others, the Company may be required to modify the design of its products or
obtain a license. There can be no assurance that the Company will be able to do
so in a timely manner, upon acceptable terms and conditions or at all. The
failure to do any of the foregoing could have a material adverse effect upon the
Company. In addition, there can be no assurance that the Company will have the
financial or other resources necessary to enforce or defend a patent
infringement or proprietary rights violation actions. Moreover, if the Company's
product or processes infringes patents or proprietary rights of others, the
Company could, under certain circumstances, become the subject of an immediate
injunction and be liable for damages, which could have a material adverse effect
on the Company.
The Company has applied for a federal trademark with respect to the mark
"SystemOne" and design.
The Company also relies on trade secrets and proprietary know-how and
employs various methods to protect the concepts, ideas and documentation of its
proprietary information. However, such methods may not afford complete
protection and there can be no assurance that others will not independently
develop such know-how or obtain access to the Company's know-how, concepts,
ideas and documentation. Although the Company has and expects to have
confidentiality agreements with its employees, suppliers and appropriate
vendors, there can be no assurance that such arrangements will adequately
protect the Company's trade secrets. Since the Company believes that its
proprietary information is important to its business, failure to protect such
information could have a material adverse effect on the Company.
RESEARCH AND DEVELOPMENT
During the years ended December 31, 1994 and 1995 and the six months ended
June 30, 1996, the Company expended $178,146, $393,874 and $365,435,
respectively, on research and development of its various products.
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The Company plans to continue to focus significant resources on research
and development of existing and future product lines. Although the Company
intends to continue to seek means of refining and improving its SystemOne(TM)
Washer, the Company believes, based on market response, that the SystemOne(TM)
Washer is at a stage where commercial exploitation is appropriate. The Company
recognizes that the industrial parts cleaning industry may be entering a phase
of rapid technological change and progress and the Company will seek to retain
what the Company perceives as its technological superiority over its
competitors' products. In order to keep pace with the rate of technological
change, the Company intends to devote considerable resources in time, personnel
and funds on continued research and development for its products. The Company
recognizes that many of its competitors have far greater financial and personnel
resources than the Company which may be devoted to research and development and
can provide no assurance that it will maintain a technological advantage.
Subject to the availability of financial and personnel resources, the
Company intends to spend approximately $400,000 and $500,000 in the years ended
December 31, 1996 and 1997, respectively, to finalize development and testing of
its various products and to develop new products and concepts. Although there
can be no assurance that the Company will ever develop any new products capable
of commercialization, the Company intends to continue its programs to develop
new products, some of which may utilize the Company's patented products and
processes.
PRODUCT LIABILITY AND INSURANCE
The Company is subject to potential product liability risks which are
inherent in the design and use of industrial parts cleaning machines. The
Company has implemented strict quality control measures and currently maintains
product liability insurance of $5,000,000 in the aggregate and $5,000,000 per
occurrence.
PROPERTIES
The Company maintains its corporate headquarters, research and development
laboratory and manufacturing facilities in a 10,000 square foot building located
in Miami, Florida 33156, under a two year lease which commenced on January 1,
1995. The lease provides for two renewal terms of two years. The Company's
annual lease payment approximates $61,000, which amount does not include the
Company's responsibility to pay all charges for gas, water, sewer, trash
collection and electrical services. The Company intends to seek additional
space, either at its current location or elsewhere, to house expanded corporate
headquarters and research and development facilities. The Company anticipates no
significant difficulty in locating such space or reasonable terms. The Company
does not anticipate that it will experience difficulty in locating and equipping
its regional sales and service centers, which are expected to contain a small
office space/showroom area and enough space for two or three delivery and
maintenance vehicles.
LEGAL PROCEEDINGS
The Company is not involved in any litigation.
EMPLOYEES
As of the date of this Prospectus, the Company employed 15 employees, of
whom four were in corporate management, three were in research and development,
two were in sales and marketing, four were in manufacturing, and two were in
administration. The Company intends to hire additional employees after this
offering, commensurate with the Company's requirements and available funds,
primarily to expand manufacturing and marketing operations.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the executive
officers and directors of the Company.
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
Pierre G. Mansur 44 Chairman of the Board and President
Paul I. Mansur 45 Director, Chief Executive Officer and
Chief Financial Officer
Charles W. Profilet 59 Vice President-Business Development
Lydia G. Hubbell 31 Controller
Elias F. Mansur 53 Director
Dr. Jan Hedberg 49 Director
Joseph E. Jack 68 Director
- -------------------
PIERRE G. MANSUR founded the Company and has served as its Chairman and
President since its inception in November 1990. From June 1973 to August 1990,
Mr. Pierre Mansur served as President of Mansur Industries Inc., a privately
held New York corporation that operated a professional race engine machine shop.
Mr. Pierre Mansur has over twenty years of advanced automotive and machinery
operations experience including developing innovative automotive machine shop
applications; designing, manufacturing, customizing, modifying and retooling
high performance engines and component parts; developing state of the art
automotive and powerboat race engines which have consistently achieved world
championship status; and providing consulting services and publishing articles
with respect to automotive technical research data. Mr. Pierre Mansur has
conducted extensive research and development projects for several companies,
including testing and evaluating engine parts and equipment for Direct
Connection, a high performance racing division of the Chrysler Corporation;
researching and developing specialized engine piston rings and codings for Seal
Power Corporation; researching high-tech plastic polymers for internal
combustion engines for ICI Americas; and designing and developing specialized
high performance engine oil pan applications. Mr. Pierre Mansur is the brother
of Paul I. Mansur and a cousin of Elias F.Mansur. Mr. Pierre Mansur is a
graduate of the City University of New York.
PAUL I. MANSUR has been Chief Executive Officer, Chief Financial Officer
and a Director since September 1993. From September 1986 to July 1993, Mr. Paul
Mansur served as Chief Executive Officer of Atlantic Entertainment Inc., a
privately held regional retail chain of video superstores. From March 1981 to
September 1986, Mr. Paul Mansur served as the Chief Executive Officer and
President of Ameritrade Corporation, a privately held international distributor
of factory direct duty free products. From June 1972 to March 1981, Mr. Paul
Mansur held various finance and operation positions, including Assistant Vice
President Finance and Operations for Mott's USA, Inc., a division of American
Brands. Mr. Paul Mansur is the brother of Pierre G. Mansur and a cousin of Elias
F. Mansur. Mr. Paul Mansur is a graduate of the City University of New York.
CHARLES W. PROFILET has been the Vice President - Business Development of
the Company since November 1995. From July 1992 to September 1995, Mr. Profilet
served as Vice President - Florida
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Operations for Rust Environment and Infrastructure, Inc., a privately held
environmental remediation company that is controlled by WMX Technologies, a
publicly traded waste collection and recycling company traded on the New York
Stock Exchange. From March 1991 to July 1992, Mr. Profilet served as Vice
President-Marketing at Metcalf and Eddy, a full-service engineering and
environmental consulting firm specializing in the treatment of waste water, air
quality assurance, emissions control and remedial design. From July 1987 to
February 1990, Mr. Profilet served as Executive Vice President and Chief
Operating Officer at Craig A. Smith and Associates, a privately-held civil
engineering firm. From August 1979 to September 1985, Mr. Profilet served as
Vice President- Business Development at Reynolds Smith and Hills, a
privately-held architectural and engineering planning firm. Mr. Profilet is a
graduate of the U.S. Military Academy at West Point and holds a Master of
Engineering degree from the University of Oklahoma.
LYDIA G. HUBBELL, C.P.A. has been the Controller of the Company since April
1995. From August 1994 until March 1995, Ms. Hubbell served as an internal
auditor for American Savings of Florida, F.S.B. From September 1992 to August
1994, Ms. Hubbell worked with KPMG Peat Marwick LLP during which period she
became the senior accountant with respect to the Company's audits. Ms. Hubbell
is a graduate of the University of Florida and holds a Master of Accounting
degree from the University of Florida.
ELIAS F. MANSUR has been a Director of the Company since August 1995. From
September 1968 to present, Mr. Elias Mansur served as Managing Director of the
Mansur Trading Company and its subsidiaries, an international, diversified group
of companies involved in banking, international trade, manufacturing, real
estate and hotel operations. From June 1975 to March 1981, Mr. Elias Mansur
served as Chairman of the Board of the Central Bank of the Netherlands Antilles.
From September 1984 to December 1985, Mr. Elias Mansur served as Minister of
Economic Affairs of the Netherlands Antilles. From October 1977 to September
1984, Mr. Elias Mansur served as the Chief Economic Advisor, Minister of
Economic Affairs and Chairman of the Council of Economic Advisors to the
government of Aruba. Mr. Elias Mansur is a cousin of Mr. Pierre Mansur and Mr.
Paul I. Mansur.
DR. JAN HEDBERG has been a Director of the Company since August 1995. From
October 1987 to March 1993, Dr. Hedberg was the Chairman and Chief Executive
Officer of Enprotec International Group, N.V., a company he co-founded and in
the business of researching and developing of advanced waste oil recycling
technologies. Since March 1993, Dr. Hedberg has been the Chairman of the Board
and Chief Executive Officer of Enprotec (USA) Inc., a wholly owned subsidiary of
Enprotec International Group, N.V., which manufactures, designs and assembles
oil re-refining plants. Dr. Hedberg was the co-recipient of the 1991
International Technology Award for Enterprising Innovation and Creativity for
the development of the Vaxon Re-refining Process, which is a proprietary process
that transforms used oil into useable oil products. Dr. Hedberg has over 15
years of experience in oil related and environmental companies and 12 years of
research and teaching experience, including executive management and advisory
positions, with several multinational organizations. Dr. Hedberg received his
Doctor of Philosophy (PhD) in Geotechnical Engineering from the Massachusetts
Institute of Technology, Cambridge, Massachusetts in 1977.
JOSEPH E. JACK has been a Director of the Company since August 1995. From
May 1989 to June 1991, Mr. Jack served as Vice President of Waste Management
Europe, a waste collection and recycling company that is a publicly traded
company on the London Stock Exchange and a controlled subsidiary of WMX
Technologies, a publicly traded New York Stock Exchange company. From April 1984
to December 1987, Mr. Jack was President of Waste Management Inc. of Florida, a
waste collection and recycling company that is an affiliate of Waste Management,
Inc.. From July 1983 to March 1984, Mr. Jack served as Vice President of Waste
Management Partners, a division of Waste Management, Inc. From February 1982 to
July 1983, Mr. Jack served as Vice President of Waste Management International,
a subsidiary of Waste Management, Inc. From April 1980 to February 1982, Mr.
Jack was Vice President of Waste
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Management International (Middle East), a subsidiary of Waste Management, Inc.,
and from May 1978 to April 1980, Mr. Jack was the Resident Manager of Waste
Management Saudi Arabia, a joint venture involving an affiliate of Waste
Management, Inc. Under Mr. Jack's leadership, Waste Management experienced
unprecedented growth in several markets worldwide including Waste Management
Europe's growth of revenues from $10 million to $700 million in a three year
period. Mr. Jack's significant accomplishments in the waste management field
were acknowledged when he was inducted by the National Waste Management
Association into the United States Waste Industry's "Hall of Fame". Mr. Jack has
been an active investor in companies since he retired in June 1991.
The Company has agreed that, for five years after the effective date of
this Prospectus, the Representative will have the right to designate one
individual to be elected to the Company's Board of Directors.
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EXECUTIVE COMPENSATION
The following table sets forth compensation paid or payable in respect of
the three years ended December 31, 1995 to the Company's Chief Executive Officer
and its other executive officer whose combined salaries and bonuses equalled or
exceeded $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------- -----------------
OTHER
ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) COMPENSATION
- ---------------------------- ------ -------- ------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Mr. Pierre G. Mansur, Chairman and 1995 $66,000 $267,460(1) $6,605(2) $0
President 1994 $66,000 $0 $ 550(2) $0
1993 $22,000 $0 $0 $0
Mr. Paul I. Mansur, Chief Executive 1995 $48,000 $0 $2,550(2) $0
Officer 1994 $48,000 $0 $0 $0
1993 $5,000 $0 $0 $0
- ------------------
<FN>
(1) Represents incentive compensation earned by Pierre G. Mansur, $88,110 of which has been paid
and the remainder of which has been accrued.
(2) Automobile allowance paid by the Company.
</FN>
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
In September 1993, the Company entered into a two year employment agreement
with Mr. Pierre Mansur, which provides for an annual base salary of $66,000 and
discretionary bonuses, based on Mr. Pierre Mansur's performance, as determined
by the Compensation Committee of the Board of Directors. Pursuant to the terms
of his employment contract, Mr. Mansur's employment was renewed in September
1995 by the Company for an additional two years. Pursuant to the employment
agreement, during the term of Mr. Pierre Mansur's employment and for a period of
three years following his termination of employment, Mr. Pierre Mansur is
prohibited from disclosing any confidential information, including without
limitation, information regarding the Company's patents, research and
development, manufacturing process or knowledge or information with respect to
confidential trade secrets of the Company. In addition, the employment agreement
provides that Mr. Pierre Mansur is prohibited from, directly or indirectly,
engaging in any business in substantial competition with the Company or its
affiliates. The employment agreement also provides that Mr. Pierre Mansur is
prohibited from becoming an officer, director or employee of any corporation,
partnership or any other business in substantial competition with the Company or
its affiliates during the term of his employment and for three years thereafter.
In September 1995, the Company entered into a two year employment agreement
with Mr. Paul Mansur, which provides for an annual base salary of $48,000 and
discretionary bonuses, based on Mr. Paul Mansur's performance, as determined by
the Compensation Committee of the Board of Directors. Pursuant to the employment
agreement, during the term of Mr. Paul Mansur's employment and for a period of
three years following his termination of employment, Mr. Paul Mansur is
prohibited from disclosing any confidential information, including without
limitation, information regarding the Company's patents, research and
development, manufacturing process or knowledge or information with respect to
confidential trade secrets of the Company. In addition, the employment agreement
provides that Mr. Paul Mansur is
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<PAGE>
prohibited from, directly or indirectly, engaging in any business in substantial
competition with the Company or its affiliates. The employment agreement also
provides that Mr. Paul Mansur is prohibited from becoming an officer, director
or employee of any corporation, partnership or any other business in substantial
competition with the Company or its affiliates during the term of his employment
and for three years thereafter.
In November 1995, the Company entered into a one year employment agreement
with Charles W. Profilet. Under the employment agreement, Mr. Profilet is
entitled to an annual base salary of $80,000, a car allowance of $400 a month
and monthly commissions, ranging from $5 per unit for parts washers to $25 per
unit for jet washers, with respect to each new washer sold by the Company in the
United States. The commissions earned by Mr. Profilet may be converted, at his
option, into Common Stock at a discount on the then current trading price of the
Common Stock. The conversion discount was 10% as of the date of this Prospectus,
but, may be adjusted at the election of the Board of Directors of the Company.
As of the date of this Prospectus, Mr. Profilet had earned an aggregate of
$12,250 of commissions. The employment agreement provides that Mr. Profilet is
eligible to participate in the Company's discretionary executive profit sharing
awards and executive stock award or stock option awards. Pursuant to the
employment agreement, if Mr. Profilet is terminated for cause, defined as an act
of dishonesty, malfeasance, or other impropriety, he is not entitled to receive
any severance payment. If Mr. Profilet is terminated without cause within his
first year of employment, he is entitled to receive his current salary for six
months or until he secures new employment, whichever occurs first. In addition
to the employment agreement, the Company and Mr. Profilet entered into a
Non-Circumvention and Non-Disclosure Agreement.
INCENTIVE COMPENSATION PLAN
The Company's 1996 Executive Incentive Compensation Plan (the "Incentive
Plan") provides for grants of stock options, stock appreciation rights ("SARS"),
restricted stock, deferred stock, other stock related awards and performance or
annual incentive awards that may be settled in cash, stock or other property
(collectively, "Awards"). The total number of shares of Common Stock that may be
subject to the granting of Awards under the Incentive Plan at any time during
the term of the Plan shall be 375,000. The Employee Plan is designed to serve as
an incentive for retaining qualified and competent employees, directors,
consultants and independent contractors of the Company.
The persons eligible to receive Awards under the Incentive Plan are the
officers, directors, employees and independent contractors of the Company, if
any, and its subsidiaries. No director of the Company who is not an employee of
the Company or any subsidiary (a "non-employee director") will be eligible to
receive any Awards under the Incentive Plan other than automatic formula grants
of stock options and restricted stock as described below, and no independent
contractor will be eligible to receive any Awards other than stock options.
The Incentive Plan is required to be administered by a committee designated
by the Board of Directors consisting of not less than two directors (the
"Committee"), each member of which must be a "disinterested person" as defined
under Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and an
"outside director" for purposes of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). The Compensation Committee of the Board has
been appointed as the Committee for the Incentive Plan. Subject to the terms of
the Incentive Plan, the Committee is authorized to select eligible persons to
receive Awards, determine the type and number of Awards to be granted and the
number of shares of Common Stock to which Awards will relate, specify times at
which Awards will be exercisable or settleable (including performance conditions
that may be required as a condition thereof), set other terms and conditions of
Awards, prescribe forms of Award agreements, interpret and specify rules and
regulations relating to the Incentive Plan, and make any other determinations
that may be necessary or advisable for the administration of the Incentive Plan.
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<PAGE>
In addition, the Incentive Plan imposes individual limitations on the
amount of certain Awards in part to comply with Code Section 162(m). Under these
limitations, during any fiscal year the number of options, SARS, restricted
shares of Common Stock, deferred shares of Common Stock, shares as a bonus or in
lieu of other Company obligations, and other stock-based Awards granted to any
one participant may not exceed 250,000 for each type of such Award, subject to
adjustment in certain circumstances. The maximum amount that may be paid out as
a final annual incentive Award or other cash Award in any fiscal year to any one
participant is $1,000,000, and the maximum amount that may be earned as a final
performance Award or other cash Award in respect of a performance period by any
one participant is $5,000,000.
The Incentive Plan provides that each non-employee director shall
automatically receive (i) on the date of his or her appointment as a director of
the Company, an option to purchase 2,500 shares of Common Stock, and (ii) each
year, on the day the Company issues its earnings release for the prior fiscal
year, an option to purchase 2,500 shares of Common Stock. Such options will have
a term of 10 years and become exercisable at the rate of 33-1/3% per year
commencing on the first anniversary of the date of grant; provided, however,
that the options will become fully exercisable in the event that, while serving
as a director of the Company, the non-employee director dies, or suffers a
"disability," or "retires" (within the meaning of such terms as defined in the
Incentive Plan). The per share exercise price of all options granted to
non-employee directors will be equal to the fair market value of a share of
Common Stock on the date such option is granted.
The Company will agree with the Representative that for a 13-month period
immediately following the effective date of the Registration Statement of which
this Prospectus forms a part, the Company will not, without the consent of the
Representative, adopt or propose to adopt any plan or arrangement permitting the
grant, issue or sale of any shares of its Common Stock or issue, sell or offer
for sale any of its Common Stock, or grant any option for its Common Stock which
shall: (x) have an exercise price per share of Common Stock less than (a) the
initial public offering price of the Common Stock offered in this Prospectus or
(b) the fair market value of the Common Stock on the date of grant; or (y) be
granted to any direct or indirect beneficial holder of more than 10% of the
issued and outstanding Common Stock of the Company. No option or other right to
acquire Common Stock granted, issued or sold during the 13- month period
immediately following the effective date of the Registration Statement of which
this Prospectus forms a part shall permit (a) the payment with any form of
consideration other than cash, (b) the payment of less than the full purchase or
exercise price for such shares of Common Stock or other securities of the
Company on or before the date of issuance, or (c) the existence of stock
appreciation rights, phantom options or similar arrangements.
The Company has not granted any Award under the Incentive Plan.
COMPENSATION OF DIRECTORS
After this offering, the Company will pay each director who is not an
employee an annual retainer of $10,000. The Company will reimburse all directors
for all travel-related expenses incurred in connection with their attendance at
meetings of the Board of Directors. Directors will also be entitled to receive
options under the Incentive Plan. See "Incentive Compensation Plan."
Mr. Elias Mansur, Dr. Jan Hedberg and Mr. Joseph Jack were each granted
10,000 shares of the Company's Common Stock in April 1996 in exchange for
previously rendered consulting services.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; AUDIT COMMITTEE
The Board of Directors currently administers and determines compensation,
including salary and bonus for the executive officers, directors and other
employees. The Company intends to establish an Audit Committee and a
Compensation Committee shortly after the closing of this offering. The
Compensation Committee will be responsible for setting and administering
policies that govern annual compensation of the Company's executive officers and
administering the 1996 Stock Option and Incentive Plan and the Directors' Plan.
The duties and responsibilities of the Audit Committee will include (i)
recommending to the full Board the appointment of the Company's auditors and any
termination of their appointment, (ii) reviewing the plan and scope of audits,
(iii) reviewing the Company's significant accounting policies and internal
controls, (iv) administering the Company's compliance programs, and (v) general
responsibility for all related auditing matters.
CERTAIN TRANSACTIONS
COMMON STOCK OWNERSHIP
In connection with the organization of the Company in November 1990, the
Company issued 2,000,000 shares of Common Stock, par value $0.001 per share, to
Mr. Pierre Mansur in exchange for the assignment to the Company of (i) certain
ongoing research and development and rights to any related patents and patents
pending, and (ii) real estate and equipment valued at $52,000.
CONSULTING AGREEMENT AND SERVICES
In November 1994, the Company entered into a two-year consulting agreement
(the "Consulting Agreement") with Environmental Technologies BVI Limited (the
"Consultant"). Pursuant to the Consulting Agreement, the Consultant agreed to
advise, consult with, introduce to third parties and generally assist the
Company in its efforts to explore new manufacturing and marketing arrangements.
In exchange for such services, the Consulting Agreement provided that the
Consultant was entitled to receive certain fees in connection with the sale of
certain equipment, services, license rights, royalty rights, manufacturing
rights, marketing rights or the Company's entrance into a partnership or joint
venture arrangement or consummation of a merger. The Consultant did not receive
any commissions pursuant to the Consulting Agreement. In December 1995, the
Company issued the Consultant 10,000 shares of Common Stock in exchange for the
services rendered by the Consultant and to secure the Consultant's agreement to
terminate the Consulting Agreement and any and all associated rights of the
Consultant. Dr. Jan Hedberg, a director of the Company, owns 50 percent and
serves as the managing director of the Consultant.
Mr. Elias Mansur, Dr. Jan Hedberg and Mr. Joseph Jack were each granted
10,000 shares of the Company's Common Stock in April 1996 in exchange for
previously rendered consulting services.
NOTE PAYABLE TO CHIEF EXECUTIVE OFFICER
Pursuant to a revolving line of credit dated June 1, 1990, Mr. Paul Mansur
made a series of advances ranging from $5,000 to $30,000, totaling an aggregate
of $150,000 (the "Debt"), to the Company between June 1, 1990 and May 31, 1996.
On December 31, 1994 and December 31, 1995, the Company paid Mr. Paul Mansur
$34,814 and $12,000, respectively, in satisfaction of interest owed with respect
to the Debt. On May 31, 1996, the Company paid Mr. Paul Mansur $150,000 and
$5,000 in satisfaction of the outstanding principal balance of and the interest
owed with respect to the Debt.
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<PAGE>
CONVERTIBLE NOTES
In connection with its issuance of an aggregate of $1,012,500 in principal
amount of Convertible Notes in June 1996, the Company issued promissory notes in
the principal amount of $101,250 to each of Environmental Technologies BVI
Limited, a consulting firm of which Dr. Jan Hedberg, a director of the Company,
is Managing Director, Mr. Joseph E. Jack, a director of the Company, and Mr.
Elias F. Mansur, a director of the Company. Upon consummation of this offering,
each of the Convertible Notes will be automatically converted into 15,000 shares
of the Company's Common Stock. Mr. Mansur, Mr. Jack and Environmental
Technologies BVI Limited acquired the Convertible Notes on the same terms as
other unaffiliated investors.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning the
beneficial ownership of the Common Stock immediately prior to this offering, and
as adjusted to reflect the sale of shares offered by this Prospectus, by: (i)
each person known by the Company to be the beneficial owner of more than 5% of
the Common Stock, (ii) each Director or nominee for Director of the Company,
(iii) each of the Named Executive Officers and (iv) all Directors and Executive
Officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED
TO THIS OFFERING AFTER THIS OFFERING
---------- ---------- --------------- -----------
NAME NUMBER PERCENTAGE NUMBER PERCENTAGE
- ---------------------------------------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Mr. Pierre G. Mansur..................... 2,000,000 59.68% 2,000,000 46.01%
Mr. Paul I. Mansur....................... 0 * 0 *
Mr. Elias F. Mansur...................... 26,025 * 41,025(2) *
Dr. Jan Hedberg.......................... 20,000(1) * 35,000(1)(2) *
Mr. Joseph E. Jack....................... 22,820 * 37,820(2) *
Mr. Charles W. Profilet.................. 0 * 0 *
All Directors and Executive
Officers as a Group (6 persons)...... 2,068,845(3) 61.64% 2,113,845(3) 48.6%
<FN>
- ----------------------
* Less than 1%
(1) Includes 10,000 shares of Common Stock held by Environmental
Technologies BVI Limited, of which Dr. Hedberg owns 50 percent and
serves as the Managing Director.
(2) Includes 15,000 shares of Common Stock issuable upon the conversion of a
Convertible Note in the principal amount of $101,250, which conversion
shall occur simultaneously with the consummation of this offering.
(3) See Notes (1) - (2).
</FN>
</TABLE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 25,000,000 shares of
Common Stock, $.001 par value per share, and 1,500,000 shares of Preferred
Stock, $1.00 par value per share. As of the date of this Prospectus, 3,351,309
shares of Common Stock and 0 shares of Preferred Stock are outstanding.
COMMON STOCK
Each outstanding share of Common Stock is entitled to one vote on all
matters submitted to a vote of shareholders. Subject to the restrictions
summarized below, dividends may be paid to the holders of Common Stock when and
if declared by the Board of Directors out of funds legally available for
dividends. See "Dividend Policy."
Holders of Common Stock have no conversion, redemption, or preemptive
rights. All outstanding shares of Common Stock are fully paid and nonassessable.
In the event of any liquidation, dissolution or winding up of the affairs of the
Company, the holders of Common Stock will be entitled to share ratably in its
assets remaining after provision for payment of creditors and holders of
Preferred Stock. See "Dividend Policy."
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<PAGE>
PREFERRED STOCK
The Company is authorized to issue Preferred Stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without shareholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the value or market price of
the Common Stock and voting power or other rights of the holders of Common
Stock. In the event of issuance, the Preferred Stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company.
ANTI-TAKEOVER PROVISIONS OF FLORIDA LAW
Florida has enacted legislation that may deter or frustrate takeovers of
Florida corporations. The "Control Share Acquisitions" section of the Florida
Business Corporation Act ("FBCA") generally provides that shares acquired in
excess of certain specified thresholds, beginning at 20% of the Company's
outstanding voting shares, will not possess any voting rights unless such voting
rights are approved by a majority vote of a corporation's disinterested
shareholders. The "Affiliated Transactions" section of the FBCA generally
requires majority approval by disinterested directors or supermajority approval
of disinterested shareholders of certain specified transactions (such as a
merger, consolidation, sale of assets, issuance of transfer of shares or
reclassifications of securities) between a corporation and a holder of more than
10% of the outstanding voting shares of the corporation, or any affiliate of
such shareholder.
The directors of the Company are subject to the "general standards for
directors" provisions set forth in the FBCA. These provisions provide that in
discharging his or her duties and determining what is in the best interests of
the Company, a director may consider such factors as the director deems
relevant, including the long-term prospects and interests of the Company and its
shareholders and the social, economic, legal or other effects of any proposed
action on the employees, suppliers or customers of the Company, the community in
which the Company operates and the economy in general. Consequently, in
connection with any proposed action, the Board of Directors is empowered to
consider interests of other constituencies in addition to the Company's
shareholders, and directors who take into account these other factors may make
decisions which are less beneficial to some, or a majority, of the shareholders
than if the law did not permit consideration of such other factors.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The authorized but unissued shares of Common Stock and Preferred Stock are
available for future issuance without shareholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans.
The existence of authorized but unissued and unreserved Common Stock and
Preferred Stock may enable the Board of Directors to issue shares to persons
friendly to current management which could render more difficult or discourage
an attempt to obtain control of the Company by means of a proxy contest, tender
offer, merger, or otherwise, and thereby protect the continuity of the Company's
management.
LIMITED LIABILITY AND INDEMNIFICATION
Under the FBCA, a director is not personally liable for monetary damages to
the corporation or any other person for any statement, vote, decision, or
failure to fact unless (i) the director breached or failed to perform his duties
as a director and (ii) a director's beach of, or failure to perform, those
duties constitutes (1) a violation of the criminal law, unless the director had
reasonable cause to believe his
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<PAGE>
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful, (2) a transaction from which the director derived an improper personal
benefit, either directly or indirectly, (3) a circumstance under which an
unlawful distribution is made, (4) in a proceeding by or in the right of the
corporation or procure a judgment in its favor or by or in the right of a
shareholder, conscious disregard for the best interest of the corporation or
willful misconduct, or (5) in a proceeding by or in the right of someone other
than the corporation or a shareholder, recklessness or an act or omission which
was committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety, or property. A corporation
may purchase and maintain insurance on behalf of any director or officer against
any liability asserted against him and incurred by him in his capacity or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the FBCA.
The Articles and Bylaws of the Company provide that the Company shall, to
the fullest extent permitted by applicable law, as amended from time to time,
indemnify all directors of the Company, as well as any officers or employees of
the Company to whom the Company has agreed to grant indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Continental Stock
Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Upon the consummation of this offering, the Company anticipates that it
will have 4,351,309 shares of Common Stock outstanding. The 1,000,000
shares of Common Stock offered hereby and pursuant to the conversion of the
Convertible Notes will be freely tradeable without restriction or further
registration under the Securities Act, except for any shares purchased by an
"affiliate" of the Company (in general, a person who has a control relationship
with the Company) which will be subject to the limitations of Rule 144 adopted
under the Securities Act. All of the remaining 3,351,309 shares are deemed to be
"restricted securities," as that term is defined under Rule 144 promulgated
under the Securities Act, in that such shares were issued and sold by the
Company in private transactions not involving a public offering. Of such
remaining shares, 2,656,729 will become eligible for sale under Rule 144 90 days
from the date of this Prospectus and the remainder will become eligible for such
sale at various times prior to June 1998.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are aggregated), who has owned
restricted shares of Common Stock beneficially for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of one percent of the total number of outstanding shares
of the same class or the average weekly trading volume during the four calendar
weeks preceding the sale. A person who has not been an affiliate of the Company
for at least the three months immediately preceding the sale and who has
beneficially owned
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<PAGE>
shares of Common Stock for at least three years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
All of the Company's officers, directors and shareholders have agreed not
to sell or otherwise dispose of any of their shares of Common Stock for a period
of 13 months from the date of this Prospectus without the prior written consent
of the Representative.
Prior to this offering, there has been no market for the Common Stock and
no prediction can be made as to the effect, if any, that market sales of shares
of Common Stock or the availability of such shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities. See "Description of Securities" for information concerning
outstanding warrants and convertible securities.
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<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), for whom First Allied
Securities, Inc. is acting as Representative, have severally agreed, subject to
the terms and conditions of the Underwriting Agreement (the "Underwriting
Agreement"), to purchase from the Company and the Company has agreed to sell to
the Underwriters on a firm commitment basis the respective number of shares of
Common Stock set forth opposite their names:
UNDERWRITER NUMBER
- ------------ ----------
First Allied Securities Inc.
----------
Total ............................... 850,000
==========
The Underwriters are committed to purchase all shares of Common Stock
offered hereby if any of such shares are purchased. The Underwriting Agreement
provides that the obligations of the several Underwriters are subject to
conditions precedent specified therein.
The Company has been advised by the Representative that the Underwriters
propose to initially offer the Common Stock to the public at the public offering
prices set forth on the cover page of this Prospectus and to certain dealers at
such prices less concessions of not in excess of $_______ per share of Common
Stock. Such dealers may reallow a concession not in excess of $_______ per share
of Common Stock to other dealers. After the commencement of this offering, the
public offering prices, concessions and reallowances may be changed by the
Representative.
The Representative has advised the Company that it does not anticipate
sales to discretionary accounts by the Underwriters to exceed five percent of
the total number of shares of Common Stock offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act. The Company has
also agreed to pay to the Representative an expense allowance on a
nonaccountable basis equal to three percent (3%) of the gross proceeds derived
from the sale of the Common Stock underwritten, of which $50,000 has been paid
to date.
The Underwriters have been granted an option by the Company, exercisable
within forty-five (45) days after the date of this Prospectus, to purchase up to
an additional 127,500 shares of Common Stock at the initial public offering
price per share of Common Stock offered hereby, less underwriting discounts and
the expense allowance. Such option may be exercised only for the purpose of
covering over-allotments, if any, incurred in the sale of the shares offered
hereby. To the extent such option is exercised in whole or in part, each
Underwriter will have a firm commitment, subject to certain conditions, to
purchase the number of the additional shares of Common Stock proportionate to
its initial commitment.
All of the Company's officers and directors and all of the holders of the
Common Stock have agreed not to, directly or indirectly, sell, transfer,
hypothecate or otherwise encumber any of their shares for thirteen (13) months
following the date of this Prospectus without the prior written consent of the
Representative.
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<PAGE>
The Company has agreed that, for five (5) years after the effective date of
this Prospectus, the Representative will have the right to designate one
individual to be elected to the Company's Board of Directors. Such individual
may be a director, officer, employee or affiliate of the Representative. In the
event the Representative elects not to designate a person to serve on the
Company's Board of Directors, the Representative may designate an observer to
attend meetings of the Board of Directors.
In connection with this offering, the Company has agreed to sell to the
Representative, for nominal consideration, the Representative's Warrants to
purchase from the Company 85,000 shares of Common Stock. The Representative's
Warrants are initially exercisable for shares of Common Stock at a price of
$__________ [120% of the initial public offering price per share of Common
Stock] per share of Common Stock for a period of four (4) years commencing one
(1) year from the date of this Prospectus and are restricted from sale,
transfer, assignment or hypothecation for a period of twelve (12) months from
the date hereof, except to officers and principals of the Representative. The
Representative's Warrants also provide for adjustment in the number of shares of
Common Stock issuable upon the exercise thereof as a result of certain
subdivisions and combinations of the Common Stock. The Representative's Warrants
grant to the holders thereof certain rights of registration for the securities
issuable upon exercise of the Representative's Warrants.
In connection with the Private Financing, the Representative is entitled to
receive a commission of $101,250 and a non-accountable expense allowance of
$30,375.
The Representative commenced operations in 1994 and does not have extensive
experience as an underwriter of public offerings of securities. The
Representative has acted as the managing underwriter for three public offerings.
The Representative is a relatively small firm and no assurance can be given that
the Representative will participate as a market maker in the Common Stock.
Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering prices of the Common Stock has
been determined by negotiations between the Company and the Representative and
is not necessarily related to the Company's asset value, net worth or other
established criteria of value. The factors considered in such negotiations
included the history of and prospects for the industry in which the Company
competes, an assessment of the Company's management, the prospects of the
Company, its capital structure and certain other factors as were deemed
relevant.
The foregoing is a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
the Underwriting Agreement filed as an Exhibit to the Registration Statement of
which this Prospectus forms a part.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami,
Florida. Orrick, Herrington & Sutcliffe, New York, New York, has acted as
counsel for the Underwriters in connection with the offering.
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EXPERTS
The financial statements of the Company as of December 31, 1995 and 1994
and for the period from November 13, 1990 (inception) to December 31, 1991, and
each of the years in the four year period ended December 31, 1995 have been
included in this Prospectus and in the registration statement in reliance upon
the reports of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere in this Prospectus, and upon the authority of said firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement under
the Securities Act with respect to the Common Stock offered hereby. As permitted
by the rules and regulations of the Commission, this Prospectus does not contain
all the information set forth in the Registration Statement and in the exhibits
and schedules thereto. For further information about the Company and the Common
Stock, reference is made to the Registration Statement and to the exhibits and
schedules filed therewith. Statements made in this Prospectus as to the contents
of any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete description of the matter involved, and each such statement
is qualified in its entirety by such reference. Copies of each such document may
be obtained from the Commission at its principal office at 450 Fifth Street,
N.W., Washington, D.C., upon payment of the charges prescribed by the
Commission. Copies of each document may also be obtained through the
Commission's internet address at http://www.sec.gov.
-46-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants.............................. F-2
Financial Statements
Balance Sheets at December 31, 1994 and 1995 and
June 30, 1996 (unaudited)............................. F-3
Statements of Operations for the period from
November 13, 1990 (inception) to December 31, 1991,
and each of the years in the four year period ended
December 31, 1995 and for the six months ended June
30, 1995 (unaudited) and 1996 (unaudited)............. F-4
Statements of Stockholders' Deficit for the
period from November 13, 1990 (inception) to
December 31, 1991, and each of the years in the
four year period ended December 31, 1995 and for
the six months ended June 30, 1996 (unaudited)........ F-5
Statements of Cash Flows for the period from
November 13, 1990 (inception) to December 31, 1991,
and each of the years in the four year period ended
December 31, 1995 and for the six months ended
June 30, 1995 (unaudited) and 1996 (unaudited)........ F-6
Notes to Financial Statements......................... F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Mansur Industries Inc.:
We have audited the accompanying balance sheets of Mansur Industries Inc. (a
development stage company) as of December 31, 1994 and 1995, and the related
statements of operations, stockholders'(deficit) and cash flows for the period
from November 13, 1990 (inception) to December 31, 1991, each of the years in
the four-year period ended December 31, 1995, and the related statements of
operations, stockholders' (deficit) and cash flows for the period from November
13, 1990 (inception) to December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
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 provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mansur Industries Inc. as of
December 31, 1994 and 1995 and the results of its operations and its cash flows
for the period from November 13, 1990 (inception) to December 31, 1991, each of
the years in the four-year period ended December 31, 1995 and for the period
from November 13, 1990 (inception) to December 31, 1995, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Miami, Florida
January 19, 1996
F-2
<PAGE>
<TABLE>
<CAPTION>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS December 31, December 31, June 30,
1994 1995 1996
------------- ------------ -----------
(unaudited)
<S> <C> <C> <C>
Current assets:
Cash $ 20,766 916,383 640,592
Inventory 98,593 193,838 412,431
Other assets 85,810 18,290 176,425
---------- ---------- ----------
Total current assets 205,169 1,128,511 1,229,448
Mortgage note receivable 200,000 0 0
Property and equipment, net 351,773 324,431 308,810
Intangible assets, net 0 0 24,454
---------- ---------- ----------
551,773 324,431 333,264
Total Assets $ 756,942 1,452,942 1,562,712
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 6,007 219,478 382,878
Due to officers/ shareholders 250,000 250,000 0
Convertible notes payable 0 0 1,012,500
Interest payable 45,684 0 2,250
Current installments of long-term debt 43,637 45,846 48,786
---------- ---------- ----------
Total current liabilities 345,328 515,324 1,446,414
Long-term debt, excluding current installments 700,011 154,165 129,014
---------- ---------- ----------
Total liabilities 1,045,339 669,489 1,575,428
---------- ---------- ----------
Convertible redeemable preferred stock, $1 par value.
Authorized 1,500,000 shares, issued and
outstanding 580,000 and 490,000 in 1994
and 1995 respectively. 633,929 2,573,863 0
---------- ---------- ----------
Stockholders' (deficit):
Common stock, $0.001 par value. Authorized
25,000,000 shares, issued and outstanding
2,000,000; 2,673,129 and 3,351,309 shares
for 1994, 1995 and 1996 respectively 2,000 2,673 3,351
Additional paid-in capital (12,257) 438,131 3,560,948
Deficit accumulated during the development
stage (912,069) (2,231,214) (3,577,015)
---------- ---------- ----------
Total stockholders' (deficit) (922,326) (1,790,410) (12,716)
---------- ---------- ----------
Total liabilities and stockholders'
(deficit) $ 756,942 1,452,942 1,562,712
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
November 13, 1990 Year ended December 31, Six Months Ended November 13, 1990
(inception) through June 30, (inception)
December 31, ------------------------------------------ ----------------------- through
1991 1992 1993 1994 1995 1995 1996 June 30, 1996
------------------- ------- -------- -------- ---------- ----------- ----------- -----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating expenses:
General and
administrative $ 8,502 8,971 81,886 268,414 907,393 418,079 622,641 1,897,807
Research and
development 128,439 31,924 69,256 178,146 393,874 162,732 365,435 1,167,074
---------- --------- -------- --------- --------- --------- --------- ----------
Total operating
expenses 136,941 40,895 151,142 446,560 1,301,267 580,811 988,076 3,064,881
---------- --------- --------- --------- ---------- --------- --------- ----------
Loss from
operations (136,941) (40,895) (151,142) (446,560) (1,301,267) (580,811) (988,076) (3,064,881)
---------- --------- --------- --------- ---------- --------- --------- ----------
Interest expense - (16,299) (16,360) (46,312) (63,528) (38,259) (24,179) (166,678)
Conversion expense on
redeemable preferred
stock - - - - - - (344,631) (344,631)
Interest Income - - - - 45,650 11,797 11,085 56,735
Loss on disposal of
property and
equipment - (39,560) (18,000) - - - - (57,560)
---------- ---------- --------- --------- ---------- ---------- --------- ----------
Net loss (136,941) (96,754) (185,502) (492,872) (1,319,145) (607,273)(1,345,801) (3,577,015)
Dividends on
redeemable
preferred stock - - (8,328) (53,929) (222,067) (75,066) (147,000) (431,324)
---------- ---------- --------- --------- ---------- ---------- --------- ----------
Net loss to common
shares $ (136,941) (96,754) (193,830) (546,801) (1,541,212) (682,339)(1,492,801) (4,008,339)
========== ========== ========== ========= ========== ========== ========= ==========
Net loss per
common share $ (0.07) (0.05) (0.10) (0.27) (0.66) (0.34) (0.53)
========== ========== ========== ========= ========== ========== =========
Weighted average
shares
outstanding 2,000,000 2,000,000 2,000,000 2,000,000 2,335,140 2,000,000 2,799,071
========== ========== ========== ========= ========== ========== =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
November 13, 1990
(inception) through Year ended December 31,
December 31,
1991 1992 1993 1994 1995
------------------ -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Cash used in operating activities:
Net loss $ (136,941) (96,754) (185,502) (492,872) (1,319,145)
Adjustments to reconcile net loss
to cash used in operating activities:
Loss on sale of property - 31,680 - - -
Write-off of equipment and patent 69,965 7,880 - - -
Depreciation - - - 18,056 42,404
Common Stock issued for services - - - - 16,400
Changes in operating assets and
liabilities:
Inventory (5,095) (23,205) (29,838) (68,755) (95,245)
Other assets 1,318) (1,174) (7,067) (76,251) (7,884)
Intangible assets - - - - -
Accounts payable and accrued
expenses 1,790 (1,666) 8,461 12,415 167,786
Advances from customer 11,500 16,800 - - -
--------- --------- --------- --------- ----------
Net cash used in operating
activities (60,099) (66,439) (213,946) (607,407) (1,195,684)
--------- --------- --------- --------- ----------
Investing activities:
Purchase of property and equipment (6,207) (4,208) (43,157) (48,227) (15,062)
Proceeds from mortgage note receivable - - - - 200,000
Net proceeds from sale of property - 68,320 - - -
--------- --------- --------- --------- ----------
Net cash provided (used) by
investing activities (6,207) 64,112 (43,157) (48,227) 184,938
--------- --------- --------- --------- ----------
Financing activities:
Proceeds from notes payable and line of credit 68,911 52,627 24,860 500,000 -
Repayment of notes payable - (15,000) - (9,262) (43,637)
Conversion expense on preferred stock converted
into common stock - - - - -
Proceeds from issuance of preferred stock - - 380,000 - 1,950,000
--------- --------- --------- --------- ----------
Net cash provided by financing 68,911 37,627 404,860 490,738 1,906,363
activities
--------- --------- --------- --------- ----------
Net increase (decrease) in cash 2,605 35,300 147,757 (164,896) 895,617
Cash, beginning of period - 2,605 37,905 185,662 20,766
--------- --------- --------- --------- ----------
Cash, end of period $ 2,605 37,905 185,662 20,766 916,383
========= ========= ========= ========= ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
November 13, 1990
Six Months Ended (inception) through
June 30, June 30,
1995 1996 1996
---------------------------- -------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash used in operating activities:
Net loss (607,273) (1,345,801) (3,577,015)
Adjustments to reconcile net loss
to cash used in operating activities:
Loss on sale of property - - 31,680
Write-off of equipment and patent - - 77,845
Depreciation 20,934 22,396 82,856
Common Stock issued for services 6,400 105,000 121,400
Changes in operating assets and
liabilities:
Inventory (85,366) (218,593) (440,731)
Other assets (1,231) (158,135) (251,829)
Intangible assets - (24,454) (24,454)
Accounts payable and accrued
expenses (38,739) 165,650 354,436
Advances from customer - - 28,300
--------- --------- ---------
Net cash used in operating
activities (705,275) (1,453,937) (3,597,512)
--------- --------- ---------
Investing activities:
Purchase of property and equipment (7,828) (6,775) (123,636)
Proceeds from mortgage note receivable 200,000 - 200,000
Net proceeds from sale of property - - 68,320
--------- --------- ---------
Net cash provided (used) by
investing activities 192,172 (6,775) 144,684
--------- --------- ---------
Financing activities:
Proceeds from notes payable and line of credit - 1,012,500 1,658,898
Repayment of notes payable (22,765) (172,210) (240,109)
Conversion expense on preferred stock
converted into common stock - 344,631 344,631
Proceeds from issuance of preferred stock 1,950,000 0 2,330,000
--------- --------- ---------
Net cash provided by financing
activities 1,927,235 1,184,921 4,093,420
--------- --------- ---------
Net increase (decrease) in cash 1,414,132 (275,791) 640,592
Cash, beginning of period 20,766 916,383 -
--------- --------- ---------
Cash, end of period 1,434,898 640,592 640,592
========= ========= =========
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
As discussed in note 7(d), in November, 1990, the Company issued 2,000,000
shares of common stock for real estate and equipment having an aggregate market
value of $52,000. In addition, the officer assigned to the Company ongoing
research and development and rights to patents and patents pending.
During April 1992, the Company sold real property for $120,000 in cash and
a $200,000 mortgage note receivable, as discussed in note 2.
In December 1993, the Company issued preferred stock in exchange for
$200,000 of notes payable.
In July 1994, the Company purchased equipment, issuing a note payable to
the seller in the amount of $252,910 (see note 5).
During 1995, convertible preferred stock in the amount of $580,000 and
related accrued dividends in the amount of $76,729 were converted to common
stock (see note 7).
During 1996, convertible preferred stock in the amount of $2,374,596 and
related accrued dividends in the amount of $346,269 and a conversion expense of
12% in the amount of $344,631 were converted to common stock (note 7).
See accompanying notes to financial statements.
F-5
<PAGE>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' (DEFICIT)
From November 13, 1990 (inception) to June 30, 1996
Preferred stock Common stock Deficit
---------------------- -------------------------------- accumulated
Additional during the Total
paid-in development stockholders'
Shares Amount Shares Par capital stage (deficit)
------ ------ ------ --- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at November 13, 1990 (inception) - $ - - $ - $ - $ - $ -
Issuance of common stock to an officer in
exchange for machinery and real estate
valued at market and rights to ongoing
research and development patents and - -
patent pending 2,000,000 2,000 50,000 - 52,000
Net loss - - - - - (136,941) (136,941)
--------- ---------- --------- --------- --------- ---------- ----------
Balance at December 31, 1991 - - 2,000,000 2,000 50,000 (136,941) (84,941)
Net loss - - - - - (96,754) (96,754)
--------- ---------- --------- -------- --------- ---------- ----------
Balance at December 31, 1992 - - 2,000,000 2,000 50,000 (233,695) (181,695)
Issuance of preferred stock in exchange
for cash 380,000 380,000 - - - - -
Issuance of preferred stock in satisfaction
of notes payable 200,000 200,000 - - - - -
Accrued dividends on preferred stock (8,328) (8,328)
Net loss - - - - - 185,502) (185,502)
--------- ---------- --------- -------- --------- ---------- ----------
Balance at December 31, 1993 580,000 580,000 2,000,000 2,000 41,672 (419,197) (375,525)
Accrued dividends on preferred stock 53,929 (53,929) (53,929)
Net loss - - - - - (492,872) (492,872)
--------- --------- --------- -------- --------- ---------- ----------
Balance at December 31, 1994 580,000 633,929 2,000,000 2,000 (12,257) (912,069) (922,326)
Issuance of preferred stock in exchange for
cash and note payable, net of costs 490,000 2,374,596 - - - - -
Accrued dividends on preferred stock 22,800 (22,800) (22,800)
Conversion of preferred stock and accrued
dividends to common stock (580,000) (656,729) 656,729 657 656,072 - 656,729
Accrued dividends on preferred stock 199,267 (199,267) (199,267)
Issuance of common stock in exchange for
services rendered - - 16,400 16 16,384 - 16,400
Net loss - - - - - (1,319,145) (1,319,145)
--------- --------- --------- -------- --------- ---------- ---------
Balance at December 31, 1995 490,000 2,573,863 2,673,129 2,673 438,132 (2,231,214) (1,790,409)
Issuance of common stock in exchange for - - 30,000 30 104,970 - 105,000
services rendered (unaudited)
Conversion of note payable into - - 20,000 20 99,980 - 100,000
common stock (unaudited)
Accrued dividends on preferred stock 147,000 (147,000) (147,000)
(unaudited)
Conversion of preferred stock and accrued (490,000) (2,720,863) 628,180 628 3,064,866 - 3,065,494
dividends to common stock (unaudited)
Net loss (unaudited) - - - - - (1,345,801) (1,345,801)
--------- --------- --------- -------- --------- ---------- ---------
Balance at June 30, 1996 (unaudited) 0 $ 0 3,351,309 $ 3,351 $3,560,948 $(3,577,015 $ (12,716)
========= ========= ========= ======== ========= ========== =========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1994 and December 31, 1995
and June 30, 1996 (unaudited) MANSUR INDUSTRIES INC.
(1) THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Mansur Industries Inc. (the "Company") is primarily engaged in
research and development, marketing, and initial production of
industrial parts cleaning equipment for use in automotive, marine,
airline and general manufacturing industries. The Company's focus is
on the design, development and manufacture of industrial cleaning
equipment which incorporate continuous recycling and recovery
technologies for solvents and solutions, thereby reducing the need to
replace and dispose of contaminated solvents and solutions. The
Company is in the development stage.
(A) OPERATIONS AND LIQUIDITY
The Company has been primarily engaged in research, development,
marketing, and initial production of its products. The Company's
ultimate success is dependent upon future events, including the
successful commercialization of the Company's products,
establishing sources for manufacturing, marketing, and
distribution channels, the outcomes of which are currently
indeterminable, and is also dependent upon obtaining sufficient
financing. As of June 30, 1996, the Company has realized no sales
of its products.
As indicated in the accompanying financial statements as of June
30, 1996, the Company's accumulated deficit totaled $3,577,015
(unaudited). The Company has financed this deficiency primarily
through private placements of debt and equity securities.
Management expects that product sales will commence during the
second half of 1996 and that proceeds from the notes payable are
sufficient to fund working capital requirements until sales of
the Company's products reach levels sufficient to fund working
capital requirements.
In July 1996, the Company expects to file a registration
statement with the Securities and Exchange Commission (the "SEC")
in connection with a proposed initial public offering ("IPO") of
shares of its common stock. In the event that the IPO is not
completed, the Company has plans to restructure operations to
minimize cash expenditures, and/or obtain additional financing in
order to continue support of its activities. If adequate funds
are not available from additional sources of financing, the
Company's business may be materially adversely affected.
F-7
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(B) INVENTORY
Inventories are stated at the lower of cost or market using
the first-in, first-out method. Inventory consists of the
following.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
-------------------- -------------------- ------------------
<S> <C> <C> <C>
Raw materials............. $13,937 55,738 233,456
Work in progress and
finished goods.... 84,656 138,100 178,975
------------------- --------------------- ------------------
$98,593 193,838 412,431
=================== ===================== ==================
</TABLE>
(C) PROPERTY AND EQUIPMENT, NET
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is calculated using the
straight-line method over the shorter of the lease term or
the estimated useful lives of the respective assets.
(D) INTANGIBLES
Patents, patent applications and rights are stated at
acquisition cost. Amortization of patents is recorded using
the straight-line method over the legal lives of the
patents, generally for periods ranging up to 17 years. The
carrying value of intangible assets is periodically reviewed
by the Company and impairments are recognized when the
expected future cash flows from operations derived from such
intangible assets is less than their carrying value.
(E) OTHER ASSETS
Included in other assets at December 31, 1994, were $75,404
in stock offering costs incurred in connection with the
Series A preferred stock private placement (note 7). On June
30, 1996, other assets consist primarily of costs relating
to the initial public offering of $94,251 and deposits with
material suppliers (note 8). (unaudited)
(F) FINANCIAL INSTRUMENTS (unaudited)
In assessing the fair value of financial instruments at
June 30, 1996 the Company has used a variety of methods and
assumptions, which were based on estimates of market
conditions and risks existing at that time. The carrying
amount of long-term debt approximates fair value at June 30,
1996. For certain instruments, including accounts payable
and accrued expenses, and short-term debt, the carrying
amount approximates fair value due to their short maturity.
F-8
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(G) RESEARCH AND DEVELOPMENT
Research and development expenses consist primarily of costs
incurred in connection with engineering activities related
to the development of industrial parts cleaning machinery
and are expensed as incurred.
(H) INCOME TAXES
The Company accounts for income taxes under the asset and
liability method. Deferred tax assets and liabilities are
recognized for the estimated future tax consequences
attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
be applied to taxable income in the years in which those
temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the
period that includes the enactment date.
(I) EARNINGS PER SHARE DATA
The computation of loss per share in each year is based on
the weighted average number of common shares outstanding.
When dilutive, convertible preferred stock and convertible
notes are included as common share equivalents using the if
converted method. As these instruments have an anti-dilutive
effect for the years presented, they are not included in the
weighted average calculation. Primary and fully diluted
earnings per share are the same for each of the years
presented.
(J) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities, if any, at the date of
the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(2) MORTGAGE NOTE RECEIVABLE
During April 1992, the Company sold real property for $120,000 in
cash and a $200,000 mortgage note receivable. The note bore
interest at a rate of 12 percent per annum payable monthly with
the principal due at maturity, being April 27, 1997. The interest
received on the mortgage note receivable was assigned by the
Company to repay interest due on an unsecured note payable and
dividends on certain of the preferred stock. In April 1995, the
balance of the note was received in full.
F-9
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(3) PROPERTY AND EQUIPMENT, NET
Property and equipment was as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996 USEFUL LIFE
------------------ ----------------- ---------------- -----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Furniture and equipment......... $ 7,289 20,433 23,709 5 Years
Machinery and equipment......... 351,688 353,606 357,105 10 Years
Leasehold improvements.......... 10,852 10,852 10,852
------------------ ----------------- ----------------
369,829 384,891 391,666
Less accumulated depreciation... 18,056 60,460 82,856
------------------ ----------------- ----------------
$351,773 324,431 308,810
================== ================= ================
</TABLE>
(4) DUE TO OFFICERS/SHAREHOLDERS
(A) NOTES PAYABLE
Notes payable at December 31, 1994 and 1995 consists of the
following:
12% unsecured note payable $ 100,000
Note payable to chief executive officer 150,000
------------
$ 250,000
============
The 12% unsecured notes payable required interest payments
monthly, with principal due at maturity. The note matured on
December 31, 1995 and was renewed for one year. Pursuant to an
amendment to the note signed in January 1996, the note was
converted into common stock at a price of $5 per share (note 7).
Advances made by the chief executive officer are pursuant to a
$200,000 line of credit agreement signed in 1990. Under the
terms of the agreement, interest is accrued at a variable rate
not to exceed 10 percent per annum nor fall below 6 percent per
annum negotiated annually. The rate for 1994 and 1995 was 6
percent. The note had a maturity date of December 31, 1995 and
was renewed for one year to mature on December 31, 1996. The
note payable to the chief executive officer was paid in full
during May of 1996 (unaudited).
(B) CONVERTIBLE NOTES PAYABLE (UNAUDITED)
In June 1996, the Company issued cumulative convertible
redeemable notes payable in the amount of $1,012,500, of which
$303,750 was due to certain directors of the Company. The notes
bear interest of 4% per annum until September 1996 and 12%
thereafter. The notes will be automatically converted into
common stock simultaneously with the initial public offering of
the
F-10
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
Company at a price of $6.75 per share. The Company may redeem
these notes in full at any time at a price equal to the
outstanding principal amount plus interest accrued thereon. Upon
the conversion of the notes into common stock resulting from an
IPO, a commission equalling 10% of the converted principal
balance and a nonaccountable expense allowance equalling 3% of
the converted principal balance is payable.
(5) LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- June 30,
1994 1995 1996
-------- -------- ----------------
(UNAUDITED)
<S> <C> <C> <C>
Long-term debt consists of the following:
12% unsecured convertible promissory note, due
May 10, 1996, converted into Series A preferred
stock in 1995 (note 7)........................ $500,000
12.5% note payable in monthly installments of
$5,690, including interest due August 4, 1999,
secured by equipment with a depreciated cost of
$230,277 on June 30, 1996 (unaudited)......... 243,648 200,011 177,800
Less current installments.................... 43,637 45,846 48,786
-------- ------- -------
Long-term debt, excluding current
installments................................. $700,011 154,165 129,014
======== ======= =======
</TABLE>
The 12 percent unsecured convertible promissory note was converted
into 100,000 shares of Series A preferred stock during 1995 and
subsequently converted to common stock in June 1996 (unaudited) (note
7).
The aggregate maturities of long-term debt for each of the four years
subsequent to June 30, 1996, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
------------ ----------------
<S> <C> <C>
1996 $ 23,635
1997 51,916
1998 58,791
1999 43,458
----------------
$177,800
================
</TABLE>
F-11
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(6) INCOME TAXES
For the period from November 13, 1990 (inception) to June 30, 1996,
the operations of the Company generated net operating losses of
approximately $3,577,015 (unaudited) for financial reporting purposes.
Because the Company is in the development stage, all costs through
1995 have been capitalized for tax purposes. The only loss reported
for tax has been a $14,280 capital loss on the sale of real property
in 1992. This capital loss may be carried forward by the Company for
up to five years and will expire at the end of 1997. Capital losses
carried forward may only be used to offset future capital gains. The
gross amount of the deferred tax asset as of June 30, 1996 was
approximately $1,288,000 (unaudited), which consists primarily of
capital loss carryforwards, start-up costs, and research and
experimental costs capitalized for tax purposes. Since realization of
these tax benefits are not assured, a valuation allowance has been
recorded against the entire deferred tax asset balance. In addition,
pursuant to the Tax Reform Act of 1986, if certain substantial changes
in ownership should occur there would be an annual limitation on the
amount of tax attribute carryforwards which can be utilized in the
future.
(7) STOCKHOLDERS' DEFICIT
(A) "SERIES A" PREFERRED STOCK
In April 1995, the Company issued 490,000 shares of 12 percent
cumulative convertible redeemable preferred stock (the "Series
A") as part of a second private placement at an offering price of
$5 per share. The issuance raised $1,950,000 in cash and
converted the $500,000 unsecured convertible promissory note (see
note 5) into Series A shares.
On April 27, 1996, the board of directors of the Company approved
the early redemption of all of the Series A preferred stock
outstanding as of May 31, 1996, at the redemption price of $5 per
share plus the aggregate amount of dividends accrued through June
30, 1996 in the amount of $346,269 (unaudited) and a conversion
expense of 12% in the amount of $344,631 (unaudited). In June
1996, 100% of Series A shareholders exercised their right to
convert all of their preferred shares together with their
dividends in the amount of $743,164 into common shares
(unaudited).
(B) "FIRST SERIES" PREFERRED STOCK
In the fourth quarter of 1993, the Company issued 580,000 shares
of 12 percent cumulative convertible redeemable preferred stock
(the "First Series") in a private placement.
On May 30, 1995, the board of directors of the Company approved
the redemption of all of the First Series preferred stock
outstanding as of June 30, 1995, at the redemption price of $1
per share plus dividends accrued through June 30, 1995, subject
to the preferred shareholders' prior right to convert such
preferred stock into common stock of the Company. In June 1995,
100% of the First Series with cumulative dividends thereon was
converted into common stock, on a one for one basis.
F-12
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(C) CONVERTIBLE NOTE PAYABLE (UNAUDITED)
In May 1996, the Company converted a $100,000 note payable into
common stock at a price of $5 per share pursuant to an amendment
to the note signed in January of 1996.
(D) COMMON STOCK
In November 1990, the Company issued 2,000,000 shares of common
stock with a par value of $0.001 per share to the President of
the Company for the President's assignment to the Company of all
ongoing research and development and the rights to any related
patents and patents pending, in addition to real estate and
equipment with an aggregate fair value of $52,000 as part of the
formation of the Company.
(8) COMMITMENTS
(A) LEASES
The Company leases operating facilities under fixed rent
operating leases. The facilities had a 24 month lease expiring
December 31, 1994 with a rent of $4,631 per month. The lease was
renewed under cancelable terms in October 1994 for an additional
two-year period at a monthly rent of $5,094. During 1994, the
Company leased equipment under an operating lease which expired
in September 1995.
Total rent expense was as follows:
For the six months ended
June 30, 1996 (unaudited) $ 30,564
For the year ended December 31:
1995 $ 61,128
1994 55,572
1993 39,740
1992 24,835
From November 13 1990
(inception) to December 31, 1991. 14,540
(B) DUE TO OFFICER
In 1995, the Board of Directors of the Company declared an
incentive bonus payable to the President, Pierre G. Mansur in the
amount of $267,460. Payment of bonuses are subject to the
determination by the Board of Directors that the Company is able
to effectuate such payment without impeding the Company's
operations or development. As a result, $88,110 has been paid and
an amount of $179,350 has been accrued at December 31, 1995 and
June 30, 1996 (unaudited).
F-13
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(C) SUPPLY AGREEMENT (unaudited)
On May 7, 1996, the Company entered into an agreement (the
"Supply Agreement" ) with a supplier (the "Supplier") pursuant to
which the Supplier agreed to supply to the Company, at the
Company's election, between 3,000 and 5,000 machine units per
year at established prices and in accordance with a delivery
schedule. The Company has agreed to pay $150,000 (the "Advance"),
$50,000 of which has been advanced through June 30, 1996. The
total Advance may be credited against future purchases under the
Supply Agreement at the rate of $50 per unit.
The Supply Agreement provides that the Company may unilaterally
terminate the contract in whole or in part for cause or for
convenience. In the event the Supply Agreement is terminated by
the Company for convenience, the Supplier will be entitled to
reimbursement of the costs it has incurred through the date of
termination and, if such termination occurs prior to the delivery
of 3,000 units, the Supplier will be entitled to payment for
units produced through the date of termination and retain any
unapplied amount of the Advance.
(9) PRODUCT FINANCING AGREEMENT (unaudited)
In May 1996, the Company entered into an agreement (the "Product
Financing Agreement") with a leasing company which agrees to
purchase machines produced by the Company and subsequently lease
these machines to customers on 60 month terms. The Company will
market the machines and provide the leasing company with credit
information on potential customers which they may either accept or
reject. The Product Financing Agreement states that the leasing
company does not have recourse against the Company for customer
failures to discharge their obligations to the leasing company
unless the Company has breached and failed to cure certain
warranties.
Under the Product Financing Agreement, the Company has agreed to
provide periodic service for the machines and replace solvent used
in the machines. In addition, upon the leasing company's request,
the Company agrees to assist the leasing company in remarketing any
repossessed or surrendered equipment for a fee. At the end of each
customer lease, the Company has the option to purchase the machine
from the leasing company at its fair market value.
F-14
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
IN WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------------------
TABLE OF CONTENTS
PAGE
Prospectus Summary..........................................................
Risk Factors................................................................
Use of Proceeds.............................................................
Dilution ...................................................................
Dividend Policy.............................................................
Capitalization..............................................................
Selected Financial Data.....................................................
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................
Business ...................................................................
Management..................................................................
Executive Compensation......................................................
Certain Transactions........................................................
Principal Shareholders......................................................
Description of Capital Stock................................................
Shares Eligible for Future Sale.............................................
Underwriting................................................................
Legal Matters...............................................................
Experts ...................................................................
Additional Information......................................................
Index to Financial Statements............................................... F-1
----------------------
UNTIL ____________ , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
850,000 SHARES
MASUR INDUSTRIES INC.
COMMON STOCK
PROSPECTUS
FIRST ALLIED
SECURITIES INC.
____________ , 1996
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED JULY 23, 1996
150,000 SHARES
MANSUR INDUSTRIES INC.
COMMON STOCK
The shares of Common Stock, $.001 par value ("Common Stock"), offered
hereby are issuable by Mansur Industries Inc. (the "Company") upon conversion of
$1,012,500 in principal amount of its convertible notes due 1997 (the
"Convertible Notes"), at a conversion price of $6.75 per share. Concurrently
herewith, the Company is offering 850,000 shares of the Common Stock at an
initial offering price of $ in an underwritten initial public offering (the
"Concurrent Offering"). On the date of this Prospectus, a registration statement
with respect to the shares offered in the Concurrent Offering was declared
effective. Prior to the Concurrent Offering there was no public market for the
Common Stock and there can be no assurance that any such market will develop or
be sustained. For information regarding the factors considered in determining
the initial public offering price in the Concurrent Offering, see "Risk
Factors." The Common Stock will be included in the Nasdaq Small Cap Market under
the symbol "MANS." The shares of Common Stock offered by this Prospectus will be
subject to an agreement by the holders thereof with the Representative of the
Underwriters in the Concurrent Offering (the "Representative") restricting the
sale thereof within the 13 months from the date of this Prospectus without the
prior written consent of the Representative. See "Concurrent Offering,"
"Description of Securities," and "Plan of Distribution."
As a result of the conversion of the Convertible Notes and the issuance
of shares of Common Stock hereby, $1,012,500 of the Company's indebtedness will
be extinguished. The Company will receive none of the proceeds of the sale of
the shares of Common Stock issued hereby by the holders thereof. The Company
will bear all of the expenses of this offering, and will pay to the
Representative commissions and fees in an aggregate amount of $131,625 in
connection with services provided in connection with the Convertible Notes.
--------------------
SEE "RISK FACTORS" ON PAGES 5 TO 10 FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
July __, 1996
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE NOTED, THE INFORMATION IN THIS
PROSPECTUS ASSUMES (I) THAT THE CONCURRENT OFFERING HAS BEEN CONSUMMATED AT AN
ASSUMED INITIAL OFFERING PRICE OF $7.50 PER SHARE (II) THAT THE UNDERWRITERS'
OVER-ALLOTMENT OPTION IN THE CONCURRENT OFFERING (THE "OVER-ALLOTMENT OPTION")
TO PURCHASE UP TO 127,500 SHARES OF COMMON STOCK HAS NOT BEEN EXERCISED, AND
(III) THAT THE REPRESENTATIVE'S WARRANTS TO PURCHASE 85,000 SHARES OF COMMON
STOCK HAVE NOT BEEN EXERCISED.
THE COMPANY
GENERAL
Mansur Industries Inc. (the "Company") has developed and obtained
patent protection with respect to a full line of self-contained, recycling
industrial parts washers that incorporate innovative, proprietary waste
minimization technologies and represent a significant advance over currently
available machinery and processes. Focusing on waste minimization rather than
its removal and recovery, the Company believes that its equipment will have a
major impact on the industrial parts cleaning industry and will have a broad
appeal to customers, because its equipment, unlike the machines now in use,
facilitates efficient and economical compliance with environmental regulations,
minimizes waste disposal requirements, enhances cleaning solution utilization,
and increases worker safety and productivity.
Most machinery and equipment require oil lubrication to function
properly. Removal of lubrication oils from tools and parts during automotive,
aviation, marine and general industrial maintenance, service and repair
operations is typically effected through the use of mineral spirit solvents
which become contaminated in the cleaning process. Under the most common current
practice, the solvent becomes more contaminated (and less effective) with
repeated use, and, when it is saturated with oil, sludge and other contaminants
as a result of the cleaning process (and frequently classified as a hazardous
waste under federal and state regulations), it must be stored on site until
pick-up, when pure solvent is delivered and the contaminated solvent is,
generally, shipped to regional refining facilities. This off-site recycling
program is typically scheduled on four to sixteen week cycles and involves both
the utilization of progressively more contaminated solvent for cleaning
operations until the solvent is too contaminated for use, and thereafter, the
on-site storage of the hazardous solution until the periodic waste recovery
service. By contrast, the Company's products allow the use and re-use of the
solvent by removing all the contaminants from the solvent within the cleaning
unit itself, minimizing the volume of waste by-product and providing pure
solvent to the customer on demand, without the costly and dangerous storage and
transportation of hazardous waste. Moreover, the small amount of waste
by-product yielded in the distillation process utilized by the Company's
products can typically be recycled and/or disposed of together with the
customer's used motor oil, which is generally not classified as a hazardous
waste. Substantially all of the Company's target customers have established
systems for the handling, transportation, recycling and disposal of used motor
oil. The Company's products have been extensively tested and proven effective by
independent engineering concerns and testing laboratories.
While the Company intends to exploit its current full line of
industrial washers, and to continue its research and development of new
products, it has initially focused its attention on its General Parts Washer,
marketed as SystemOne(Trademark) (the "SystemOne(Trademark) Washer"). The
SystemOne(Trademark) Washer consists of a washing sink mounted on top of a metal
cabinet in which the distillation and recovery apparatus is contained. The
equipment allows the solvent to be used, treated and re-used, on demand, without
requiring off-site processing. The Company has concluded extensive testing by
independent laboratories and at various commercial sites and is currently
conducting test marketing in a local area within close proximity to its
facilities. Demonstrator models were placed in 38 selected automotive repair
facilities of national, fleet, industrial and commercial accounts.
Notwithstanding the absence of a formal marketing program during
- 1 -
<PAGE>
the test period, the Company has, as of the date of this Prospectus, received
orders from a number of facilities in which the machines were placed, including
Florida Detroit Diesel MTU (46 Units); Kelly Tractor Company and Pantropic Power
Products, South Florida Caterpillar dealers (48 Units); United States Postal
Service (2 Units); Southern Sanitation, a subsidiary of Waste Management, Inc.
(5 Units); Broward County Mass Transit (25 Units); and a number of South Florida
automobile dealerships (an aggregate of 54 Units). The Company commenced
commercial sales and delivery of units in July 1996 at an approximate price per
unit of $2,700.
The initial market for the Company's industrial cleaning product line
includes automotive, aviation, marine and general industrial maintenance,
service and repair operations. The Company believes that domestic expenditures
in connection with industrial parts cleaning machines exceeds $1.0 billion
annually, and that the anticipated monthly cost to the customer for the
Company's products typically will not exceed, and is intended to be well below,
the monthly cost of the non-recycling machines now in use. Additional
competitive advantages provided by the Company's products include practical and
cost effective compliance with demanding regulations of the Environmental
Protection Agency; elimination of routine waste disposal costs; significant
improvements in cleaning productivity; minimized cleaning solution purchases;
and reduction of equipment down time for routine machine maintenance.
The Company has retained experienced executives to head and develop its
sales and marketing organization. In addition to its regional office in Miami,
the Company expects to open four additional service centers in Orlando, Tampa,
Jacksonville and West Palm Beach, Florida during 1996. The Company expects to
pursue a national expansion program, through internal growth utilizing a network
of regional distribution and service centers, as in Florida, through a strategic
alliance with a national distributor, if one is available on favorable terms, or
through a combination of the two. In August, the Company will commence a pilot
program with First Recovery and Valvoline Oil Company, two affiliates of Ashland
Inc., a multinational oil refiner and distributor of automotive related
products, including Valvoline Oil and Ashland 140 Solvent, one of the brands of
mineral spirits solvent used in the Company's SystemOne(Trademark) Washer. Under
the pilot program, First Recovery will be the exclusive distributor of the
SystemOne(Trademark) Washer in the Dallas/Ft. Worth and Houston markets. The
initial term of the program is one year. If the arrangement proves successful,
the Company expects to negotiate a broader agreement, possibly including a
national distribution program.
The Company has manufactured all its prototype and test models at its
10,000 square foot research and development ("R&D") facility. The Company's
current manufacturing capabilities include advanced Computer Aided
Design/Computer Aided Manufacturing technology and state of the art
manufacturing machinery. Because the Company's R&D facility can be utilized to
manufacture up to 200 units of the SystemOne(Trademark) Washer per month, all
manufacturing operations, including design, metal fabrication, robotic welding,
painting and assembly, can be performed in the Company's R&D facility during the
Company's initial roll-out phase. At present, the Company plans to continue to
use its own facility for existing and new product R&D activities and to use
contract manufacturers when a product achieves commercial sales levels. In order
to accommodate increased demand for the SystemOne(Trademark) Washer, the Company
has entered into an agreement with a contract manufacturer with respect to the
manufacture of at least 3,000 units during the first year thereof. In addition,
the Company has entered into negotiations with a major contract manufacturer
with a 2 million square foot facility and 75 years of experience to provide the
manufacturing capacity needed to meet anticipated future customer demand.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Common Stock Offered.......................................... 150,000 shares
Common Stock Outstanding After Offering....................... 4,351,309(1)
Use of Proceeds by the Company................................ The Company utilized the proceeds of the
private financing pursuant to which the
Convertible Notes were issued to finance the
Concurrent Offering and for general
corporate purposes. The Company will not
receive any of the proceeds from the sale by
the holders thereof of the shares of
Common Stock issued pursuant to this
Prospectus.
Risk Factors.................................................. This offering involves a high degree of risk
and immediate substantial dilution. See
"Risk Factors" and "Dilution."
Nasdaq SmallCap Symbol........................................ MANS
<FN>
- --------------------
(1) Does not include an aggregate of 375,000 shares of Common Stock reserved for issuance upon exercise of options available
for future grant and future restricted stock awards under the Company's Incentive Compensation Plan. See "Underwriting" and
"Management--Incentive Compensation Plans."
</FN>
</TABLE>
The Company will furnish its shareholders with annual reports containing
audited financial statements certified by an independent auditing firm.
CONCURRENT OFFERING
On the date of this Prospectus, a registration statement filed under
the Securities Act with respect to a concurrent underwritten public offering by
the Company of 850,000 shares of Common Stock, and up to 127,500 additional
shares of Common Stock to cover over-allotments, if any, was declared effective
by the Securities and Exchange Commission (the "Concurrent Offering"). The
Company received net proceeds of approximately $________ from the sale of those
shares, and will receive approximately $________ in additional net proceeds if
the over-allotment option is exercised in full, after payment of underwriting
discounts and commissions and estimated expenses of the Concurrent Offering.
Mansur Industries Inc. was incorporated in Florida in 1990. The
Company's principal executive office is located at 8425 S.W. 129th Terrace,
Miami, Florida 33156, and its telephone number is (305) 232-6768.
- 3 -
<PAGE>
Summary Financial Data
The summary financial information set forth below should be read in
conjunction with financial statements appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------------- ----------------------
1991(1) 1992 1993 1994 1995 1995 1996
---------- --------- --------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating expenses:
General and administrative.... $ 8,502 $ 8,971 $ 81,886 $ 268,414 $ 907,393 $ 418,079 $ 622,641
Research and development...... 128,439 31,924 69,256 178,146 393,874 162,732 365,435
---------- --------- --------- ----------- ----------- --------- ----------
Total operating expenses.... 136,941 40,895 151,142 446,560 1,301,267 580,811 988,076
---------- --------- --------- ----------- ----------- --------- ----------
Interest (expense), net.......... -- (16,299) (16,360) (46,312) (17,878) (26,462) (13,094)
Conversion (expense) on
redeemable preferred stock.... -- -- -- -- -- -- (344,631)
Loss on disposition of property and
equipment..................... -- (39,560) (18,000) -- -- -- --
---------- --------- --------- ----------- ----------- --------- ----------
Net (loss)....................... (136,941) (96,754) (185,502) (492,872) (1,319,145) (607,273) (1,345,801)
Dividends on redeemable preferred
stock......................... -- -- (8,328) (53,929) (222,067) (75,066) (147,000)
---------- --------- --------- ----------- ----------- --------- ----------
Net (loss) to common shares...... $(136,941) $(96,754) $(193,830) $(546,801) $(1,541,212) $(682,339) $(1,492,801)
========== ========= ========= =========== =========== ========= ==========
Net (loss) per common share(2)... $(0.07) $(0.05) $(0.10) $(0.27) $(0.66) $(0.34) $(0.53)
========== ========= ========= =========== =========== ========= ==========
Weighted average shares
outstanding(2)................ 2,000,000 2,000,000 2,000,000 2,000,000 2,335,140 2,000,000 2,799,071
</TABLE>
JUNE 30, 1996
---------------------------------
ACTUAL AS ADJUSTED(3)
---------------- --------------
BALANCE SHEET DATA:
Working capital.......................... $(216,966) $5,921,034
Total assets............................. 1,562,712 6,628,212
Total liabilities........................ 1,575,428 502,928
Total stockholders' equity (deficit)..... (12,716) 6,125,284
- --------------------------
(1) Information provided for the period from November 13, 1990 (inception) to
December 31, 1991.
(2) See Note 1 to Notes to Financial Statements for information concerning the
computation of net loss per share.
(3) Adjusted to reflect (i) the issuance of 150,000 shares of Common Stock as a
result of the conversion of the Convertible Notes; and (ii) the sale of
850,000 shares of Common Stock offered in the Concurrent Offering at an
assumed initial public offering price of $7.50 per share and the initial
application of the estimated net proceeds therefrom. See "Capitalization"
and "Use of Proceeds of Concurrent Offering."
- 4 -
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS BEFORE MAKING AN INVESTMENT DECISION.
LIMITED OPERATING HISTORY; SIGNIFICANT AND CONTINUING LOSSES. The
Company was formed in November 1990 and was a development stage company through
June 30, 1996. It has only recently commenced the marketing and sale of one of
its product lines on a limited basis, and has a limited operating history upon
which an evaluation of the Company's performance and prospects can be made. The
Company's prospects must be considered in light of the numerous risks, expenses,
delays, problems and difficulties frequently encountered in the establishment of
a new business in an industry characterized by vigorous competition and
regulatory requirements. Since inception, the Company has incurred significant
losses, including losses of $492,872 and $1,319,145, for the years ended
December 31, 1994 and 1995, respectively, and a loss of $1,345,801 for the six
months ended June 30, 1996. Losses are continuing through the date of this
Prospectus. Inasmuch as the Company's operating expenses have increased and can
be expected to continue to increase significantly in connection with the
Company's proposed expansion, including the development of manufacturing
capabilities, the development and establishment of regional sales, service and
technological support centers and a service fleet, the development of a larger
corporate headquarters and research and development facility, and the purchase
of raw materials and inventory, the Company anticipates that losses and negative
operating cash flow will continue until such time, if ever, as the Company is
able to generate sufficient revenues to offset its operating costs and the costs
of continuing expansion. There can be no assurance that the Company will
generate significant revenues or ever achieve profitable operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Financial Statements.
UNCERTAINTY OF MARKET ACCEPTANCE. To date, the Company's products have
been marketed in limited geographic areas and, thus, have achieved only limited
market acceptance. The Company is attempting to market a new product which
relies on a fundamental change in the way parts and tools are cleaned and
solvent utilized, an activity pattern which has been relatively consistent
within the target industries in the past. As is typically the case with an
emerging business concept, demand and market acceptance for newly introduced
products and services are subject to a high level of uncertainty. The Company
has limited marketing experience and limited financial, marketing, personnel and
other resources to undertake extensive marketing activities. The Company's
success will be largely dependent on the Company's ability to position its
products as a preferred method for cleaning parts. The Company believes that
substantially all its target customers currently utilize competitive parts
cleaning equipment. Potential customers may elect to utilize devices or methods
with which they are more familiar or which they believe to be more efficient or
have other advantages over the Company's system. Accordingly, achieving market
acceptance for the Company's products will require substantial marketing efforts
and expenditure of significant funds to educate automotive dealership and repair
facilities and other potential users of the products of the distinctive
characteristics and benefits of the Company's products as well as their
environmental and cost savings advantages. There can be no assurance that the
Company's efforts will result in significant initial or continued market
acceptance for the Company's products or that the Company will succeed in
positioning its products as a preferred method for cleaning parts. See
"Business-Marketing and Servicing Strategy."
INDUSTRY COMPETITION. The parts cleaning industry is characterized by
intense competition, and the industry is dominated by Safety-Kleen, Inc. A
number of other companies provide parts cleaning equipment and services. While
the Company believes that none of its competitors offer a product with the same
features as the Company's products, many customers may view the products as
functionally equivalent, and there can be no assurance that functionally
equivalent products will not become available in the near future. In addition,
there are numerous companies involved in the waste management industry,
including waste hauling companies and companies engaged in waste separation,
recovery and recycling, which may have
- 5 -
<PAGE>
the expertise and resources that would encourage them to attempt to develop and
market products which would compete with the Company's products or render them
obsolete or less marketable. Safety-Kleen, Inc., as well as most of the
companies marketing such waste disposal services or products or with the
potential to do so, are well established, have substantially greater financial
and other resources than the Company, and have established reputations relating
to product design, development, marketing and support. There can be no assurance
that the Company's financial performance and prospects will not be negatively
affected if Safety-Kleen, Inc. materially lowers the price to customers of its
parts washers, or that the Company will be able to compete successfully. See
"Business-Competition."
RISKS ASSOCIATED WITH RAPID EXPANSION. The Company has achieved limited
growth to date and has limited experience in effectuating rapid expansion or in
managing operations which are geographically dispersed. Expansion of the
Company's operations will be dependent on, among other things, the Company's
ability to achieve significant market acceptance for its products, successfully
locate, establish and operate Service Centers, hire and retain skilled
management, marketing, technical and other personnel, secure adequate sources of
supply on a timely basis and on commercially reasonable terms, successfully
manage growth (including monitoring operations, controlling costs and
maintaining effective quality controls), and maintain a third party leasing
program capable of financing the customer's acquisition of the Company's
products in a timely manner. To date, a substantial portion of the Company's
products have been installed on a test basis in automotive dealership and repair
facilities concentrated in limited geographic markets near the Company's
headquarters. The Company's growth prospects will be largely dependent upon its
ability to achieve greater penetration in these markets as well as significant
penetration in new geographic markets. The Company's prospects could be
adversely affected by declines in the automotive sales, maintenance or service
industries or the economy generally, which could result in reduction or deferral
of capital expenditures by prospective customers. The Company's future growth
will also be dependent upon the Company's ability to achieve a sufficient
installed base of its products. The Company may also seek to expand its
operations through the acquisition of existing companies with customer bases
that would appear to have needs for the Company's product line. There can be no
assurance that the Company will be able to successfully expand its operations.
See "Business-Marketing and Servicing Strategy."
DEPENDENCE ON OFFERING PROCEEDS TO IMPLEMENT PROPOSED EXPANSION;
POSSIBLE NEED FOR ADDITIONAL FINANCING. The Company's capital requirements have
been and will continue to be significant. The Company is dependent on and
intends to use a substantial portion of the proceeds of the Concurrent Offering
to implement its proposed expansion. The Company anticipates, based on currently
proposed plans and assumptions relating to its operations (including the
anticipated costs associated with, and timetable for, its proposed expansion),
that the proceeds of this offering, together with cash flow from operations,
will be sufficient to satisfy its contemplated cash requirements for at least 12
months following the consummation of this offering. In the event that the
Company's plans change, its third party lease financing arrangement does not
function as anticipated, its assumptions change or prove to be inaccurate or if
the proceeds of this offering or cash flow otherwise prove to be insufficient to
fund expansion (due to unanticipated expenses, delays, problems, difficulties or
otherwise), the Company has plans to restructure its operations to minimize cash
expenditures and/or obtain additional financing in order to support its plan of
operations. The Company has no current arrangements with respect to, or sources
of, additional financing and there can be no assurance that any additional
financing will be available to the Company on acceptable terms, or at all.
Although the Company believes that available third party lease financing may
help offset the Company's cost structure for product rollout, a significant
level of demand for the Company's products will, in all likelihood, initially
result in significant up-front capital expenditures without corresponding cash
flow. Any additional equity financing may involve dilution to the interests of
the Company's then existing shareholders. If adequate funds are not available
from additional sources of financing, the Company's business may be materially
adversely affected. See "Use of Proceeds."
RISKS ASSOCIATED WITH PRODUCT FINANCING. The Company has entered into
a third party lease financing arrangement with Oakmont Financial Services
("Oakmont"), pursuant to which Oakmont has
- 6 -
<PAGE>
agreed to provide third party leasing services. If the Company breaches certain
warranties, Oakmont has the right to require the Company to repurchase the
leased unit from Oakmont. To the extent that the Company is required to use a
portion of the proceeds of the Concurrent Offering to repurchase units from
Oakmont, the Company will have less resources available to it for other
purposes. Oakmont has the right to review the creditworthiness of proposed
lessees and to withhold financing on the basis of its credit review. While the
Company may terminate its agreement with Oakmont if Oakmont consistently refuses
to approve the credit of the Company's proposed lessees, any such termination,
in the absence of alternative financing programs, could have a material adverse
effect on the Company. The Company is not likely to utilize third party
financing with respect to units leased under its pilot marketing program with
First Recovery and Valvoline Oil Company, but will, instead, use a portion of
the proceeds of the Concurrent Offering. See "Use of Proceeds of Concurrent
Offering" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
DEPENDENCE ON ENVIRONMENTAL LEGISLATION. In recent years, government
authorities have adopted extensive regulations regulating the storage, handling,
shipment, recycling and/or disposal of hazardous waste, including contaminated
solvent used in industrial parts washers. The Company believes that continuing
initiatives of federal, state and local government authorities and increasing
storage and hauling costs and disposal fees will create incentives for customers
to use the Company's products. Failure by government authorities to continue to
implement such legislation or significant relaxation of such requirements or
enforcement thereof could have a material adverse effect on the Company's
business and prospects. Moreover, while the Company believes that its process
results in pure solvent and a residue that is not classified as hazardous waste,
but may, rather, be disposed of or utilized as used motor oil, there can be no
assurance that environmental agencies will reach the same conclusion. If the
residue is classified as hazardous waste, or if used motor oil itself is
classified as hazardous waste, the Company will lose a significant competitive
advantage. The Company believes that certain of its competitors have attempted
and are continuing their efforts to have used motor oil classified as a
hazardous waste. See "Business-Industry Overview" and "Risk Factors -- Potential
Warranty Expense and Product Liability."
DEPENDENCE ON THIRD-PARTY MANUFACTURING ARRANGEMENTS. The Company will
be dependent on third parties for its components and for the manufacture of a
large portion of its finished units. Although the Company has several
alternative manufacturing sources and believes that additional alternative
manufacturing sources are readily available, failure by its current
manufacturers to continue to supply the Company on commercially reasonable
terms, or at all, in the absence of readily available alternative sources, would
have a material adverse effect on the Company. The Company is substantially
dependent on the ability of its manufacturers, among other things, to satisfy
performance and quality specifications and dedicate sufficient production
capacity for components within scheduled delivery times. See
"Business-Manufacturing and Supply."
PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION. The Company holds four
United States patents and has four United States patents pending with respect to
the Company's products. Two of the five pending patents have been allowed by the
U.S. Patent Office and are awaiting issuance. Other parts washing machines which
may not be covered by the Company's patents are currently in commercial
distribution by the Company's competitors. The Company has applied for
international patents in Canada, Mexico, Europe and Japan and anticipates that
it will apply for additional patents as deemed appropriate. The Company believes
that patent protection is important to its business and that it could be
required to expend significant funds in connection with enforcing or defending
its patent rights. There can be no assurance as to the breadth or degree of
protection which existing or future patents, if any, may afford the Company,
that any unissued patent applications will result in issued patents or that
patents will not be circumvented or invalidated. It is possible that the
Company's existing patent rights may not be valid although the Company believes
that neither its products nor processes now infringe or will infringe patents or
violate proprietary rights of others. It is possible that infringement of
existing or future patents or proprietary rights of others may occur. In the
event that the Company's products or processes infringe
- 7 -
<PAGE>
patents or proprietary rights of others, the Company may be required to modify
the design or obtain a license. There can be no assurance that the Company will
be able to do so in a timely manner, upon acceptable terms and conditions or at
all. Failure to do any of the foregoing could have a material adverse effect on
the Company. In addition, there can be no assurance that the Company will have
the financial or other resources necessary to enforce or defend a patent
infringement, proprietary rights violation action or alleged infringement or
violation action. Moreover, if the Company's products or processes infringe
patents or propriety rights of others, the Company could, under certain
circumstances, become the subject of an immediate injunction and be liable for
damages, which could have a material adverse effect on the Company. See
"Business -Patents, Trademarks and Proprietary Technology."
The Company also relies on trade secrets and proprietary know-how and
employs various methods to protect the concepts, ideas and documentation of its
proprietary information. However, such methods may not afford complete
protection and there can be no assurance that others will not independently
develop such know-how or obtain access to the Company's know-how, concepts,
ideas and documentation. Although the Company has and expects to have
confidentiality agreements with its employees, suppliers and appropriate
vendors, there can be no assurance that such agreements will adequately protect
the Company's trade secrets. Since the Company believes that its proprietary
information is important to its business, failure to protect such information
could have a material adverse effect on the Company. See "Business-Patents,
Trademarks and Proprietary Information."
POTENTIAL WARRANTY EXPENSE AND PRODUCT LIABILITY. The Company
unconditionally warrants its products to be free of material defects for 60
months. In addition the Company warrants to users that if, for any reason, the
residue generated by its System One(Trademark) Washer cannot be recycled and/or
disposed of as used oil, the Company will pay for any required recovery and
disposal services. Accordingly, the Company could incur significant warranty
expenses as a result of defects in its products or a change in federal or state
regulations pertaining to the disposal of cleaning residue. Since the Company
only recently commenced its planned principal operations, the reserve account it
will establish for warranty expense will be derived without the benefit of
historical figures and actual warranty expenses could exceed the amount which
will be established as a reserve. The Company may also be exposed to potential
product liability claims by its customers and users of its products. The Company
maintains product liability insurance coverage of $5,000,000 in the aggregate
and $5,000,000 per occurrence. The Company believes such insurance provides
adequate coverage for the types of products currently marketed by the Company.
There can be no assurance, however, that such insurance will be sufficient to
cover potential claims or that an adequate level of coverage will be available
in the future at a reasonable cost. A partially insured or completely uninsured
successful claim against the Company could have a material adverse effect on the
Company. See "Business-Sales Financing and Service Programs" and "-Product
Liability and Insurance."
DEPENDENCE ON KEY PERSONNEL. The success of the Company will be largely
dependent on the personal efforts of Pierre Mansur, its Chairman of the Board
and President and the inventor of the Company's products, Paul Mansur, its Chief
Executive Officer, and other key personnel. Although the Company has entered
into employment agreements with Pierre Mansur and Paul Mansur which expire in
September 1997, the loss of the services of either of such individuals or
certain other key employees, could have a material adverse effect on the
Company's business and prospects. The Company has obtained and is the sole
beneficiary of "key-man" life insurance on Pierre Mansur and Paul Mansur each in
the amount of $1,000,000. The success of the Company is also dependent upon its
ability to hire and retain additional qualified marketing, technical and other
personnel. There can be no assurance that the Company will be able to hire or
retain such personnel. See "Management."
CONTROL BY MANAGEMENT. After consummation of this offering and the
Concurrent Offering, Pierre Mansur will beneficially own approximately 46% of
the Company's outstanding Common Stock. Accordingly, Pierre Mansur will be in a
position to effectively control the Company, including the election of all of
the directors of the Company. See "Management" and "Principal Shareholders."
- 8 -
<PAGE>
BROAD DISCRETION IN APPLICATION OF PROCEEDS; POSSIBLE BENEFITS TO
RELATED PARTIES. Approximately $572,000 (11%) of the estimated net proceeds from
the Concurrent Offering has been allocated to working capital and general
corporate purposes. Accordingly, the Company's management will have broad
discretion as to the application of such proceeds. In addition, the Company may
use a portion of the net proceeds allocated to working capital to pay salaries
and benefits of executive officers over the 12 months following the consummation
of this offering to the extent cash flow is insufficient for such purpose. See
"Use of Proceeds of Concurrent Offering."
NO PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE. Prior to
the Concurrent Offering, there has been no public market for the Common Stock,
and no assurance can be given that an active trading market will develop or be
sustained after this offering. Since there has been no trading market, the
initial public offering price of the Common Stock and the conversion price of
the Convertible Notes may not bear any relationship to the actual value of the
Common Stock. The initial public offering price was established by negotiations
between the Company and the Representative, is not necessarily related to the
Company's asset value, net worth or other established criteria of value, and may
not be indicative of prices that will prevail in the trading market. The stock
market has experienced significant price and volume fluctuations that are often
unrelated to the operating performance of particular companies. The market price
of the Common Stock, similar to that of securities of other development stage
companies, is likely to be highly volatile. Factors such as the results of
studies and trials by the Company or its competitors, other evidence of the
efficacy of products of the Company or its competitors, announcements of
technological innovations or new products by the Company or its competitors,
changes in governmental regulation, developments in patent or other proprietary
rights of the Company or its competitors, including litigation, fluctuations in
the Company's operating results and changes in general market conditions could
have a significant impact on the future price of the Common Stock. See
"Underwriting."
EFFECTIVE OF ANTI-TAKEOVER LEGISLATION; POSSIBLE ADVERSE EFFECT OF
ISSUANCE OF PREFERRED STOCK ON MARKET PRICE AND RIGHTS OF COMMON STOCK. The
State of Florida has enacted legislation that may deter or frustrate takeovers
of Florida corporations. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not posses any
voting rights unless such voting rights are approved by a majority vote of a
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires supermajority approval by disinterested directors or
shareholders of certain specified transactions between a public corporation and
holders of more than 10% of the outstanding voting shares of the corporation (or
their affiliates). The Company's Articles of Incorporation authorize the
issuance of 1,500,000 shares of "blank check" Preferred Stock ("Preferred
Stock") with such designations, rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, the Board of Directors is
empowered, without shareholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of the holders of the Common Stock. The issuance of
any series of Preferred Stock having rights superior to those of the Common
Stock may result in a decrease in the value or market price of the Common Stock.
Holders of Preferred Stock to be issued in the future may have the right to
receive dividends and certain preferences in liquidation and conversion rights.
The issuance of such Preferred Stock could make the possible takeover of the
Company or the removal of management of the Company more difficult, discourage
hostile bids for control of the Company in which shareholders may receive
premiums for their Common Stock and adversely affect the voting and other rights
of the holders of the Common Stock. The Company may in the future issue
additional shares of its Preferred Stock. See "Description of Securities."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS. As of the date of
this Prospectus, 4,351,309 shares of Common Stock are issued and outstanding. Of
such shares, 1,000,000 shares are freely tradeable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"), unless held by an "affiliate" of the Company. The remaining
3,351,309 shares of Common Stock are "restricted securities," as that term is
defined under Rule 144 promulgated under the Securities Act. Of such shares,
2,656,729 shares are currently eligible for sale under Rule 144 and the
remainder will become eligible
- 9 -
<PAGE>
for sale under Rule 144 at various times prior to June 1998. No prediction can
be made as to the effect, if any, that sales or shares of Common Stock or the
availability of such shares for sale will have on the market prices prevailing
from time to time. Nevertheless, the possibility that substantial amounts of
Common Stock may be sold in the public market may adversely affect prevailing
market prices for the Common Stock and could impair the Company's ability to
raise capital through the sale of its equity securities. See "Shares Eligible
for Future Sale."
DIVIDENDS. The Company has not paid any cash dividends on its Common
Stock and does not expect to declare or pay any cash dividends in the
foreseeable future. See "Dividend Policy."
DILUTION. The conversion price of $6.75 is substantially higher than
the net tangible book value per share of Common Stock. Investors purchasing
shares of Common Stock in this offering will incur immediate and substantial
dilution of approximately $5.35 per share of Common Stock from the conversion
price. See "Dilution."
INEXPERIENCE OF REPRESENTATIVE. The Representative commenced operations
in 1994 and does not have extensive experience as an underwriter of public
offerings of securities. The Representative has acted as the managing
underwriter for three public offerings. The Representative is a relatively small
firm and no assurance can be given that the Representative will participate as a
market maker in the Common Stock. See "Underwriting."
FORWARD -- LOOKING STATEMENTS AND ASSOCIATED RISK. This prospectus
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including statements regarding, among other items (i) the Company's growth
strategies, (ii) the impact of the Company's products and anticipated trends in
the Company's business, and (iii) the Company's ability to enter into contracts
with certain suppliers and strategic partners. These forward-looking statements
are based largely on the Company's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the Company's control.
Actual results could differ materially from these forward-looking statements as
a result of the factors described herein, including, among others, regulatory or
economic influences. In light of these risks and uncertainties, there can be no
assurance that the forward-looking information contained in this Prospectus will
in fact transpire or prove to be accurate.
CONCURRENT OFFERING
On the date of this Prospectus, a registration statement filed under
the Securities Act with respect to a concurrent underwritten public offering by
the Company of 850,000 shares of Common Stock, and up to 127,500 additional
shares of Common Stock to cover over-allotments, if any, was declared effective
by the Securities and Exchange Commission (the "Concurrent Offering"). The
Company received net proceeds of approximately $________ from the sale of those
shares, and will receive approximately $________ in additional net proceeds if
the over-allotment option is exercised in full, after payment of underwriting
discounts and commissions and estimated expenses of the Concurrent Offering.
- 10 -
<PAGE>
USE OF PROCEEDS OF CONCURRENT OFFERING
The Company will receive no proceeds from the offering of shares under
the Prospectus. However, the conversion of the Convertible Notes will result in
the extinguishment of $1,012,500 of indebtedness. The net proceeds to be
received by the Company from the sale of the shares of Common Stock offered
pursuant to the Concurrent Offering are estimated to be approximately $5,271,750
based on an assumed initial public offering price of $7.50 per share
(approximately $6,103,688 if the Underwriters' over-allotment option is
exercised in full), after deducting underwriting discounts and commissions and
estimated offering expenses payable by the Company.
<TABLE>
<CAPTION>
APPROXIMATE
APPROXIMATE PERCENTAGE OF NET
APPLICATION OF PROCEEDS DOLLAR AMOUNT PROCEEDS
----------------------- ------------------- -----------------
<S> <C> <C>
Development of manufacturing capacity(1)............................. $ 750,000 14%
Development of marketing, sales and service centers and
service fleet(2)................................................ 1,250,000 24
Development of corporate headquarters and research and
development facilities(3)....................................... 700,000 13
Purchase of raw materials and inventory(4)........................... 2,000,000 38
Working capital and general corporate purposes....................... 571,750 11
---------
Total....................................................... $5,271,750 100%
========= ===
<FN>
- ---------------------------
(1) Represents the estimated cost of developing the Company's manufacturing
capabilities, primarily for research and development, testing and
initial pre-commercial manufacturing operations, including certain
property, plant and equipment costs, set-up costs, hard and soft
tooling costs and custom mold development costs over the next 12
months. See "Business - Manufacturing and Supply" and "--Research and
Development."
(2) Represents the estimated cost of developing sales, service and technological
support centers and a fleet of service vehicles throughout Florida and the
eastern United States over the next 12 months. See "Business - Marketing
and Servicing Strategy."
(3) Represents the estimated cost of developing a larger corporate headquarters
and research and development facility, including the cost of a client server
computer system, over the next 12 months. See "Business - Research and
Development."
(4) Represents the estimated cost of raw materials and finished goods
inventory that may be held by the Company, as well as the cost of units
provided under its pilot marketing program with First Recovery and
Valvoline Oil Company for which the Company will not use third-party
financing.
</FN>
</TABLE>
The foregoing represents the Company's best estimate of its allocation
of the net proceeds of the Concurrent Offering based upon the current status of
its business operations, its current plans, and current economic and industry
conditions. Future events, as well as changes in economic or competitive
conditions or the Company's business and the results of the Company's sales and
marketing activities may make shifts in the allocation of funds within or
between each of the items referred to above necessary or desirable.
If the Underwriters exercise the over-allotment option in full, the
Company will realize additional net proceeds of approximately $832,000 which
will be added to the Company's working capital.
The Company anticipates, based on currently proposed plans and
assumptions relating to its operations, that the proceeds of the Concurrent
Offering, together with projected cash flow from operations, will be sufficient
to satisfy its contemplated cash requirements for at least 12 months following
the consummation of this offering. In the event that the Company's plans change
or its assumptions change or prove to be inaccurate or if the proceeds of this
offering or cash flow prove to be insufficient (due to unanticipated expenses or
otherwise), the Company may be required to seek additional financing. There can
be no assurance that additional financing will be available to the Company on
commercially reasonable terms, or at all.
Proceeds not immediately required for the purposes described above will
be invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest-bearing
investments.
- 11 -
<PAGE>
DILUTION
The difference between the conversion price per share of Common Stock
and the pro forma net tangible book value per share after this offering
constitutes the dilution to holders of the Convertible Notes and recipients of
shares of Common Stock pursuant to this offering. Net tangible book value per
share is determined by dividing the net tangible book value of the Company
(total tangible assets less total liabilities) by the number of outstanding
shares of Common Stock.
At June 30, 1996, the net tangible book value of the Company was
$(37,170), or $(.01) per share. After giving effect to the conversion of the
Convertible Notes into 150,000 shares of Common Stock, and assuming the sale of
850,000 shares of Common Stock offered in the Concurrent Offering at an assumed
initial public offering price of $7.50 per share and deducting underwriting
discounts and commissions and estimated expenses of that offering, the pro forma
net tangible book value of the Company as of June 30, 1996 would have been
$6,100,830, or $1.40 per share. This represents an immediate increase in net
tangible book value of $1.41 per share to the existing shareholders and an
immediate dilution of $5.35 per share to the holders of Convertible Notes. The
following table illustrates this dilution, on a per share basis:
Conversion price of Common Stock...................... $6.75
Net tangible book value before offering.......... $(.01)
Increase attributable to new investors........... 1.41
Pro forma net tangible book value after offering...... 1.40
----------
Total dilution to holders of Convertible Notes........ $5.35
If the Underwriters' over-allotment option is exercised in full, the pro forma
net tangible book value of the Company as of June 30, 1996 will be $6,932,768,
or $1.59 per share. This represents an immediate increase in net tangible book
value of $1.60 per share to the existing shareholders and an immediate dilution
of $5.15 per share to new investors.
The following table summarizes, as of June 30, 1996, the total number
of shares of Common Stock purchased from the Company, the total consideration
paid and the average price per share paid by the existing shareholders and the
new investors.
<TABLE>
<CAPTION>
PERCENT OF
SHARES PERCENT OF AGGREGATE TOTAL AVERAGE PRICE
PURCHASED TOTAL SHARES CONSIDERATION CONSIDERATION PER SHARE
------------- ------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders............. 3,501,309 80.5% $4,142,500 39.4% $1.18
New Investors..................... 850,000 19.5% 6,375,000 60.6% $7.50
Total.......................... 4,351,309 100.0% 10,517,500 100.0%
============= ============ ================ =============
</TABLE>
If the Underwriters' over-allotment option is exercised in full, the new
investors will have paid $7,331,250 for 977,500 shares of Common Stock,
representing 63.9% of the total consideration for 21.8% of the total number of
shares outstanding.
- 12 -
<PAGE>
CAPITALIZATION
Set forth below is the capitalization of the Company at June 30, 1996,
and as adjusted to reflect the Company's issuance of 850,000 shares of Common
Stock in this offering at an assumed initial public offering price of $7.50 per
share and the automatic conversion of the Convertible Notes. See Note 5 of Notes
to Financial Statements.
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------------------------
ACTUAL AS ADJUSTED
--------------------- ---------------------
<S> <C> <C>
DEBT:
Short-term debt..................................................... $1,012,500 $ 0
Current installments of long-term debt.............................. 48,786 48,786
Long-term debt, excluding current installments...................... 129,014 129,014
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, $1 par value; 1,500,000 shares authorized;
no shares issued and outstanding.......................... 0 0
Common Stock, $.001 par value; 25,000,000 shares
authorized; 3,351,309 and 4,351,309 shares issued and
outstanding, respectively................................. 3,351 4,351
Additional paid in capital.......................................... 3,560,948 9,697,948
Deficit accumulated during the development stage.................... 3,577,015 3,577,015
--------------------- ---------------------
Total stockholders' equity (deficit)........................... (12,716) 6,125,284
--------------------- ---------------------
Total capitalization................................................ $1,177,584 $6,303,084
===================== =====================
</TABLE>
- 13 -
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below has been derived from the
financial statements of the Company. The financial statements as of and for the
period from November 13, 1990 (inception) through December 31, 1991 and for the
years ended December 31, 1992, 1993, 1994 and 1995 have been audited by KPMG
Peat Marwick LLP, independent certified public accountants. In the opinion of
the Company, the financial information for each of the six month periods ended
June 30, 1995 and 1996, which is unaudited, includes all adjustments, consisting
only of normal recurring adjustments, which the Company considers necessary for
a fair presentation of its financial position and results of operations for
these periods. The statement of operations data for the six month period ended
June 30, 1996 is not necessarily indicative of the results of operations that
may be expected for the full year. The selected financial data presented below
should be read in conjunction with the Company's financial statements, related
notes, and other financial information contained in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- -----------------------
1991(1) 1992 1993 1994 1995 1995 1996
--------- --------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating expenses:
General and administrative.. $ 8,502 $ 8,971 $81,886 $268,414 $ 907,393 $ 418,079 $ 622,641
Research and development.... 128,439 31,924 69,256 178,146 393,874 162,732 365,435
--------- --------- ---------- ---------- ---------- ---------- ---------
Total operating expenses.. 136,941 40,895 151,142 446,560 1,301,267 580,811 988,076
--------- --------- ---------- ---------- ---------- ---------- ---------
Interest (expense), net........ -- (16,299) (16,360) (46,312) (17,878) (26,462) (13,094)
Conversion (expense) on
redeemable preferred stock.. -- -- -- -- -- -- (344,631)
Loss on disposition of property
and equipment............... -- (39,560) (18,000) -- -- -- --
--------- --------- ---------- ---------- ---------- ---------- ---------
Net (loss)..................... (136,941) (96,754) (185,502) (492,872) (1,319,145) (607,273) (1,345,801)
Dividends on redeemable
preferred stock............. -- -- (8,328) (53,929) (222,067) (75,066) (147,000)
--------- --------- ---------- ---------- ---------- ---------- ---------
Net (loss) to common shares.... $(136,941) $(96,754) $(193,830) $(546,801) $(1,541,212) $(682,339) $(1,492,801)
========= ========= ========== ========== ========== ========== =========
Net (loss) per common share(2). $(0.07) $(0.05) $(0.10) $(0.27) $(0.66) $(0.34) $(0.53)
========= ========= ========== ========== ========== ========== =========
Weighted average shares
outstanding(2).............. 2,000,000 2,000,000 2,000,000 2,000,000 2,335,140 2,000,000 2,799,071
</TABLE>
JUNE 30, 1996
--------------------------------
ACTUAL AS ADJUSTED(3)
--------------- --------------
BALANCE SHEET DATA:
Working capital........................... $(216,966) $5,921,034
Total assets.............................. 1,562,712 6,628,212
Total liabilities......................... 1,575,428 502,928
Stockholders' equity (deficit):
Total stockholders' equity (deficit)... (12,716) 6,125,284
- --------------------------
(1) Information provided for the period from November 13, 1990 (inception) to
December 31, 1991.
(2) See Note 1 to Notes to Financial Statements for information concerning the
computation of net loss per share.
(3) Adjusted to reflect (i) the issuance of 150,000 shares of Common Stock as
a result of the conversion of the Convertible Notes; and (ii) the sale of
850,000 shares of Common Stock offered in the Concurrent Offering at an
assumed initial public offering price of $7.50 per share and the initial
application of the estimated net proceeds therefrom. See "Capitalization"
and "Use of Proceeds of Concurrent Offering."
- 14 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Financial Statements, including the notes thereto, contained elsewhere
in this Prospectus.
GENERAL
Since its inception in November 1990 the Company has devoted
substantially all of its resources to research and development programs relating
to its full line of self contained, recycling industrial parts washers. The
Company was a development stage company through June 30, 1996, and commenced its
planned principal operations in July 1996. The Company has been unprofitable
since its inception and expects that it will incur significant additional losses
at least through December 31, 1996. From the period from inception through June
30, 1996, the Company incurred a cumulative net loss of $3,577,015. The Company
anticipates that it will incur losses until such time, if ever, as the Company
is able to generate sufficient revenues to offset its operating costs and the
costs of its continuing expansion. In light of the material uncertainties in
connection with the commencement of the Company's operations, the Company cannot
reasonably estimate the length of time before the Company may generate net
income, if ever.
The Company intends to make its SystemOne(Trademark) Washer and
services available to the public through a third party leasing program. The
Company will recognize the revenue from the sale of a machine at the time that
the equipment is delivered either to the third party lessor or directly by the
Company to the lessee. A portion of the revenue (currently estimated at 10% of
the sale price per machine) will be accounted for as deferred revenue, and
recognized as revenue in respect of the service portion of the agreement over
the term of the underlying lease. See "Business - Sales Financing and Servicing
Programs" for a description of the Product Financing Agreement the Company has
entered into with Oakmont Financial Services.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30,
1995.
The Company did not generate any revenues prior to June 30, 1996.
The Company's general and administrative expenses increased by $204,562
to $622,641 for the six months ended June 30, 1996 from $418,079 during the
comparable period in 1995. The increase is primarily attributable to the
Company's hiring of additional management, sales and marketing staff in
anticipation of the Company's commencement of its planned principal operations
and the Company's grant of an aggregate of 30,000 shares of Common Stock to
three directors of the Company in exchange for certain consulting services.
The Company's research and development expenses for the six months
ended June 30, 1995 and 1996 were $162,732 and $365,435, respectively. The 125%
increase is primarily a function of the Company's accelerated prototype
development during the latter period, as opposed to the basic and applied
research conducted during the prior period. During 1996, the Company
manufactured and shipped a number of SystemOne(TM) Washers to various facilities
to test market receptivity.
The Company's interest expenses for the six months ended June 30, 1995
and 1996 were $38,259 and $24,179, respectively. The Company's interest expense
in the six months ended June 30, 1996 decreased by 36% relative to the six
months ended June 30, 1995 due to a relative decrease in the indebtedness of the
Company. In the six months ended June 30, 1995 and 1996, the Company earned
interest income of $11,797 and $11,085 on cash deposits.
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In the six months ended June 30, 1995, the Company incurred a
conversion expense of $344,631 in connection with its efforts to induce all the
holders of the Company's Series A Preferred Stock to convert their Series A
Preferred Stock to Common Stock.
As a result of the foregoing, the Company incurred a net loss of
$607,273 and $1,345,801 in the six months ended June 30, 1995 and 1996,
respectively.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.
The Company's general and administrative expenses for the years ended
December 31, 1994 and 1995 were $268,414 and $907,393, respectively. The
$638,979 increase in general and administrative expenses was a function of the
Company's hiring of additional management and sales staff, increased use of
management consulting, engineering, legal and accounting professionals, purchase
of more comprehensive insurance policies and increased executive compensation.
For the years ended December 31, 1994 and 1995, the Company's research
and development expenses were $178,146 and $393,874, respectively. The $215,728
increase in research and development expenses was a reflection of the Company's
accelerated research and development efforts and an increased focus on
developing prototype products during the latter part of 1995.
The Company's interest expense was $46,312 and $63,528 for the years
ended December 31, 1994 and 1995, respectively. The Company's interest expense
increased by $17,216 as a result of additional interest expenses incurred with
respect to equipment financing secured in September 1994. In the year ended
December 31, 1995, the Company earned interest income of $45,650 on cash
deposits.
Due to the factors described above, the Company incurred net losses of
$492,872 and $1,319,145 in the years ended December 31, 1994 and 1995,
respectively.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993.
The Company's general and administrative expenses were $81,886 in the
year ended December 31, 1993 and $268,414 in the year ended December 31, 1994.
General and administrative expenses increased by $186,528 primarily in response
to increases in the Company's staff and the Company's increased use of
management consulting, engineering, legal and accounting professionals.
For the years ended December 31, 1993 and 1994, research and
development expenses were $69,256 and $178,146, respectively. The Company's
expenses for research and development increased by $108,890 as the Company
increased the scope of its research and development efforts to a number of
product lines.
Interest expense for the Company for the years ended December 31, 1993
and 1994 was $16,360 and $46,312, respectively. The Company's interest expense
increased by $29,952 primarily as a result of $10,346 of additional interest
expense with respect to equipment financing secured in September 1994 and
$11,278 of additional interest expense with respect to notes payable.
In the year ended December 31, 1993, the Company recognized a $18,000
loss on the disposal of property and equipment.
As a result of the foregoing, the Company incurred net losses of
$185,502 and $492,872 in the years ended December 31, 1993 and 1994,
respectively.
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LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had a working capital deficiency of
$(216,966) and cash and cash equivalents of $640,592. The Company intends to use
the proceeds of this offering and the cash generated from operations, if any, to
finance its proposed plan of operations.
The capital requirements relating to implementation of the Company's
business plan will be significant. Based on the Company's current assumptions
relating to implementation of its business plan (including the timetable of and
the cost associated with development of manufacturing capabilities, a service
fleet, a corporate headquarters, and research and development facilities), the
Company will seek to develop at least four service centers during the 12 months
immediately following this offering. The Company believes that product sales
will commence in the third quarter of 1996 and that the proceeds from the
Convertible Notes are sufficient to fund working capital requirements until
sales of the Company's products reach levels sufficient to fund working capital
requirements. The Company believes that its ability to generate cash from
operations is dependent upon, among other things, demand for its products and
services and the Company's third party leasing arrangement with Oakmont. If the
Company's third party leasing arrangements with Oakmont proves to be
unsuccessful, and the Company is unable to locate another third party willing to
provide comparable third party leasing services, the Company believes that it
will be substantially dependent upon the proceeds of the Concurrent Offering to
execute its proposed plan of operations over the next 12 months. If the
Company's plans change, its assumptions prove to be inaccurate, the capital
resources available to the Company otherwise prove to be insufficient to
implement its business plan (as a result of unanticipated expenses, problems or
difficulties, or otherwise) or in the event the Concurrent Offering is not
completed, the Company has plans to restructure its operations to minimize cash
expenditures and/or obtain additional financing in order to support its plan of
operations. In order to reduce certain of the Company's up-front capital
requirements associated with service center and service fleet development, the
Company intends to lease service center sites and may seek to the extent
possible, to lease rather than purchase certain equipment and vehicles necessary
for service center development. There can be no assurance that the Company will
have sufficient capital resources to permit the Company to fully implement its
business plan. The Company has no current arrangements with respect to, or
sources of, additional financing. There can be no assurance that any additional
financing will be available to the Company on acceptable terms, or at all. If
adequate funds are not available from additional sources of financing, the
Company's business may be materially adversely affected. In addition, any
implementation of the Company's business plan subsequent to the 12 month period
immediately following this offering will require capital resources substantially
greater than the proceeds of the Concurrent Offering or otherwise currently
available to the Company.
The Company's material commitments relate to its obligations to pay the
contract manufacturers of its SystemOne(Trademark) Washers, make lease payments
pursuant to certain real property and equipment leases and satisfy its financial
obligations under three employment agreements. Upon consummation of this
offering, the Company will not have any outstanding indebtedness. The Company
anticipates that its material commitments will increase significantly upon the
consummation of this offering as a result of the Company's planned expansion.
See "Business-Manufacturing and Supply" and "-Properties" and "Executive
Compensation." Additionally, under certain circumstances, the Company would be
required to acquire the lessor's interest of First Recovery in certain leases
entered into by First Recovery under a pilot marketing program. Because the
Company does not intend to use third-party financing with respect to units
leased under the pilot marketing program with First Recovery and Valvoline Oil
Company, it will be required to use a portion of the proceeds of the Concurrent
Offering to finance those units. See "Business-Marketing and Servicing
Strategy."
In August 1994, the Company acquired a Trumpf Model 200 TC Computer
Numerical Controlled Punch Press (the "Punch Press"). The Company financed the
acquisition of the Punch Press pursuant to a finance and security agreement with
The CIT Group/Equipment Financing, Inc. ("CIT"). Pursuant to the terms of the
finance agreement and security agreement, the Company has agreed to pay CIT an
aggregate
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of $341,397 in equal monthly payments of $5,690 over five years. The Company's
obligations to CIT are secured by a security interest in the Punch Press.
As indicated in the accompanying financial statements, as of June 30,
1996, the Company's accumulated deficit totalled $3,577,015. Since its
inception, the Company has financed its operations through a variety of stock
and debt issuances and conversions and the sale of property. In November 1990,
the Company obtained from Pierre Mansur, its Chairman and President, all rights
to certain ongoing research and development and related patents and patents
pending, as well as certain real estate and equipment, in exchange for 2,000,000
shares of Common Stock. In January 1991, the Company issued $300,000 in
principal amount of its 12% Promissory Notes (the "Promissory Notes"). To raise
additional capital and refinance a portion of the Promissory Notes, in September
1993 the Company issued 580,000 shares of 12% Cumulative Redeemable Preferred
Stock (the "First Series Preferred Stock") in exchange for $380,000 and the
satisfaction of $200,000 in principal amount of the Promissory Notes.
In April 1992, the Company sold the commercial property originally
contributed to the Company in 1990 for $120,000 in cash and a $200,000 purchase
money mortgage ("PMM"), which bore interest at a rate of 12%. In January 1994,
the Company assigned its rights to receive interest with respect to the PMM to
satisfy the Company's obligation to pay interest with respect to the remaining
outstanding Promissory Note. The principal amount of the PMM was paid to the
Company on April 24, 1995.
In November 1994, the Company borrowed $500,000 pursuant to a 12%
Secured Convertible Promissory Note (the "Secured Note") and in April 1995 the
Company issued 490,000 shares of 12% Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock") in exchange for $1,950,000 in cash and the
satisfaction of the Secured Note.
To minimize the Company's dividend obligations, in May 1995 the Company
issued a notice of redemption with respect to the First Series Preferred Stock
and, subsequently, all of the outstanding shares of First Series Preferred Stock
and accrued interest thereon were converted into an aggregate 656,729 shares of
Common Stock.
In May 1996, the Company issued 20,000 shares of Common Stock in
satisfaction of the remaining outstanding $100,000 in principal amount of the
Promissory Notes.
In June 1996, the Company issued 628,180 shares of Common Stock in
exchange for all of the Series A Preferred Stock and accrued dividends thereon.
Pursuant to a revolving line of credit dated June 1, 1990, Mr. Paul
Mansur advanced the Company an aggregate of $150,000 (the "Debt") between June
1, 1990 and May 31, 1996. On December 31, 1994 and December 31, 1995, the
Company paid Mr. Paul Mansur $34,814 and $12,000, respectively, in satisfaction
of interest owed with respect to the Debt. On May 31, 1996, the Company paid Mr.
Paul Mansur $150,000 and $5,000 in satisfaction of the outstanding principal
balance of and the interest owed with respect to the Debt.
In June 1996, the Company issued (the "Private Financing") $1,012,500
in principal amount of Convertible Notes, bearing interest at the rate of 4% per
annum through September 30, 1996 and thereafter until maturity at the rate of
12% per annum, and convertible into Common Stock at a conversion price of $6.75
per share. Pursuant to the provisions of the Convertible Notes, the entire
outstanding principal amount thereof will be automatically converted into
150,000 shares of Common Stock upon the consummation of this offering. Each of
Environmental Technologies BVI, Limited, a consulting firm of which Dr. Jan
Hedberg, a director of the Company, is Managing Director, Mr. Joseph E. Jack, a
director of the Company, and Mr. Elias F. Mansur, a director of the Company,
acquired Convertible Notes in the principal amount of $101,250, and, upon
consummation of this offering, each of them will receive 15,000 shares of the
Company's Common Stock pursuant to the automatic conversion thereof.
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BUSINESS
GENERAL
The Company has developed and obtained patent protection with respect
to a full line of self-contained, recycling industrial parts washers that
incorporate innovative, proprietary waste minimization technologies and
represent a significant advance over currently available machinery and
processes. Focusing on waste minimization rather than its removal and recovery,
the Company believes that its equipment will have a major impact on the
industrial parts cleaning industry and will have a broad appeal to customers,
because its equipment, unlike the machines now in use, facilitates efficient and
economical compliance with environmental regulations, minimizes waste disposal
requirements, enhances cleaning solution utilization, and increases worker
safety and productivity.
Most machinery and equipment require oil lubrication to function
properly. Removal of lubrication oils from tools and parts during automotive,
aviation, marine and general industrial maintenance, service and repair
operations is typically effected through the use of mineral spirit solvents
which become contaminated in the cleaning process. Under the most common current
practice, the solvent becomes more contaminated (and less effective) with
repeated use, and, when it is saturated with oil, sludge and other contaminants
as a result of the cleaning process (and frequently classified as a hazardous
waste under federal and state regulations), it must be stored on site until
pick-up, when pure solvent is delivered and the contaminated solvent is,
generally, shipped to regional refining facilities. This off-site recycling
program is typically scheduled on four to sixteen week cycles and involves both
the utilization of progressively more contaminated solvent for cleaning
operations until the solvent is too contaminated for use, and thereafter, the
on-site storage of the hazardous solution until the periodic waste recovery
service. By contrast, the Company's products allow the use and re-use of the
solvent by removing all the contaminants from the solvent within the cleaning
unit itself, minimizing the volume of waste by-product and providing pure
solvent to the customer on demand, without the costly and dangerous storage and
transportation of hazardous waste. Moreover, the small amount of waste
by-product yielded in the distillation process utilized by the Company if
products can typically be recycled and/or disposed of together with the
customer's used motor oil, which is generally not classified as a hazardous
waste. Substantially all of the Company's target customers have established
systems for the handling, transportation, recycling and disposal of used motor
oil. The Company's products have been extensively tested and proven effective by
independent engineering concerns and testing laboratories.
STRATEGY
The Company's strategy is to focus initially on the manufacture,
marketing and sale of its SystemOne(TM) Washer because of the anticipated size
of the market for the product. The Company anticipates that the product should
be able to achieve fairly rapid market penetration because of its technological,
economic and environmental advantages and its relatively low price point
compared to competitive equipment. Once the manufacturing and marketing programs
for the SystemOne(TM) Washer are fully implemented, it will commence marketing
its other products for which it has continued its research and development. The
Company hopes to rapidly penetrate the industrial parts cleaning market by
entering into large quantity contracts with target customers which have already
established a national or regional presence, and are able to exploit more fully
the economic and environmental benefits of the Company's products.
The Company expects to pursue a national expansion program, through
internal growth utilizing a network of regional distribution and service
centers, through a strategic alliance with a national distributor, if one is
available on favorable terms, or through a combination of the two. The Company
is carrying out an internal growth program in Florida, where, in addition to its
regional service center in Miami, it plans to establish at least four additional
centers during the 12 months immediately following this offering, in Orlando,
Tampa, Jacksonville and West Palm Beach. In August, the Company will commence a
test of a strategic marketing alliance by entering into a pilot program with
First Recovery and Valvoline Oil Company, two
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affiliates of Ashland Inc., a multinational oil refiner and distributor of
automotive related products, including Valvoline Oil and Ashland 140 Solvent,
one of the brands of mineral spirits solvent used in the Company's
SystemOne(Trademark) Washer. Under the pilot program, First Recovery will be the
exclusive distributor of the SystemOne(Trademark) Washer in the Dallas/Ft. Worth
and Houston markets. The initial term of the program is one year. If the
arrangement proves successful, the Company expects to negotiate a broader
agreement, possibly including a national distribution program.
The Company expects to continue its emphasis on research and
development even after its initial products are commercialized. The Company
believes that its technology and its emphasis on waste minimization should yield
product advances with broad market applications beyond the Company's current
target market.
INDUSTRY OVERVIEW
The Company believes the chemical industrial parts cleaning industry
has grown primarily in response to the demand for means of removing lubrication
oils and other contaminants from tools and parts during automotive, aviation,
marine and general industrial maintenance, service and repair operations. Based
on financial and trade journal reports, the Company believes that in 1996
businesses in the United States incurred more than $1 billion in expenses to
clean industrial parts using chemical cleaning techniques. Industrial parts
cleaning machines are used by automotive, aviation and maritime service, repair
and rebuilding facilities, gas stations, transmission shops, parts
remanufacturers, machine shops, and general manufacturing operations of every
size and category requiring parts cleaning.
The Company believes that the level of demand for the different types
of industrial parts cleaning machines and services is and will continue to be a
function of, among other things: (1) the effectiveness of the technology; (2)
the cost of the machines and service; (3) the time and costs associated with
documenting compliance with applicable environmental and other laws; (4) the
safety and environmental risks associated with the machine and service; (5)
customer service; and (6) the difficulty in handling the regulated substances
used and/or generated by competitive machines.
PRODUCTS AND SERVICES
The Company product line includes a variety of self-contained recycling
industrial cleaning and washing equipment, all of which incorporate proprietary
waste minimization technology with respect to which the Company has obtained or
applied for patent protection. The Company expects that all the products listed
below will be available for commercial exploitation at various times prior to
December 31, 1998. All of the Company's products utilize technology that (i)
provides continuously recycled cleaning solution during the cleaning process,
(ii) eliminates the necessity for continual replacement and disposal of
contaminated cleaning solution and residues and (iii) facilitates practical and
cost effective compliance with environmental laws and regulations. The Company
anticipates that it will offer its various parts washing products to commercial
users at prices which range from $2,000 to $25,000 per unit.
SYSTEMONE(Trademark) WASHER.
The first of the Company's products to be available in commercial
quantities is the SystemOne(Trademark) Washer. The SystemOne(Trademark) Washer
line provides users with pure mineral spirit solvent for parts and tools
cleaning purposes, utilizing a low-temperature vacuum distillation process to
recycle the used solvent within the SystemOne(Trademark) Washer, so that the
solvent may be reused, on demand, without any need for off-site processing. The
SystemOne(Trademark) Washer minimizes the volume of waste by-product and
eliminates the need for storage and disposal of the hazardous waste solvent
necessitated by the most widely-used current treatment method.
The Company's SystemOne(Trademark) Washer consists of one or two
washing sinks mounted at standing level on top of a metal cabinet; a hinged lid
on top of the washing sink to minimize evaporation of solvent;
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a five gallon primary solvent holding tank; a distillation unit which contains a
residue reservoir; and a 30-gallon secondary solvent holding tank. The
SystemOne(Trademark) Washer utilizes a manually operated hose and scrubber which
directs the flow of solvent to the part being cleaned.
The distillation unit separates the solvent from the contaminants that
accumulate in the solvent as a result of use by heating the solvent solution in
a vacuum to a temperature at which the solvent, but not the residue, vaporizes;
and then, cooling the solvent vapor so that the vapor condenses and is converted
back into a liquid. The distilled solvent is channeled to the secondary solvent
holding tank for future use. Accordingly, the solvent may be repeatedly used,
distilled and reused without need for off-site distillation or processing. The
residue is collected and held in the residue reservoir until final disposal.
With respect to SystemOne(Trademark) Washers which are used in
accordance with their intended purpose, the Company believes that the residue
may be legally recycled and/or disposed of in the same manner that used oil is
recycled and/or disposed of. See "-Government Regulations." The Company believes
that substantially all of its target customers currently have established
systems for the handling, transportation, recycling and disposal of used oil. In
those instances in which the residue may not be recycled as used oil, the
residue, but not the distilled solvent, shall be periodically picked up,
recycled and/or disposed of by a third party. The Company warrants to users that
if, for any reason, the residue generated by its SystemOne(Trademark) Washer
cannot be recycled and/or disposed of as used oil, the Company will pay for any
required recovery and disposal services. The Company does not intend to be in
the business of handling, transporting, recycling and/or disposal of residue. If
it is required under its warranty to pay for recovery and disposal, it intends
to retain a third party to provide the required services.
The Company has also developed and obtained patent protection with
respect to a general parts washer which utilizes an aqueous based cleaning
solution. The Company is in the process of evaluating when it will commence the
commercial production and marketing of its aqueous based parts cleaner.
The target market for SystemOne(Trademark) Washers are automotive,
aviation and maritime service, repair and rebuilding facilities, gas stations,
transmission shops, parts remanufacturers, machine shops, and general
manufacturing operations of every size and category requiring small parts
cleaning.
The Company anticipates that the SystemOne(Trademark) Washer will
require service approximately four times a year for replacement of solvent lost
to evaporation or spillage and general maintenance requirements. See "Marketing
and Services Strategy" for additional information regarding the servicing of the
SystemOne(Trademark) washers.
OTHER PRODUCTS.
MULTIPROCESS POWER SPRAY WASHER is currently manufactured and marketed
on a limited basis, and integrates three processes in one self-contained
machine; a power spray wash process, a recycling/reclamation process and a
thermal oxidation process. The Power Spray Washer is able to accommodate large
and bulky parts or units that are too large for the SystemOne(Trademark) Washer.
The target market for power spray washers are automotive, aviation and maritime
maintenance, repair and rebuilding facilities, parts remanufactures, machine
shops, transmission shops, and all facets of general manufacturing requiring
maintenance and repair of mechanical equipment.
MULTIPROCESS SPRAY GUN WASHER is scheduled for commercial introduction
in late 1996. It incorporates the Company's recycling/reclamation capabilities
for paint thinner recovery. The target market for spray gun washers are
automotive, aviation and maritime paint shops and all general manufacturing
operations that utilize paint. The Company anticipates that the auto paint
industry will represent a substantial market. The MultiProcess Spray Gun Washer
facilitates compliance with rigorous environmental disposal regulations for the
paint industry.
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MULTIPROCESS IMMERSION WASHER is scheduled for commercial introduction
in 1997. It integrates an immersion wash process, a recycling/reclamation
process and a thermal oxidation process in one self-contained machine. The
MultiProcess Immersion Washer is designed for cleaning of complex parts
containing substantial integral and highly inaccessible passages requiring a
total immersion washing. The primary target market for immersion washers are
radiator rebuilding shops as well as automotive, aviation and maritime
maintenance, repair and rebuilding facilities, parts remanufactures, machine
shops, transmission shops, and all facets of general manufacturing requiring
maintenance and repair of mechanical equipment.
MINIDISPOSER is scheduled for commercial introduction in 1998. It is a
compact and portable mini-thermal oxidizer developed as a practical and
efficient means for the disposal of contaminants by thermal oxidation within a
unit measuring only one cubic foot. The MiniDisposer will be marketed both as
optional equipment with the SystemOne(Trademark) Washer and as a stand alone
mini-thermal oxidizer. The Company believes that the size and scope of the
market for the MiniDisposer is substantial and diversified and includes
industrial, commercial and consumer applications that generate small contaminant
waste by-products. The Company continues to explore potential markets in
medical, restaurant and other commercial and consumer applications.
COMPETITION
The industrial parts cleaning industry is highly competitive and
dominated by a large company, Safety-Kleen Inc. ("Safety-Kleen"), which has
substantially greater financial and other resources than the Company.
Safety-Kleen services the parts cleaning industry through a "closed-loop"
recycling system in which contaminated solvent is removed for recycling and
fresh solvent is delivered on a periodic basis. There can be no assurance that
Safety-Kleen will not develop or acquire technology similar to or different from
the Company's that would allow it to provide an on-site recycling service. To
the best of the Company's knowledge, no other company is currently commercially
marketing a recycling parts washer with comparable characteristics. There can be
no assurance that Safety-Kleen or other competitors will not acquire or develop
patent rights with respect to a recycling parts washer which are competitively
superior to the Company's patent rights. See "-Patents, Trademarks and
Proprietary Technology."
The Company believes that certain of its target customers have
attempted to enhance the capabilities of their existing industrial parts washers
by acquiring machines capable of distilling solvent used in and removed from the
parts washers. Although there are a wide variety and types of such machinery
currently available to the public, the Company believes its SystemOne(Trademark)
Washers provide superior service at a lower cost.
The Company believes that Safety-Kleen services a significant portion
of the parts washing machines currently in use. Based upon market studies
conducted by the Company, the Company believes that no other competitor accounts
for more than 2% of the industrial parts washer market in the State of Florida
or the United States.
According to Safety-Kleen's Annual Report on Form 10-K for the year
ended December 31, 1995 (the "Safety-Kleen Annual Report"), Safety-Kleen was the
world's largest provider of parts washing services and one of the world's
largest collectors and re-refiners of used oil. According to the Safety-Kleen
Annual Report, at December 31, 1995, Safety-Kleen had Shareholders' Equity of
approximately $433.0 million and, in the year ended December 31, 1995,
Safety-Kleen had aggregate revenues of approximately $859.0 million, including
revenues of approximately $240.0 million from its automotive/retail parts
cleaning service and $119 million from its industrial parts cleaning service,
and served its customers in North America and Europe through a network of 235
branch facilities. At December 31, 1995, Safety-Kleen was providing services for
approximately 493,000 parts washers for customers in the United States, of which
approximately 375,000 were owned by Safety-Kleen and 118,000 were owned by its
customers.
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The Company believes that its SystemOne(Trademark) Washer will compete
favorably with its competitors on the basis of, among other things, (1) the
effectiveness of the technology; (2) cost; (3) the time and cost associated with
documenting compliance with applicable environmental and other laws; (4) the
safety and environmental risks associated with the machines and service; (5)
customer service; and (6) the difficulty in handling the regulated substances
used and/or generated by competitive machines.
GOVERNMENT REGULATION
The Company believes that federal and state laws and regulations have
been instrumental in shaping the industrial parts washing industry. Federal and
state regulations dictate and restrict to varying degrees what types of cleaning
solvents may be utilized, how a solvent may be stored and utilized, and the
manner in which contaminated solvents may be generated, handled, transported,
recycled and disposed of.
Although the federal and state laws and regulations discussed below
regulate the behavior of the Company's customers, and not the Company, the
Company believes that customer demand for its SystemOne(Trademark) Washer is
partially a function of the legal environment in which the Company's customers
conduct business. The Company's SystemOne(Trademark) Washer was designed to help
minimize the cost of complying with existing federal and state environmental
laws and regulations. Any changes, relaxation or repeal of the federal or state
laws and regulations which have shaped the industrial parts washing industry may
significantly affect demand for the Company's products and the Company's
competitive position.
REGULATION OF SOLVENT TYPES. Federal and state regulations have
restricted the types of solvents that may be utilized in industrial parts
cleaning machines. Prior to December 1995, methyl chloroform was a widely used
cleaning solvent. The Clean Air Act of 1990 mandated the elimination of methyl
chloroform by December 1995.
REGULATION OF HANDLING AND USE OF SOLVENTS. Stoddard solvents, more
commonly known as mineral spirits and solvent naphtha, are the cleaning solvents
typically used in the industrial parts washers of the Company's closest
competitors. The Company intends to use mineral spirits with a minimum of 140
degrees fahrenheit ignitable limits in its SystemOne(Trademark) Washer. Such
mineral spirits do not exhibit the ignitability characteristic for liquid
hazardous wastes as defined in the Resource Conservation and Recovery Act of
1976, as amended, and the implementing regulations of that statute adopted by
the United States Environmental Protection Agency (the "EPA") (collectively,
"RCRA"). Certain machines of the Company's competitors use mineral spirits with
lower ignitable limits, which may, after use, render such mineral spirits
subject to regulation as a hazardous waste. The Company believes that the
ability to recycle the mineral spirits used in its SystemOne(Trademark) Washer
provides an economic benefit to the Company's customers by allowing them to
avoid the expenses and potential liability associated with the disposal of such
solvent as a hazardous waste. See "Government Regulation -Regulation of
Generation, Handling, Transportation and Disposal of Contaminated Solvents."
Federal, state and many local governments have adopted regulations
governing the handling, transportation and disposal of such solvents. On the
federal level, under the Hazardous Materials Transportation Act (HMTA), the
United States Department of Transportation has promulgated requirements for the
packaging, labeling and transportation of mineral spirits in excess of specified
quantities. The Company does not intend to transport mineral spirits in
quantities that would trigger the HMTA requirements.
Relative to the handling and disposal of mineral spirits, many states
and local governments have established programs requiring the assessment and
remediation of hazardous materials that have been improperly discharged into the
environment. Liability under such programs is possible for unauthorized release
of mineral spirits in violation of applicable standards. Civil penalties and
administrative costs may also be imposed for such violations.
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REGULATION OF GENERATION,TRANSPORTATION, TREATMENT, STORAGE AND
DISPOSAL OF CONTAMINATED SOLVENTS. The generation, transportation, treatment,
storage and disposal of contaminated solvents is regulated by the federal and
state governments.
At the federal level, the Resource Conservation and Recovery Act
authorized the EPA to develop specific rules and regulations governing the
generation, transportation, treatment, storage and disposal of hazardous wastes
as defined by the EPA. The EPA's definition of hazardous waste appears under
Chapter 40 CFR Part 261. The Company believes that none of the residue
by-products, the used solvent before distillation or the solvent recycled in a
SystemOne(Trademark) Washer used in accordance with its intended purpose and
instructions is subject to regulation as a "hazardous waste." In contrast, the
Company believes that the mixture of solvent and contaminants which is
periodically recovered from the machines of many of its competitors is subject
to regulation as "hazardous waste."
The Company believes that the ability to recycle and dispose of its
residue by-product as used oil rather than as a hazardous waste is economically
attractive to the Company's customers for a number of reasons. The Company
believes that substantially all of its target customers currently have
established systems for the handling, transportation, recycling and/or disposal
of used oil. Accordingly, the classification of the residue as used oil would
enable the Company's customers to: (1) dispose of or recycle the residue at no
significant additional cost; and (2) avoid certain costs associated with
establishing and disposing of wastes in compliance with a hazardous waste
disposal system.
Even if the residue by-product was required to be handled, transported,
recycled and/or disposed of as a hazardous waste, the fact that the
SystemOne(Trademark) Washer effects a substantial reduction in the volume of
waste product requiring disposal would still serve to minimize disposal costs.
The Company believes that solvent which has been used and is being held
in a SystemOne(Trademark) Washer prior to distillation is not a "waste" and is
not subject to regulation as a hazardous waste.
RCRA establishes the basic framework for federal regulation of
hazardous waste. RCRA governs the generation, transportation, treatment,
storage, and disposal of hazardous waste. In contrast to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), which
is discussed below, RCRA is designed to anticipate and prevent harm to human
health and the environment, rather than to respond to the release of hazardous
wastes.
RCRA requires that facilities that generate, treat, store or dispose of
hazardous wastes comply with certain operating and permitting standards. RCRA
provides standards for permitting, maintenance and operation of facilities
handling hazardous wastes, including requirements for testing and maintenance of
equipment, contingency plans and emergency procedures, secondary containment,
recordkeeping and reporting to government agencies. The recordkeeping and
reporting requirements of RCRA are significant. Before transportation and
disposal of hazardous wastes off-site, generators of such waste must package and
label their shipments consistent with detailed regulations and prepare a
manifest to be filed with the appropriate governmental agency identifying the
material and stating its destination. The transporter must deliver the hazardous
waste in accordance with the manifest and to a facility with an appropriate RCRA
permit (a "TSD Facility"). Failure to comply with the manifesting requirements
may result in the imposition of civil and/or criminal penalties. Many states and
local governments have adopted regulatory programs which parallel the RCRA
regulatory system, many of which programs are in certain ways more restrictive
and burdensome than the RCRA system.
With regard to regulation of "used oil", the EPA ruled in 1992 that
used oil is not a hazardous waste under RCRA. Like the RCRA regulations
pertaining to hazardous wastes, the EPA's used oil regulations provide standards
for permitting, the maintenance and operation of used oil facilities, including
requirements for testing and maintenance of equipment, contingency plans and
emergency procedures, secondary containment, recordkeeping and reporting.
However, there are some material differences between RCRA's regulation of
hazardous waste and used oil. In contrast to hazardous wastes, used oil need not
be
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processed solely at sites with treatment, storage and disposal permits. In
addition, the generators of used oil are not required to file a shipping
manifest with government agencies with respect to each shipment of used oil.
Many state and local governments have adopted regulatory programs which parallel
the EPA's program for regulating used oil, many of which programs are in certain
ways more restrictive or burdensome than the EPA's program. For instance,
certain state and local governments continue to regulate used oil as a hazardous
waste.
CERCLA, as amended by the Superfund Amendments and Reauthorization Act
of 1986 ("SARA"), sets forth national policy and procedures for containing and
removing releases of hazardous substances, and identifying and remediating sites
contaminated with hazardous substances. CERCLA created an $8.5 billion fund (the
"Superfund"), financed from taxes on petroleum and various chemicals, to be
administered by the EPA to fund cleanup of hazardous waste sites. SARA
significantly expanded the scope of hazardous waste cleanup and imposed more
stringent cleanup requirements. The Superfund's most notable objective, however,
is to provide criteria and financial assistance for site cleanups and to impose
liability on parties responsible for such contamination - namely, owners and
operators of vessels or facilities from which such releases occur, and persons
who generated, transported, or arranged for the transportation of hazardous
substances to a facility from which a release or threatened release occurs.
Most states, including Florida, have created programs similar to
Superfund. These state programs are principally designed to help finance the
state's share of remediation costs of sites under the federal Superfund and to
finance cleanups at state sites that are not considered a priority for
remediation under the federal program.
The CERCLA definition of hazardous substances provides a major
exception for petroleum, including used oil if recycled. However, liability
under CERCLA is possible if petroleum products are released that contain
hazardous substances as additives or that are tainted with hazardous substances
during their use and disposal.
The Company believes that the demand for its SystemOne(Trademark)
Washer is enhanced as a result of certain federal and state environmental laws
and regulations. Although the demand for industrial parts cleaning machines and
services may be substantial in certain international markets, the level of
demand for the Company's SystemOne(Trademark) Washer may not be substantial in
certain countries as a result of permissive regulatory systems which allow the
use of less environmentally stringent cleaning and waste disposal methods.
MANUFACTURING AND SUPPLY
The Company manufactures certain of its SystemOne(Trademark) Washers at
its 10,000 square foot manufacturing facility located in Miami, Florida, at
which all manufacturing operations, including design, metal cutting, bending and
welding, painting and assembly can be performed. The Company has acquired all of
the machinery necessary to manufacture SystemOne(Trademark) Washers. The Company
believes that it can produce up to 200 SystemOne(Trademark) Washers a month at
its manufacturing facility. The Company has secured third parties capable of
manufacturing the balance of the SystemOne(Trademark) Washers needed to meet
anticipated customer demand for the next 12 months. The Company intends to
secure additional manufacturing capacity as the need arises.
On May 7, 1996, the Company entered into an agreement (the "Supply
Agreement") with a supplier (the "Supplier") pursuant to which the Supplier
agreed to supply to the Company, at the Company's election, between 3,000 and
5,000 SystemOne(Trademark) Washers at established prices and in accordance with
a delivery schedule. The Supply Agreement delivery schedule provides for the
monthly delivery of a minimum of 100, 200, 300 and 400 SystemOne(Trademark)
Washers in the quarters commencing August 1996, November 1996, February 1997 and
May 1997, respectively, and for the monthly delivery of a maximum of 500
SystemOne(Trademark) Washers after December 1996. The Supply Agreement provides
for adjustments in the established pricing
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schedule based upon certain reductions in the cost of production and/or
increases in the cost of sheet metal.
The Company has ordered a prototype SystemOne(Trademark) Washer
manufactured by the Supplier and has paid the first of three $50,000 payments
toward a $150,000 advance (the "Advance"), which amount will be credited against
future purchases under the Supply Agreement at a rate of $50 per
SystemOne(Trademark) Washer. The Supply Agreement provides that the Supplier
will, based upon the Company's specifications and drawings, manufacture the
SystemOne(Trademark) Washers in its factory and manufacture such items
exclusively for the Company. According to the Supply Agreement, the Supplier is
expressly responsible for all sheet metal fabrication, painting, assembling and
quality assurance testing associated with the manufacture of
SystemOne(Trademark) Washers.
The Supply Agreement requires the Company to provide the Supplier with
all of the components and raw materials, except for sheet metal, necessary to
manufacture SystemOne(Trademark) Washers. In addition, the Supply Agreement
requires the Company to acquire and provide to the Supplier for use all of the
hard tooling required to manufacture the SystemOne(Trademark) Washers.
The Supply Agreement provides that the Company may unilaterally
terminate the contract in whole or in part for cause or for convenience. In the
event the Supply Agreement is terminated by the Company for convenience, the
Supplier will be entitled to reimbursement of the costs it has incurred through
the date of termination and, if such termination occurs prior to the delivery of
3,000 SystemOne(Trademark) Washers, the Supplier will be entitled to payment for
SystemOne(Trademark) Washers produced through the date of termination and retain
any unapplied amount of the Advance.
The Company has retained the right to secure other contract
manufacturers of SystemOne(Trademark) Washers. Although, at present, the Company
seeks to avoid the transaction and opportunity costs associated with
identifying, securing and training another SystemOne(Trademark) Washer
manufacturer, the Company does not believe that it is dependent upon the
Supplier to manufacture SystemOne(Trademark) Washers and that other
manufacturers are readily available. The Company has entered into negotiations
with a major contract manufacturer with a 2 million square foot facility and 75
years of experience to provide the manufacturing capacity needed to meet
anticipated future customer demand. No assurances can be given that the Company
and the major contract manufacturers will ever enter into a binding contract.
The SystemOne(Trademark) Washer is an assembly of raw materials and
components all of which the Company believes are readily obtainable in the
United States of America. The Company does not believe that it nor the Supplier
is dependent upon any of their respective current suppliers to obtain the raw
materials and components necessary to assemble and manufacture
SystemOne(Trademark) Washers.
The Company is capable of manufacturing its other products in the
amounts required for testing and test marketing in its own manufacturing
facility.
MARKETING AND SERVICING STRATEGY
In order to create awareness of its products and test the demand for
them, commencing in December 1995, the Company placed an aggregate of 47
SystemOne(Trademark) Washers in 38 automotive dealerships, municipal and private
fleet maintenance facilities, repair facilities and other users of parts
cleaning equipment in South Florida. The demonstrator units were provided at no
charge. The test program was conducted primarily to enable the Company to gauge
the demand for its products. Notwithstanding the absence of a formal marketing
program during the test period, the Company has, to date, received orders from a
number of facilities in which the machines were placed, including Florida
Detroit Diesel MTU (46 Units); Kelly Tractor Company (23 units) and Pantropic
Power Products (25 units), the South Florida Caterpillar dealers; United States
Postal Service (2 units); Southern Sanitation, a subsidiary of Waste Management,
Inc. (5 units); Broward County Mass Transit (25 units); and a number of South
Florida
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automobile dealerships (an aggregate of 54 units). The Company commenced
commercial sales and delivery of units in July 1996 at an approximate price per
unit of $2,700.
In a parallel marketing strategy, to test the viability of the
strategic marketing alliance concept for its products, in August 1996 the
Company will commence a pilot program with First Recovery and Valvoline Oil
Company, two affiliates of Ashland Oil, pursuant to which First Recovery will
serve as the exclusive distributor for the SystemOne(Trademark) Washer in the
Dallas/Ft. Worth and Houston markets. The program, whose initial term is one
year, but is cancelable by either party on 60 days notice, sets forth a schedule
for the purchase of 1,000 units by First Recovery during the first year. First
Recovery is obligated to provide routine service to customers. Upon termination
of the program, First Recovery will have the option to require the Company to
assume the leases it has entered into with its customers and to pay First
Recovery, on a discounted basis, the profit it would have realized under such
leases. If First Recovery does not exercise that option, it will have the
additional option, for one year after termination of the program, to lease up to
four times the number of units it leased under the program, but only to its
existing customers. Subject to its assessment of First Recovery's performance,
the Company will consider entering into a more extensive distribution agreement.
The Company also intends to expand the geographic scope of its
operations through its internal marketing operations, initially focusing on
Florida and then expanding to other regions. In addition to its sales and
service operations in Miami, the Company intends to establish sales, service and
technical support service centers in Orlando, Tampa, Jacksonville and West Palm
Beach, Florida during 1996 to support its proposed operations in Florida. The
Company will market and service the SystemOne(Trademark) Washers it places with
customers with its own marketing, service and technical support personnel. The
Company believes it will retain at least 15 marketing, service and technical
support personnel to support its proposed operations in Florida over the next 12
months.
The Company intends to continue to generate consumer awareness of its
SystemOne(Trademark) Washer through the efforts of its sales force, general
advertisements in trade publications, and participation in trade conventions.
SALES FINANCING AND SERVICING PROGRAMS
Initially, the Company intends to make its SystemOne(Trademark) Washers
available to the public through a third party leasing program. The Company
entered into an agreement (the "Product Financing Agreement") with Oakmont
Financial Services ("Oakmont") on May 28, 1996 pursuant to which Oakmont agreed
to provide third party leasing services. Pursuant to the Product Financing
Agreement, the Company is to provide Oakmont certain information with respect to
each proposed customer for which a third party lease is sought, including credit
information with respect to each proposed lessee. Oakmont may reject a lease
application if, in its sole discretion, the proposed transaction does not comply
with Oakmont's then applicable criteria. If Oakmont elects to provide lease
financing, Oakmont will purchase the SystemOne(Trademark) Washer in the manner
and for an amount agreed to by the Company and Oakmont from time to time, upon
Oakmont's receipt of required documentation.
The Product Financing Agreement provides that, upon the customer's
satisfaction of all of its lease payment obligations to Oakmont, the Company
may, at its option, repurchase the subject equipment from Oakmont at a cash
purchase price equal to the fair market value of the subject equipment plus
applicable sales tax. The Product Financing Agreement states that the fair
market value of a SystemOne(Trademark) Washer shall be determined by the mutual
agreement of the Company and Oakmont or, if such an agreement is not reached, by
an appraiser selected by mutual agreement of the Company and Oakmont.
Under the Product Financing Agreement, the Company has agreed, for a
fee, to utilize a reasonable and non-discriminatory approach to assist Oakmont
in reselling any SystemOne(Trademark) Washers with respect to which a customer
has failed to discharge its payment obligations to Oakmont. The Product
Financing Agreement states that Oakmont does not have recourse against the
Company for customer failures to
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discharge their obligations to Oakmont unless the Company has breached and
failed to cure certain warranties. In such event, the Product Financing
Agreement requires the Company to purchase from Oakmont the SystemOne(Trademark)
Washer and Oakmont's rights under the financing agreements with the customer for
an amount equal to the sum of all lease payments then due and owing under the
lease, all lease payments payable from the date of default to the end of the
lease term and twenty percent of the equipment cost, less any applicable deposit
which may be retained by Oakmont. Where required by applicable law, the
foregoing amounts are required to be calculated using the discounted present
value of the subject lease payments.
The Product Financing Agreement provides for a term of one year, which
automatically renews for successive one-year terms. Under the Product Financing
Agreement, either the Company or Oakmont may terminate the agreement with or
without cause upon 60 days notice, without affecting the rights and obligations
of either party with respect to previous sales. In addition, if Oakmont declines
any five lease applications within a 30-day period, which lease applications are
accepted and funded by a third party on terms declined by Oakmont, the Company
may, upon 10 days notice, terminate the Product Financing Agreement.
PATENTS, TRADEMARKS AND PROPRIETARY TECHNOLOGY
The Company holds United States patents relating to its
SystemOne(Trademark) Washer, Power Spray Washer, Spray Gun Washer and Immersion
Washer and anticipates that it will apply for additional patents it deems
appropriate. The Company has applied for international patents in Canada, Japan,
Europe and Mexico.
The Company's patent with respect to its SystemOne(Trademark) Washer
was issued on September 27, 1994 and will expire on September 26, 2011. The
Company has three patents pending with respect to its SystemOne(Trademark)
Washer, one of which was allowed by the U.S. Patent Office on April 2, 1996 and
is awaiting issuance. The Company's patent with respect to its Power Spray
Washer was issued on January 11, 1994, and expires on January 10, 2011. The
Company's patent with respect to its Spray Gun Washer was issued on February 14,
1995, and expires on February 13, 2012. The Company's patent with respect to its
Immersion Washer was issued on May 21, 1996 and expires on May 20, 2013. The
Company's patent with respect to its MiniDisposer was allowed by the U.S. Patent
Office on June 26, 1996 and is awaiting issuance.
The Company believes that patent protection is important to its
business. There can be no assurance as to the breadth or degree of protection
which existing or future patents, if any, may afford the Company, that any
patent applications will result in issued patents, that patents will not be
circumvented or invalidated or that the Company's competitors will not commence
marketing self-contained washers with similar technology. It is possible that
the Company's existing patent rights may not be valid although the Company
believes that its patents and products do not and will not infringe patents or
violate proprietary rights of others. It is possible that infringement of
existing or future patents or proprietary rights of others may occur. In the
event the Company's products or processes infringe patents or proprietary rights
of others, the Company may be required to modify the design of its products or
obtain a license. There can be no assurance that the Company will be able to do
so in a timely manner, upon acceptable terms and conditions or at all. The
failure to do any of the foregoing could have a material adverse effect upon the
Company. In addition, there can be no assurance that the Company will have the
financial or other resources necessary to enforce or defend a patent
infringement or proprietary rights violation actions. Moreover, if the Company's
product or processes infringes patents or proprietary rights of others, the
Company could, under certain circumstances, become the subject of an immediate
injunction and be liable for damages, which could have a material adverse effect
on the Company.
The Company has applied for a federal trademark with respect to the
mark "SystemOne" and design.
The Company also relies on trade secrets and proprietary know-how and
employs various methods to protect the concepts, ideas and documentation of its
proprietary information. However, such methods may not
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afford complete protection and there can be no assurance that others will not
independently develop such know-how or obtain access to the Company's know-how,
concepts, ideas and documentation. Although the Company has and expects to have
confidentiality agreements with its employees, suppliers and appropriate
vendors, there can be no assurance that such arrangements will adequately
protect the Company's trade secrets. Since the Company believes that its
proprietary information is important to its business, failure to protect such
information could have a material adverse effect on the Company.
RESEARCH AND DEVELOPMENT
During the years ended December 31, 1994 and 1995 and the six months
ended June 30, 1996, the Company expended $178,146, $393,874 and $365,435,
respectively, on research and development of its various products.
The Company plans to continue to focus significant resources on
research and development of existing and future product lines. Although the
Company intends to continue to seek means of refining and improving its
SystemOne(Trademark) Washer, the Company believes, based on market response,
that the SystemOne(Trademark) Washer is at a stage where commercial exploitation
is appropriate. The Company recognizes that the industrial parts cleaning
industry may be entering a phase of rapid technological change and progress and
the Company will seek to retain what the Company perceives as its technological
superiority over its competitors' products. In order to keep pace with the rate
of technological change, the Company intends to devote considerable resources in
time, personnel and funds on continued research and development for its
products. The Company recognizes that many of its competitors have far greater
financial and personnel resources than the Company which may be devoted to
research and development and can provide no assurance that it will maintain a
technological advantage.
Subject to the availability of financial and personnel resources, the
Company intends to spend approximately $400,000 and $500,000 in the years ended
December 31, 1996 and 1997, respectively, to finalize development and testing of
its various products and to develop new products and concepts. Although there
can be no assurance that the Company will ever develop any new products capable
of commercialization, the Company intends to continue its programs to develop
new products, some of which may utilize the Company's patented products and
processes.
PRODUCT LIABILITY AND INSURANCE
The Company is subject to potential product liability risks which are
inherent in the design and use of industrial parts cleaning machines. The
Company has implemented strict quality control measures and currently maintains
product liability insurance of $5,000,000 in the aggregate and $5,000,000 per
occurrence.
PROPERTIES
The Company maintains its corporate headquarters, research and
development laboratory and manufacturing facilities in a 10,000 square foot
building located in Miami, Florida 33156, under a two year lease which commenced
on January 1, 1995. The lease provides for two renewal terms of two years. The
Company's annual lease payment approximates $61,000, which amount does not
include the Company's responsibility to pay all charges for gas, water, sewer,
trash collection and electrical services. The Company intends to seek additional
space, either at its current location or elsewhere, to house expanded corporate
headquarters and research and development facilities. The Company anticipates no
significant difficulty in locating such space or reasonable terms. The Company
does not anticipate that it will experience difficulty in locating and equipping
its regional sales and service centers, which are expected to contain a small
office space/showroom area and enough space for two or three delivery and
maintenance vehicles.
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LEGAL PROCEEDINGS
The Company is not involved in any litigation.
EMPLOYEES
As of the date of this Prospectus, the Company employed 15 employees,
of whom four were in corporate management, three were in research and
development, two were in sales and marketing, four were in manufacturing, and
two were in administration. The Company intends to hire additional employees
after this offering, commensurate with the Company's requirements and available
funds, primarily to expand manufacturing and marketing operations.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the
executive officers and directors of the Company.
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
Pierre G. Mansur 44 Chairman of the Board and President
Paul I. Mansur 45 Director, Chief Executive Officer and
Chief Financial Officer
Charles W. Profilet 59 Vice President-Business Development
Lydia G. Hubbell 31 Controller
Elias F. Mansur 53 Director
Dr. Jan Hedberg 49 Director
Joseph E. Jack 68 Director
- -------------------
PIERRE G. MANSUR founded the Company and has served as its Chairman and
President since its inception in November 1990. From June 1973 to August 1990,
Mr. Pierre Mansur served as President of Mansur Industries Inc., a privately
held New York corporation that operated a professional race engine machine shop.
Mr. Pierre Mansur has over twenty years of advanced automotive and machinery
operations experience including developing innovative automotive machine shop
applications; designing, manufacturing, customizing, modifying and retooling
high performance engines and component parts; developing state of the art
automotive and powerboat race engines which have consistently achieved world
championship status; and providing consulting services and publishing articles
with respect to automotive technical research data. Mr. Pierre Mansur has
conducted extensive research and development projects for several companies,
including testing and evaluating engine parts and equipment for Direct
Connection, a high performance racing division of the Chrysler Corporation;
researching and developing specialized engine piston rings and codings for Seal
Power Corporation; researching high-tech plastic polymers for internal
combustion engines for ICI Americas; and designing and developing specialized
high performance engine oil pan applications. Mr. Pierre Mansur is the brother
of Paul I. Mansur and a cousin of Elias F. Mansur. Mr. Pierre Mansur is a
graduate of the City University of New York.
PAUL I. MANSUR has been Chief Executive Officer, Chief Financial
Officer and a Director since September 1993. From September 1986 to July 1993,
Mr. Paul Mansur served as Chief Executive Officer of Atlantic Entertainment
Inc., a privately held regional retail chain of video superstores. From March
1981 to September 1986, Mr. Paul Mansur served as the Chief Executive Officer
and President of Ameritrade Corporation, a privately held international
distributor of factory direct duty free products. From June 1972 to March 1981,
Mr. Paul Mansur held various finance and operation positions, including
Assistant Vice President Finance and Operations for Mott's USA, Inc., a division
of American Brands. Mr. Paul Mansur is the brother of Pierre G. Mansur and a
cousin of Elias F. Mansur. Mr. Paul Mansur is a graduate of the City University
of New York.
CHARLES W. PROFILET has been the Vice President - Business Development
of the Company since November 1995. From July 1992 to September 1995, Mr.
Profilet served as Vice President - Florida Operations for Rust Environment and
Infrastructure, Inc., a privately held environmental remediation company that is
controlled by WMX Technologies, a publicly traded waste collection and recycling
company traded on the New York Stock Exchange. From March 1991 to July 1992, Mr.
Profilet served as Vice President-Marketing at Metcalf and Eddy, a full-service
engineering and environmental consulting firm specializing in the treatment of
waste water, air quality assurance, emissions control and remedial design. From
July 1987 to February 1990, Mr. Profilet served as Executive Vice President and
Chief Operating Officer at Craig A. Smith and Associates, a privately-held civil
engineering firm. From August 1979 to September
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1985, Mr. Profilet served as Vice President- Business Development at Reynolds
Smith and Hills, a privately-held architectural and engineering planning firm.
Mr. Profilet is a graduate of the U.S. Military Academy at West Point and holds
a Master of Engineering degree from the University of Oklahoma.
LYDIA G. HUBBELL, C.P.A. has been the Controller of the Company since
April 1995. From August 1994 until March 1995, Ms. Hubbell served as an internal
auditor for American Savings of Florida, F.S.B. From September 1992 to August
1994, Ms. Hubbell worked with KPMG Peat Marwick LLP during which period she
became the senior accountant with respect to the Company's audits. Ms. Hubbell
is a graduate of the University of Florida and holds a Master of Accounting
degree from the University of Florida.
ELIAS F. MANSUR has been a Director of the Company since August 1995.
From September 1968 to present, Mr. Elias Mansur served as Managing Director of
the Mansur Trading Company and its subsidiaries, an international, diversified
group of companies involved in banking, international trade, manufacturing, real
estate and hotel operations. From June 1975 to March 1981, Mr. Elias Mansur
served as Chairman of the Board of the Central Bank of the Netherlands Antilles.
From September 1984 to December 1985, Mr. Elias Mansur served as Minister of
Economic Affairs of the Netherlands Antilles. From October 1977 to September
1984, Mr. Elias Mansur served as the Chief Economic Advisor, Minister of
Economic Affairs and Chairman of the Council of Economic Advisors to the
government of Aruba. Mr. Elias Mansur is a cousin of Mr. Pierre Mansur and Mr.
Paul I. Mansur.
DR. JAN HEDBERG has been a Director of the Company since August 1995.
From October 1987 to March 1993, Dr. Hedberg was the Chairman and Chief
Executive Officer of Enprotec International Group, N.V., a company he co-founded
and in the business of researching and developing of advanced waste oil
recycling technologies. Since March 1993, Dr. Hedberg has been the Chairman of
the Board and Chief Executive Officer of Enprotec (USA) Inc., a wholly owned
subsidiary of Enprotec International Group, N.V., which manufactures, designs
and assembles oil re-refining plants. Dr. Hedberg was the co-recipient of the
1991 International Technology Award for Enterprising Innovation and Creativity
for the development of the Vaxon Re-refining Process, which is a proprietary
process that transforms used oil into useable oil products. Dr. Hedberg has over
15 years of experience in oil related and environmental companies and 12 years
of research and teaching experience, including executive management and advisory
positions, with several multinational organizations. Dr. Hedberg received his
Doctor of Philosophy (PhD) in Geotechnical Engineering from the Massachusetts
Institute of Technology, Cambridge, Massachusetts in 1977.
JOSEPH E. JACK has been a Director of the Company since August 1995.
From May 1989 to June 1991, Mr. Jack served as Vice President of Waste
Management Europe, a waste collection and recycling company that is a publicly
traded company on the London Stock Exchange and a controlled subsidiary of WMX
Technologies, a publicly traded New York Stock Exchange company. From April 1984
to December 1987, Mr. Jack was President of Waste Management Inc. of Florida, a
waste collection and recycling company that is an affiliate of Waste Management,
Inc.. From July 1983 to March 1984, Mr. Jack served as Vice President of Waste
Management Partners, a division of Waste Management, Inc. From February 1982 to
July 1983, Mr. Jack served as Vice President of Waste Management International,
a subsidiary of Waste Management, Inc. From April 1980 to February 1982, Mr.
Jack was Vice President of Waste Management International (Middle East), a
subsidiary of Waste Management, Inc., and from May 1978 to April 1980, Mr. Jack
was the Resident Manager of Waste Management Saudi Arabia, a joint venture
involving an affiliate of Waste Management, Inc. Under Mr. Jack's leadership,
Waste Management experienced unprecedented growth in several markets worldwide
including Waste Management Europe's growth of revenues from $10 million to $700
million in a three year period. Mr. Jack's significant accomplishments in the
waste management field were acknowledged when he was inducted by the National
Waste Management Association into the United States Waste Industry's "Hall of
Fame". Mr. Jack has been an active investor in companies since he retired in
June 1991.
The Company has agreed that, for five years after the effective date of
this Prospectus, the Representative will have the right to designate one
individual to be elected to the Company's Board of Directors.
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EXECUTIVE COMPENSATION
The following table sets forth compensation paid or payable in respect
of the three years ended December 31, 1995 to the Company's Chief Executive
Officer and its other executive officer whose combined salaries and bonuses
equalled or exceeded $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------------------------- -----------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) COMPENSATION
- ----------------------------------- ------------ ---------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Mr. Pierre G. Mansur, Chairman and 1995 $66,000 $267,460(1) $6,605(2) $0
President 1994 $66,000 $0 $ 550(2) $0
1993 $22,000 $0 $0 $0
Mr. Paul I. Mansur, Chief Executive 1995 $48,000 $0 $2,550(2) $0
Officer 1994 $48,000 $0 $0 $0
1993 $5,000 $0 $0 $0
<FN>
- ------------------
(1) Represents incentive compensation earned by Pierre G. Mansur, $88,110 of which has been paid and the remainder of
which has been accrued.
(2) Automobile allowance paid by the Company.
</FN>
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
In September 1993, the Company entered into a two year employment
agreement with Mr. Pierre Mansur, which provides for an annual base salary of
$66,000 and discretionary bonuses, based on Mr. Pierre Mansur's performance, as
determined by the Compensation Committee of the Board of Directors. Pursuant to
the terms of his employment contract, Mr. Mansur's employment was renewed in
September 1995 by the Company for an additional two years. Pursuant to the
employment agreement, during the term of Mr. Pierre Mansur's employment and for
a period of three years following his termination of employment, Mr. Pierre
Mansur is prohibited from disclosing any confidential information, including
without limitation, information regarding the Company's patents, research and
development, manufacturing process or knowledge or information with respect to
confidential trade secrets of the Company. In addition, the employment agreement
provides that Mr. Pierre Mansur is prohibited from, directly or indirectly,
engaging in any business in substantial competition with the Company or its
affiliates. The employment agreement also provides that Mr. Pierre Mansur is
prohibited from becoming an officer, director or employee of any corporation,
partnership or any other business in substantial competition with the Company or
its affiliates during the term of his employment and for three years thereafter.
In September 1995, the Company entered into a two year employment
agreement with Mr. Paul Mansur, which provides for an annual base salary of
$48,000 and discretionary bonuses, based on Mr. Paul Mansur's performance, as
determined by the Compensation Committee of the Board of Directors. Pursuant to
the employment agreement, during the term of Mr. Paul Mansur's employment and
for a period of three years following his termination of employment, Mr. Paul
Mansur is prohibited from disclosing any confidential information, including
without limitation, information regarding the Company's patents, research and
development, manufacturing process or knowledge or information with respect to
confidential trade secrets of the Company. In addition, the employment agreement
provides that Mr. Paul Mansur is prohibited from, directly or indirectly,
engaging in any business in substantial competition with the Company or its
affiliates. The employment agreement also provides that Mr. Paul Mansur is
prohibited from becoming an officer, director or employee of any corporation,
partnership or any other business in substantial competition with the Company or
its affiliates during the term of his employment and for three years thereafter.
- 33 -
<PAGE>
In November 1995, the Company entered into a one year employment
agreement with Charles W. Profilet. Under the employment agreement, Mr. Profilet
is entitled to an annual base salary of $80,000, a car allowance of $400 a month
and monthly commissions, ranging from $5 per unit for parts washers to $25 per
unit for jet washers, with respect to each new washer sold by the Company in the
United States. The commissions earned by Mr. Profilet may be converted, at his
option, into Common Stock at a discount on the then current trading price of the
Common Stock. The conversion discount was 10% as of the date of this Prospectus,
but, may be adjusted at the election of the Board of Directors of the Company.
As of the date of this Prospectus, Mr. Profilet had earned an aggregate of
$12,250 of commissions. The employment agreement provides that Mr. Profilet is
eligible to participate in the Company's discretionary executive profit sharing
awards and executive stock award or stock option awards. Pursuant to the
employment agreement, if Mr. Profilet is terminated for cause, defined as an act
of dishonesty, malfeasance, or other impropriety, he is not entitled to receive
any severance payment. If Mr. Profilet is terminated without cause within his
first year of employment, he is entitled to receive his current salary for six
months or until he secures new employment, whichever occurs first. In addition
to the employment agreement, the Company and Mr. Profilet entered into a
Non-Circumvention and Non-Disclosure Agreement.
INCENTIVE COMPENSATION PLAN
The Company's 1996 Executive Incentive Compensation Plan (the
"Incentive Plan") provides for grants of stock options, stock appreciation
rights ("SARS"), restricted stock, deferred stock, other stock related awards
and performance or annual incentive awards that may be settled in cash, stock or
other property (collectively, "Awards"). The total number of shares of Common
Stock that may be subject to the granting of Awards under the Incentive Plan at
any time during the term of the Plan shall be 375,000. The Employee Plan is
designed to serve as an incentive for retaining qualified and competent
employees, directors, consultants and independent contractors of the Company.
The persons eligible to receive Awards under the Incentive Plan are the
officers, directors, employees and independent contractors of the Company, if
any, and its subsidiaries. No director of the Company who is not an employee of
the Company or any subsidiary (a "non-employee director") will be eligible to
receive any Awards under the Incentive Plan other than automatic formula grants
of stock options and restricted stock as described below, and no independent
contractor will be eligible to receive any Awards other than stock options.
The Incentive Plan is required to be administered by a committee
designated by the Board of Directors consisting of not less than two directors
(the "Committee"), each member of which must be a "disinterested person" as
defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended,
and an "outside director" for purposes of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Compensation Committee of the Board
has been appointed as the Committee for the Incentive Plan. Subject to the terms
of the Incentive Plan, the Committee is authorized to select eligible persons to
receive Awards, determine the type and number of Awards to be granted and the
number of shares of Common Stock to which Awards will relate, specify times at
which Awards will be exercisable or settleable (including performance conditions
that may be required as a condition thereof), set other terms and conditions of
Awards, prescribe forms of Award agreements, interpret and specify rules and
regulations relating to the Incentive Plan, and make any other determinations
that may be necessary or advisable for the administration of the Incentive Plan.
In addition, the Incentive Plan imposes individual limitations on the
amount of certain Awards in part to comply with Code Section 162(m). Under these
limitations, during any fiscal year the number of options, SARS, restricted
shares of Common Stock, deferred shares of Common Stock, shares as a bonus or in
lieu of other Company obligations, and other stock-based Awards granted to any
one participant may not exceed 250,000 for each type of such Award, subject to
adjustment in certain circumstances. The maximum amount that may be paid out as
a final annual incentive Award or other cash Award in any fiscal year to any one
participant is $1,000,000, and the maximum amount that may be earned as a final
performance Award or other cash Award in respect of a performance period by any
one participant is $5,000,000.
- 34 -
<PAGE>
The Incentive Plan provides that each non-employee director shall
automatically receive (i) on the date of his or her appointment as a director of
the Company, an option to purchase 2,500 shares of Common Stock, and (ii) each
year, on the day the Company issues its earnings release for the prior fiscal
year, an option to purchase 2,500 shares of Common Stock. Such options will have
a term of 10 years and become exercisable at the rate of 33-1/3% per year
commencing on the first anniversary of the date of grant; provided, however,
that the options will become fully exercisable in the event that, while serving
as a director of the Company, the non-employee director dies, or suffers a
"disability," or "retires" (within the meaning of such terms as defined in the
Incentive Plan). The per share exercise price of all options granted to
non-employee directors will be equal to the fair market value of a share of
Common Stock on the date such option is granted.
The Company will agree with the Representative that for a 13-month
period immediately following the effective date of the Registration Statement of
which this Prospectus forms a part, the Company will not, without the consent of
the Representative, adopt or propose to adopt any plan or arrangement permitting
the grant, issue or sale of any shares of its Common Stock or issue, sell or
offer for sale any of its Common Stock, or grant any option for its Common Stock
which shall: (x) have an exercise price per share of Common Stock less than (a)
the initial public offering price of the Common Stock offered in this Prospectus
or (b) the fair market value of the Common Stock on the date of grant; or (y) be
granted to any direct or indirect beneficial holder of more than 10% of the
issued and outstanding Common Stock of the Company. No option or other right to
acquire Common Stock granted, issued or sold during the 13-month period
immediately following the effective date of the Registration Statement of which
this Prospectus forms a part shall permit (a) the payment with any form of
consideration other than cash, (b) the payment of less than the full purchase or
exercise price for such shares of Common Stock or other securities of the
Company on or before the date of issuance, or (c) the existence of stock
appreciation rights, phantom options or similar arrangements.
The Company has not granted any Award under the Incentive Plan.
COMPENSATION OF DIRECTORS
After this offering, the Company will pay each director who is not an
employee an annual retainer of $10,000. The Company will reimburse all directors
for all travel-related expenses incurred in connection with their attendance at
meetings of the Board of Directors. Directors will also be entitled to receive
options under the Incentive Plan. See "Incentive Compensation Plan."
Mr. Elias Mansur, Dr. Jan Hedberg and Mr. Joseph Jack were each granted
10,000 shares of the Company's Common Stock in April 1996 in exchange for
previously rendered consulting services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; AUDIT COMMITTEE
The Board of Directors currently administers and determines
compensation, including salary and bonus for the executive officers, directors
and other employees. The Company intends to establish an Audit Committee and a
Compensation Committee shortly after the closing of this offering. The
Compensation Committee will be responsible for setting and administering
policies that govern annual compensation of the Company's executive officers and
administering the 1996 Stock Option and Incentive Plan and the Directors' Plan.
The duties and responsibilities of the Audit Committee will include (i)
recommending to the full Board the appointment of the Company's auditors and any
termination of their appointment, (ii) reviewing the plan and scope of audits,
(iii) reviewing the Company's significant accounting policies and internal
controls, (iv) administering the Company's compliance programs, and (v) general
responsibility for all related auditing matters.
- 35 -
<PAGE>
CERTAIN TRANSACTIONS
COMMON STOCK OWNERSHIP
In connection with the organization of the Company in November 1990,
the Company issued 2,000,000 shares of Common Stock, par value $0.001 per share,
to Mr. Pierre Mansur in exchange for the assignment to the Company of certain
ongoing research and development and rights to any related patents and patents
pending and real estate and equipment valued at $52,000.
CONSULTING AGREEMENT AND SERVICES
In November 1994, the Company entered into a two-year consulting
agreement (the "Consulting Agreement") with Environmental Technologies BVI
Limited (the "Consultant"). Pursuant to the Consulting Agreement, the Consultant
agreed to advise, consult with, introduce to third parties and generally assist
the Company in its efforts to explore new manufacturing and marketing
arrangements. In exchange for such services, the Consulting Agreement provided
that the Consultant was entitled to receive certain fees in connection with the
sale of certain equipment, services, license rights, royalty rights,
manufacturing rights, marketing rights or the Company's entrance into a
partnership or joint venture arrangement or consummation of a merger. The
Consultant did not receive any commissions pursuant to the Consulting Agreement.
In December 1995, the Company issued the Consultant 10,000 shares of Common
Stock in exchange for the services rendered by the Consultant and to secure the
Consultant's agreement to terminate the Consulting Agreement and any and all
associated rights of the Consultant. Dr. Jan Hedberg, a director of the Company,
owns 50 percent and serves as the managing director of the Consultant.
Mr. Elias Mansur, Dr. Jan Hedberg and Mr. Joseph Jack were each granted
10,000 shares of the Company's Common Stock in April 1996 in exchange for
previously rendered consulting services.
NOTE PAYABLE TO CHIEF EXECUTIVE OFFICER
Pursuant to a revolving line of credit dated June 1, 1990, Mr. Paul
Mansur made a series of advances ranging from $5,000 to $30,000, totaling an
aggregate of $150,000 (the "Debt"), to the Company between June 1, 1990 and May
31, 1996. On December 31, 1994 and December 31, 1995, the Company paid Mr. Paul
Mansur $34,814 and $12,000, respectively, in satisfaction of interest owed with
respect to the Debt. On May 31, 1996, the Company paid Mr. Paul Mansur $150,000
and $5,000 in satisfaction of the outstanding principal balance of and the
interest owed with respect to the Debt.
CONVERTIBLE NOTES
In connection with its issuance of an aggregate of $1,012,500 in
principal amount of Convertible Notes in June 1996, the Company issued
promissory notes in the principal amount of $101,250 to each of Environmental
Technologies BVI Limited, a consulting firm of which Dr. Jan Hedberg, a director
of the Company, is Managing Director, Mr. Joseph E. Jack, a director of the
Company, and Mr. Elias F. Mansur, a director of the Company. Upon consummation
of this offering, each of the Convertible Notes will be automatically converted
into 15,000 shares of the Company's Common Stock. Mr. Mansur, Mr. Jack and
Environmental Technologies BVI Limited acquired the Convertible Notes on the
same terms as other unaffiliated investors.
- 36 -
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning the
beneficial ownership of the Common Stock immediately prior to this offering, and
as adjusted to reflect the sale of shares offered hereby and in the Concurrent
Offering, by: (i) each person known by the Company to be the beneficial owner of
more than 5% of the Common Stock, (ii) each Director or nominee for Director of
the Company, (iii) each of the Named Executive Officers and (iv) all Directors
and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED
TO THIS OFFERING AFTER THIS OFFERING
------------------------------------ --------------------------------
NAME NUMBER PERCENTAGE NUMBER PERCENTAGE
- ----------------------------------------- ------------------ ---------------- ------------------ -----------
<S> <C> <C> <C> <C>
Mr. Pierre G. Mansur..................... 2,000,000 59.68% 2,000,000 46.01%
Mr. Paul I. Mansur....................... 0 * 0 *
Mr. Elias F. Mansur...................... 26,025 * 41,025(2) *
Dr. Jan Hedberg.......................... 20,000(1) * 35,000(1)(2) *
Mr. Joseph E. Jack....................... 22,820 * 37,820(2) *
Mr. Charles W. Profilet.................. 0 * 0 *
All Directors and Executive
Officers as a Group (6 persons)...... 2,068,845(3) 61.64% 2,113,845(3) 48.6%
<FN>
- ----------------------
* Less than 1%
(1) Includes 10,000 shares of Common Stock held by Environmental Technologies
BVI Limited, of which Dr. Hedberg owns 50 percent and serves as the
Managing Director.
(2) Includes 15,000 shares of Common Stock issuable upon the conversion of a
Convertible Note in the principal amount of $101,250, which conversion
shall occur simultaneously with the consummation of this offering.
(3) See Notes (1) - (2).
</FN>
</TABLE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 25,000,000 shares of
Common Stock, $.001 par value per share, and 1,500,000 shares of Preferred
Stock, $1.00 par value per share. As of the date of this Prospectus, 3,351,309
shares of Common Stock and 0 shares of Preferred Stock are outstanding.
COMMON STOCK
Each outstanding share of Common Stock is entitled to one vote on all
matters submitted to a vote of shareholders. Subject to the restrictions
summarized below, dividends may be paid to the holders of Common Stock when and
if declared by the Board of Directors out of funds legally available for
dividends. See "Dividend Policy."
Holders of Common Stock have no conversion, redemption, or preemptive
rights. All outstanding shares of Common Stock are fully paid and nonassessable.
In the event of any liquidation, dissolution or winding up of the affairs of the
Company, the holders of Common Stock will be entitled to share ratably in its
assets remaining after provision for payment of creditors and holders of
Preferred Stock. See "Dividend Policy."
- 37 -
<PAGE>
PREFERRED STOCK
The Company is authorized to issue Preferred Stock with such
designations, rights and preferences as may be determined from time to time by
the Board of Directors. Accordingly, the Board of Directors is empowered,
without shareholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could adversely affect the
value or market price of the Common Stock and voting power or other rights of
the holders of Common Stock. In the event of issuance, the Preferred Stock could
be utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company.
ANTI-TAKEOVER PROVISIONS OF FLORIDA LAW
Florida has enacted legislation that may deter or frustrate takeovers
of Florida corporations. The "Control Share Acquisitions" section of the Florida
Business Corporation Act ("FBCA") generally provides that shares acquired in
excess of certain specified thresholds, beginning at 20% of the Company's
outstanding voting shares, will not possess any voting rights unless such voting
rights are approved by a majority vote of a corporation's disinterested
shareholders. The "Affiliated Transactions" section of the FBCA generally
requires majority approval by disinterested directors or supermajority approval
of disinterested shareholders of certain specified transactions (such as a
merger, consolidation, sale of assets, issuance of transfer of shares or
reclassifications of securities) between a corporation and a holder of more than
10% of the outstanding voting shares of the corporation, or any affiliate of
such shareholder.
The directors of the Company are subject to the "general standards for
directors" provisions set forth in the FBCA. These provisions provide that in
discharging his or her duties and determining what is in the best interests of
the Company, a director may consider such factors as the director deems
relevant, including the long-term prospects and interests of the Company and its
shareholders and the social, economic, legal or other effects of any proposed
action on the employees, suppliers or customers of the Company, the community in
which the Company operates and the economy in general. Consequently, in
connection with any proposed action, the Board of Directors is empowered to
consider interests of other constituencies in addition to the Company's
shareholders, and directors who take into account these other factors may make
decisions which are less beneficial to some, or a majority, of the shareholders
than if the law did not permit consideration of such other factors.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The authorized but unissued shares of Common Stock and Preferred Stock
are available for future issuance without shareholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans.
The existence of authorized but unissued and unreserved Common Stock
and Preferred Stock may enable the Board of Directors to issue shares to persons
friendly to current management which could render more difficult or discourage
an attempt to obtain control of the Company by means of a proxy contest, tender
offer, merger, or otherwise, and thereby protect the continuity of the Company's
management.
LIMITED LIABILITY AND INDEMNIFICATION
Under the FBCA, a director is not personally liable for monetary
damages to the corporation or any other person for any statement, vote,
decision, or failure to fact unless (i) the director breached or failed to
perform his duties as a director and (ii) a director's beach of, or failure to
perform, those duties constitutes (1) a violation of the criminal law, unless
the director had reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful, (2) a transaction from
which the director
- 38 -
<PAGE>
derived an improper personal benefit, either directly or indirectly, (3) a
circumstance under which an unlawful distribution is made, (4) in a proceeding
by or in the right of the corporation or procure a judgment in its favor or by
or in the right of a shareholder, conscious disregard for the best interest of
the corporation or willful misconduct, or (5) in a proceeding by or in the right
of someone other than the corporation or a shareholder, recklessness or an act
or omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety, or
property. A corporation may purchase and maintain insurance on behalf of any
director or officer against any liability asserted against him and incurred by
him in his capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the FBCA.
The Articles and Bylaws of the Company provide that the Company shall,
to the fullest extent permitted by applicable law, as amended from time to time,
indemnify all directors of the Company, as well as any officers or employees of
the Company to whom the Company has agreed to grant indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Continental
Stock Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Upon the consummation of this offering, the Company anticipates that it
will have 4,351,309 shares of Common Stock outstanding. The 1,000,000 shares
will be freely tradeable without restriction or further registration under the
Securities Act, except for any shares purchased by an "affiliate" of the Company
(in general, a person who has a control relationship with the Company) which
will be subject to the limitations of Rule 144 adopted under the Securities Act.
All of the remaining 3,351,309 shares are deemed to be "restricted securities,"
as that term is defined under Rule 144 promulgated under the Securities Act, in
that such shares were issued and sold by the Company in private transactions not
involving a public offering. Of such remaining shares, 2,656,729 will become
eligible for sale under Rule 144 90 days from the date of this Prospectus and
the remainder will become eligible for such sale at various times prior to June
1998.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are aggregated), who has owned
restricted shares of Common Stock beneficially for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of one percent of the total number of outstanding shares
of the same class or the average weekly trading volume during the four calendar
weeks preceding the sale. A person who has not been an affiliate of the Company
for at least the three months immediately preceding the sale and who has
beneficially owned shares of Common Stock for at least three years is entitled
to sell such shares under Rule 144 without regard to any of the limitations
described above.
- 39 -
<PAGE>
All of the Company's officers, directors and shareholders have agreed
not to sell or otherwise dispose of any of their shares of Common Stock for a
period of 13 months from the date of this Prospectus without the prior written
consent of the Representative.
Prior to this offering, there has been no market for the Common Stock
and no prediction can be made as to the effect, if any, that market sales of
shares of Common Stock or the availability of such shares for sale will have on
the market prices prevailing from time to time. Nevertheless, the possibility
that substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities. See "Description of Securities" for information concerning
outstanding warrants and convertible securities.
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby are issuable by the Company
upon conversion of $1,012,500 in principal amount of Convertible Notes at a
conversion price of $6.75 per share. As a result of the conversion of the
Convertible Notes and the issuance of shares of Common Stock hereby, $1,012,500
of the Company's indebtedness will be extinguished. The Company utilized the
proceeds of the private financing pursuant to which the Convertible Notes were
issued to finance the Concurrent Offering and for general corporate purposes.
The Company will receive none of the proceeds of the sale of shares of Common
Stock issued hereby by the holders thereof. The Company will bear all of the
expenses of the offering, and will pay the Representative commissions and fees
in an aggregate amount of $131,625 in connection with services provided in
connection with the Convertible Notes.
As of the date of this Prospectus, First Malro, Inc., Said Mouawad,
Enrivonmental Technologies BVI Limited, Mr. Joseph E. Jack and Mr. Elias F.
Mansur held $657,000, $33,750, $101,250, $101,250 and $101,250 in principal
amount of the Convertible Notes, respectively. As of the date of this Prospectus
and upon consummation of this offering and the Concurrent Offering, none of the
holders of the Convertible Notes will beneficially own more than 5% of the
Common Stock.
- 40 -
<PAGE>
UNDERWRITING OF THE CONCURRENT OFFERING
In connection with the Concurrent Offering, the Underwriters named
below (the "Underwriters"), for whom First Allied Securities, Inc. is acting as
Representative, have severally agreed, subject to the terms and conditions of
the Underwriting Agreement (the "Underwriting Agreement"), to purchase from the
Company and the Company has agreed to sell to the Underwriters on a firm
commitment basis the respective number of shares of Common Stock set forth
opposite their names:
UNDERWRITER NUMBER
- ----------- -------------
First Allied Securities, Inc.
-------------
Total................................... 850,000
=============
The Underwriters are committed to purchase all shares of Common Stock
offered in the Concurrent Offering if any of such shares are purchased. The
Underwriting Agreement provides that the obligations of the several Underwriters
are subject to conditions precedent specified therein.
The Company has been advised by the Representative that the
Underwriters propose to initially offer the Common Stock to the public for
$_______ and to certain dealers at such prices less concessions of not in excess
of $_______ per share of Common Stock. Such dealers may reallow a concession not
in excess of $_______ per share of Common Stock to other dealers. After the
commencement of the Concurrent Offering, the public offering prices, concessions
and reallowances may be changed by the Representative.
The Representative has advised the Company that it does not anticipate
sales to discretionary accounts by the Underwriters to exceed five percent of
the total number of shares of Common Stock offered in the Concurrent Offering.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act. The Company has
also agreed to pay to the Representative an expense allowance on a
nonaccountable basis equal to three percent (3%) of the gross proceeds derived
from the sale of the Common Stock underwritten, of which $50,000 has been paid
to date.
The Underwriters have been granted an option by the Company,
exercisable within forty-five (45) days after the date of this Prospectus, to
purchase up to an additional 127,500 shares of Common Stock at the initial
public offering price per share of Common Stock offered in the Concurrent
Offering, less underwriting discounts and the expense allowance. Such option may
be exercised only for the purpose of covering over-allotments, if any, incurred
in the sale of the shares offered in the Concurrent Offering. To the extent such
option is exercised in whole or in part, each Underwriter will have a firm
commitment, subject to certain conditions, to purchase the number of the
additional shares of Common Stock proportionate to its initial commitment.
All of the Company's officers and directors and all of the holders of
the Common Stock have agreed not to, directly or indirectly, sell, transfer,
hypothecate or otherwise encumber any of their shares for thirteen (13) months
following the date of this Prospectus without the prior written consent of the
Representative.
- 41 -
<PAGE>
The Company has agreed that, for five (5) years after the effective
date of this Prospectus, the Representative will have the right to designate one
individual to be elected to the Company's Board of Directors. Such individual
may be a director, officer, employee or affiliate of the Representative. In the
event the Representative elects not to designate a person to serve on the
Company's Board of Directors, the Representative may designate an observer to
attend meetings of the Board of Directors.
In connection with the Concurrent Offering, the Company has agreed to
sell to the Representative, for nominal consideration, the Representative's
Warrants to purchase from the Company 85,000 shares of Common Stock. The
Representative's Warrants are initially exercisable for shares of Common Stock
at a price of $__________ [120% of the initial public offering price per share
of Common Stock] per share of Common Stock for a period of four (4) years
commencing one (1) year from the date of this Prospectus and are restricted from
sale, transfer, assignment or hypothecation for a period of twelve (12) months
from the date hereof, except to officers and principals of the Representative.
The Representative's Warrants also provide for adjustment in the number of
shares of Common Stock issuable upon the exercise thereof as a result of certain
subdivisions and combinations of the Common Stock. The Representative's Warrants
grant to the holders thereof certain rights of registration for the securities
issuable upon exercise of the Representative's Warrants.
In connection with the Private Financing, the Representative is
entitled to receive a commission of $101,250 and a non-accountable expense
allowance of $30,375.
The Representative commenced operations in 1994 and does not have
extensive experience as an underwriter of public offerings of securities. The
Representative has acted as the managing underwriter for three public offerings.
The Representative is a relatively small firm and no assurance can be given that
the Representative will participate as a market maker in the Common Stock.
Prior to the Concurrent Offering, there has been no public market for
the Common Stock. Consequently, the initial public offering prices of the Common
Stock has been determined by negotiations between the Company and the
Representative and is not necessarily related to the Company's asset value, net
worth or other established criteria of value. The factors considered in such
negotiations included the history of and prospects for the industry in which the
Company competes, an assessment of the Company's management, the prospects of
the Company, its capital structure and certain other factors as were deemed
relevant.
The foregoing is a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
the Underwriting Agreement filed as an Exhibit to the Registration Statement of
which this Prospectus forms a part.
- 42 -
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
Miami, Florida. Orrick, Herrington & Sutcliffe, New York, New York, has acted as
counsel for the Underwriters in connection with the offering.
EXPERTS
The financial statements of the Company as of December 31, 1995 and
1994 and for the period from November 13, 1990 (inception) to December 31, 1991,
and each of the years in the four year period ended December 31, 1995 have been
included in this Prospectus and in the registration statement in reliance upon
the reports of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere in this Prospectus, and upon the authority of said firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement
under the Securities Act with respect to the Common Stock offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all the information set forth in the Registration Statement and in
the exhibits and schedules thereto. For further information about the Company
and the Common Stock, reference is made to the Registration Statement and to the
exhibits and schedules filed therewith. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement is qualified in its entirety by such reference. Copies of each
such document may be obtained from the Commission at its principal office at 450
Fifth Street, N.W., Washington, D.C., upon payment of the charges prescribed by
the Commission. Copies of each document may also be obtained through the
Commission's internet address at http://www.sec.gov.
- 43 -
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
<S> <C>
Report of Independent Accountants.................................................... F-2
Financial Statements
Balance Sheets at December 31, 1994 and 1995 and June 30, 1996 (unaudited)...... F-3
Statements of Operations for the period from November 13, 1990 (inception)
to December 31, 1991, and each of the years in the four year period ended
December 31, 1995 and for the six months ended June 30, 1995 (unaudited)
and 1996 (unaudited)............................................................ F-4
Statements of Stockholders' Deficit for the period from November 13, 1990
(inception) to December 31, 1991, and each of the years in the four year
period ended December 31, 1995 and for the six months ended June 30, 1996
(unaudited)..................................................................... F-5
Statements of Cash Flows for the period from November 13, 1990 (inception)
to December 31, 1991, and each of the years in the four year period ended
December 31, 1995 and for the six months ended June 30, 1995 (unaudited)
and 1996 (unaudited)............................................................ F-6
Notes to Financial Statements................................................... F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Mansur Industries Inc.:
We have audited the accompanying balance sheets of Mansur Industries Inc. (a
development stage company) as of December 31, 1994 and 1995, and the related
statements of operations, stockholders' (deficit) and cash flows for the period
from November 13, 1990 (inception) to December 31, 1991, each of the years in
the four-year period ended December 31, 1995, and the related statements of
operations, stockholders' (deficit) and cash flows for the period from November
13, 1990 (inception) to December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
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 provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mansur Industries Inc. as of
December 31, 1994 and 1995 and the results of its operations and its cash flows
for the period from November 13, 1990 (inception) to December 31, 1991, each of
the years in the four-year period ended December 31, 1995 and for the period
from November 13, 1990 (inception) to December 31, 1995, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Miami, Florida
January 19, 1996
F-2
<PAGE>
<TABLE>
<CAPTION>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS December 31, December 31, June 30,
1994 1995 1996
------------- ------------ -----------
(unaudited)
<S> <C> <C> <C>
Current assets:
Cash $ 20,766 916,383 640,592
Inventory 98,593 193,838 412,431
Other assets 85,810 18,290 176,425
---------- ---------- ----------
Total current assets 205,169 1,128,511 1,229,448
Mortgage note receivable 200,000 0 0
Property and equipment, net 351,773 324,431 308,810
Intangible assets, net 0 0 24,454
---------- ---------- ----------
551,773 324,431 333,264
Total Assets $ 756,942 1,452,942 1,562,712
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 6,007 219,478 382,878
Due to officers/ shareholders 250,000 250,000 0
Convertible notes payable 0 0 1,012,500
Interest payable 45,684 0 2,250
Current installments of long-term debt 43,637 45,846 48,786
---------- ---------- ----------
Total current liabilities 345,328 515,324 1,446,414
Long-term debt, excluding current installments 700,011 154,165 129,014
---------- ---------- ----------
Total liabilities 1,045,339 669,489 1,575,428
---------- ---------- ----------
Convertible redeemable preferred stock, $1 par value.
Authorized 1,500,000 shares, issued and
outstanding 580,000 and 490,000 in 1994
and 1995 respectively. 633,929 2,573,863 0
---------- ---------- ----------
Stockholders' (deficit):
Common stock, $0.001 par value. Authorized
25,000,000 shares, issued and outstanding
2,000,000; 2,673,129 and 3,351,309 shares
for 1994, 1995 and 1996 respectively 2,000 2,673 3,351
Additional paid-in capital (12,257) 438,131 3,560,948
Deficit accumulated during the development
stage (912,069) (2,231,214) (3,577,015)
---------- ---------- ----------
Total stockholders' (deficit) (922,326) (1,790,410) (12,716)
---------- ---------- ----------
Total liabilities and stockholders'
(deficit) $ 756,942 1,452,942 1,562,712
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
November 13, 1990 Year ended December 31, Six Months Ended November 13, 1990
(inception) through June 30, (inception)
December 31, ------------------------------------------ ----------------------- through
1991 1992 1993 1994 1995 1995 1996 June 30, 1996
------------------- ------- -------- -------- ---------- ----------- ----------- -----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating expenses:
General and
administrative $ 8,502 8,971 81,886 268,414 907,393 418,079 622,641 1,897,807
Research and
development 128,439 31,924 69,256 178,146 393,874 162,732 365,435 1,167,074
---------- --------- -------- --------- --------- --------- --------- ----------
Total operating
expenses 136,941 40,895 151,142 446,560 1,301,267 580,811 988,076 3,064,881
---------- --------- --------- --------- ---------- --------- --------- ----------
Loss from
operations (136,941) (40,895) (151,142) (446,560) (1,301,267) (580,811) (988,076) (3,064,881)
---------- --------- --------- --------- ---------- --------- --------- ----------
Interest expense - (16,299) (16,360) (46,312) (63,528) (38,259) (24,179) (166,678)
Conversion expense on
redeemable preferred
stock - - - - - - (344,631) (344,631)
Interest Income - - - - 45,650 11,797 11,085 56,735
Loss on disposal of
property and
equipment - (39,560) (18,000) - - - - (57,560)
---------- ---------- --------- --------- ---------- ---------- --------- ----------
Net loss (136,941) (96,754) (185,502) (492,872) (1,319,145) (607,273)(1,345,801) (3,577,015)
Dividends on
redeemable
preferred stock - - (8,328) (53,929) (222,067) (75,066) (147,000) (431,324)
---------- ---------- --------- --------- ---------- ---------- --------- ----------
Net loss to common
shares $ (136,941) (96,754) (193,830) (546,801) (1,541,212) (682,339)(1,492,801) (4,008,339)
========== ========== ========== ========= ========== ========== ========= ==========
Net loss per
common share $ (0.07) (0.05) (0.10) (0.27) (0.66) (0.34) (0.53)
========== ========== ========== ========= ========== ========== =========
Weighted average
shares
outstanding 2,000,000 2,000,000 2,000,000 2,000,000 2,335,140 2,000,000 2,799,071
========== ========== ========== ========= ========== ========== =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
November 13, 1990
(inception) through Year ended December 31,
December 31,
1991 1992 1993 1994 1995
------------------ -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Cash used in operating activities:
Net loss $ (136,941) (96,754) (185,502) (492,872) (1,319,145)
Adjustments to reconcile net loss
to cash used in operating activities:
Loss on sale of property - 31,680 - - -
Write-off of equipment and patent 69,965 7,880 - - -
Depreciation - - - 18,056 42,404
Common Stock issued for services - - - - 16,400
Changes in operating assets and
liabilities:
Inventory (5,095) (23,205) (29,838) (68,755) (95,245)
Other assets 1,318) (1,174) (7,067) (76,251) (7,884)
Intangible assets - - - - -
Accounts payable and accrued
expenses 1,790 (1,666) 8,461 12,415 167,786
Advances from customer 11,500 16,800 - - -
--------- --------- --------- --------- ----------
Net cash used in operating
activities (60,099) (66,439) (213,946) (607,407) (1,195,684)
--------- --------- --------- --------- ----------
Investing activities:
Purchase of property and equipment (6,207) (4,208) (43,157) (48,227) (15,062)
Proceeds from mortgage note receivable - - - - 200,000
Net proceeds from sale of property - 68,320 - - -
--------- --------- --------- --------- ----------
Net cash provided (used) by
investing activities (6,207) 64,112 (43,157) (48,227) 184,938
--------- --------- --------- --------- ----------
Financing activities:
Proceeds from notes payable and line of credit 68,911 52,627 24,860 500,000 -
Repayment of notes payable - (15,000) - (9,262) (43,637)
Conversion expense on preferred stock converted
into common stock - - - - -
Proceeds from issuance of preferred stock - - 380,000 - 1,950,000
--------- --------- --------- --------- ----------
Net cash provided by financing 68,911 37,627 404,860 490,738 1,906,363
activities
--------- --------- --------- --------- ----------
Net increase (decrease) in cash 2,605 35,300 147,757 (164,896) 895,617
Cash, beginning of period - 2,605 37,905 185,662 20,766
--------- --------- --------- --------- ----------
Cash, end of period $ 2,605 37,905 185,662 20,766 916,383
========= ========= ========= ========= ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
November 13, 1990
Six Months Ended (inception) through
June 30, June 30,
1995 1996 1996
---------------------------- -------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash used in operating activities:
Net loss (607,273) (1,345,801) (3,577,015)
Adjustments to reconcile net loss
to cash used in operating activities:
Loss on sale of property - - 31,680
Write-off of equipment and patent - - 77,845
Depreciation 20,934 22,396 82,856
Common Stock issued for services 6,400 105,000 121,400
Changes in operating assets and
liabilities:
Inventory (85,366) (218,593) (440,731)
Other assets (1,231) (158,135) (251,829)
Intangible assets - (24,454) (24,454)
Accounts payable and accrued
expenses (38,739) 165,650 354,436
Advances from customer - - 28,300
--------- --------- ---------
Net cash used in operating
activities (705,275) (1,453,937) (3,597,512)
--------- --------- ---------
Investing activities:
Purchase of property and equipment (7,828) (6,775) (123,636)
Proceeds from mortgage note receivable 200,000 - 200,000
Net proceeds from sale of property - - 68,320
--------- --------- ---------
Net cash provided (used) by
investing activities 192,172 (6,775) 144,684
--------- --------- ---------
Financing activities:
Proceeds from notes payable and line of credit - 1,012,500 1,658,898
Repayment of notes payable (22,765) (172,210) (240,109)
Conversion expense on preferred stock
converted into common stock - 344,631 344,631
Proceeds from issuance of preferred stock 1,950,000 0 2,330,000
--------- --------- ---------
Net cash provided by financing
activities 1,927,235 1,184,921 4,093,420
--------- --------- ---------
Net increase (decrease) in cash 1,414,132 (275,791) 640,592
Cash, beginning of period 20,766 916,383 -
--------- --------- ---------
Cash, end of period 1,434,898 640,592 640,592
========= ========= =========
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
As discussed in note 7(d), in November, 1990, the Company issued 2,000,000
shares of common stock for real estate and equipment having an aggregate market
value of $52,000. In addition, the officer assigned to the Company ongoing
research and development and rights to patents and patents pending.
During April 1992, the Company sold real property for $120,000 in cash and
a $200,000 mortgage note receivable, as discussed in note 2.
In December 1993, the Company issued preferred stock in exchange for
$200,000 of notes payable.
In July 1994, the Company purchased equipment, issuing a note payable to
the seller in the amount of $252,910 (see note 5).
During 1995, convertible preferred stock in the amount of $580,000 and
related accrued dividends in the amount of $76,729 were converted to common
stock (see note 7).
During 1996, convertible preferred stock in the amount of $2,374,596 and
related accrued dividends in the amount of $346,269 and a conversion expense of
12% in the amount of $344,631 were converted to common stock (note 7).
See accompanying notes to financial statements.
F-5
<PAGE>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' (DEFICIT)
From November 13, 1990 (inception) to June 30, 1996
Preferred stock Common stock Deficit
---------------------- -------------------------------- accumulated
Additional during the Total
paid-in development stockholders'
Shares Amount Shares Par capital stage (deficit)
------ ------ ------ --- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at November 13, 1990 (inception) - $ - - $ - $ - $ - $ -
Issuance of common stock to an officer in
exchange for machinery and real estate
valued at market and rights to ongoing
research and development patents and - -
patent pending 2,000,000 2,000 50,000 - 52,000
Net loss - - - - - (136,941) (136,941)
--------- ---------- --------- --------- --------- ---------- ----------
Balance at December 31, 1991 - - 2,000,000 2,000 50,000 (136,941) (84,941)
Net loss - - - - - (96,754) (96,754)
--------- ---------- --------- -------- --------- ---------- ----------
Balance at December 31, 1992 - - 2,000,000 2,000 50,000 (233,695) (181,695)
Issuance of preferred stock in exchange
for cash 380,000 380,000 - - - - -
Issuance of preferred stock in satisfaction
of notes payable 200,000 200,000 - - - - -
Accrued dividends on preferred stock (8,328) (8,328)
Net loss - - - - - 185,502) (185,502)
--------- ---------- --------- -------- --------- ---------- ----------
Balance at December 31, 1993 580,000 580,000 2,000,000 2,000 41,672 (419,197) (375,525)
Accrued dividends on preferred stock 53,929 (53,929) (53,929)
Net loss - - - - - (492,872) (492,872)
--------- --------- --------- -------- --------- ---------- ----------
Balance at December 31, 1994 580,000 633,929 2,000,000 2,000 (12,257) (912,069) (922,326)
Issuance of preferred stock in exchange for
cash and note payable, net of costs 490,000 2,374,596 - - - - -
Accrued dividends on preferred stock 22,800 (22,800) (22,800)
Conversion of preferred stock and accrued
dividends to common stock (580,000) (656,729) 656,729 657 656,072 - 656,729
Accrued dividends on preferred stock 199,267 (199,267) (199,267)
Issuance of common stock in exchange for
services rendered - - 16,400 16 16,384 - 16,400
Net loss - - - - - (1,319,145) (1,319,145)
--------- --------- --------- -------- --------- ---------- ---------
Balance at December 31, 1995 490,000 2,573,863 2,673,129 2,673 438,132 (2,231,214) (1,790,409)
Issuance of common stock in exchange for - - 30,000 30 104,970 - 105,000
services rendered (unaudited)
Conversion of note payable into - - 20,000 20 99,980 - 100,000
common stock (unaudited)
Accrued dividends on preferred stock 147,000 (147,000) (147,000)
(unaudited)
Conversion of preferred stock and accrued (490,000) (2,720,863) 628,180 628 3,064,866 - 3,065,494
dividends to common stock (unaudited)
Net loss (unaudited) - - - - - (1,345,801) (1,345,801)
--------- --------- --------- -------- --------- ---------- ---------
Balance at June 30, 1996 (unaudited) 0 $ 0 3,351,309 $ 3,351 $3,560,948 $(3,577,015 $ (12,716)
========= ========= ========= ======== ========= ========== =========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
MANSUR INDUSTRIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1994 and December 31, 1995
and June 30, 1996 (unaudited)
(1) THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Mansur Industries Inc. (the "Company") is primarily engaged in research
and development, marketing, and initial production of industrial parts
cleaning equipment for use in automotive, marine, airline and general
manufacturing industries. The Company's focus is on the design,
development and manufacture of industrial cleaning equipment which
incorporate continuous recycling and recovery technologies for solvents
and solutions, thereby reducing the need to replace and dispose of
contaminated solvents and solutions. The Company is in the development
stage.
(A) OPERATIONS AND LIQUIDITY
The Company has been primarily engaged in research,
development, marketing, and initial production of its
products. The Company's ultimate success is dependent upon
future events, including the successful commercialization of
the Company's products, establishing sources for
manufacturing, marketing, and distribution channels, the
outcomes of which are currently indeterminable, and is also
dependent upon obtaining sufficient financing. As of June 30,
1996, the Company has realized no sales of its products.
As indicated in the accompanying financial statements as of
June 30, 1996, the Company's accumulated deficit totaled
$3,577,015 (unaudited). The Company has financed this
deficiency primarily through private placements of debt and
equity securities. Management expects that product sales will
commence during the second half of 1996 and that proceeds from
the notes payable are sufficient to fund working capital
requirements until sales of the Company's products reach
levels sufficient to fund working capital requirements.
In July 1996, the Company expects to file a registration
statement with the Securities and Exchange Commission (the
"SEC") in connection with a proposed initial public offering
("IPO") of shares of its common stock. In the event that the
IPO is not completed, the Company has plans to restructure
operations to minimize cash expenditures, and/or obtain
additional financing in order to continue support of its
activities. If adequate funds are not available from
additional sources of financing, the Company's business may be
materially adversely affected.
F-7
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(B) INVENTORY
Inventories are stated at the lower of cost or market using
the first-in, first-out method. Inventory consists of the
following.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
------------------- ------------------- -----------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials................ $13,937 55,738 233,456
Work in progress and
finished goods.......... 84,656 138,100 178,975
------------------- ------------------- -----------------
$98,593 193,838 412,431
=================== =================== =================
</TABLE>
(C) PROPERTY AND EQUIPMENT, NET
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is calculated using the
straight-line method over the shorter of the lease term or the
estimated useful lives of the respective assets.
(D) INTANGIBLES
Patents, patent applications and rights are stated at
acquisition cost. Amortization of patents is recorded using
the straight-line method over the legal lives of the patents,
generally for periods ranging up to 17 years. The carrying
value of intangible assets is periodically reviewed by the
Company and impairments are recognized when the expected
future cash flows from operations derived from such intangible
assets is less than their carrying value.
(E) OTHER ASSETS
Included in other assets at December 31, 1994, were $75,404 in
stock offering costs incurred in connection with the Series A
preferred stock private placement (note 7). On June 30, 1996,
other assets consist primarily of costs relating to the
initial public offering of $94,251 and deposits with material
suppliers (note 8). (unaudited)
(F) FINANCIAL INSTRUMENTS (unaudited)
In assessing the fair value of financial instruments at June
30, 1996 the Company has used a variety of methods and
assumptions, which were based on estimates of market
conditions and risks existing at that time. The carrying
amount of long-term debt approximates fair value at June 30,
1996. For certain instruments, including accounts payable and
accrued expenses, and short-term debt, the carrying amount
approximates fair value due to their short maturity.
F-8
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(G) RESEARCH AND DEVELOPMENT
Research and development expenses consist primarily of costs
incurred in connection with engineering activities related to
the development of industrial parts cleaning machinery and are
expensed as incurred.
(H) INCOME TAXES
The Company accounts for income taxes under the asset and
liability method. Deferred tax assets and liabilities are
recognized for the estimated future tax consequences
attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to be applied to
taxable income in the years in which those temporary
differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes
the enactment date.
(I) EARNINGS PER SHARE DATA
The computation of loss per share in each year is based on the
weighted average number of common shares outstanding. When
dilutive, convertible preferred stock and convertible notes
are included as common share equivalents using the if
converted method. As these instruments have an anti-dilutive
effect for the years presented, they are not included in the
weighted average calculation. Primary and fully diluted
earnings per share are the same for each of the years
presented.
(J) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities, if any, at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
(2) MORTGAGE NOTE RECEIVABLE
During April 1992, the Company sold real property for $120,000 in cash
and a $200,000 mortgage note receivable. The note bore interest at a
rate of 12 percent per annum payable monthly with the principal due at
maturity, being April 27, 1997. The interest received on the mortgage
note receivable was assigned by the Company to repay interest due on an
unsecured note payable and dividends on certain of the preferred stock.
In April 1995, the balance of the note was received in full.
F-9
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(3) PROPERTY AND EQUIPMENT, NET
Property and equipment was as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996 USEFUL LIFE
---------------- --------------- -------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Furniture and equipment............. $ 7,289 20,433 23,709 5 Years
Machinery and equipment............. 351,688 353,606 357,105 10 Years
Leasehold improvements.............. 10,852 10,852 10,852
---------------- --------------- --------------
369,829 384,891 391,666
Less accumulated depreciation....... 18,056 60,460 82,856
---------------- --------------- --------------
$351,773 324,431 308,810
================ =============== ==============
</TABLE>
(4) DUE TO OFFICERS/SHAREHOLDERS
(A) NOTES PAYABLE
Notes payable at December 31, 1994 and 1995 consists of the
following:
12% unsecured note payable $ 100,000
Note payable to chief executive officer 150,000
-------
$ 250,000
The 12% unsecured notes payable required interest payments
monthly, with principal due at maturity. The note matured on
December 31, 1995 and was renewed for one year. Pursuant to an
amendment to the note signed in January 1996, the note was
converted into common stock at a price of $5 per share (note
7).
Advances made by the chief executive officer are pursuant to a
$200,000 line of credit agreement signed in 1990. Under the
terms of the agreement, interest is accrued at a variable rate
not to exceed 10 percent per annum nor fall below 6 percent
per annum negotiated annually. The rate for 1994 and 1995 was
6 percent. The note had a maturity date of December 31, 1995
and was renewed for one year to mature on December 31, 1996.
The note payable to the chief executive officer was paid in
full during May of 1996 (unaudited).
(B) CONVERTIBLE NOTES PAYABLE (UNAUDITED)
In June 1996, the Company issued cumulative convertible
redeemable notes payable in the amount of $1,012,500, of which
$303,750 was due to certain directors of the Company. The
notes bear interest of 4% per annum until September 1996 and
12% thereafter. The notes will be automatically converted into
common stock simultaneously with the initial public offering
F-10
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
of the Company at a price of $6.75 per share. The Company may
redeem these notes in full at any time at a price equal to the
outstanding principal amount plus interest accrued thereon.
Upon the conversion of the notes into common stock resulting
from an IPO, a commission equalling 10% of the converted
principal balance and a nonaccountable expense allowance
equalling 3% of the converted principal balance is payable.
(5) LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------- JUNE 30,
1994 1995 1996
--------------- -------------- ---------------
(UNAUDITED)
<S> <C> <C> <C>
Long-term debt consists of the following:
12% unsecured convertible promissory note, due
May 10, 1996, converted into Series A preferred
stock in 1995 (note 7)............................... $500,000
12.5% note payable in monthly installments of $5,690,
including interest due August 4, 1999, secured by
equipment with a depreciated cost of $230,277 on
June 30, 1996 (unaudited)............................ 243,648 200,011 177,800
Less current installments............................ 43,637 45,846 48,786
--------------- -------------- ---------------
Long-term debt, excluding current installments....... $700,011 154,165 129,014
=============== ============== ===============
</TABLE>
The 12 percent unsecured convertible promissory note was converted into
100,000 shares of Series A preferred stock during 1995 and subsequently
converted to common stock in June 1996 (unaudited) (note 7).
The aggregate maturities of long-term debt for each of the four years
subsequent to June 30, 1996, are as follows:
YEAR ENDING
DECEMBER 31, AMOUNT
------------------------------------ -------------------------
1996 $ 23,635
1997 51,916
1998 58,791
1999 43,458
-------------------------
$177,800
=========================
F-11
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(6) INCOME TAXES
For the period from November 13, 1990 (inception) to June 30, 1996, the
operations of the Company generated net operating losses of
approximately $3,577,015 (unaudited) for financial reporting purposes.
Because the Company is in the development stage, all costs through 1995
have been capitalized for tax purposes. The only loss reported for tax
has been a $14,280 capital loss on the sale of real property in 1992.
This capital loss may be carried forward by the Company for up to five
years and will expire at the end of 1997. Capital losses carried
forward may only be used to offset future capital gains. The gross
amount of the deferred tax asset as of June 30, 1996 was approximately
$1,288,000 (unaudited), which consists primarily of capital loss
carryforwards, start-up costs, and research and experimental costs
capitalized for tax purposes. Since realization of these tax benefits
are not assured, a valuation allowance has been recorded against the
entire deferred tax asset balance. In addition, pursuant to the Tax
Reform Act of 1986, if certain substantial changes in ownership should
occur there would be an annual limitation on the amount of tax
attribute carryforwards which can be utilized in the future.
(7) STOCKHOLDERS' DEFICIT
(A) "SERIES A" PREFERRED STOCK
In April 1995, the Company issued 490,000 shares of 12 percent
cumulative convertible redeemable preferred stock (the "Series
A") as part of a second private placement at an offering price
of $5 per share. The issuance raised $1,950,000 in cash and
converted the $500,000 unsecured convertible promissory note
(see note 5) into Series A shares.
On April 27, 1996, the board of directors of the Company
approved the early redemption of all of the Series A preferred
stock outstanding as of May 31, 1996, at the redemption price
of $5 per share plus the aggregate amount of dividends accrued
through June 30, 1996 in the amount of $346,269 (unaudited)
and a conversion expense of 12% in the amount of $344,631
(unaudited). In June 1996, 100% of Series A shareholders
exercised their right to convert all of their preferred shares
together with their dividends in the amount of $743,164 into
common shares (unaudited).
(B) "FIRST SERIES" PREFERRED STOCK
In the fourth quarter of 1993, the Company issued 580,000
shares of 12 percent cumulative convertible redeemable
preferred stock (the "First Series" ) in a private placement.
On May 30, 1995, the board of directors of the Company
approved the redemption of all of the First Series preferred
stock outstanding as of June 30, 1995, at the redemption price
of $1 per share plus dividends accrued through June 30, 1995,
subject to the preferred shareholders' prior right to convert
such preferred stock into common stock of the Company. In June
1995, 100% of the First Series with cumulative dividends
thereon was converted into common stock, on a one for one
basis.
F-12
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(C) CONVERTIBLE NOTE PAYABLE (UNAUDITED)
In May 1996, the Company converted a $100,000 note payable
into common stock at a price of $5 per share pursuant to an
amendment to the note signed in January of 1996.
(D) COMMON STOCK
In November 1990, the Company issued 2,000,000 shares of
common stock with a par value of $0.001 per share to the
President of the Company for the President's assignment to the
Company of all ongoing research and development and the rights
to any related patents and patents pending, in addition to
real estate and equipment with an aggregate fair value of
$52,000 as part of the formation of the Company.
(8) COMMITMENTS
(A) LEASES
The Company leases operating facilities under fixed rent
operating leases. The facilities had a 24 month lease expiring
December 31, 1994 with a rent of $4,631 per month. The lease
was renewed under cancelable terms in October 1994 for an
additional two-year period at a monthly rent of $5,094. During
1994, the Company leased equipment under an operating lease
which expired in September 1995.
Total rent expense was as follows:
For the six months ended
June 30, 1996 (unaudited) $ 30,564
For the year ended December 31:
1995 $ 61,128
1994 55,572
1993 39,740
1992 24,835
From November 13 1990
(inception) to December 31, 1991. 14,540
(B) DUE TO OFFICER
In 1995, the Board of Directors of the Company declared an
incentive bonus payable to the President, Pierre G. Mansur in
the amount of $267,460. Payment of bonuses are subject to the
determination by the Board of Directors that the Company is
able to effectuate such payment without impeding the Company's
operations or development. As a result, $88,110 has been paid
and an amount of $179,350 has been accrued at December 31,
1995 and June 30, 1996 (unaudited).
F-13
<PAGE>
MANSUR INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENT
(C) SUPPLY AGREEMENT (unaudited)
On May 7, 1996, the Company entered into an agreement (the
"Supply Agreement" ) with a supplier (the "Supplier") pursuant
to which the Supplier agreed to supply to the Company, at the
Company's election, between 3,000 and 5,000 machine units per
year at established prices and in accordance with a delivery
schedule. The Company has agreed to pay $150,000 (the
"Advance"), $50,000 of which has been advanced through June
30, 1996. The total Advance may be credited against future
purchases under the Supply Agreement at the rate of $50 per
unit.
The Supply Agreement provides that the Company may
unilaterally terminate the contract in whole or in part for
cause or for convenience. In the event the Supply Agreement is
terminated by the Company for convenience, the Supplier will
be entitled to reimbursement of the costs it has incurred
through the date of termination and, if such termination
occurs prior to the delivery of 3,000 units, the Supplier will
be entitled to payment for units produced through the date of
termination and retain any unapplied amount of the Advance.
(9) PRODUCT FINANCING AGREEMENT (unaudited)
In May 1996, the Company entered into an agreement (the "Product
Financing Agreement") with a leasing company which agrees to purchase
machines produced by the Company and subsequently lease these machines
to customers on 60 month terms. The Company will market the machines
and provide the leasing company with credit information on potential
customers which they may either accept or reject. The Product Financing
Agreement states that the leasing company does not have recourse
against the Company for customer failures to discharge their
obligations to the leasing company unless the Company has breached and
failed to cure certain warranties.
Under the Product Financing Agreement, the Company has agreed to
provide periodic service for the machines and replace solvent used in
the machines. In addition, upon the leasing company's request, the
Company agrees to assist the leasing company in remarketing any
repossessed or surrendered equipment for a fee. At the end of each
customer lease, the Company has the option to purchase the machine from
the leasing company at its fair market value.
F-14
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
IN WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-----------------
TABLE OF CONTENTS
PAGE
Prospectus Summary.............................................
Summary Combined Financial and Operating Data..................
Risk Factors...................................................
Concurrent Offering............................................
Use of Proceeds of Concurrent Offering.........................
Dilution.......................................................
Dividend Policy................................................
Capitalization.................................................
Selected Financial Data........................................
Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................
Business.......................................................
Management.....................................................
Executive Compensation.........................................
Certain Transactions...........................................
Principal Shareholders.........................................
Description of Capital Stock...................................
Shares Eligible for Future Sale................................
Plan of Distribution...........................................
Underwriting of the Concurrent Offering........................
Legal Matters..................................................
Experts........................................................
Additional Information.........................................
Index to Financial Statements.................................. F-1
----------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
150,000 SHARES
MANSUR INDUSTRIES INC.
COMMON STOCK
----------
PROSPECTUS
----------
FIRST ALLIED
SECURITIES, INC.
--------------, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that expenses in connection with the offering
described in this registration statement, excluding the Underwriter's
non-accountable expense allowance, will be as follows:
Securities and Exchange Commission registration fee ................ $ 6,000
NASD filing fee..................................................... 1,465
Printing and engraving expenses..................................... 50,000
Accounting fees and expenses........................................ 35,000
Legal fees and expenses............................................. 125,000
NASDAQ National market listing fees................................. 6,500
Fees and expenses (including legal fees) for qualifications under
state securities laws ........................................... 30,000
Registrar and Transfer Agent's fees and expenses.................... 5,000
Miscellaneous....................................................... 15,535
---------
Total............................................................... $ 274,500
=========
All amounts except the Securities and Exchange Commission registration fee
and the NASD filing fee are estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS PROSPECTUS
The Registrant has authority under Section 607.0850 of the Florida Business
Corporation Act to indemnify its directors and officers to the extent provided
for in such statute. The Registrant's Articles of Incorporation provide that the
Registrant shall indemnify and may insure its officers and directors to the
fullest extent not prohibited by law. The Registrant has also entered into an
agreement (the form of which is filed as Exhibit 10.3 hereto) with each of its
directors and executive officers wherein it has agreed to indemnify each of them
to the fullest extent permitted by law. In general, Florida law permits a
Florida corporation to indemnify its directors, officers, employees and agents,
and persons serving at the corporation's request in such capacities for another
enterprise, against liabilities arising from conduct that such persons
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful.
Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement, the Underwriter has agreed to indemnify the directors,
officers and controlling persons of the Registrant against certain civil
liabilities that may be incurred in connection with the offering, including
certain liabilities under the Securities Act of 1933, as amended.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Set forth below are the dates, number of shares and purchase prices per
share of all shares of capital stock sold by the Company during the past three
years:
ISSUANCE OF FIRST SERIES PREFERRED STOCK
DATE NUMBER OF SHARES PRICE
- --------------------- ----------------------- ------------------
October 1993 245,000(1) $1
November 1993 115,000(2) $1
December 1993 20,000(3) $1
- ---------------------
(1) Such figure represents shares issued to a group of accredited investors
comprised of Weymouth Investments, Mark J. Bryn, Timothy P. Gilbert,
Nicholas Milazzo, John R. Tormondsen, Ronald J. Marks and Jack Milazzo.
(2) Such figure represents shares issued to a group of accredited investors
comprised of Crestwell Corporation and George V. Hindy. (3) Such figure
represents shares issued to a group of accredited investors comprised of
Robert M. & Angela M. Downey and Richard T. & John T. Downey.
EXCHANGE OF PROMISSORY NOTES FOR COMMON STOCK
DATE NUMBER OF SHARES PRICE
- --------------------- ----------------------- ------------------
December 1993 200,000(1) $1
May 1996 20,000 $5
- --------------------
(1) Such figure represents 100,000 shares of the Company's Common Stock issued
in exchange for a $100,000 Promissory Note issued in favor of Frank Sanci;
and 100,000 shares of the Company's Common Stock issued in exchange for
$100,000 of a $200,000 Promissory Note issued in favor of Philip Salvatore.
(2) Such figure represents 20,000 shares of the Company's Common Stock issued
in exchange for the remaining $100,000 principal amount of a $200,000
Promissory Note issued in favor of Philip Salvatore.
ISSUANCE OF SERIES A PREFERRED STOCK
DATE NUMBER OF SHARES PRICE
- --------------------- ----------------------- ------------------
April 1995 390,000(1) $5
- ---------------------
(1) Such figure represents shares issued to a group of accredited investors
comprised of Landmark Services, Mark J. Bryn, First Malro, Timothy P.
Gilbert, Nicholas Milazzo, John R. Tormondsen, Ronald J. Marks, Jack
Milazzo, George V. Hindy, Joseph E. Jack, C. Steven Duncker, Antonin &
Adele Tutter, Said H. Mouawad, Artur Sella, Patrick Buhse, Maria G.
Jackson, Stanley Krueger, Paul H. Davis, Julian & Sydonia Nacron, Gerald
Michelak, James J. & Paul E. Downey, Vincent Pacella, Peter H. Burger,
Derek Lee, Peter L. Polito, Jonathan Savitz, Caballo Grande Investments,
Howard J. Gilbert and William S. Gilbert.
II-2
<PAGE>
EXCHANGE OF PROMISSORY NOTES FOR SERIES A PREFERRED STOCK
DATE NUMBER OF SHARES PRICE
- --------------------- ----------------------- ------------------
April 1995 100,000(1) $5
- ---------------------
(1) Such figure represents 100,000 shares of Series A Preferred Stock issued in
exchange for a $500,000 12% Secured Convertible Promissory Note, dated as
of November 1994, issued in favor of Imperial Trust.
CONVERSION OF FIRST SERIES PREFERRED STOCK INTO COMMON STOCK
DATE NUMBER OF SHARES PRICE
- --------------------- ----------------------- ------------------
April 1995 456,729 $1
- ---------------------
(1) Such figure includes (i) 380,000 shares of Common Stock issued upon
conversion of 380,000 shares of First Series Preferred Stock and (ii)
76,729 shares of Common Stock issued in satisfaction of dividends with
respect to the First Series Preferred Stock, which accrued at a rate of 12
percent from the date of issuance until the date of conversion.
ISSUANCE OF COMMON STOCK
DATE NUMBER OF SHARES PRICE
- --------------------- ----------------------- ------------------
June 1995 6,400(1) $5
December 1995 10,000(2) $1
April 1996 30,000(3) $3.50
- -------------------------
(1) Such figure represents shares of the Company's Common Stock issued to
William R. Burdette and Edward A. Calt, as Placement Agents in connection
with the Series A Preferred Stock offering.
(2) Such figure represents shares of the Company's Common Stock issued to
Environmental Technologies BVI Limited for cancellation of any and all
rights of that certain Consulting Agreement, dated as of November 10, 1994.
(3) Such figure represents share of the Company's Common Stock issued to Elias
F. Mansur, Jan Hedberg and Joseph E. Jack, non-employee directors of the
Company, for previously rendered consulting services.
CONVERSION OF SERIES A PREFERRED STOCK INTO COMMON STOCK
DATE NUMBER OF SHARES PRICE
- --------------------- ----------------------- ------------------
June 1996 628,180 $5
- ---------------------
(1) Such figure includes (i) 490,000 shares of Common Stock issued upon
conversion of 490,000 shares of Series A Preferred Stock; (ii) 69,254
shares of Common Stock issued in satisfaction of dividends with respect to
the Series A Preferred Stock, which accrued at a rate of 12 percent from
the date of issuance, through the maturity date of June 30, 1996; and (iii)
68,926 shares of Common Stock issued as a conversion expense to induce all
of the holders of the Series A
II-3
<PAGE>
Preferred Stock to convert the Series A Preferred Stock into shares of
Common Stock as of June 30, 1996.
The aforementioned issuances and sales were made in reliance upon the
exemption from the registration provisions of the 1933 Act afforded by Sections
4(2) and/or 4(6) thereof and/or Regulation D promulgated thereunder, as
transactions by an issuer not involving a public offering. The Purchasers of the
securities described above acquired them for their own account and not with a
view to any distribution thereof to the public. The certificates evidencing the
securities bear legends stating that the shares may not be offered, sold or
transferred other than pursuant to an effective registration statement under the
1933 Act, or an exemption from such registration requirements. The Company will
place stop transfer instructions with its transfer agent with respect to all
such securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
EXHIBIT DESCRIPTION
- ------- -------------------------------------------------------------------
1.1 Proposed form of Underwriting Agreement between the Registrant and First
Allied Securities Inc. (the "Underwriter")
3.1 Amended and Restated Articles of Incorporation of Registrant
3.2 Bylaws of Registrant
4.1 Certificate for Shares of Common Stock, par value $.001*
4.3 Proposed form of Representatives' Warrant Agreement between the Registrant
and the Underwriter with form of warrant attached
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. as
to the validity of the Common Stock being registered*
10.1 Registrant's Executive Incentive Plan
10.2 Master Lease and Distribution Agreement, effective August 1, 1996, among
the Registrant, The Valvoline Company and First Recovery
10.3 Form of Indemnification Agreement between the Registrant and each of its
directors and executive officers
10.4 Employment Agreement between Pierre G. Mansur and the Registrant dated
September 1, 1995
10.5 Employment Agreement between Paul I. Mansur and the Registrant dated
September 1, 1995
10.6 Employment Agreement between the Company and Charles W. Profilet, dated as
of November 27, 1995
10.7 Vendor Lease Plan Agreement between the Registrant and Oakmont Financial
Services, dated as of May 28, 1996
10.8 A Manufacture Agreement between the Registrant and EMJAC Industries, Inc.,
dated as of May 7, 1996
10.9 Lease Agreement, dated October 29, 1994, between Registrant and Marvin L.
Duncan
II-4
<PAGE>
EXHIBIT DESCRIPTION
- ------- -------------------------------------------------------------------
10.10 Security Agreement between the Registrant and The CIT Group/Equipment
Financing, Inc. for one (1) TRUMPF TC 200 CNC Punching Machine, Serial No.
070080 with tooling package, dated as of October 25, 1995
10.11 Term Life Insurance Policy for Pierce G. Mansur with the Equitable Life
Assurance Society of the United States, dated as of November 9, 1994
10.12 Term Life Insurance Policy for Paul I. Mansur with the Equitable Life
Assurance Society of the United States, dated as of May 24, 1996
10.13 United States Patent No. 5,277,208 for Multi-Process Power Spray Washer
Apparatus dated January 11, 1994
10.14 United States Patent No. 5,349,974 for SystemOne(TM)Washer dated September
27, 1994
10.15 United States Patent Application No. 08/394,290 for Improved
SystemOne(TM)Washer allowed April 2, 1996
10.16 United States Patent No. 5,388,601 for Spray Gun Washer dated February 14,
1995
10.17 United States Patent No. 5,518,013 for Immersion Washer dated May 21, 1996
10.18 United States Patent Applications No. 08/364,785 for apparatus for
disposal of refuse by thermal oxidation allowed June 26, 1996
23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (to
be included in its opinion to be filed as Exhibit 5.1)*
23.2 Consent of KPMG Peat Marwick LLP
24.1 Reference is made to the Signatures section of this Registration Statement
for the Power of Attorney contained herein.
27.1 Financial Data Schedule
- ------------------------
* To be filed by amendment
II-5
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective dateof the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes to provide to the
Underwriter at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as
required by the Underwriter to permit prompt delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida,
on July 23, 1996.
MANSUR INDUSTRIES INC.
By: /s/ PAUL I. MANSUR
-----------------------
Paul I. Mansur
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints each of Pierre G. Mansur and Paul I.
Mansur, respectively, his true and lawful attorney-in-fact, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments, including any
post-effective amendments, to this Registration Statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact or his substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
/S/ PIERRE G. MANSUR Chairman of the Board and July 23, 1996
- --------------------- President
Pierre G. Mansur
/S/ PAUL I. MANSUR Director and Chief Executive Officer July 23, 1996
- --------------------- [Principal Executive and Financial Officer]
Paul I. Mansur
/S/ LYDIA G. HUBBELL Controller July 23, 1996
- --------------------- [Principal Accounting Officer]
Lydia G. Hubbell
/S/ ELIAS F. MANSUR Director July 23, 1996
- ---------------------
Elias F. Mansur
/S/ DR. JAN HEDBERG Director July 23, 1996
- ---------------------
Dr. Jan Hedberg
/S/ JOSEPH E. JACK Director July 23, 1996
- ---------------------
Joseph E. Jack
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
PAGE
EXHIBIT DESCRIPTION NUMBER
- --------------- --------------------------------------------------------------------- ------------------------
<S> <C> <C>
1.1 Proposed form of Underwriting Agreement between the
Registrant and First Allied Securities Inc. (the
"Underwriter")
3.1 Amended and Restated Articles of Incorporation of
Registrant
3.2 Bylaws of Registrant
4.3 Proposed form of Representatives' Warrant Agreement
between the Registrant and the Underwriter with form of
warrant attached
10.1 Registrant's Executive Incentive Plan
10.2 Master Lease and Distribution Agreement, effective August
1, 1996, among the Registrant, The Valvoline Company
and First Recovery
10.3 Form of Indemnification Agreement between the
Registrant and each of its directors and executive officers
10.4 Employment Agreement between Pierre G. Mansur and
the Registrant dated September 1, 1995
10.5 Employment Agreement between Paul I. Mansur and the
Registrant dated September 1, 1995
10.6 Employment Agreement between the Company and
Charles W. Profilet, dated as of November 27, 1995
10.7 Vendor Lease Plan Agreement between the Registrant and
Oakmont Financial Services, dated as of May 28, 1996
10.8 A Manufacture Agreement between the Registrant and
EMJAC Industries, Inc., dated as of May 7, 1996
10.9 Lease Agreement, dated October 29, 1994, between
Registrant and Marvin L. Duncan
10.10 Security Agreement between the Registrant and The CIT
Group/Equipment Financing, Inc. for one (1) TRUMPF TC
200 CNC Punching Machine, Serial No. 070080 with
tooling package, dated as of October 25, 1995
10.11 Term Life Insurance Policy for Pierce G. Mansur with the
Equitable Life Assurance Society of the United States,
dated as of November 9, 1994
10.12 Term Life Insurance Policy for Paul I. Mansur with the
Equitable Life Assurance Society of the United States,
dated as of May 24, 1996
10.13 United States Patent No. 5,277,208 for Multi-Process
Power Spray Washer Apparatus dated January 11, 1994
<PAGE>
10.14 United States Patent No. 5,349,974 for SystemOne(TM)
Washer dated September 27, 1994
10.15 United States Patent Application No. 08/394,290 for
Improved SystemOne(TM) Washer allowed April 2, 1996
10.16 United States Patent No. 5,388,601 for Spray Gun Washer
dated February 14, 1995
10.17 United States Patent No. 5,518,013 for Immersion Washer
dated May 21, 1996
10.18 United States Patent Applications No. 08/364,785 for
apparatus for disposal of refuse by thermal oxidation
allowed June 26, 1996
23.2 Consent of KPMG Peat Marwick LLP
24.1 Reference is made to the Signatures section of this
Registration Statement for the Power of Attorney contained
herein.
27.1 Financial Data Schedule
</TABLE>
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EXHIBIT 1.1
OH&S DRAFT
[Form of Underwriting Agreement - Subject to Additional Review]
850,000 SHARES OF COMMON STOCK
MANSUR INDUSTRIES INC.
UNDERWRITING AGREEMENT
New York, New York
, 1996
FIRST ALLIED SECURITIES, INC.
As Representative of the
Several Underwriters listed on Schedule A hereto
c/o First Allied Securities, Inc.
200 Park Avenue
24th Floor
New York, New York 10166
Ladies and Gentlemen:
Mansur Industries Inc., a Florida corporation (the "Company")
confirms its agreement with First Allied Securities, Inc. ("First Allied") and
each of the underwriters named in Schedule A hereto (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in SECTION 11), for whom First Allied is acting as
representative (in such capacity, First Allied shall hereinafter be referred to
as "you" or the "Representative"), with respect to the sale by the Company and
the purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of the Company's common stock, $.001 par value per
share ("Common Stock") set forth in Schedule A hereto. Such shares of Common
Stock are hereinafter referred to as the "Firm Shares."
Upon your request, as provided in Section 2(b) of this
Agreement, the Company shall also sell to the Underwriters, acting severally and
not jointly, up to an additional 127,500 shares of Common Stock for the purpose
of covering over-allotments, if any (the "Option Shares"). The Firm Shares and
the Option Shares are sometimes hereinafter referred to as the "Shares." The
Company also proposes to issue and sell to you warrants (the "Representative's
<PAGE>
Warrants") pursuant to the Representative's Warrant Agreement (the
"Representative's Warrant Agreement") for the purchase of an additional 85,000
shares of Common Stock. The shares of Common Stock issuable upon exercise of the
Representative's Warrants are hereinafter referred to as the "Representative's
Shares." The Firm Shares, the Option Shares, the Representative's Warrants and
the Representative's Shares (collectively, hereinafter referred to as the
"Securities") are more fully described in the Registration Statement and the
Prospectus referred to below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to, and agrees with, each of the Underwriters as
of the date hereof, and as of the Closing Date (hereinafter defined) and the
Option Closing Date (hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a registration statement,
and an amendment or amendments thereto, on Form S-1 (No. 333-_____), including
any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Firm Shares and the Option Shares under the Securities Act
of 1933, as amended (the "Act"), which registration statement and amendment or
amendments have been prepared by the Company in conformity with the requirements
of the Act, and the rules and regulations (the "Regulations") of the Commission
under the Act. The Company will promptly file a further amendment to said
registration statement in the form heretofore delivered to the Underwriters and
will not, file any other amendment thereto to which the Underwriters shall have
objected in writing after having been furnished with a copy thereof. Except as
the context may otherwise require, such registration statement, as amended, on
file with the Commission at the time the registration statement becomes
effective (including the prospectus, financial statements, schedules, exhibits
and all other documents filed as a part thereof or incorporated therein
(including, but not limited to those documents or information incorporated by
reference therein) and all information deemed to be a part thereof as of such
time pursuant to paragraph (b) of Rule 430(A) of the Regulations)), is
hereinafter called the "Registration Statement", and the form of prospectus in
the form first filed with the Commission pursuant to Rule 424(b) of the
Regulations, is hereinafter called the "Prospectus." For purposes hereof, "Rules
and Regulations" mean the rules and regulations adopted by the Commission under
either the Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable.
(b) Neither the Commission nor any state regulatory
authority has issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or the Prospectus or any part
of any thereof and no proceedings for a stop order suspending the effectiveness
of the Registration Statement or any of the Company's securities have been
instituted or are pending or to the Company's knowledge, threatened. Each of the
Preliminary Prospectus, Registration Statement and Prospectus at the time of
filing thereof conformed with the requirements of the Act and the Rules and
Regulations, and none of the Preliminary Prospectus, Registration Statement or
Prospectus at the time of filing thereof contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that this representation and
warranty does
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<PAGE>
not apply to statements made in reliance upon and in conformity with written
information furnished to the Company with respect to the Underwriters by or on
behalf of the Underwriters expressly for use in such Preliminary Prospectus,
Registration Statement or Prospectus.
(c) When the Registration Statement becomes effective
and at all times subsequent thereto up to the Closing Date and each Option
Closing Date, if any, and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Underwriters or a
dealer, the Registration Statement and the Prospectus will contain all
statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations, and will conform to the requirements of the Act
and the Rules and Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, PROVIDED, HOWEVER,
that this representation and warranty does not apply to statements made or
statements omitted in reliance upon and in conformity with information furnished
to the Company in writing by or on behalf of any Underwriter expressly for use
in the Preliminary Prospectus, Registration Statement or Prospectus or any
amendment thereof or supplement thereto.
(d) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the state of its
incorporation. The Company does not own an interest in any corporation,
partnership, trust, joint venture or other business entity. The Company is duly
qualified and licensed and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing. The
Company has all requisite corporate power and authority, and the Company has
obtained any and all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or regulatory
officials and bodies (including, without limitation, those having jurisdiction
over environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and has been
doing business in compliance with all such authorizations, approvals, orders,
licenses, certificates, franchises and permits and all federal, state and local
laws, rules and regulations; and the Company has not received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, position, prospects, value, operation,
properties, business or results of operations of the Company. The disclosures in
the Registration Statement concerning the effects of federal, state and local
laws, rules and regulations on the Company's business as currently conducted and
as contemplated are correct in all material respects and do not omit to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made.
(e) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, under
"Capitalization" and "Description of Capital Stock" and will have the adjusted
capitalization set forth therein on the Closing Date and the Option Closing
Date, if any, based upon the assumptions set forth therein, and the Company is
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<PAGE>
not a party to or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Representative's Warrant Agreement
and as described in the Prospectus. The Securities and all other securities
issued or issuable by the Company conform or, when issued and paid for, will
conform, in all respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and non-assessable and the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The Securities are not and will not
be subject to any preemptive or other similar rights of any stockholder, have
been duly authorized and, when issued, paid for and delivered in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable and will
conform to the description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely as such holders; all
corporate action required to be taken for the authorization, issue and sale of
the Securities has been duly and validly taken; and the certificates
representing the Securities will be in due and proper form. Upon the issuance
and delivery pursuant to the terms hereof of the Securities to be sold by the
Company hereunder, the Underwriters or the Representative, as the case may be,
will acquire good and marketable title to such Securities free and clear of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever.
(f) The financial statements, including the related
notes and schedules thereto, included in the Registration Statement, each
Preliminary Prospectus and the Prospectus fairly present the financial position,
income, changes in cash flow, changes in stockholders' equity, and the results
of operations of the Company at the respective dates and for the respective
periods to which they apply [and the pro forma financial information included in
the Registration Statement and Prospectus presents fairly on a basis consistent
with that of the audited financial statements included therein, what the
Company's pro forma capitalization would have been for the respective periods
and as of the respective dates to which they apply after giving effect to the
adjustments described therein.] Such financial statements have been prepared in
conformity with generally accepted accounting principles and the Rules and
Regulations, consistently applied throughout the periods involved. There has
been no adverse change or development involving a material prospective change in
the condition, financial or otherwise, or in the earnings, position, prospects,
value, operation, properties, business, or results of operations of the Company
whether or not arising in the ordinary course of business, since the date of the
financial statements included in the Registration Statement and the Prospectus
and the outstanding debt, the property, both tangible and intangible, and the
business of the Company conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus. Financial
information set forth in the Prospectus under the headings "Summary Financial
Data," "Selected Financial Data," "Capitalization," and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," fairly present,
on the basis stated in the Prospectus, the information set forth therein, have
been derived from or compiled on a basis consistent with that of the audited
financial statements included in the Prospectus.
- 4 -
<PAGE>
(g) The Company (i) has paid all federal, state, local,
and foreign taxes for which it is liable, including, but not limited to,
withholding taxes and amounts payable under Chapters 21 through 24 of the
Internal Revenue Code of 1986 (the "Code"), and has furnished all information
returns it is required to furnish pursuant to the Code, (ii) has established
adequate reserves for such taxes which are not due and payable, and (iii) does
not have any tax deficiency or claims outstanding, proposed or assessed against
it.
(h) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters in connection with (i) the issuance
by the Company of the Securities, (ii) the purchase by the Underwriters of the
Securities from the Company and the purchase by the Representative of the
Representative's Warrants from the Company, (iii) the consummation by the
Company of any of its obligations under this Agreement or the Representative's
Warrant Agreement, or (iv) resales of the Shares in connection with the
distribution contemplated hereby.
(i) The Company maintains insurance policies,
including, but not limited to, general liability and property insurance, which
insures the Company and its employees, against such losses and risks generally
insured against by comparable businesses. The Company (A) has not failed to give
notice or present any insurance claim with respect to any matter, including but
not limited to the Company's business, property or employees, under the
insurance policy or surety bond in a due and timely manner, (B) does not have
any disputes or claims against any underwriter of such insurance policies or
surety bonds or has not failed to pay any premiums due and payable thereunder,
or (C) has not failed to comply with all conditions contained in such insurance
policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company.
(j) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or circumstances
that may give rise to the same), or involving the properties or business of, the
Company which (i) questions the validity of the capital stock of the Company,
this Agreement or the Representative's Warrant Agreement or of any action taken
or to be taken by the Company pursuant to or in connection with this Agreement
or the Representative's Warrant Agreement, (ii) is required to be disclosed in
the Registration Statement which is not so disclosed (and such proceedings as
are summarized in the Registration Statement are accurately summarized in all
material respects), or (iii) might materially and adversely affect the
condition, financial or otherwise, or the earnings, position, prospects,
stockholders' equity, value, operation, properties, business or results of
operations of the Company.
(k) The Company has full legal right, power and
authority to authorize, issue, deliver and sell the Securities, enter into this
Agreement and the Representative's Warrant Agreement and to consummate the
transactions provided for in such agreements; and this Agreement and the
Representative's Warrant Agreement have each been duly and properly authorized,
executed and delivered by the Company. Each of this Agreement and the
Representative's Warrant Agreement constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except (i) as such
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<PAGE>
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification or
contribution provisions may be limited under applicable laws or the public
policies underlying such laws and (iii) that the remedies of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings may be brought. None of the Company's issue and sale of the
Securities, execution or delivery of this Agreement or the Representative's
Warrant Agreement, its performance hereunder and thereunder, its consummation of
the transactions contemplated herein and therein, the conversion of $1,012,500
in principal amount of convertible notes of the Company issued in June 1996 (the
"Convertible Notes") into an aggregate of 150,000 shares of Common Stock or the
conduct of its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or violation of any of the
terms or provisions of, or constitutes or will constitute a default under, or
result in the creation or imposition of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of, (i) the certificate of incorporation or by-laws of the
Company, (ii) any license, contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note, loan or credit agreement or any
other agreement or instrument to which the Company is a party or by which it is
or may be bound or to which any of its properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or properties.
(l) Except as described in the Prospectus, no consent,
approval, authorization or order of, and no filing with, any court, regulatory
body, government agency or other body, domestic or foreign, is required for the
issuance of the Shares pursuant to the Prospectus and the Registration
Statement, the issuance of the Representative's Warrants, the performance of
this Agreement and the Representative's Warrant Agreement and the transactions
contemplated hereby and thereby, including without limitation, any waiver of any
preemptive, first refusal or other rights that any entity or person may have for
the issue and/or sale of any of the Shares, or the Representative's Warrants,
except such as have been or may be obtained under the Act or may be required
under state securities or Blue Sky laws in connection with the Underwriters'
purchase and distribution of the Shares, and the Representative's Warrants to be
sold by the Company hereunder.
(m) All executed agreements, contracts or other
documents or copies of executed agreements, contracts or other documents filed
as exhibits to the Registration Statement to which the Company is a party or by
which it may be bound or to which any of its assets, properties or business may
be subject have been duly and validly authorized, executed and delivered by the
Company, and constitute the legal, valid and binding agreements of the Company,
enforceable against the Company, in accordance with their respective terms. The
descriptions in the Registration Statement of agreements, contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown with
- 6 -
<PAGE>
respect thereto by Form S-1, and there are no contracts or other documents which
are required by the Act to be described in the Registration Statement or filed
as exhibits to the Registration Statement which are not described or filed as
required, and the exhibits which have been filed are in all material respects
complete and correct copies of the documents of which they purport to be copies.
(n) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus, and
except as may otherwise be indicated or contemplated herein or therein, the
Company has not (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, (ii) entered into any
transaction other than in the ordinary course of business, or (iii) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock of any class, and there has not been any change in the capital stock, or
any material change in the debt (long or short term) or liabilities or material
adverse change in or affecting the general affairs, management, financial
operations, stockholders' equity or results of operations of the Company.
(o) No default exists in the due performance and
observance of any term, covenant or condition of any license, contract,
indenture, mortgage, installment sale agreement, lease, deed of trust, voting
trust agreement, stockholders agreement, partnership agreement, note, loan or
credit agreement, purchase order, or any other agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which the property or assets (tangible or intangible) of the Company is
subject or affected.
(p) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance with all
federal, state, local, and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours. There are no pending investigations involving the Company by the U.S.
Department of Labor, or any other governmental agency responsible for the
enforcement of such federal, state, local, or foreign laws and regulations.
There is no unfair labor practice charge or complaint against the Company
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving the Company or any predecessor entity, and none has ever occurred. No
representation question exists respecting the employees of the Company, and no
collective bargaining agreement or modification thereof is currently being
negotiated by the Company. No grievance or arbitration proceeding is pending
under any expired or existing collective bargaining agreements of the Company.
No labor dispute with the employees of the Company exists, or is imminent.
(q) Except as described in the Prospectus, the Company
does not maintain, sponsor or contribute to any program or arrangement that is
an "employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute, now or
at any time previously, to a defined benefit plan, as defined in Section 3(35)
of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in a
"prohibited
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<PAGE>
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code, which could subject the Company to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA Plan is in
compliance with all reporting, disclosure and other requirements of the Code and
ERISA as they relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified thereunder. The Company has never completely
or partially withdrawn from a "multiemployer plan."
(r) Neither the Company nor any of its employees,
directors, stockholders, partners, or affiliates (within the meaning of the
Rules and Regulations) of any of the foregoing has taken or will take, directly
or indirectly, any action designed to or which has constituted or which might be
expected to cause or result in, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or otherwise.
(s) Except as otherwise disclosed in the Prospectus,
none of the patents, patent applications, trademarks, service marks, service
names, trade names and copyrights, and none of the licenses and rights to the
foregoing presently owned or held by the Company are in dispute or are in any
conflict with the right of any other person or entity. The Company (i) owns or
has the right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever, all patents, patent applications, trademarks,
service marks, service names, trade names and copyrights, technology and
licenses and rights with respect to the foregoing, used in the conduct of its
business as now conducted or proposed to be conducted without infringing upon or
otherwise acting adversely to the right or claimed right of any person,
corporation or other entity under or with respect to any of the foregoing and
(ii) is not obligated or under any liability whatsoever to make any payment by
way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, patent application, trademark, service mark, service
names, trade name, copyright, know-how, technology or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business or otherwise. There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental or other proceeding,
domestic or foreign, pending or threatened (or circumstances that may give rise
to the same) against the Company which challenges the exclusive rights of the
Company with respect to any trademarks, trade names, service marks, service
names, copyrights, patents, patent applications or licenses or rights to the
foregoing used in the conduct of its business, or which challenge the right of
the Company to use any technology presently used or contemplated to be used in
the conduct of its business.
(t) The Company owns and has the unrestricted right to
use all trade secrets, know-how (including all other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
inventions, technology, designs, processes, works of authorship, computer
programs and technical data and information (collectively herein "intellectual
property") that are material to the development, manufacture, operation and sale
of all products and services sold or proposed to be sold by the Company, free
and clear of and without violating any right, lien, or claim of others,
including without limitation, former
- 8 -
<PAGE>
employers of its employees; provided, however, that the possibility exists that
other persons or entities, completely independently of the Company, or its
employees or agents, could have developed trade secrets or items of technical
information similar or identical to those of the Company. The Company is not
aware of any such development of similar or identical trade secrets or technical
information by others.
(u) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property stated in the Prospectus, to be owned or leased by it free and clear of
all liens, charges, claims, encumbrances, pledges, security interests, defects,
or other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and payable.
(v) KPMG Peat Marwick, L.L.P., whose report is filed
with the Commission as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules and
Regulations.
(w) The Company has caused to be duly executed legally
binding and enforceable agreements pursuant to which all of the holders of the
Common Stock and holders of securities exchangeable or exercisable for or
convertible into shares of Common Stock have agreed not to, directly or
indirectly, offer to sell, sell, grant any option for the sale of, assign,
transfer, pledge, hypothecate, distribute or otherwise encumber or dispose of
any shares of Common Stock or securities convertible into, exercisable or
exchangeable for or evidencing any right to purchase or subscribe for any shares
of Common Stock (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any beneficial interest therein for a period of not
less than 13 months following the effective date of the Registration Statement
without the prior written consent of the Representative. The Company will cause
the Transfer Agent, as defined below, to mark an appropriate legend on the face
of stock certificates representing all of such securities and to place "stop
transfer" orders on the Company's stock ledgers.
(x) Except as described in the Prospectus under
"Underwriting," there are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company or any of its officers, directors, stockholders,
partners, employees or affiliates that may affect the Underwriters'
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(y) The Common Stock has been approved for quotation on
the Nasdaq National Market ("NNM").
(z) Neither the Company nor any of its officers,
employees, agents, or any other person acting on behalf of the Company, has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for
- 9 -
<PAGE>
office (domestic or foreign) or other person who was, is, or may be in a
position to help or hinder the business of the Company (or assist the Company in
connection with any actual or proposed transaction) which (a) might subject the
Company, or any other such person to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign), (b) if
not given in the past, might have had a materially adverse effect on the assets,
business or operations of the Company, or (c) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company. The Company's internal accounting controls are sufficient to cause the
Company to comply with the Foreign Corrupt Practices Act of 1977, as amended.
(aa) Except as set forth in the Prospectus, no officer,
director or stockholder of the Company, or any "affiliate" or "associate" (as
these terms are defined in Rule 405 promulgated under the Rules and Regulations)
of any of the foregoing persons or entities has or has had, either directly or
indirectly, (i) an interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to be furnished
or sold by the Company, or (B) purchases from or sells or furnishes to the
Company any goods or services, or (ii) a beneficial interest in any contract or
agreement to which the Company is a party or by which it may be bound or
affected. Except as set forth in the Prospectus under "Certain Transactions,"
there are no existing agreements, arrangements, understandings or transactions,
or proposed agreements, arrangements, understandings or transactions, between or
among the Company and any officer, director, or Principal Stockholder (as such
term is defined in the Prospectus) of the Company or any partner, affiliate or
associate of any of the foregoing persons or entities.
(bb) Any certificate signed by any officer of the
Company, and delivered to the Underwriters or to Underwriters' Counsel (as
defined herein) shall be deemed a representation and warranty by the Company to
the Underwriters as to the matters covered thereby.
(cc) The minute books of the Company have been made
available to the Underwriters and contains a complete summary of all meetings
and actions of the directors, stockholders, audit committee, compensation
committee and any other committee of the Board of Directors of the Company,
respectively, since the time of its incorporation, and reflects all transactions
referred to in such minutes accurately in all material respects.
(dd) Except and to the extent described in the
Prospectus, no holders of any securities of the Company or of any options,
warrants or other convertible or exchangeable securities of the Company have the
right to include any securities issued by the Company in the Registration
Statement or any registration statement to be filed by the Company or to require
the Company to file a registration statement under the Act and no person or
entity holds any anti-dilution rights with respect to any securities of the
Company.
(ee) The Company has as of the effective date of the
Registration Statement (i) entered into an employment agreement with each of
Paul I. Mansur and Pierre G. Mansur, in the form filed as Exhibits ____ and
____, respectively, to the Registration Statement and (ii)
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purchased term key-man insurance on the lives of Paul I. Mansur and Pierre G.
Mansur in the amount of $1,000,000 each, which policies name the Company as the
sole beneficiary thereof.
(ff) The conversion of $1,012,500 in principal amount
of the Convertible Notes into an aggregate of 150,000 shares of Common Stock as
set forth in the Prospectus has been duly authorized by the Company, the holders
of the Convertible Notes and the shareholders of the Company, if applicable, in
accordance with all agreements, documents, understandings and instruments
affecting the rights, duties, responsibilities, obligations and/or privileges of
holders of the Convertible Notes or to which the Company is bound, including
without limitation, the Convertible Notes, the Company's certificate of
incorporation and the Company's by-laws; and upon the consummation of the
Offering, without any further action of the Company, any holder of a Convertible
Note(s) or any shareholder of the Company, the aggregate outstanding principal
amount of the Convertible Notes will simultaneously convert into 150,000 validly
issued, fully paid and nonassessable shares of Common Stock.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES AND
REPRESENTATIVE'S WARRANTS.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter, severally and not jointly, agrees to purchase from the Company
at a price of $_______ [90% of the initial public offering price] per share of
Common Stock, that number of Firm Shares of set forth in Schedule A opposite the
name of such Underwriter, plus any additional number of Firm Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
SECTION 11 hereof.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional 127,500 shares of Common Stock at a price of $____ [90% of the
initial public offering price] per share of Common Stock. The option granted
hereby will expire 45 days after (i) the date the Registration Statement becomes
effective, if the Company has elected not to rely on Rule 430A under the Rules
and Regulations, or (ii) the date of this Agreement if the Company has elected
to rely upon Rule 430A under the Rules and Regulations, and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Shares upon notice by the Representative to the Company
setting forth the number of Option Shares as to which the several Underwriters
are then exercising the option and the time and date of payment and delivery for
any such Option Shares. Any such time and date of delivery (an "Option Closing
Date") shall be determined by the Representative, but shall not be later than
seven full business days after the exercise of said option, nor in any event
prior to the Closing Date, as hereinafter defined, unless otherwise agreed upon
by the Representative and the Company. Nothing herein contained shall obligate
the Underwriters to make any over-allotments. No Option Shares shall be
delivered unless the Firm Shares shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
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(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of First Allied
Securities, Inc. at 200 Park Avenue, 24th Floor, New York, New York 10166, or at
such other place as shall be agreed upon by the Representative and the Company.
Such delivery and payment shall be made at 10:00 a.m. (New York City time) on
_________________ , 1996 or at such other time and date as shall be agreed upon
by the Representative and the Company, but not less than three (3) nor more than
seven (7) full business days after the effective date of the Registration
Statement (such time and date of payment and delivery being herein called
"Closing Date"). In addition, in the event that any or all of the Option Shares
are purchased by the Underwriters, payment of the purchase price for, and
delivery of certificates for, such Option Shares shall be made at the above
mentioned office of the Representative or at such other place as shall be agreed
upon by the Representative and the Company on each Option Closing Date as
specified in the notice from the Representative to the Company. Delivery of the
certificates for the Firm Shares and the Option Shares, if any, shall be made to
the Underwriters against payment by the Underwriters, severally and not jointly,
of the purchase price for the Firm Shares and the Option Shares, if any, to the
order of the Company for the Firm Shares and the Option Shares, if any, by New
York Clearing House funds. In the event such option is exercised, each of the
Underwriters, acting severally and not jointly, shall purchase that proportion
of the total number of Option Shares then being purchased which the number of
Firm Shares set forth in Schedule A hereto opposite the name of such Underwriter
bears to the total number of Firm Shares, subject in each case to such
adjustments as the Representative in their discretion shall make to eliminate
any sales or purchases of fractional shares. Certificates for the Firm Shares
and the Option Shares, if any, shall be in definitive, fully registered form,
shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriters may request in writing at least two
(2) business days prior to the Closing Date or the relevant Option Closing Date,
as the case may be. The certificates for the Firm Shares and the Option Shares,
if any, shall be made available to the Representative at such office or such
other place as the Representative may designate for inspection, checking and
packaging no later than 9:30 a.m. on the last business day prior to Closing Date
or the relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and
sell to the Representative Representative's Warrants at a purchase price of
$.001 per warrant, which warrants shall entitle the holders thereof to purchase
an aggregate of 85,000 shares of Common Stock. The Representative's Warrants
shall be exercisable for a period of four years commencing one year from the
effective date of the Registration Statement at a price equaling one hundred
twenty percent (120%) of the initial public offering price of the shares of
Common Stock. The Representative's Warrant Agreement and form of Warrant
Certificate shall be substantially in the form filed as Exhibit [4.3] to the
Registration Statement. Payment for the Representative's Warrants shall be made
on the Closing Date.
3. PUBLIC OFFERING OF THE SHARES. As soon after the
Registration Statement becomes effective as the Representative deems advisable,
the Underwriters shall make a public offering of the Shares (other than to
residents of or in any jurisdiction in which qualification of the Shares is
required and has not become effective) at the price and upon the other terms set
forth in the Prospectus. The Representative may from time to time increase or
decrease the public offering price after distribution of the Shares has been
completed to such extent as the
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Representative, in their discretion deems advisable. The Underwriters may enter
into one of more agreements as the Underwriters, in each of their sole
discretion, deem advisable with one or more broker-dealers who shall act as
dealers in connection with such public offering.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company
covenants and agrees with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before or after the
effective date of the Registration Statement, file any amendment to the
Registration Statement or supplement to the Prospectus or file any document
under the Act or Exchange Act before termination of the offering of the Shares
by the Underwriters of which the Representative shall not previously have been
advised and furnished with a copy, or to which the Representative shall have
objected or which is not in compliance with the Act, the Exchange Act or the
Rules and Regulations.
(b) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Representative and confirm the
notice in writing, (i) when the Registration Statement, as amended, becomes
effective, if the provisions of Rule 430A promulgated under the Act will be
relied upon, when the Prospectus has been filed in accordance with said Rule
430A and when any post-effective amendment to the Registration Statement becomes
effective, (ii) of the issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceeding, suspending the effectiveness
of the Registration Statement or any order preventing or suspending the use of
the Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or the institution of proceedings for that purpose, (iii) of the
issuance by the Commission or by any state securities commission of any
proceedings for the suspension of the qualification of any of the Securities for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that purpose, (iv) of the receipt of any comments from the
Commission; and (v) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information. If the Commission or any state securities commission
authority shall enter a stop order or suspend such qualification at any time,
the Company will make every effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and
substance satisfactory to the Representative) or transmit the Prospectus by a
means reasonably calculated to result in filing with the Commission pursuant to
Rule 424(b)(1) (or, if applicable and if consented to by the Representative,
pursuant to Rule 424(b)(4)) not later than the Commission's close of business on
the earlier of (i) the second business day following the execution and delivery
of this Agreement and (ii) the fifteenth business day after the effective date
of the Registration Statement.
(d) The Company will give the Representative notice of
its intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the
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offering of the Securities which differs from the corresponding prospectus on
file at the Commission at the time the Registration Statement becomes effective,
whether or not such revised prospectus is required to be filed pursuant to Rule
424(b) of the Rules and Regulations), and will furnish the Representative with
copies of any such amendment or supplement a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file any such
prospectus to which the Representative or Orrick, Herrington & Sutcliffe
("Underwriters' Counsel"), shall object.
(e) The Company shall endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as the Representative may
designate to permit the continuance of sales and dealings therein for as long as
may be necessary to complete the distribution, and shall make such applications,
file such documents and furnish such information as may be required for such
purpose; PROVIDED, HOWEVER, the Company shall not be required to qualify as a
foreign corporation or file a general or limited consent to service of process
in any such jurisdiction. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representative agree that such action is
not at the time necessary or advisable, use all reasonable efforts to file and
make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be
delivered under the Act, the Company shall use all reasonable efforts to comply
with all requirements imposed upon it by the Act and the Exchange Act, as now
and hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus relating
to the Securities or the Representative's Shares is required to be delivered
under the Act, any event shall have occurred as a result of which, in the
opinion of counsel for the Company or Underwriters' Counsel, the Prospectus, as
then amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will notify the Representative
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act, each such amendment or
supplement to be satisfactory to Underwriters' Counsel, and the Company will
furnish to the Underwriters copies of such amendment or supplement as soon as
available and in such quantities as the Underwriters may request.
(g) As soon as practicable, but in any event not later
than 45 days after the end of the 12-month period beginning on the day after the
end of the fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Representative, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act
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<PAGE>
and Rule 158(a) of the Rules and Regulations, which statement need not be
audited unless required by the Act, covering a period of at least 12 consecutive
months after the effective date of the Registration Statement.
(h) During a period of seven years after the date
hereof, the Company will furnish to its stockholders, as soon as practicable,
annual reports (including financial statements audited by independent public
accountants) and unaudited quarterly reports of earnings, and will deliver to
the Representative:
i) concurrently with furnishing such quarterly reports
to its stockholders, statements of income of the Company for each quarter in the
form furnished to the Company's stockholders and certified by the Company's
principal financial or accounting officer;
ii) concurrently with furnishing such annual reports to
its stockholders, a balance sheet of the Company as at the end
of the preceding fiscal year, together with statements of
operations, stockholders' equity, and cash flows of the
Company for such fiscal year, accompanied by a copy of the
certificate thereon of independent certified public
accountants;
iii) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders;
iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with
the Commission, the NASD or any securities exchange;
v) every press release and every material news item or
article of interest to the financial community in respect of
the Company, or its affairs which was released or prepared by
or on behalf of the Company; and
vi) any additional information of a public nature
concerning the Company (and any future subsidiary) or its
businesses which the Representative may request.
During such seven-year period, if the Company has an active
subsidiary, the foregoing financial statements will be on a consolidated basis
to the extent that the accounts of the Company and its subsidiary are
consolidated, and will be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(i) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Common Stock.
(j) The Company will furnish to the Representative or
on the Representative's order, without charge, at such place as the
Representative may designate, copies
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of each Preliminary Prospectus, the Registration Statement and any pre-effective
or post-effective amendments thereto (two of which copies will be signed and
will include all financial statements and exhibits), the Prospectus, and all
amendments and supplements thereto, including any prospectus prepared after the
effective date of the Registration Statement, in each case as soon as available
and in such quantities as the Representative may request.
(k) On or before the effective date of the Registration
Statement, the Company shall provide the Representative with true copies of duly
executed, legally binding and enforceable agreements pursuant to which for a
period of 13 months from the effective date of the Registration Statement, the
holders of all shares of Common Stock and holders of securities exchangeable or
exercisable for or convertible into shares of Common Stock, agree that it or he
or she will not directly or indirectly, issue, offer to sell, sell, grant an
option for the sale of, assign, transfer, pledge, hypothecate, distribute or
otherwise encumber or dispose of any shares of Common Stock or securities
convertible into, exercisable or exchangeable for or evidencing any right to
purchase or subscribe for any shares of Common Stock (either pursuant to Rule
144 of the Rules and Regulations or otherwise) or dispose of any beneficial
interest therein without the prior written consent of the Representative
(collectively, the "Lock-up Agreements"). During the 13 month period commencing
with the effective date of the Registration Statement, the Company shall not,
without the prior written consent of the Representative, sell, contract or offer
to sell, issue, transfer, assign, pledge, hypothecate, distribute, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or any options,
rights or warrants with respect to any shares of Common Stock, except as set
forth in clause (s) of SECTION 4 hereof. On or before the Closing Date, the
Company shall deliver instructions to the Transfer Agent authorizing it to place
appropriate legends on the certificates representing the securities subject to
the Lock-up Agreements and to place appropriate stop transfer orders on the
Company's ledgers.
(l) Neither the Company, nor any of its officers,
directors, stockholders, nor any of their respective affiliates (within the
meaning of the Rules and Regulations) will take, directly or indirectly, any
action designed to, or which might in the future reasonably be expected to cause
or result in, stabilization or manipulation of the price of any securities of
the Company.
(m) The Company shall apply the net proceeds from the
sale of the Securities in the manner, and subject to the conditions, set forth
under "Use of Proceeds" in the Prospectus. Except as described in the
Prospectus, no portion of the net proceeds will be used, directly or indirectly,
to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports,
forms or other documents as may be required (including, but not limited to, a
Form SR as may be required pursuant to Rule 463 under the Act) from time to
time, under the Act, the Exchange Act, and the Rules and Regulations, and all
such reports, forms and documents filed will comply as to form and substance
with the applicable requirements under the Act, the Exchange Act, and the Rules
and Regulations.
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<PAGE>
(o) The Company shall furnish to the Representative as
early as practicable prior to each of the date hereof, the Closing Date and each
Option Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in its letter to be
furnished pursuant to SECTION 6(i) hereof.
(p) The Company shall cause the Common Stock to be
quoted on NNM and for a period of seven (7) years from the date hereof, use its
best efforts to maintain the NNM quotation of the Common Stock to the extent
outstanding.
(q) For a period of five (5) years from the Closing
Date, the Company shall furnish to the Representative at the Representative's
request and at the Company's sole expense, (i) daily consolidated transfer
sheets relating to the Common Stock (ii) the list of holders of all of the
Company's securities and (iii) a Blue Sky "Trading Survey" for secondary sales
of the Company's securities prepared by counsel to the Company.
(r) As soon as practicable, (i) but in no event more
than 5 business days before the effective date of the Registration Statement,
file a Form 8-A with the Commission providing for the registration under the
Exchange Act of the Securities and (ii) but in no event more than 30 days from
the effective date of the Registration Statement, take all necessary and
appropriate actions to be included in Standard and Poor's Corporation
Descriptions and Moody's OTC Manual and to continue such inclusion for a period
of not less than seven (7) years.
(s) The Company hereby agrees that it will not for a
period of thirteen (13) months from the effective date of the Registration
Statement, adopt, propose to adopt or otherwise permit to exist any employee,
officer, director, consultant or compensation plan or arrangement permitting the
grant, issue or sale of any shares of Common Stock or other securities of the
Company (i) in an amount greater than an aggregate of 375,000 shares, (ii) at an
exercise or sale price per share less than the greater of (a) the initial public
offering price of the Shares set forth herein and (b) the fair market value of
the Common Stock on the date of grant or sale, (iii) to any direct or indirect
beneficial holder on the date hereof of more than 10% of the issued and
outstanding shares of Common Stock, (iv) with the payment for such securities
with any form of consideration other than cash, (v) upon payment of less than
the full purchase or exercise price for such shares of Common Stock or other
securities of the Company on the date of grant or issuance, or (vi) permitting
the existence of stock appreciation rights, phantom options or similar
arrangements. The Company further agrees that it will not issue any stock
options to Pierre G. Mansur for a period of thirteen (13) months from the
effective date of the Registration Statement.
(t) Until the completion of the distribution of the
Shares, the Company shall not without the prior written consent of the
Representative and Underwriters' Counsel, issue, directly or indirectly, any
press release or other communication or hold any press conference with respect
to the Company or its activities or the offering contemplated hereby,
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other than trade releases issued in the ordinary course of the Company's
business consistent with past practices with respect to the Company's
operations.
(u) For a period equal to the lesser of (i) seven (7)
years from the date hereof, and (ii) the sale to the public of the
Representative's Shares, the Company will not take any action or actions which
may prevent or disqualify the Company's use of Form S-1 (or other appropriate
form) for the registration under the Act of the Representative's Shares.
(v) For a period of five (5) years after the effective
date of the Registration Statement, the Representative shall have the right to
designate for election one (1) individual to the Company's Board of Directors
(the "Board"). In the event the Representative elects not to exercise such
right, then it may designate one (1) individual to attend meetings of the
Company's Board. The Company shall notify the Representative of each meeting of
the Board and the Company shall send to such individual all notices and other
correspondence and communications sent by the Company to members of the Board.
Such individual shall be reimbursed for all out-of-pocket expenses incurred in
connection with his attendance of meetings of the Board.
5. PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date (to the extent not paid at the Closing
Date) all expenses and fees (other than fees of Underwriters' Counsel, except as
provided in (iv) below) incident to the performance of the obligations of the
Company under this Agreement and the Representative's Warrant Agreement,
including, without limitation, (i) the fees and expenses of accountants and
counsel for the Company, (ii) all costs and expenses incurred in connection with
the preparation, duplication, printing, (including mailing and handling charges)
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments and
supplements thereto and the printing, mailing (including the payment of postage
with respect thereto) and delivery of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreements, and related documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriters and such dealers as the Underwriters may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and delivery of the
Securities including, but not limited to, (x) the purchase by the Underwriters
of the Shares and the purchase by the Representative of the Representative's
Warrants from the Company, (y) the consummation by the Company of any of its
obligations under this Agreement and the Representative's Warrant Agreement, and
(z) resale of the Shares by the Underwriters in connection with the distribution
contemplated hereby, (iv) the qualification of the Securities under state or
foreign securities or "Blue Sky" laws and determination of the status of such
securities under legal investment laws, including the costs of printing and
mailing the "Preliminary Blue Sky Memorandum," the "Supplemental Blue Sky
Memorandum" and "Legal Investments Survey," if any, and disbursements and fees
of counsel in connection therewith (such fees not to exceed $40,000), (v) costs
and expenses in connection with due diligence investigations, including but not
limited to the fees of any independent counsel or consultant retained, (vi) fees
and expenses of the transfer agent and registrar, (vii) applications for
assignments of a rating of the Securities by qualified rating agencies,
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(viii) the fees payable to the Commission and the NASD, and (ix) the fees and
expenses incurred in connection with the quotation of the Securities on NNM and
any other exchange.
(b) If this Agreement is terminated by the Underwriters
in accordance with the provisions of SECTION 6 or SECTION 12, the Company shall
reimburse and indemnify the Representative for all of its actual out-of-pocket
expenses, including the fees and disbursements of Underwriters' Counsel, less
any amounts already paid pursuant to SECTION 5(c) hereof.
(c) The Company further agrees that, in addition to the
expenses payable pursuant to subsection (a) of this SECTION 5, it will pay to
the Representative on the Closing Date by certified or bank cashier's check or,
at the election of the Representative, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to three
percent (3%) of the gross proceeds received by the Company from the sale of the
Firm Shares, $50,000 of which has been paid to date. In the event the
Representative elect to exercise the over-allotment option described in SECTION
2(b) hereof, the Company agrees to pay to the Representative on the Option
Closing Date (by certified or bank cashier's check or, at the Representative's
election, by deduction from the proceeds of the Option Shares) a non-accountable
expense allowance equal to three percent (3%) of the gross proceeds received by
the Company from the sale of the Option Shares.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Underwriters hereunder shall be subject to the continuing
accuracy of the representations and warranties of the Company herein as of the
date hereof and as of the Closing Date and each Option Closing Date, if any,
with respect to the Company as if it had been made on and as of the Closing Date
or each Option Closing Date, as the case may be; the accuracy on and as of the
Closing Date or Option Closing Date, if any, of the statements of the officers
of the Company made pursuant to the provisions hereof; and the performance by
the Company on and as of the Closing Date and each Option Closing Date, if any,
of its covenants and obligations hereunder and to the following further
conditions:
(a) The Registration Statement shall have become
effective not later than 12:00 Noon, New York time, on the date of this
Agreement or such later date and time as shall be consented to in writing by the
Representative, and, at Closing Date and each Option Closing Date, if any, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or
shall be pending or contemplated by the Commission and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of Underwriters' Counsel. If the Company has elected
to rely upon Rule 430A of the Rules and Regulations, the price of the Shares and
any price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to Closing Date the Company shall
have provided evidence satisfactory to the Representative of such timely filing,
or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations.
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(b) The Representative shall not have advised the
Company that the Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in the Representative's opinion, is material, or
omits to state a fact which, in the Representative's opinion, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Representative's opinion, is material, or
omits to state a fact which, in the Representative's opinion, is material and is
required to be stated therein or is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representative
shall have received from Underwriters' Counsel, such opinion or opinions with
respect to the organization of the Company, the validity of the Securities, the
Representative's Warrants, the Registration Statement, the Prospectus and other
related matters as the Representative may request and Underwriters' Counsel
shall have received such papers and information as they request to enable them
to pass upon such matters.
(d) At Closing Date, the Underwriters shall have
received the favorable opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen &
Quentel, P.A., counsel to the Company, dated the Closing Date, addressed to the
Underwriters and in form and substance satisfactory to Underwriters' Counsel, to
the effect that:
i) the Company (A) has been duly organized and is
validly existing as a corporation in good standing under the
laws of its jurisdiction, (B) is duly qualified and licensed
and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such
qualification or licensing, and (C) has all requisite
corporate power and authority; and the Company has obtained
any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including,
without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its
properties and conduct its business as described in the
Prospectus; the Company is and has been doing business in
material compliance with all such authorizations, approvals,
orders, licenses, certificates, franchises and permits and all
federal, state and local laws, rules and regulations; the
Company has not received any notice of proceedings relating to
the revocation or modification of any such authorization,
approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially
adversely affect the business, operations, condition,
financial or otherwise, or the earnings, business affairs,
position, prospects, value, operation, properties, business or
results of operations of the Company. The disclosures in the
Registration Statement concerning the effects of federal,
state and local laws, rules and regulations on the Company's
business as currently conducted and as contemplated are
correct in all material respects and do not omit to state a
fact
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necessary to make the statements contained therein not
misleading in light of the circumstances in which they were
made;
ii) to the best of such counsel's knowledge, the
Company does not own an interest in any other corporation,
partnership, joint venture, trust or other business entity;
iii) the Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and
any amendment or supplement thereto, under "Capitalization"
and "Description of Capital Stock," and the Company is not a
party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock,
rights, warrants, options or other securities, except for this
Agreement, the Representative's Warrant Agreement and as
described in the Prospectus. The Securities, and all other
securities issued or issuable by the Company conform in all
material respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus.
All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of
rescission with respect thereto, and are not subject to
personal liability by reason of being such holders; and none
of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company. The
Shares, the Representative's Warrants and the Representative's
Shares to be sold by the Company hereunder and under the
Representative's Warrant Agreement are not and will not be
subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid
for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable and conform to
the description thereof contained in the Prospectus; the
holders thereof will not be subject to any liability solely as
such holders; all corporate action required to be taken for
the authorization, issue and sale of the Shares, the
Representative's Warrants and the Representative's Shares has
been duly and validly taken; and the certificates representing
the Shares and the Representative's Warrants are in due and
proper form. The Representative's Warrants constitute valid
and binding obligations of the Company to issue and sell, upon
exercise thereof and payment therefor, the number and type of
securities of the Company called for thereby. Upon the
issuance and delivery pursuant to this Agreement and the
Representative's Warrant Agreement of the Shares and the
Representative's Warrants, respectively, to be sold by the
Company, the Underwriters and the Representative,
respectively, will acquire good and marketable title to the
Shares and Representative's Warrants free and clear of any
pledge, lien, charge, claim, encumbrance, pledge, security
interest, or other restriction or equity of any kind
whatsoever. No transfer tax is payable by or on behalf of the
Underwriters in connection with (A) the issuance by the
Company of the Shares, (B) the purchase by the Underwriters
and the Representative of the Shares and the Representative's
Warrants, respectively, from the Company, (C) the consummation
by the Company of any of its obligations under this Agreement
or the Representative's
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Warrant Agreement, or (D) resales of the Shares in connection
with the distribution contemplated hereby;
iv) The conversion of $1,012,500 in principal amount
of the Convertible Notes into an aggregate of 150,000 shares
of Common Stock of the Company as set forth in the Prospectus
has been duly authorized by the Company, the holders of the
Convertible Notes and the shareholders of the Company, if
applicable, in accordance with all agreements, documents,
understandings and instruments affecting the rights, duties,
responsibilities, obligations and/or privileges of holders of
the Convertible Notes or to which the Company is bound,
including without limitation, the Convertible Notes, the
Company's certificate of incorporation and the Company's
by-laws; and upon the consummation of the Offering, without
any further action of the Company, any holder of a Convertible
Note(s) or any shareholder of the Company, the aggregate
outstanding principal amount of the Convertible Notes will
simultaneously convert into 150,000 validly issued, fully paid
and nonassessable shares of Common Stock;
v) the Registration Statement is effective under the
Act, and, if applicable, filing of all pricing information has
been timely made in the appropriate form under Rule 430A, and
no stop order suspending the use of the Preliminary
Prospectus, the Registration Statement or Prospectus or any
part of any thereof or suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or, to the
best of such counsel's knowledge, threatened or contemplated
under the Act;
vi) each of the Preliminary Prospectus, the
Registration Statement, and the Prospectus and any amendments
or supplements thereto (other than the financial statements
and other financial and statistical data included therein, as
to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the
Rules and Regulations;
vii) to the best of such counsel's knowledge, (A)
there are no agreements, contracts or other documents required
by the Act to be described in the Registration Statement and
the Prospectus and filed as exhibits to the Registration
Statement other than those described in the Registration
Statement (or required to be filed under the Exchange Act if
upon such filing they would be incorporated, in whole or in
part, by reference therein) and the Prospectus and filed as
exhibits thereto, and the exhibits which have been filed are
correct copies of the documents of which they purport to be
copies; (B) the descriptions in the Registration Statement and
the Prospectus and any supplement or amendment thereto of
contracts and other documents to which the Company is a party
or by which it is bound, including any document to which the
Company is a party or by which it is bound, incorporated by
reference into the Prospectus and any supplement or amendment
thereto, are accurate in all material respects and fairly
represent the information required to be shown by Form S-1;
(C) there is not pending or threatened against the Company any
action, arbitration, suit,
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proceeding, inquiry, investigation, litigation, governmental
or other proceeding (including, without limitation, those
having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or
circumstances that may give rise to the same), or involving
the properties or business of the Company which (x) is
required to be disclosed in the Registration Statement which
is not so disclosed (and such proceedings as are summarized in
the Registration Statement are accurately summarized in all
material respects), (y) questions the validity of the capital
stock of the Company or this Agreement or the Representative's
Warrant Agreement, or of any action taken or to be taken by
the Company pursuant to or in connection with any of the
foregoing; (D) no statute or regulation or legal or
governmental proceeding required to be described in the
Prospectus is not described as required; and (E) there is no
action, suit or proceeding pending, or threatened, against or
affecting the Company before any court or arbitrator or
governmental body, agency or official (or any basis thereof
known to such counsel) in which there is a reasonable
possibility of an adverse decision which may result in a
material adverse change in the condition, financial or
otherwise, or the earnings, position, prospects, stockholders'
equity, value, operation, properties, business or results of
operations of the Company, which could adversely affect the
present or prospective ability of the Company to perform its
obligations under this Agreement or the Representative's
Warrant Agreement or which in any manner draws into question
the validity or enforceability of this Agreement or the
Representative's Warrant Agreement;
viii) the Company has full legal right, power and
authority to enter into each of this Agreement and the
Representative's Warrant Agreement, and to consummate the
transactions provided for herein and therein; and each of this
Agreement and the Representative's Warrant Agreement has been
duly authorized, executed and delivered by the Company. Each
of this Agreement and the Representative's Warrant Agreement,
assuming due authorization, execution and delivery by each
other party thereto constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms (except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law), and none of
the Company's execution or delivery of this Agreement and the
Representative's Warrant Agreement, its performance hereunder
or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business
as described in the Registration Statement, the Prospectus,
and any amendments or supplements thereto, or the conversion
of the Convertible Notes as set forth in the Registration
Statement, the Prospectus and any amendments or supplements
thereto, conflicts with or will conflict with or results or
will result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default
under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect
or other restriction or equity of any
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kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of, (A) the
certificate of incorporation or by-laws of the Company, (B)
any license, contract, indenture, mortgage, deed of trust,
voting trust agreement, stockholders agreement, note, loan or
credit agreement or any other agreement or instrument to which
the Company is a party or by which it is or may be bound or to
which any of its respective properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (C)
any statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or
body (including, without limitation, those having jurisdiction
over environmental or similar matters), domestic or foreign,
having jurisdiction over the Company or any of its activities
or properties;
ix) except as described in the Prospectus, no
consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other
body (other than such as may be required under Blue Sky laws,
as to which no opinion need be rendered) is required in
connection with the issuance of the Shares pursuant to the
Prospectus, the issuance of the Representative's Warrants, and
the Registration Statement, the performance of this Agreement
and the Representative's Warrant Agreement, and the
transactions contemplated hereby and thereby;
x) the properties and business of the Company
conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus;
and the Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and
personal property stated in the Prospectus to be owned or
leased by it, in each case free and clear of all liens,
charges, claims, encumbrances, pledges, security interests,
defects or other restrictions or equities of any kind
whatsoever, other than those referred to in the Prospectus and
liens for taxes not yet due and payable;
xi) to the best knowledge of such counsel, the
Company is not in breach of, or in default under, any term or
provision of any license, contract, indenture, mortgage,
installment sale agreement, deed of trust, lease, voting trust
agreement, stockholders' agreement, partnership agreement,
note, loan or credit agreement or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party
or by which the Company may be bound or to which the property
or assets (tangible or intangible) of the Company is subject
or affected; and the Company is not in violation of any term
or provision of its certificate of incorporation by-laws, or
in violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation;
xii) the statements in the Prospectus under
"BUSINESS," "MANAGEMENT," "PRINCIPAL SHAREHOLDERS," "CERTAIN
TRANSACTIONS," "DESCRIPTION OF CAPITAL STOCK," and "SHARES
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<PAGE>
ELIGIBLE FOR FUTURE SALE" have been reviewed by such counsel,
and insofar as they refer to statements of law, descriptions
of statutes, licenses, rules or regulations or legal
conclusions, are correct in all material respects;
xiii) the Shares have been accepted for quotation on
NNM;
xiv) the persons listed under the caption "PRINCIPAL
SHAREHOLDERS" in the Prospectus are the respective "beneficial
owners" (as such phrase is defined in regulation 13d-3 under
the Exchange Act) of the securities set forth opposite their
respective names thereunder as and to the extent set forth
therein;
xv) except as described in the Prospectus, no person,
corporation, trust, partnership, association or other entity
has the right to include and/or register any securities of the
Company in the Registration Statement, require the Company to
file any registration statement or, if filed, to include any
security in such registration statement;
xvi) except as described in the Prospectus, there are
no claims, payments, issuances, arrangements or understandings
for services in the nature of a finder's or origination fee
with respect to the sale of the Securities hereunder or
financial consulting arrangement or any other arrangements,
agreements, understandings, payments or issuances that may
affect the Underwriters' compensation, as determined by the
NASD;
xvii) assuming due execution by the parties thereto
other than the Company, the Lock-up Agreements are legal,
valid and binding obligations of parties thereto, enforceable
against the party and any subsequent holder of the securities
subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles
in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law);
and
xviii) except as described in the Prospectus, the
Company does not (A) maintain, sponsor or contribute to any
ERISA Plans, (B) maintain or contribute, now or at any time
previously, to a defined benefit plan, as defined in Section
3(35) of ERISA, and (C) has never completely or partially
withdrawn from a "multiemployer plan".
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and related matters were discussed and,
although such
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<PAGE>
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which lead
them to believe that either the Registration Statement or any amendment thereto,
at the time such Registration Statement or amendment became effective or the
Preliminary Prospectus or Prospectus or amendment or supplement thereto as of
the date of such opinion contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or Prospectus).
Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written policy
or other document relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991), or any
comparable State bar accord.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance satisfactory to Underwriters'
Counsel) of other counsel acceptable to Underwriters' Counsel, familiar with the
applicable laws; (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company, and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and that the
Representative and they are justified in relying thereon.
At each Option Closing Date, if any, the Underwriters shall
have received the favorable opinion of Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A., counsel to the Company, dated the Option Closing Date,
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel confirming as of Option Closing Date the statements made
by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., in its opinion
delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the
Option Closing Date, if any, Underwriters' Counsel shall have been furnished
such documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this SECTION 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company, or herein contained.
(f) Prior to each of the Closing Date and each Option
Closing Date, if any, (i) there shall have been no material adverse change nor
development involving a prospective
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<PAGE>
change in the condition, financial or otherwise, prospects, stockholders' equity
or the business activities of the Company, whether or not in the ordinary course
of business, from the latest dates as of which such condition is set forth in
the Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, from the latest date as of which the financial condition of the Company
is set forth in the Registration Statement and Prospectus which is materially
adverse to the Company; (iii) the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness; (iv) the
Company shall not have issued any securities (other than the Securities); the
Company shall not have declared or paid any dividend or made any distribution in
respect of its capital stock of any class; and there has not been any change in
the capital stock of the Company, or any material change in the debt (long or
short term) or liabilities or obligations of the Company (contingent or
otherwise); (v) no material amount of the assets of the Company shall have been
pledged or mortgaged, except as set forth in the Registration Statement and
Prospectus; (vi) no action, suit or proceeding, at law or in equity, shall have
been pending or threatened (or circumstances giving rise to same) against the
Company, or affecting any of its properties or business before or by any court
or federal, state or foreign commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may adversely affect the
business, operations, prospects or financial condition or income of the Company,
except as set forth in the Registration Statement and Prospectus; and (vii) no
stop order shall have been issued under the Act and no proceedings therefor
shall have been initiated, threatened or contemplated by the Commission.
(g) At each of the Closing Date and each Option
Closing Date, if any, the Underwriters shall have received a certificate of the
Company signed by the principal executive officer and by the chief financial or
chief accounting officer of the Company, dated the Closing Date or Option
Closing Date, as the case may be, to the effect that each of such persons has
carefully examined the Registration Statement, the Prospectus and this
Agreement, and that:
(i) The representations and warranties of the Company
in this Agreement are true and correct, as if made on and as of the Closing Date
or the Option Closing Date, as the case may be, and the Company has complied
with all agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to such Closing
Date or Option Closing Date, as the case may be;
ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been instituted or are pending or, to the best of each of
such person's knowledge, after due inquiry are contemplated or threatened under
the Act;
iii) The Registration Statement and the Prospectus and,
if any, each amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be
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<PAGE>
stated therein or necessary to make the statements therein not
misleading and neither the Preliminary Prospectus or any
supplement thereto included any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; and
iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (a) the Company has not incurred up to and
including the Closing Date or the Option Closing Date, as the
case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or
contingent; (b) the Company has not paid or declared any
dividends or other distributions on its capital stock; (c) the
Company has not entered into any transactions not in the
ordinary course of business; (d) there has not been any change
in the capital stock of the Company or any material change in
the debt (long or short-term) of the Company; (e) the Company
has not sustained any material loss or damage to its property
or assets, whether or not insured; (g) there is no litigation
which is pending or threatened (or circumstances giving rise
to same) against the Company, or any affiliated party of any
of the foregoing which is required to be set forth in an
amended or supplemented Prospectus which has not been set
forth; and (h) there has occurred no event required to be set
forth in an amended or supplemented Prospectus which has not
been set forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(h) By the Closing Date, the Underwriters will have
received clearance from the NASD as to the amount of compensation allowable or
payable to the Underwriters, as described in the Registration Statement.
(i) At the time this Agreement is executed, the
Underwriters shall have received a letter, dated such date, addressed to the
Underwriters in form and substance satisfactory (including the non-material
nature of the changes or decreases, if any, referred to in clause (iii) below)
in all respects to the Underwriters and Underwriters' Counsel, from KPMG Peat
Marwick, L.L.P.;
(i) confirming that they are independent certified
public accountants with respect to the Company within the
meaning of the Act and the applicable Rules and Regulations;
ii) stating that it is their opinion that the
financial statements and supporting schedules of the Company
included in the Registration Statement comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations
thereunder and that the Representative may rely upon the
opinion of KPMG Peat Marwick, L.L.P. with
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<PAGE>
respect to such financial statements and supporting schedules
included in the Registration Statement;
iii) stating that, on the basis of a limited review
which included a reading of the latest available unaudited
interim financial statements of the Company, a reading of the
latest available minutes of the stockholders and board of
directors and the various committees of the boards of
directors of the Company, consultations with officers and
other employees of the Company responsible for financial and
accounting matters and other specified procedures and
inquiries, nothing has come to their attention which would
lead them to believe that (A) the pro forma financial
information contained in the Registration Statement and
Prospectus does not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
Rules and Regulations or is not fairly presented in conformity
with generally accepted accounting principles applied on a
basis consistent with that of the audited financial statements
of the Company or the unaudited pro forma financial
information included in the Registration Statement, (B) the
unaudited financial statements and supporting schedules of the
Company included in the Registration Statement do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and
Regulations or are not fairly presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements of the Company included in the Registration
Statement, or (C) at a specified date not more than five (5)
days prior to the effective date of the Registration
Statement, there has been any change in the capital stock of
the Company, any change in the long-term debt of the Company,
or any decrease in the stockholders' equity of the Company or
any decrease in the net current assets or net assets of the
Company as compared with amounts shown in the June 30, 1996
balance sheets included in the Registration Statement, other
than as set forth in or contemplated by the Registration
Statement, or, if there was any change or decrease, setting
forth the amount of such change or decrease, and (D) during
the period from June 30, 1996 to a specified date not more
than five (5) days prior to the effective date of the
Registration Statement, there was any decrease in net revenues
or net earnings of the Company or increase in net earnings per
common share of the Company, in each case as compared with the
corresponding period beginning June 30, 1995 other than as set
forth in or contemplated by the Registration Statement, or, if
there was any such decrease, setting forth the amount of such
decrease;
iv) setting forth, at a date not later than five (5)
days prior to the date of the Registration Statement, the
amount of liabilities of the Company (including a break-down
of commercial paper and notes payable to banks);
v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and
earnings, statements and other financial information
pertaining to the Company set forth in the Prospectus in each
case to the extent that such amounts, numbers, percentages,
statements and information
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<PAGE>
may be derived from the general accounting records, including
work sheets, of the Company and excluding any questions
requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries
and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found
them to be in agreement; and
vi) statements as to such other matters incident to
the transaction contemplated hereby as the Representative may
request.
(j) At the Closing Date and each Option Closing Date,
if any, the Underwriters shall have received from KPMG Peat Marwick, L.L.P. a
letter, dated as of the Closing Date or the Option Closing Date, as the case may
be, to the effect that they reaffirm the statements made in the letter furnished
pursuant to SUBSECTION (i) of this Section hereof except that the specified date
referred to shall be a date not more than five days prior to the Closing Date or
the Option Closing Date, as the case may be, and, if the Company has elected to
rely on Rule 430A of the Rules and Regulations, to the further effect that they
have carried out procedures as specified in clause (v) of SUBSECTION (i) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Representative and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
(k) The Company shall have delivered to the
Representative a letter from KPMG Peat Marwick, L.L.P. addressed to the Company
stating that they have not during the immediately preceding two year period
brought to the attention of the Company's management any "weakness" as defined
in Statement of Auditing Standards No. 60 "Communication of Internal Control
Structure Related Matters Noted in an Audit," in any of the Company's internal
controls.
(l) On or before the Closing Date, the Underwriters
shall have received the favorable opinion of [____________________], special
intellectual property counsel to the Company, dated the Closing Date, addressed
to the Underwriters, in form and substance satisfactory to Underwriters'
Counsel, and in substantially the form of EXHIBIT A attached hereto.
At each Option Closing date, if any, the Underwriters
shall have received the favorable opinion of [___________________], dated the
relevant Option Closing Date, addressed to the Underwriters and in form and
substance satisfactory to Underwriter's Counsel confirming, as of the Option
Closing Date, the statements made by [___________________], in its opinion
delivered on the Closing Date.
(m) On each of the Closing Date and Option Closing
Date, if any, there shall have been duly tendered to the Representative for the
several Underwriters' accounts the appropriate number of Shares.
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<PAGE>
(n) No order suspending the sale of the Securities in
any jurisdiction designated by the Representative pursuant to subsection (e) of
SECTION 4 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(o) On or before the Closing Date, the Company shall
have executed and delivered to the Representative, (i) the Representative's
Warrant Agreement substantially in the form filed as Exhibit 4.2 to the
Registration Statement in final form and substance satisfactory to the
Representative, and (ii) the Representative's Warrants in such denominations and
to such designees as shall have been provided to the Company.
(p) On or before the Closing Date, the Shares shall
have been duly approved for quotation on NNM, subject to official notice of
issuance.
(q) On or before the Closing Date, there shall have
been delivered to the Representative all of the Lock-up Agreements, in form and
substance satisfactory to Underwriters' Counsel.
If any condition to the Underwriters' obligations hereunder to
be fulfilled prior to or at the Closing Date or the relevant Option Closing
Date, as the case may be, is not so fulfilled, the Representative may terminate
this Agreement or, if the Representative so elect, it may waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
7. INDEMNIFICATION.
(a) The Company, agrees to indemnify and hold
harmless each of the Underwriters (for purposes of this SECTION 7 "Underwriter"
shall include the officers, directors, partners, employees, agents and counsel
of the Underwriter, including specifically each person who may be substituted
for an Underwriter as provided in SECTION 11 hereof), and each person, if any,
who controls the Underwriter ("controlling person") within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, from and against any
and all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, investigations, inquiries, and suits in respect thereof),
whatsoever (including but not limited to any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) any untrue statement
or alleged untrue statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from time to time
amended and supplemented); (ii) in any post-effective amendment or amendments or
any new registration statement and prospectus in which is included securities of
the Company issued or issuable upon exercise of the Securities; or (iii) in any
application or other document or written communication (in this SECTION 7
collectively called "application") executed by the Company or based upon written
information furnished by the Company filed, delivered or used in any
jurisdiction in
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<PAGE>
order to qualify the Securities under the securities laws thereof or filed with
the Commission, any state securities commission or agency, NNM or any other
securities exchange, (B) the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of the Prospectus, in the light of the
circumstances under which they were made), or (C) any breach of any
representation, warranty, covenant or agreement of the Company contained herein
or in any certificate by or on behalf of the Company or any of its officers
delivered pursuant hereto unless, in the case of clause (A) or (B) above, such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to any Underwriter by or on
behalf of such Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto, or in any application, as the case may be.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but
not jointly, to indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of the Act, to the
same extent as the foregoing indemnity from the Company to the Underwriters but
only with respect to statements or omissions, if any, made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any application made in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
any Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this Offering. The
Company acknowledges that the statements with respect to the public offering of
the Securities set forth under the heading "Underwriting" and the stabilization
legend in the Prospectus have been furnished by the Underwriters expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which the Underwriters may have at common law or
otherwise.
(c) Promptly after receipt by an indemnified party
under this SECTION 7 of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in respect thereof is to be
made against one or more indemnifying parties under this SECTION 7, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this SECTION 7 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may have otherwise). In case any such
action, investigation, inquiry, suit or proceeding is brought against any
indemnified party, and it notifies an indemnifying party or parties of the
commencement
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<PAGE>
thereof, the indemnifying party or parties will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action at the expense of the indemnifying
party, (ii) the indemnifying parties shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action, investigation, inquiry, suit or proceeding on behalf of
the indemnified party or parties), in any of which events such fees and expenses
of one additional counsel shall be borne by the indemnifying parties. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action,
investigation, inquiry, suit or proceeding or separate but similar or related
actions, investigations, inquiries, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances.
Anything in this SECTION 7 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; PROVIDED, HOWEVER, that such consent was not
unreasonably withheld. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action,
investigation, inquiry, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party form all liability arising out of such claim, action, suit or
proceeding and (ii) doe snot include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this SECTION 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this SECTION 7 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions, investigations, inquiries, suits or proceedings in respect thereof) (A)
in such proportion as is appropriate to reflect the relative benefits received
by each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the Securities or (B) if the
allocation provided by clause (A) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
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<PAGE>
referred to in clause (i) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is the contributing
party and the Underwriters are the indemnified party, the relative benefits
received by the Company on the one hand, and the Underwriters, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions, investigations, inquiries,
suits or proceedings in respect thereof) referred to above in this subdivision
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action, claim, investigation, inquiry, suit or proceeding. Notwithstanding the
provisions of this subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this SECTION 7, each person, if
any, who controls the Company within the meaning of the Act, each officer of the
Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit, inquiry,
investigation or proceeding against such party in respect to which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this subparagraph (d), or to
the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements at the Closing
Date and the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the indemnity agreements contained
in SECTION 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, any controlling person of any Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and delivery of the
Securities to the Underwriters and the Representative, as the case may be.
- 34 -
<PAGE>
9. EFFECTIVE DATE.
(a) This Agreement shall become effective at 10:00
a.m., New York City time, on the next full business day following the date
hereof, or at such earlier time after the Registration Statement becomes
effective as the Representative, in its discretion, shall release the Shares for
sale to the public; PROVIDED, HOWEVER, that the provisions of SECTIONS 5, 7 and
10 of this Agreement shall at all times be effective. For purposes of this
SECTION 9, the Shares to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representative of telegrams to
securities dealers releasing such shares for offering or the release by the
Representative for publication of the first newspaper advertisement which is
subsequently published relating to the Shares.
10. TERMINATION.
(a) Subject to subsection (b) of this SECTION 10, the
Representative shall have the right to terminate this Agreement, after the date
hereof, (i) if any domestic or international event or act or occurrence has
materially disrupted, or in the Representative's opinion will in the immediate
future materially adversely disrupt the financial markets; or (ii) any material
adverse change in the financial markets shall have occurred; or (iii) if trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Boston Stock Exchange, the
Chicago Board of Trade, the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange, the Commission or any other government authority having
jurisdiction; or (iv) if trading of any of the securities of the Company shall
have been suspended, or any of the securities of the Company shall have been
delisted, on any exchange or in any over-the-counter market; or (v) if the
United States shall have become involved in a war or major hostilities, or if
there shall have been an escalation in an existing war or major hostilities or a
national emergency shall have been declared in the United States; or (vi) if a
banking moratorium has been declared by a state or federal authority; or (vii)
if a moratorium in foreign exchange trading has been declared; or (viii) if the
Company shall have sustained a loss material or substantial to the Company by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been insured, will,
in the Representative's opinion, make it inadvisable to proceed with the
delivery of the Securities; or (viii) if there shall have occurred any outbreak
or escalation of hostilities or any calamity or crisis or there shall have been
such a material adverse change in the conditions or prospects of the Company, or
such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere as in the Representative's
judgment would make it inadvisable to proceed with the offering, sale and/or
delivery of the Securities or (ix) if Paul I. Mansur and Pierre G. Mansur shall
no longer serve the Company in their present capacity.
(b) If this Agreement is terminated by the
Representative in accordance with the provisions of SECTION 10(a) the Company
shall promptly reimburse and indemnify the Representative for all of their
actual out-of-pocket expenses, including the fees and disbursements of counsel
for the Underwriters (less amounts previously paid pursuant to SECTION 5(c)
above). Notwithstanding any contrary provision contained in this Agreement, if
this
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<PAGE>
Agreement shall not be carried out within the time specified herein, or any
extension thereof granted to the Representative, by reason of any failure on the
part of the Company to perform any undertaking or satisfy any condition of this
Agreement by it to be performed or satisfied (including, without limitation,
pursuant to SECTION 6 or SECTION 12) then, the Company shall promptly reimburse
and indemnify the Representative for all of their actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriters (less
amounts previously paid pursuant to SECTION 5(c) above). In addition, the
Company shall remain liable for all Blue Sky counsel fees (such fees not to
exceed $40,000) and expenses and filing fees. Notwithstanding any contrary
provision contained in this Agreement, any election hereunder or any termination
of this Agreement (including, without limitation, pursuant to SECTIONS 6, 10, 11
and 12 hereof), and whether or not this Agreement is otherwise carried out, the
provisions of SECTION 5 and SECTION 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
11. SUBSTITUTION OF THE UNDERWRITERS. If one or more of
the Underwriters shall fail (otherwise than for a reason sufficient to justify
the termination of this Agreement under the provisions of SECTION 6, SECTION 10
or SECTION 12 hereof) to purchase the Securities which it or they are obligated
to purchase on such date under this Agreement (the "Defaulted Securities"), the
Representative shall have the right, within 24 hours thereafter, to make
arrangement for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not
exceed 10% of the total number of Firm Shares to be purchased
on such date, the non-defaulting Underwriters shall be
obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10%
of the total number of Firm Shares, this Agreement shall
terminate without liability on the part of any non-defaulting
Underwriters.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Representative shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
12. DEFAULT BY THE COMPANY. If the Company shall fail
at the Closing Date or at any Option Closing Date, as applicable, to sell and
deliver the number of Shares which it is obligated to sell hereunder on such
date, then this Agreement shall terminate (or, if such default shall occur with
respect to any Option Shares to be purchased on an Option Closing
- 36 -
<PAGE>
Date, the Underwriters may at the Representative's option, by notice from the
Representative to the Company, terminate the Underwriters' obligation to
purchase Option Shares from the Company on such date) without any liability on
the part of any non-defaulting party other than pursuant to SECTION 5, SECTION 7
and SECTION 10 hereof. No action taken pursuant to this Section shall relieve
the Company from liability, if any, in respect of such default.
13. NOTICES. All notices and communications hereunder,
except as herein otherwise specifically provided, shall be in writing and shall
be deemed to have been duly given if mailed or transmitted by any standard form
of telecommunication. Notices to the Underwriters shall be directed to the
Representative c/o First Allied Securities, Inc., 200 Park Avenue, 24th Floor,
New York, New York 10166, Attention: Scott A. Weisman, with a copy to Orrick,
Herrington & Sutcliffe, 666 Fifth Avenue, New York, New York 10103, Attention:
Lawrence B. Fisher, Esq. Notices to the Company shall be directed to the Company
at 8425 S.W. 129th Terrace, Miami, Florida 33156, Attention: Paul I. Mansur,
Chief Executive Officer, with a copy to Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A., 1221 Brickell Avenue, Miami, Florida 33131, Attention:
Gary M. Epstein, Esq.
14. PARTIES. This Agreement shall inure solely to the
benefit of and shall be binding upon, the Underwriters, the Company and the
controlling persons, directors and officers referred to in SECTION 7 hereof, and
their respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein contained. No purchaser of Securities from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
15. CONSTRUCTION. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York
without giving effect to the choice of law or conflict of laws principles.
16. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which taken together shall be deemed to be one and the same instrument.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Representative's Warrant Agreement constitute the entire agreement of the
parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representative
and the Company.
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<PAGE>
If the foregoing correctly sets forth the understanding
between the Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
MANSUR INDUSTRIES INC.
By:
Paul I. Mansur
Chief Executive Officer
Confirmed and accepted as of
the date first above written.
FIRST ALLIED SECURITIES, INC.
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:
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<PAGE>
SCHEDULE A
Member of Firm Shares
NAME OF UNDERWRITERS TO BE PURCHASED
First Allied Securities, Inc..........................
Total.................................................. 850,000
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<PAGE>
EXHIBIT A
[FORM OF INTELLECTUAL PROPERTY OPINION]
___________________, 1996
FIRST ALLIED SECURITIES, INC.
200 Park Avenue, 24th Floor
New York, New York 10166
Re: PUBLIC OFFERING OF MANSUR INDUSTRIES INC.
Gentlemen:
We have acted as special counsel to MANSUR INDUSTRIES Inc., a
Florida corporation (the "Company"), in connection with the entering into by the
Company of that certain Underwriting Agreement by and between First Allied
Securities, Inc. ("First Allied"), as representative of the several underwriters
named in Schedule A thereto, and the Company, dated _______________, 1996 (the
"Underwriting Agreement"). This opinion is provided to you pursuant to Section
____ of the Underwriting Agreement.
For the purpose of rendering the opinions set forth below we
have reviewed the following (collectively, the "Documents"):
(i) the Underwriting Agreement;
(ii) that certain Registration Statement filed _____,
1996, together with any and all amendments thereof exhibits
thereto (collectively, the "Registration Statement");
(iii) a search of the United States Patent and Trademark
Office records relevant to ownership of any and all:
patents and patent applications (including, without
limitation, the patents and patent applications listed
on Schedule A annexed hereto and hereby incorporated
by reference herein (collectively, the "Patents")),
and trademarks, trademark applications, service marks
and service mark applications (collectively, the
"Marks") (including, without limitation, the Marks
listed on Schedule B annexed hereto and hereby
incorporated by reference herein (collectively, the
"Trademarks")),
<PAGE>
First Allied Securities, Inc. __________, 1996
owned, purportedly owned or licensed by the Company
(including, those patents, patent applications and Marks
licensed, without limitation, pursuant to the licenses listed
on Schedule C annexed hereto and hereby incorporated by
reference herein (collectively, the "Licenses")), conducted by
______________________________ and certified as true and
correct as of _______________________, 1996 (no earlier than 5
days prior to the date of the Closing (as defined in the
Underwriting Agreement));
(v) _____ a search of the United States Copyright Office
records relevant to ownership of any and all copyrighted
material (including, without limitation, the copyright in, or
license permitting the Company's actual use of, the material
licensed or otherwise distributed by the Company and listed on
Schedule D annexed hereto and hereby incorporated by reference
herein (collectively, the "Copyrighted Material")), owned,
purportedly owned or licensed by the Company conducted by
_____________________ and certified as true and correct as of
__________________, 1996 (no earlier than 5 days prior to the
date of the Closing);
(vi) ____ an intellectual property litigation search with
respect to all Patents, Trademarks, Licenses and Copyrighted
Material, listed on Schedules A, B, C and D, respectively;
(vii) a search of the Uniform Commercial Code ("UCC")
recordation offices, in the following jurisdictions --
[________________, _____________ and _______], with respect to
the following two categories of general intangibles:
(a) the intellectual property general intangibles of
the Company, including, without limitation, the
Company's patents, patent applications, inventions,
know how, trademarks, service marks, copyrights,
service and trade names, intellectual property
licenses and other rights, and
(b) the intellectual property general intangibles
licensed to the Company, including, without
limitation, the patents, patent applications,
inventions, know how, trademarks, service marks,
copyrights, service and trade names and other
intellectual property rights licensed to the Company
pursuant to the Licenses (listed on Schedule C),
said search certified to us as complete and accurate by
________________ and current through ________________________,
1996 (no earlier than 5 days prior to the date of the Closing)
and said jurisdictions being the only jurisdictions in which
filing of UCC financing statements or other documents may be
filed to effectively evidence a security or other interest in
said general intangibles; and
A-2
<PAGE>
First Allied Securities, Inc. __________, 1996
(viii) any and all records, documents, instruments and
agreements in our possession or under our control relating to
the Company.
We have also examined such corporate records, documents,
instruments and agreements, and inquired into such other matters, as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
Whenever our opinion herein is qualified by the phrase "to the best of our
knowledge" or "to the best of our knowledge, after due inquiry," such language
means that, based upon (i) our inquiries of officers of the Company, (ii) our
review of the Documents, and (iii) our review of such other corporate records,
documents, instruments and agreements described in the first sentence of this
paragraph, we believe that such opinions are factually correct.
To the best of our knowledge, as to all matters of fact
represented to you by the Company, we advise you that nothing has come to our
attention that would cause us to believe that such facts are incorrect,
incomplete or misleading or that reliance thereon is not warranted under the
circumstances. We call to your attention that our opinion is limited to such
facts as they exist on the date hereof and do not take into account any change
of circumstances, fact or law subsequent thereto.
Based upon and subject to the foregoing, we are of the opinion
that:
1. To the best of our knowledge, after due inquiry,
except as described in the Registration Statement, the Company
owns or has the right to use, free and clear of all liens,
encumbrances, pledges, security interests, defects or other
restrictions or equities of any kind whatsoever,
(i) all patents and patent applications (including,
without limitation, the Patents),
(ii) all trademarks and service marks (including,
without limitation, the Trademarks),
(iii) all copyrights (including, without limitation,
the Copyrighted Material),
(iv) all service and trade names, and
(v) all intellectual property licenses (including,
without limitation, the Licenses),
used in, or required for, the conduct of the Company's
business.
A-3
<PAGE>
First Allied Securities, Inc. __________, 1996
2. To the best of our knowledge, after due inquiry,
the Company possesses all material intellectual property
licenses or rights used in, or required for, the conduct of
its business (including, the Licenses and without limitation,
any such licenses or rights described in the Registration
Statement as being owned, possessed or licensed by the
Company, as the case may be) and such licenses and rights are
in full force and effect.
3. To the best of our knowledge, after due inquiry,
there is no claim or action, pending, threatened or potential,
which affects or could affect the rights of the Company with
respect to any trademarks, service marks, copyrights, service
names, trade names, patents, patent applications or licenses
used in, or required for, the conduct of the Company's
business.
4. To the best of our knowledge, after due inquiry,
there is no intellectual property based claim or action,
pending, threatened or potential, which affects or could
affect the rights of the Company with respect to any products,
services, processes or licenses, including, without
limitation, the Licenses used in the conduct of the Company's
business.
5. To the best of our knowledge, after due inquiry,
except as described in the Registration Statement, the Company
is not under any obligation to pay royalties or fees to any
third party with respect to any material, technology or
intellectual properties developed, employed, licensed or used
by the Company.
6. To the best of our knowledge, after due inquiry,
the statements in the Registration Statement under the
headings, "Risk Factors - ______________________ " and
"Business - ____________________", are accurate in all
material respects, fairly represent the information disclosed
therein and do not omit to state any fact necessary to make
the statements made therein complete and accurate.
7. To the best of our knowledge, after due inquiry,
the statements in the Registration Statement do not contain
any untrue statement of a material fact with respect to the
intellectual property position of the Company, or omit to
state any material fact relating to the intellectual property
position of the Company which is required to be stated in the
Registration Statement or is necessary to make the statements
therein not misleading.
We call your attention to the fact that the members of this
firm are licensed to practice law in the State of ______________ and before the
United States Patent and Trademark Office as Registered Patent Attorneys.
Accordingly, we express no opinion with respect to the laws, rules and
regulations of any jurisdictions other than the State of ___________ and the
United States of America.
A-4
<PAGE>
First Allied Securities, Inc. __________, 1996
The opinions expressed herein are for the sole benefit of, and
may be relied upon only by, the several Underwriters named in Schedule A to the
Underwriting Agreement and Orrick, Herrington & Sutcliffe.
Very truly yours,
A-5
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
MANSUR INDUSTRIES INC.
ARTICLE I
The name of the corporation is MANSUR INDUSTRIES INC.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The date and time of the commencement of the corporate existence shall be
November 13, 1990, the date of the filing of the original Articles with the
Department of State for the State of Florida.
ARTICLE IV
The purpose or purposes for which the corporation is organized is to
engage in the transaction of any or all lawful business for which the
corporation may be incorporated under the provisions of the Florida General
Corporation Act of the State of Florida.
ARTICLE V
This Corporation is authorized to issue Ten Million (10,000,000) shares of
$.001 par value common stock, which shall be designated "Common Shares" and One
Million Five Hundred Thousand (1,500,000) shares of preferred stock of $1.00 per
share par value, which shall be designated Preferred Shares".
ARTICLE VI
Preferred Shares may be issued from time to time in series. All Preferred
Shares shall be of equal rank and identical, except in respect to the
particulars that are set forth in these Articles or as they may be fixed by the
Board of Directors consistent with these Articles. Consistent with the
provisions of these Articles, the Board of Directors is authorized and
<PAGE>
required to fix, in the manner and to the full extent provided and permitted by
law, all provisions of the shares of each series set forth below:
1. The distinctive designation of all series and the number of shares
which shall constitute such series;
2. The annual rate and nature of dividends payable on the shares of all
series and the time and manner of payment;
3. The redemption price or prices, if any, for the shares of each, any or
all series;
4. The obligation, if any, of the Corporation to maintain a sinking fund
for the periodic redemption of shares of any series and to apply the sinking
fund to the redemption of such shares; and
5. The rights, if any, of the holders of shares of each series to convert
such shares into Common shares and the terms and conditions of such conversion.
ARTICLE VII
SECTION 1. DIVIDENDS.
The holders of record of Preferred Shares shall be entitled to cash
dividends when and as declared by the Board of Directors at the rate per share
per annum and at the time and in the manner determined by the Board of Directors
in the resolution authorizing each series of Preferred Shares. Cash dividends on
Preferred Shares shall accrue from the date of issue. Upon the payment or
setting apart for payment of all current dividends at the specified percentage
rate per share per annum upon the outstanding Preferred Shares, the Directors
may declare and pay dividends upon the Common Shares.
Cash dividends on Preferred Shares shall, unless specifically fixed
otherwise by the Board of Directors with respect to any particular class or
series of preferred stock, be cumulative so that if, for any dividend period,
cash dividends at the specified percentage rate per share per annum shall not
have been declared and paid or set apart for payment on the Preferred Shares
outstanding, the deficiency shall be declared and paid or set apart for payment
prior to the making of any dividend or other distribution in the Common Shares.
SECTION 2. RIGHTS UPON LIQUIDATION OR DISSOLUTION.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of this Corporation, the holders of record of the outstanding
Preferred Shares shall be entitled to be paid the value established by the Board
of Directors at the time any series of Preferred Shares is authorized,
consistent with these Articles. If no such value is established at the time of
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authorization by the Board of Directors, then the holders of record of the
Preferred Shares shall be entitled to be paid the book value for each of such
Preferred Shares, plus accumulated dividends thereon up to the date of such
liquidation, dissolution or winding up of this Corporation, whether or not this
Corporation shall have a surplus or earnings available for dividends, and no
more. After payment to the holders of Preferred Shares of the amount payable to
them as above set forth, the remaining assets of this Corporation shall be
payable to and distributed ratably among the holders of record of the Common
Shares.
SECTION 3. VOTING RIGHTS.
Except as otherwise provided by law, the entire voting power for the
election of Directors and for all other purposes shall be vested exclusively in
the holders of the outstanding Common Shares.
ARTICLE VIII
SECTION 1. SERIES A 12% CUMULATIVE CONVERTIBLE PREFERRED STOCK.
A. DESIGNATION.
The shares of the second series of the Company's 12% Cumulative
Convertible Preferred Stock, $1.00 par value, shall be designated "Series A 12%
Cumulative Convertible Preferred Stock" (hereinafter the "Series A Preferred
Stock") and the number of authorized shares constituting such series shall be
600,000. The number of authorized shares of Series A Preferred Stock may not be
increased.
B. DIVIDENDS.
B.1. The holders of shares of Series A Preferred Stock shall be
entitled, in preference to the Common Stock and any other stock of the Company,
to receive cumulative cash dividends when and as declared by the Board of
Directors out of funds legally available for the purpose, from the date of
original issuance of such shares at a rate of $.60 per year per share of Series
A Preferred Stock. The amount of dividends per share payable for any dividend
period less than a full dividend period, shall be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days elapsed in
the period for which payable. Dividends shall be payable when and as declared by
the Board of Directors, out of funds legally available therefor. Each such
dividend shall be paid to the holders of record of shares of the Series A
Preferred Stock as they appear on the stock register of the Corporation on any
record date, not exceeding 30 days preceding the payment date thereof, as shall
be fixed by the Board of Directors. Dividends may be declared and paid at any
time, without reference to any regular dividend payment date, to holders of
record on such date, not exceeding 45 days preceding the payment date thereof,
as may be fixed by the Board of Directors. Dividends shall be cumulative,
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whether or not earned, and will accrue on each share of Series A Preferred Stock
from the date of original issuance thereof.
B2. If dividends at the rate per share set forth in paragraph B1
shall not have been declared and paid or set apart for payment on all
outstanding shares of Series A Preferred Stock, then, until the aggregate
deficiency shall be declared and fully paid or set apart for payment, the
Company shall not (i) declare or pay or set apart for payment any dividends or
make any other distribution on any capital stock of the Company ranking junior
to, or on parity with, the Series A Preferred Stock with respect to the payment
of dividends or upon liquidation (such stock being herein referred to as "Junior
or Parity Stock"), or dividends or distributions paid in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Junior Stock, or (ii)
make any payment on account of the purchase, redemption, retirement or other
acquisition of any Junior Stock or any options, warrants or rights to subscribe
for or purchase any Junior or Parity Stock.
C. LIQUIDATION PREFERENCE. Upon any liquidation (complete or partial),
dissolution or winding up of the Company, or sale of substantially all the
Company's assets, whether voluntary or involuntary, or any similar distribution
of its assets to its shareholders which results in a return of capital, whether
voluntary or involuntary, the holders of Series A Preferred Stock, in preference
to all other future issues of preferred stock or any junior stock, shall be
entitled to be paid out of the assets of the Company available for distribution
to its shareholders (whether from capital, surplus or earnings) an amount per
share of Series A Preferred Stock equal to $5.00 plus twice the amount of
aggregate dividends accrued through the date of distribution computed in
accordance with this paragraph, through the effective date of liquidation or
sale.
D. REDEMPTION.
D1. REDEMPTION OF SERIES A PREFERRED STOCK. The Company shall
purchase or redeem the Series A Preferred Stock on June 30, 1996, or any
extension of such redemption date which the Board of Directors of the Company
may declare at their sole discretion.
(a) For each share of the Series A Preferred Stock redeemed by
the Company, pursuant to this paragraph D1, the Company shall be
obligated to pay to the holder thereof, upon surrender, by such
holder at the Company's principal office of the certificate
representing such share, endorsed in blank or accompanied by an
appropriate form of assignment, an amount in cash (the "Redemption
Price") equal to the appropriate liquidation preference price of
$5.00, plus twice the aggregate amount of dividends accrued with
respect to such Series A Preferred Stock, calculated in accordance
with this paragraph, through the date of redemption, which date shall
be specified in the Company's notice to the Preferred Shareholder.
(b) The number of shares of Series A Preferred Stock to be
redeemed from each holder thereof in redemptions under this paragraph
D1 shall be the
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number of whole shares, as nearly as practicable to the nearest
share, determined by multiplying the total number of shares of Series
A Preferred Stock to be redeemed times a fraction, the numerator of
which shall be the total number of shares of Series A Preferred Stock
then held by such holder and the denominator of which shall be the
total number of shares of Preferred Stock then outstanding. In case
less than all the shares represented by any certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(c) Notice of any redemption of Series A Preferred Stock,
specifying the date and time of redemption and the Redemption Price,
shall be mailed by certified or registered mail, return receipt
requested, to each holder of record of shares to be redeemed, at the
address for such holder shown on the Company's records, not more than
60 nor less than 30 days prior to the date on which such redemption
is to be made. If less than all the shares of the Series A Preferred
Stock owned by such holder are then to be redeemed, the notice shall
also specify the number of such shares and the certificate numbers
thereof which are to be redeemed. Upon mailing any such notice of
redemption, the Company shall become obligated to redeem, on the date
specified therein, all shares of the Series A Preferred Stock
specified in such notice.
D2. RIGHTS AFTER REDEMPTION OR REPURCHASE. On the date any share of
Series A Preferred Stock is redeemed or repurchased under this paragraph D, all
rights of the holder of such share as a shareholder of the Company by reason of
the ownership of such share shall cease, except the right to receive the
Redemption Price of such share upon the presentation and surrender of the
certificate representing such share, and such share shall not be deemed to be
outstanding after the date on which it is redeemed or repurchased.
D3. REDEEMED OR OTHERWISE ACQUIRED SHARES TO BE CANCELED. Any shares
of Series A Preferred Stock redeemed or repurchased pursuant to this section or
otherwise acquired by the Company in any manner whatsoever shall be canceled and
shall not under any circumstances be reissued, sold or transferred. The Company
shall from time to time take such action as may be necessary to reduce the
authorized number of shares of Series A Preferred Stock accordingly.
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E. CONVERSION.
E1. CONVERSION PROCEDURES.
(a) A holder of shares of Series A Preferred Stock may, at the
holder's option, at any time prior to the effective date of
redemption, as specified in the Company's notice in accordance with
Paragraph D1(c) hereof, convert all or any part (in whole numbers of
shares only) of the shares of Series A Preferred Stock held by such
holder into such number of fully paid and nonassessable whole shares
of Common Stock, on a one for one basis, that is one share of Series
A Preferred Stock may be converted into one whole share of Common
Stock.
(b) Each conversion of shares of Series A Preferred Stock shall
be effected by the surrender of the certificate or certificates
representing the shares to be converted at the principal office of
the Company (or such other office or agency of the Company as the
Company may designate by notice in writing to the holder or holders
of the Series A Preferred Stock) at any time during its usual
business hours, together with written notice by the holder of such
Series A Preferred Stock stating that such holder desires to convert
the shares, or a stated number of the shares, represented by such
certificate or certificates, into shares of Common Stock. Such notice
shall also specify the name or names (with addresses) and
denominations in which the certificate or certificates for Common
Stock shall be issued and shall include instructions for delivery
thereof. Such conversion shall be deemed to have been effected as of
the close of business on the date on which such certificate or
certificates shall have been surrendered, and as of such date (the
"Conversion Date") the rights of the holder of such Series A
Preferred Stock (or specified portion thereof) as such holder shall
cease and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock are to be
issued upon such conversion shall be deemed to have become the holder
or holders of record of the shares of Common Stock represented
thereby.
(c) As soon as possible after the Conversion Date (but in no
event more than 30 days after the Conversion Date, the Company shall
deliver to the converting holder or, with respect to the
certificate(s) specified in (a) below, as specified by such
converting holder:
(i) a certificate or certificates representing the number
of shares of Common Stock issuable by reason of such conversion
registered in such name or names and such denomination or
denominations as the converting holder shall have specified;
and
(ii) a certificate representing any shares of Series A
Preferred Stock which shall have been represented by the
certificate or certificates
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which shall have been delivered to the Company in connection
with such conversion but which shall not have been converted.
(iii) A Company check in the amount of any accrued but
unpaid dividends, which dividends have not been converted to
shares of Common Stock.
E2. AUTHORIZATION AND ISSUANCE OF COMMON STOCK.
(a) The Company will at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for
the purpose of issue upon the conversion of the Series A Preferred
Stock, as provided in this paragraph, such number of shares of Common
Stock as shall then be issuable upon the conversion of all
outstanding shares of Series A Preferred Stock together with accrued
interest thereon. The Company covenants that all shares of Common
Stock which shall be so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes,
liens, and charges. The Company will take all such action as may be
necessary to assure that all such shares of Common Stock may be so
issued without violation of any applicable law or regulation.
(b) The Company will not take any action which results in any
adjustment of the number of shares of Common Stock acquirable upon
conversion of shares of the Series A Preferred Stock if after such
action the total number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock then outstanding, together
with the total number of shares of Common Stock then outstanding and
the total number of shares of Common Stock reserved for any purpose
other than issuance upon conversion of Series A Preferred Stock,
would exceed the total number of shares of Common Stock then
authorized by these Articles of Incorporation.
(c) If any shares of Common Stock required to be reserved for
purposes of conversions of shares of Series A Preferred Stock under
this paragraph E2 require registration with, or approval of, any
governmental authority under any federal or state law (other than any
registration under the Securities Act of 1933, as then in effect, or
any similar federal statute then in force, or any state securities
law, required by reason of any transfer involved in such conversion),
or listing on any domestic securities exchange, before such shares
may be issued upon conversion, the Company will, at its expense and
as expeditiously as possible, use its best efforts to cause such
shares to be duly registered or approved for listing or listed on
such domestic securities exchange, as the case may be.
(d) The issuance of certificates for shares of Common Stock
upon conversion of shares of the Series A Preferred Stock shall be
made without charge to the holders of such shares for any issuance
tax in respect thereof, or other cost
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incurred by the Company in connection with such conversion and the
related issuance of shares of Common Stock, provided that the Company
shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series A
Preferred Stock converted.
(e) The Company will not close its books against the transfer
of any share of Series A Preferred Stock or of any share of Common
Stock issued or issuable upon the conversion of such shares in any
manner which interferes with the timely conversion of such shares.
E3. SUBDIVISIONS AND COMBINATIONS. In the event the Company shall at
any time subdivide (by any stock split, stock dividend or otherwise) one or more
classes of its outstanding Common Stock into a greater number of shares of
Common Stock, the Conversion Price in effect immediately prior to such
subdivision forthwith shall be proportionately reduced. Conversely, in the event
the outstanding shares of one or more classes of the Common Stock shall be
combined into a smaller number of shares (by reverse stock split or otherwise),
the Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
E4. LIQUIDATING DIVIDENDS. While any shares of Series A Preferred
Stock are outstanding, the Company will not declare a dividend (other than a
dividend payable in Common Stock, Options or Convertible Securities) upon Common
Stock payable otherwise than out of earnings or retained earnings (determined in
accordance with generally accepted accounting principles, consistently applied).
For purposes of this paragraph E4, a dividend other than in cash shall be
considered payable out of earnings or earned surplus only to the extent that
such earnings or earned surplus are charged an amount equal to the fair value of
such dividend.
E5. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any capital reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with or into another
corporation, or any sale of all or substantially all of the Company's assets to
another corporation shall be effected in such a way that holders of Common Stock
shall be entitled to receive (either directly, or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby each of the
holders of the Series A Preferred Stock shall thereafter have the right to
acquire and receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock of the Company immediately
theretofore acquirable and receivable upon the conversion of such holder's
Series A Preferred Stock, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of Common Stock equal to the number of shares of Common Stock immediately
theretofore acquirable and receivable upon conversion of such Series A Preferred
Stock had such reorganization, reclassification, consolidation, merger or sale
not taken place, and, in any such case, appropriate provision shall
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be made with respect to such holder's rights and interests to the end that the
provisions of this paragraph E (including without limitation provisions for
adjustments of the Conversion Price and of the number of shares of Common Stock
acquirable and receivable upon the exercise of the conversion rights granted in
this paragraph E) shall thereafter be applicable in relation to any shares of
stock, securities or assets thereafter deliverable upon the conversion of such
holder's shares (including, in the case of any such consolidation, merger or
sale in which the successor corporation or purchasing corporation is other than
the Company, an immediate adjustment of the Conversion Price to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale if
the value so reflected is less than the Conversion Price in effect immediately
prior to such consolidation, merger or sale). In the event of a merger or
consolidation of the Company with or into another corporation or the sale of all
or substantially all of the Company's assets to another corporation, as a result
of which a number of shares of common stock of the surviving or purchasing
corporation greater or lesser than the number of shares of Common Stock of the
Company outstanding immediately prior to such merger, consolidation or sale are
issuable to holders of Common Stock, then the Conversion Price in effect
immediately prior to such merger, consolidation or sale shall be adjusted
(pursuant to paragraph E) as though there were a subdivision or combination of
the outstanding shares of Common Stock. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument, executed and mailed or delivered by first class mail,
postage prepaid, to each holder of Series A Preferred Stock at the address of
each such holder as shown on the books of the Company, the obligation to deliver
to each such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to acquire or
receive. If the purchase, tender or exchange offer is made to and accepted by
the holders of more than fifty percent (50%) of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger or sale with the
person having made such offer or with any affiliate of such person unless prior
to the consummation of such consolidation, merger or sale each of the holders of
Series A Preferred Stock shall have been given a reasonable opportunity to then
elect to receive upon the conversion of such holder's shares either the stock,
securities or assets then issuable with respect to the Common Stock or the
stock, securities or assets, or the equivalent, issued to previous holders of
the Common Stock in accordance with such offer.
E6. NOTICE OF ADJUSTMENT. Immediately upon any adjustment of the
Conversion Price, the Company shall send written notice thereof to all holders
of Series A Preferred Stock (by first class mail, postage prepaid, addressed to
each such holder at the address for such holder shown on the books of the
Company), which notice shall state the Conversion Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares of
Common Stock acquirable and receivable upon conversions of all shares of Series
A Preferred Stock held by each such holder, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
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E7. OTHER ADJUSTMENT-RELATED NOTICES. In the event that at any
time:
(a) the Company shall declare a dividend (or any other
distribution) upon its Common Stock payable otherwise than in cash
out of earnings or earned surplus;
(b) the Company shall offer for subscription pro rata to the
holders of any class of its Common Stock any additional shares of
stock of any class or other rights;
(c) there shall be any capital reorganization, reclassification
of the capital stock of the Company, or consolidation or merger of
the Company with, or sale of all or substantially all of its assets
to, another corporation; or
(d) there shall be any voluntary or involuntary dissolution,
liquidation, winding up or similar distribution of the Company;
then, in connection with any such event, the Company shall give, by first class
mail, postage prepaid, addressed to the holders of Series A Preferred Stock at
the address for each such holder as shown on the books of the Company: (a) at
least 60 days prior written notice of the date on which the books of the Company
shall close or a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or similar distribution; and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or similar distribution, at least 60 days prior written
notice of the date when the same shall take place (and specifying the date on
which the holders of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, winding
up or similar distribution).
E8. CERTAIN EVENTS. If any event occurs as to which, in the opinion
of the Board of Directors, the other provisions of this paragraph E are not
strictly applicable or if strictly applicable would not fairly protect the
conversion rights of the Series A Preferred Stock in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such conversion
rights as aforesaid, but in no event shall any such adjustment have the effect
of increasing the Conversion Price as otherwise determined pursuant to this
paragraph E except in the event of a combination of shares of the type
contemplated in paragraph E3 and then in no event to an amount larger than the
Conversion Price as adjusted pursuant to paragraph E3.
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F. VOTING. Except as otherwise provided by law or herein, the holders of
shares of Series A Preferred Stock shall not be entitled to vote upon any matter
relating to the business or affairs of the Company or for any other purposes.
G. REGISTRATION OF TRANSFER. The Company shall keep at its principal
office (or such other place as the Company reasonably designates) a register for
the registration of shares of Series A Preferred Stock. Upon the surrender of
any certificate representing Series A Preferred Stock at such place, the Company
shall, at the request of the registered holder of such certificate, execute and
deliver (at the Company's expense) a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares represented by the
surrendered certificate, subject to the requirements of applicable securities
laws. Each such new certificate shall be registered in such name and shall
represent such number of shares as shall be requested by the holder of the
surrendered certificate, shall be substantially identical in form to the
surrendered certificate, and the holders of the shares represented by such new
certificate shall be entitled to receive all mandatory redemption payments on
the shares represented by the surrendered certificate.
H. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the registered holder shall be deemed satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing one or more shares of the Series A Preferred Stock and, in the case
of any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company (provided that if the registered holder is an
institutional investor its own agreement of indemnity, without bond, shall be
satisfactory) or, in the case of any such mutilation, upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in lieu of
such certificate a new certificate of like kind representing the number of
shares represented by such lost, stolen, destroyed or mutilated certificate. The
term "outstanding" when used herein with reference to shares of the Series A
Preferred Stock as of any particular time shall not include any shares
represented by any certificate in lieu of which a new certificate has been
executed and delivered by the Company in accordance with paragraph 8 or this
paragraph, but shall include only those shares represented by such new
certificate.
I. RESTRICTIONS ON COMPANY ACTION. So long as any shares of Series A
Preferred Stock shall be outstanding, and in addition to any other approvals or
consents required by law, without the prior affirmative vote or written consent
of the holders of fifty percent (50%) of all shares of Series A Preferred Stock
at the time outstanding:
(i) The Company shall not authorize, create or issue any
shares, or securities convertible into such shares, of any class of
stock having preference over, or being on a parity with, the Series A
Preferred Stock with respect to rights upon dissolution, liquidation,
winding up or similar distribution of the Company or distribution of
assets to its shareholders by way of return of capital, whether
voluntary or involuntary.
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(ii) The Company shall not sell, lease, or convey all or
substantially all of the property or business of the Company (which
for purposes hereof, "substantially all" shall be deemed to
constitute fifty percent (50%) or more) and shall not effect a merger
or consolidation of or with any other corporation or corporations
unless such merger or consolidation shall be with a Subsidiary of the
Company or unless as a result of such merger or consolidation and
after giving effect thereto (a) the Company shall be the surviving
corporation, (b) the Series A Preferred Stock then outstanding shall
continue to be outstanding, (c) there shall be no alteration or
change in the powers or designation or the preferences and rights,
and the qualifications, limitations or restrictions applicable to
outstanding shares of Series A Preferred Stock, in any material
respect prejudicial to the holders thereof, and (d) there shall not
be created or thereafter exist any new class or series of stock, or
securities convertible into such stock, having preference over, or
being on a parity with, the Series A Preferred Stock with respect to
rights upon dissolution, liquidation, winding up or similar
distribution or distribution of assets to shareholders by way of
return of capital of the Company.
(iii) The Company shall not amend, alter or repeal any of the
provisions of these Articles of Incorporation or the Bylaws of the
Company in any manner which would adversely affect the preferences
and rights and the qualifications, limitations or restrictions of the
Series A Preferred Stock or the holders thereof, nor shall the
Company increase the number of shares of Series A Preferred Stock
which the Company is authorized to issue.
(iv) The Company shall not enter into any agreement which would
by its terms prohibit or in any way restrict the Company from
redeeming the Series A Preferred Stock or performing any other
obligation to the holders of the Series A Preferred Stock imposed on
the Company by these Articles of Incorporation.
J. DEFINITIONS. The following terms shall have the following meanings,
which meanings shall be equally applicable to the singular and plural forms of
such terms:
(i) "Common Stock" means, collectively, the Common Stock and
any capital stock of any class of the Company hereafter authorized
which shall not be limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to
participate in dividends or in the distribution of assets upon any
liquidation, dissolution, winding up or similar distribution of the
Company.
(ii) "Common Stock Deemed Outstanding" means, at any given
time, the sum of (a) the number of shares of Common Stock actually
outstanding at such time (exclusive of any shares of Common Stock
owned or held by or for the account of the Company), plus (b) the
number of shares of Common Stock deemed to be outstanding under
paragraph E hereof at such time.
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(iii) "Conversion Price" means $1.00, as such price may be
adjusted from time to time pursuant to the provisions of paragraph E
hereof.
(iv) "Person" means and includes an individual, a partnership,
a corporation, a trust, a joint venture, an unincorporated
organization or a government or any department or agency thereof.
(v) "Junior Security" means the Company's Common Stock and any
other equity security of any kind which the Company shall at any time
issue or be authorized to issue other than the Series A Preferred
Stock. The terms and conditions of Series A Preferred Stock are set
forth in these Articles.
(vi) "Series A Preferred Stock" means the Company's second
series of 12% Cumulative Convertible Preferred Stock, par value $1.00
per share.
(vii) "Subsidiary" means any corporation at least 50% of the
voting stock of every class of which shall, at the time as of which
any determination is being made, be owned by the Company either
directly or through one or more Subsidiaries.
K. SEVERABILITY. The unenforceability or invalidity of any provision or
provisions hereof shall not affect or tender invalid or unenforceable any other
provision or provisions herein contained.
ARTICLE IX
The number of directors constituting the Board of Directors of the
Corporation is a minimum of one (1). The number of directors may be increased or
diminished from time to time, pursuant to the Bylaws of the Corporation, but
shall never be less than one (1).
ARTICLE X
The principal place of business and mailing address of this Corporation
is:
8425 S.W. 129th Terrace
Miami, Florida 33156
ARTICLE XI
The by-laws of the Corporation may be adopted, altered, amended or
repealed from time to time by either the shareholders or the Board of Directors,
but the Board of Directors shall not
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alter, amend or repeal any by-laws adopted by the shareholders if the
shareholders specifically provide that such bylaws are not subject to amendment
or repeal by the directors.
ARTICLE XII
SECTION 1. INDEMNIFICATION
This Corporation shall indemnify and shall advance expenses on behalf of
its officers and directors to the fullest extent not prohibited by law in
existence either now or hereafter.
SECTION 2. DIRECTORS AND OFFICERS INSURANCE
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who was or is a director or officer of the Corporation, or
who is or was serving at the request of the Corporation as a director or officer
of another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his or her status as such, whether or not
the Corporation would have authority to indemnify him or her against such
liability under the provisions of these articles, or under the law.
- 14 -
EXHIBIT 3.2
BYLAWS
OF
MANSUR INDUSTRIES INC.
<PAGE>
BYLAWS
OF
MANSUR INDUSTRIES INC.
ARTICLE I. OFFICES 1
ARTICLE II. SHAREHOLDERS 1
Section 1. Annual Meetings 1
Section 2. Special Meetings 1
Section 3. Notice of Meeting 1
Section 4. Notice of Adjourned Meeting 2
Section 5. Waiver of Notice 2
Section 6. Voting Record 2
Section 7. Shareholder Quorum 2
Section 8. Proxies 2
Section 9. Voting of Shares 3
Section 10. Voting of Shares by Certain Holders 3
Section 11. Action Taken by Shareholders Without a Meeting 3
Section 12. Shareholders' Agreements 3
ARTICLE III. BOARD OF DIRECTORS 3
Section 1. Number, Qualification, Election and Tenure 3
Section 2. Regular Meetings 3
Section 3. Special Meetings 4
Section 4. Special Meetings 4
Section 5. Notice and Waiver 4
Section 6. Quorum and Voting 4
Section 7. Action Without a Meeting 4
Section 8. Presumption of Assent 4
Section 9. Vacancies 4
Section 10. Compensation 5
Section 11. Conflict of Interest 5
Section 12. Resignations 5
Section 13. Removal 5
ARTICLE IV. OFFICERS 5
Section 1. Officers 5
Section 2. Election and Term of Office 5
Section 3. Duties 5
Section 4. Vacancies 6
Section 5. Removal 6
Section 6. Compensation 6
Section 7. Repayment by Officers for
Compensation Held Unreasonable 7
Section 8. Delegation of Duties 7
<PAGE>
ARTICLE V. EXECUTIVE AND OTHER COMMITTEES 7
Section 1. Creation of Committees 7
Section 2. Authority 7
Section 3. Qualification and Tenure 7
Section 4. Meetings 7
Section 5. Quorum and Manner of Acting 7
Section 6. Action Without a Meeting
Section 7. Procedure 8
ARTICLE VI. CONTRACTS, LOANS, CHECKS AND DEPOSITS 8
Section 1. Contracts 8
Section 2. Loans 8
Section 3. Checks, Drafts, Etc 8
Section 4. Deposits 8
ARTICLE Vll. STOCK 8
Section 1. Certificates 8
Section 2. Issuance of Shares for
Future Services or Promissory Notes 9
Section 3. Transfer of Shares 9
ARTICLE VIII. FISCAL YEAR 9
ARTICLE IX. BOOKS AND RECORDS 9
Section 1. Books and Records 9
Section 2. Inspection by Shareholders 9
Section 3. Financial Reports 10
ARTICLE X. DIVIDENDS 10
ARTICLE XI. CORPORATE SEAL 10
ARTICLE XII. EMERGENCY BYLAWS 10
ARTICLE XIII. AMENDMENTS TO BYLAWS 10
ARTICLE XIV. INDEMNIFICATION 11
<PAGE>
BYLAWS
OF
MANSUR INDUSTRIES INC.
ARTICLE I - OFFICES
The principal office of the Corporation shall be in the State of Florida. The
Corporation may have such other offices, within or outside of the State of
Florida, as the Board of Directors may designate as the business of the
Corporation may require from time to time.
The Corporation shall designate and maintain a registered office within the
State of Florida. Such office need not be identical with the principal office of
the Corporation and the address of the registered office may be changed from
time to time by the Board of Directors.
ARTICLE II - SHAREHOLDERS
Section 1. Annual Meetings.
The annual meeting of the Shareholders shall be held at the principal office of
the Corporation during the month of December beginning with the year 1993 or at
such other time and place as may be designated by the Board of Directors. If the
day fixed for the annual meeting shall fall on a Sunday or legal holiday the
meeting shall be held on the next succeeding business day. The purpose of the
annual meeting shall be to elect the Directors of the Corporation and transact
such other businesses as may come before the meeting. Failure to hold a timely
meeting shall in no way affect the terms of Officers or Directors of the
Corporation or the validity of actions of the Corporation.
Section 2. Special Meetings.
Special meetings of the Shareholders, unless otherwise prescribed by statute may
be called by the President or the Board of Directors, and shall be called by the
President at the request of the holders of not less than one-tenth of all
outstanding Shares of the Corporation entitled to vote at the meeting. The
purpose of such special meeting shall be stated in the notice of the meeting and
only business within the purpose or purposes described in the special meeting
notice may be conducted at a special Shareholders' meeting unless all
Shareholders' are in attendance and agree to consider additional business.
Section 3. Notice of Meeting.
Oral or written notice stating the place, day and hour of the Shareholder's
meeting and, in the case of a special meeting, the purpose of the meeting shall,
unless otherwise prescribed by statute, be delivered not less than ten nor more
than sixty days before the date of the meeting. Such notice may be delivered in
person, by telephone, telegram, teletype, fax or other form of electronic
communication, or by mail at the discretion of the person calling the meeting.
If mailed, such notice shall be effective when mailed, postpaid, to the
Shareholder's address of record.
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<PAGE>
Section 4. Notice of Adjourned Meeting.
If a meeting is adjourned to another date, time or place, notice need not be
given of the new date, time or place if the new date, time or place is announced
at the meeting before the adjournment is taken, and any business may be
transacted at the adjourned meeting that might have been transacted on the
original date of the meeting.
Section 5. Waiver of Notice.
A written waiver of notice signed by a Shareholder before or after a meeting
shall be the equivalent of giving the Shareholder notice of the meeting and
shall be filed with the Corporate records. Attendance of a Shareholder at a
meeting shall constitute a waiver of notice of the meeting except when the
Shareholder attends for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Any Shareholder attending a meeting also waives
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
Shareholder objects to considering the matter when it is presented.
Section 6. Voting Record.
The Officer or Agent having charge of stock transfer records of the Corporation
shall make a list of all Shareholders entitled to vote at such meeting or any
adjournment thereof. The record date may not be more than 70 days before the
meeting or action requiring a determination of Shareholders and shall not be
later than the day prior to delivery of the first notice to any Shareholder.
Such record date shall be effective for any adjournment of the meeting unless
the meeting is adjourned to a date more than 120 days after the date fixed for
the original meeting. The list of Shareholders eligible to vote shall include
the address and number of Shares held for each Shareholder, and shall be kept on
file either at the registered or principal office of the Corporation or at the
office of the transfer agent of the Corporation and shall be open for inspection
during usual business hours by any Shareholder, Shareholder's agent, or
attorney, at the Shareholder's expense, at least ten days prior to the meeting.
The list shall also be available at the Shareholder's meeting and open for
inspection by any Shareholder, Shareholder's agent or attorney at any time
during the meeting. If the requirements of this section have not been
substantially complied with, then, upon demand by any Shareholder, personally or
by proxy, the meeting shall be adjourned until the requirements of this section
are complied with. If no such demand is made, failure to comply with the
requirements of this section shall not affect the validity of any action taken
at such meeting.
Section 7. Shareholder Quorum.
A majority of the outstanding Shares of the Corporation, represented in person
or by proxy, entitled to vote shall constitute a quorum at the meeting of
Shareholders. If less than a quorum is present at the meeting, a majority of the
Shares represented at the meeting may adjourn the meeting without further
notice. The Shareholders present at a duly organized meeting may continue to
transact business until adjournment notwithstanding the withdrawal of enough
Shareholders during the meeting to leave less than quorum.
Section 8. Proxies.
Every Shareholder entitled to vote at a Shareholder's meeting may vote in person
or by proxy executed in writing by the Shareholder or the Shareholder's
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or during the meeting. No proxy shall be valid after eleven
months from the date of its execution unless otherwise provided in the proxy.
Every proxy is revocable by the Shareholder unless the appointment form
specifically states that is irrevocable and the appointment is coupled with an
interest.
2
<PAGE>
Section 9. Voting of Shares.
Each outstanding share, regardless of class, shall be entitled to one vote on
each matter submitted to a vote at a meeting of Shareholders. Unless otherwise
provided in the Articles of Incorporation or these Bylaws, at any duly convened
Shareholders' meeting an affirmative vote of a majority of Shares in attendance
shall be the act of Shareholders. If a quorum exists, action is taken
affirmatively on a matter if the votes favoring the action exceed the votes cast
opposing the action. Abstentions constitute neutral votes.
Section 10. Voting of Shares by Certain Holders.
Shares held in the name of another corporation may be voted by such officer,
agent or proxy as the bylaws of such corporation may prescribe, or in the
absence of such provision, as the Board of Directors of such other corporation
may determine.
Section 11. Action Taken by Shareholders Without a Meeting.
Any action required or permitted to be taken at a meeting of the Shareholders
may be taken without a meeting, without prior notice, and without a vote if
consent in writing, setting forth the action so taken, shall be signed by the
holders of the outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all Shares entitled to vote thereon were present and voted. No written
consent shall be effective to take the corporate action referred to therein
unless, within 60 days of the date of receipt by the Corporation of the earliest
dated consent, all required consents are received. Any written consent may be
revoked prior to the date the Corporation receives the required number of
consents to authorize the proposed action. Whenever action is taken pursuant to
this Section, all written consent of Shareholders shall be held with the
Corporate minutes.
Section 12. Shareholder's Agreements.
The Shareholders may enter into a Shareholder's Agreement, and the provision of
such agreement will supersede these Bylaws providing all Shareholders are
parties to the agreement.
ARTICLE III - BOARD OF DIRECTORS
Section 1. Powers.
Subject to limitation by the Articles of Incorporation these Bylaws and Florida
statutes, all business of the Corporation shall be directed and managed by the
Board of Directors.
Section 2. Number, Qualification, Election. and Tenure.
The initial Directors of the Corporation shall be Pierre G. Mansur and Paul I.
Mansur. Pierre G. Mansur shall serve as the initial Chairman of the Board.
Pierre G. Mansur may appoint additional directors who shall serve until the
first annual meeting of the Shareholders in 1996. Commencing in 1996, Directors
shall be elected by the Shareholders at the annual Shareholder's meeting and
shall hold office until the next annual Shareholder's meeting and until their
successors have been elected and qualified. The number of Directors may be
increased or decreased from time to time by a majority of vote of the
Shareholders without need to amend these Bylaws but shall never be less than
one. The Directors must be natural persons but need not be Shareholders nor
residents of the State of Florida. The majority of Directors in office shall
select a Chairman immediately subsequent to their election.
3
<PAGE>
Section 3. Regular Meetings.
Regular annual meetings of the Board of Directors shall be held without other
notice than by this bylaw immediately after, and at the same place as, the
annual Shareholder's meeting. Additional regular meetings may be provided by
resolutions of the Board of Directors and held without notice other than such
resolution. Meetings may be held by telephone conference.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be called by or at the request of
the Chairman of the Board, the Chief Executive Officer, the President, or any
Director. Meetings may be held by telephone conference.
Section 5. Notice and Waiver.
Oral or written notice of any special meeting shall be given at least two days
prior to the meeting. Such notice may be delivered in person, mailed, or given
by telephone, telegram, teletype, fax or other electronic method. If mailed,
such notice shall be deemed to be delivered when mailed, postage paid, to the
Director at the Director's current address in the Corporation's records. Any
Director may waive notice of any meeting. Attendance by a Director at a meeting
shall constitute a waiver of notice except where a Director attends a meeting
for the express purpose of objecting to any business because the meeting was not
lawfully called or convened. Neither the business to be transacted at the
meeting nor the purpose need to be stated in the notice or waiver of any
meeting.
Section 6. Quorum and Voting.
A majority of Directors shall constitute a quorum for the transaction of
business and a vote of the majority of Directors present at a duly convened
meeting shall be the act of the Board of Directors. If less than a quorum is
present then a majority of the Directors present may adjourn the meeting without
notice until a quorum is present.
Section 7. Action without a Meeting.
Any action required or permitted to be taken by the Board of Directors at a
meeting may be taken without a meeting if a consent in writing, setting forth
the action to be taken, shall be signed by all of the Directors. Such action is
not effective until the last required consent is received by the Corporation.
Section 8. Presumption of Assent.
A Director who is present at a meeting of the Board of Directors at which action
on any corporate matter is taken shall be presumed to have assented to the
action taken unless he votes against such action or abstains from voting. An
abstention is a neutral vote.
Section 9. Vacancies.
Any vacancy occurring in the Board of Directors may be filled by an affirmative
vote of majority of the remaining Directors though less than a quorum of the
Board of Directors, or by a majority vote of the Shareholders. A Director
elected to fill a vacancy shall be elected for the unexpired term of the
Director's predecessor. Any Directorship to be filled due to an increase in the
number of Directors shall be filled by a vote of the majority of the Board, the
term of office continuing only until the next election of Directors by the
Shareholders.
4
<PAGE>
Section 10. Compensation.
By resolution of the Board of Directors each Director may be paid the expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a stated salary as Director or a fixed sum for attendance at each meeting or
both. No such payment shall preclude any Director from serving the Corporation
in any other capacity and receiving compensation therefor. Directors may set
their own compensation for service as Officers as well as for service as
Directors.
Section 11. Conflict of Interest.
Any contract or other transaction between the Corporation and any corporation or
firm in which any of its Directors holds a financial interest shall be valid for
all purposes notwithstanding the presence of such Director at the meeting
authorizing such contract or transaction, or his participation in such meeting.
The foregoing shall, however, apply only (a) if the interest of such Director is
disclosed to the Board of Directors at said meeting; (b) the Board, having been
apprised of the interest, affirmed the subject transaction with no vote cast by
the interested Director; or (c) the contract or transaction is deemed to be fair
and reasonable to the Corporation at the time it is authorized. The interested
Director may be counted for the purpose of determining whether a quorum is
present.
Section 12. Resignations.
Directors may resign at any time by delivering written notice to the Corporation
or to the Board of Directors.
Section 13. Removal.
At any duly convened meeting of Shareholders called expressly for that purpose,
any Director may be removed from office, with or without cause.
ARTICLE IV - OFFICERS
Section 1. Officers.
The Officers of the Corporation shall be elected or appointed by the Board of
Directors and may include a Chief Executive Officer, President, Secretary,
Treasurer, one or more Vice Presidents, Controller and/or such other Officers as
may be deemed necessary or desirable. Any two or more offices may be held by the
same person. The Directors may eliminate or add Officers at any time by
resolution.
Section 2. Election and Term of Office.
All Officers to be elected or appointed by the Board of Directors shall be
elected or appointed at the regular annual meeting of the Board. Each Officer
shall hold office until that Officer's death, resignation or removal or until
his or her successor shall have been duly elected or appointed in accordance
with these Bylaws.
Section 3. Duties.
A. President: The President shall have the responsibility for the
general and active management of the business of the Corporation and shall see
that all orders and resolutions of the Board are carried into effect. The
President shall preside at all meetings of the Shareholders and of Board of
Directors unless the Board elects a Chairman of the Board or Chief Executive
Officer. The President shall have all powers generally associated with the
Presidency of the Corporation as well as any powers authorized by resolution of
the Board.
5
<PAGE>
B. Vice President: The Vice Presidents, in the order designated by the
Board of Directors if there is more than one, shall in the absence or disability
of the President, perform the duties and exercise the powers of the President
and shall perform other duties as the Board of Directors may prescribe.
C. Secretary: The Secretary shall attend all meetings of the
Shareholders and of the Board of Directors and shall record all votes and the
minutes of all such proceedings in a book to be kept for that purpose and shall
perform like duties for committees of the Corporation when required. The
Secretary shall give, or cause to be given, all required notices for such
meetings and shall perform other duties as may be prescribed by the President or
the Board of Directors. When required or requested, the Secretary shall execute
with the President all contracts, conveyances or other instruments of the
Corporation and shall, when requested, provide certifications of recorded
minutes. The Secretary shall keep safe custody of the Corporate Seal and, when
requested, shall affix same to any instrument requiring it. The Secretary shall
keep a current register of the mailing addresses of each Shareholder, such
addresses to be furnished to the Secretary by the Shareholders and the
responsibility for keeping said addresses current shall be upon the
Shareholders. The Secretary shall have general charge of the stock transfer
books of the Corporation and shall issue or transfer stock at the direction of
the Board of Directors.
D. Treasurer: The Treasurer shall have custody of and keep of all
money, funds and property of the Corporation, unless otherwise determined by the
Board of Directors, and shall render such accounts and present such statements
to the Directors and President when requested. The Treasurer shall deposit funds
of the Corporation which may come into his or her hands into such bank or banks
as designed by the Board of Directors and shall keep all bank accounts in the
name of the Corporation and shall exhibit the Corporation's books and accounts
at all reasonable times to any Director of the Corporation upon reasonable
notice and during regular business hours. If required by the Board, the
Treasurer shall give a bond to the Corporation with such surety in such amount
as are acceptable to the Board.
E. Assistant Officers: The Assistant Secretaries and Assistant
Treasurers, if any, in the order designated by the Board, shall perform the
respective duties of the Secretary and Treasurer.
F. Other Officers: Should the Board designate Officers other than those
listed above, they shall, by resolution, set forth the specific duties of each
Officer designated.
Section 4. Vacancies.
Any vacancies shall be filled at any time by an election or appointment by the
Board of Directors for the unexpired term of such offices.
Section 5. Removal.
Any Officer or Agent of the Corporation may be removed at any time with or
without cause by the Board of Directors.
Section 6. Compensation.
All compensation of Officers shall be fixed from time to time by the Board of
Directors; no Officer shall be prevented from receiving such compensation by
reason of the fact that he is also a Director of the Corporation.
6
<PAGE>
Section 7. Repayment by Officers for Compensation Held Unreasonable.
Any payments made to an Officer of the Corporation, including but not limited
to, salary, commissions, bonuses, interest, rent or entertainment or other
expenses incurred by him, which shall be disallowed in whole or in part as a
deductible expense by the Internal Revenue Service shall be reimbursed by such
Officer to the Corporation to the full extent of such disallowance. It shall be
the duty of the Board to enforce payment of all amounts so disallowed. In lieu
of payment by the Officer, subject to the determination of the Directors,
proportionate amounts may be withheld from any Officer's future compensation
payments until the amount owed to the Corporation has been recovered.
Section 8. Delegation of Duties.
Should an Officer be absent or disabled or for any other reason be unable to
perform his duties, the Board of Directors may delegate his powers or duties to
any other Officer.
ARTICLE V - EXECUTIVE AND OTHER COMMITTEES
Section 1. Creation of Committees.
The Board of Directors may, by resolution, designate an Executive Committee or
other committees consisting of two or more members of the Board. The designation
of such committees, however, shall not relieve the Board of Directors or any
member thereof of any responsibility imposed by law and any such committees'
powers are limited by Florida Statutes.
Section 2. Authority.
The Executive Committee shall consult with and advise the Officers of the
Corporation in the management of its business and shall have, and may exercise,
to the extent provided in the resolution of the Board of Directors creating such
committee, such powers as may be lawfully delegated by the Board. Other
committees shall have the functions and may exercise such power of the Board as
can be lawfully delegated and as provided in the resolutions of the Board
creating such committees.
Section 3. Qualifications and Tenure.
All members of the Executive Committee and other committees appointed by the
Board shall be members of the Board and shall hold office until the next regular
annual meeting of the Board, their resignation, death or removal by a majority
vote of the Board.
Section 4. Meetings.
Regular meetings of the Executive Committee may be held without notice at such
times and places as the committee may affix from time to time by resolution.
Special meetings of the Executive Committee or other committees, may be called
by any member thereof upon not less than one day's notice to the other members
of the committees, which notice may be oral or by mail. If given by mail, such
notice shall be deemed to be delivered when deposited, postage paid, in the
United States mail addressed to the committee member at this business address.
Any member of any committee may waive notice of any meeting and attendance at a
meeting shall constitute waiver of notice of the meeting.
Section 5. Quorum and Manner of Acting.
At all committee meetings, a majority of committee members then in office shall
constitute a quorum for the transaction of business. The acts of a majority of
committee members at any duly convened meeting of that committee shall be the
act of that committee.
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<PAGE>
Section 6. Action without a Meeting.
Any action required or permitted to be taken by a committee may be taken without
a meeting if a consent in writing, setting forth the action so taken shall be
signed by all the members of the Committee. Such action shall not become
effective until the last required consent has been received by the Corporation.
Section 7. Procedure.
Each Committee shall elect its own presiding Officer from its members and may
fix its own rules of procedure as long as such rules are not inconsistent with
these Bylaws. The Committees shall keep regular minutes of their proceedings and
report same to the Board of Directors when requested.
ARTICLE VI - CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts.
The Board of Directors may authorize any Officer or Agent to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to specific
instances.
Section 2. Loans.
No loans shall be contracted on behalf of the Corporation and no evidences of
indebtedness shall be issued in its name unless authorized by resolution of the
Board of Directors. Such authority may be general or confined to specific
instances.
Section 3. Checks, Drafts, etc.
All checks, drafts or other order for the payment of money, notes or other
evidences of indebtedness of the Corporation shall be signed by such Officers or
Agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits.
All funds of the Corporation not otherwise employed shall be deposited to the
credit of the Corporation in such depositories as the Board of Directors may
select.
ARTICLE VII - STOCK
Section 1. Certificates.
The Directors may, but do not need to, provide for Certificates to represent
shares of the Corporation. If required, such certificates shall be in such form
as shall be determined by the Board of Directors, signed by an authorized
Officer of the Corporation and may, but need not be, sealed with a corporate
seal or facsimile thereof. The signature of an authorized Officer upon a
certificate may be a facsimile if the certificate is manually signed on behalf
of transfer agent or a registrar. Each certificate shall be consecutively
numbered and contain the following information: (a) the name of the Corporation,
(b) that the Corporation is organized under the laws of the State of Florida,
(c) the name of the person or persons to whom issued, (d) the number and class
of shares and the designation of series, if any, which the certificate
represents, (e) the par value of each share. If there are any restrictions on
transfer of the stock, the certificate shall so state.
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<PAGE>
Section 2. Issuance of Shares for Future Services or Promissory Notes.
Shares may be issued in exchange for a promissory note and such note may be
unsecured if deemed sufficient by the Directors. Shares may be issued in
exchange for a written contract for future services. Any shares issued in this
manner must be disclosed to all existing Shareholders. In either event the
Directors may determine whether to immediately issue such Shares or to place
them in escrow until the promissory note is paid in full or the contract for
services has been fully performed. In the event the promissory note is not paid
or a contract for services not performed, the shares issued therefore shall be
deemed recalled and cancelled.
Section 3. Transfer of Shares.
All certificates surrendered to the Corporation for transfer shall be cancelled
and no new certificate shall be issued until the former certificate for like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe. Transfer of Shares shall be made only on the stock transfer books of
the Corporation by the holder of record thereof or by his legal representative
who shall furnish proper evidence of authority to transfer, or by his attorney
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation. The person in whose name the shares stand on the books of the
Corporation shall be deemed to be the owner thereof for all purposes. There
shall be no treasury stock and all previously issued stock transferred to the
Corporation shall revert to authorized unissued stock.
ARTICLE VIII - FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st day of January in each
year. The fiscal year may be changed by a resolution of the Board of Directors
without amending these Bylaws.
ARTICLE IX - BOOKS AND RECORDS
Section 1. Books and Records.
The Corporation shall keep complete and accurate books, records of account and
minutes of the proceedings of Shareholders, the Board of Directors and
Committees of Directors. The Corporation shall keep at its registered office,
principal place of business or office of its attorneys, a record of all
Shareholders, indicating the name, address and number of shares held by each
registered Shareholder.
Section 2. Inspection by Shareholders.
Upon five business days written notice, any Shareholder may, in person or by
agent or attorney, inspect and copy at the Shareholder's expense at the
Corporation's principal office during regular business hours (a) The Articles of
Incorporation and amendments, (b) the Bylaws and amendments, (c) resolutions
adopted by the Board of Directors creating a series of classes of stock and
fixing their relative rights, preferences and limitations, if shares issued
pursuant to those resolutions are outstanding, (d) minutes of all Shareholders'
meetings and actions taken by them without a meeting for the past three years,
(e) written communications to all Shareholders of a class or series within the
past three years, including financial statements for the past three years, (f)
a list of the names and business street addresses of current Directors and
Officers, and (g) the Corporations most recent Corporate Annual Report filed
with the Secretary of State.
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Upon five business days written notice, any Shareholder may, in person or by
agent or attorney, inspect and copy at the Shareholder's expense at the
Corporation's principal office during regular business hours, any other books
and records of the Corporation if (a) the demand is made in good faith and for a
proper purpose, (b) the Shareholder describes with particularity his or her
purpose and the records to be inspected, and (c) the records demanded are
directly connected with the Shareholder's purpose.
SECTION 3. FINANCIAL REPORTS.
Not later than four months after the close of each fiscal year, the Corporation
shall furnish to all Shareholders financial statements for the prior fiscal year
that include a balance sheet, an income statement, and a cash flow statement.
ARTICLE X - DIVIDENDS
The Board of Directors may from time to time declare dividends on its Shares in
cash, property or its own Shares except when the Corporation is insolvent, or
when the payment thereof would render the Corporation insolvent.
ARTICLE XI - CORPORATE SEAL
The Board of Directors may, but does not need to, require a corporate seal. If
required, such seal shall be in circular form, embossing in nature, and
inscribed with the name of the Corporation, the year of incorporation and the
words "Corporate Seal".
ARTICLE XII - EMERGENCY BYLAWS
In accordance with Section 22 of the Florida Business Corporation Act, in the
event that a quorum of the Corporation's Directors cannot be readily assembled
because of some catastrophic event, the directors may adopt emergency Bylaws.
Such Bylaws may be adopted prior or during such emergency, shall be effective
only during such emergency and are subject to amendment or repeal by the
Shareholders. Such Bylaws may provide for procedures for calling a meeting of
the Directors, establish quorum requirements for such a meeting, and provide for
the designation of additional or substitute directors. All provisions of the
regular Bylaws of the Corporation that are not inconsistent with the emergency
Bylaws remain in effect. Any Corporate action taken in good faith in accordance
with emergency Bylaws binds the Corporation and may not be used to impose
liability on a corporate director, officer, employee or agent.
ARTICLE XIII - AMENDMENTS TO BYLAWS
These Bylaws may be revised, amended or replaced and new Bylaws adopted by the
Board of Directors provided that any such revisions, amendments or new Bylaws
may be repealed by the Shareholders at a special meeting called for that
purpose.
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ARTICLE XIV - INDEMNIFICATION
The Corporation shall indemnify its present and former Officers and Directors to
the fullest extent permitted by law. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending, or completed claim, demand, action, suit, or proceeding, whether civil
or criminal, administrative or investigative, by reason of the fact that he or
she is or was a director or officer of the Corporation, or is or was serving at
the request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust, or other enterprise. Such indemnification
shall be against expenses including, without limitation, attorneys' fees,
judgments, fines, and amounts paid in settlement, actually and reasonably
incurred by him or her in connection with such claim, demand, action, suit, or
proceeding, including any appeal of such action, suit or proceeding, if he or
she acted in good faith or in a manner he or she reasonably believed to be in
the best interests of the Corporation, and with respect to any criminal action
or proceeding, if he or she had no reasonable cause to believe such conduct was
unlawful. However, with respect to any action by or in the right of the
Corporation to procure a judgement in its favor, no indemnification shall be
made with respect to any claim, issue, or matter as to which such person is
adjudged liable for negligence or misconduct in the performance of his or her
duty to the Corporation unless, and only to the extent that, the court in which
such action or suit was brought determines, on application, that despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity in view of all the circumstances of the case. Any indemnification
under this article shall be made only on a determination by a majority of
disinterested directors or upon the approval of a majority of shareholders; that
indemnification is proper in the particular circumstances because the party to
be indemnified has met the applicable standard of conduct. Determination of any
claim, demand, action, suit, or proceeding by judgement, order, settlement,
conviction, or on a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the party did not meet the applicable standard
of conduct. Indemnification may be paid by the Corporation in advance of the
final disposition of any claim, demand, action, suit, or proceeding, on a
preliminary determination that the director or officer met the applicable
standard of conduct and on receipt of an undertaking by or on behalf of the
director or officer to repay such amount, unless it is ultimately determined
that he or she is entitled to be indemnified by the Corporation as authorized in
this article.
The Corporation shall have power to purchase and maintain insurance on behalf of
any person who was or is a director or officer of the Corporation, or who is or
was serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his or her status as such, whether or not
the Corporation would have authority to indemnify him or her against such
liability under the provisions of these articles, or under the law.
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EXHIBIT 4.3
OHS DRAFT
[FORM OF REPRESENTATIVES' WARRANT AGREEMENT]
[SUBJECT TO ADDITIONAL REVIEW]
MANSUR INDUSTRIES INC.
AND
FIRST ALLIED SECURITIES, INC.
REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of ________, 1996
<PAGE>
REPRESENTATIVE'S WARRANT AGREEMENT dated as of _______, 1996
among MANSUR INDUSTRIES INC., a Florida corporation (the "Company"), FIRST
ALLIED SECURITIES, INC. (hereinafter referred to variously as the "Holder" or
the "Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative
or their designees warrants ("Warrants") to purchase up to an aggregate 85,000
shares of common stock of the Company ("Common Stock"); and
WHEREAS, the Representative has agreed pursuant to the
underwriting agreement (the "Underwriting Agreement") dated as of the date
hereof among the Representative, as the Representative of the Several
Underwriters named in Schedule A thereto, and the Company to act as the
Representative in connection with the Company's proposed public offering of up
to 850,000 shares of Common Stock at a public offering price of $____ per share
of Common Stock (the "Public Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement
will be issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representative in consideration for, and as
part of the Representative's compensation in connection with, the Representative
acting as the Representative pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment
by the Representative to the Company of an aggregate eighty-five dollars
($85.00), the agreements
<PAGE>
herein set forth and other good and valuable consideration, hereby acknowledged,
the parties hereto agree as follows:
1. GRANT. The Representative is hereby granted the right to
purchase, at any time from _______, 1997 [one year from the effective date of
the registration statement], until 5:30 P.M., New York time, on ____________,
2001 [five years from the effective date of the registration statement], up to
an aggregate of 85,000 shares of Common Stock (the "Shares") at an initial
exercise price (subject to adjustment as provided in SECTION 8 hereof) of $____
per share of Common Stock [120% of the initial public offering price per share]
subject to the terms and conditions of this Agreement. Except as set forth
herein, the Shares issuable upon exercise of the Warrants are in all respects
identical to the shares of Common Stock being purchased by the Underwriters for
resale to the public pursuant to the terms and provisions of the Underwriting
Agreement.
2. WARRANT CERTIFICATES. The warrant certificates (the
"Warrant Certificates") delivered and to be delivered pursuant to this Agreement
shall be in the form set forth in Exhibit A, attached hereto and made a part
hereof, with such appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
3. EXERCISE OF WARRANT.
3.1 METHOD OF EXERCISE. The Warrants initially are
exercisable at an aggregate initial exercise price (subject to adjustment as
provided in SECTION 8 hereof) per share of Common Stock set forth in SECTION 6
hereof payable by certified or official bank check in New York Clearing House
funds, subject to adjustment as provided in SECTION 8 hereof. Upon surrender of
a Warrant Certificate with the annexed Form of Election to Purchase duly
executed, together with payment of the Exercise Price (as hereinafter defined)
for the shares of Common
2
<PAGE>
Stock purchased at the Company's principal offices in Miami, Florida (presently
located at 8425 S.W. 129th Terrace, Miami, Florida 33156) the registered holder
of a Warrant Certificate ("Holder" or "Holder") shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of the Common Stock underlying the Warrants). Warrants may be exercised
to purchase all or part of the shares of Common Stock represented thereby. In
the case of the purchase of less than all the shares of Common Stock purchasable
under any Warrant Certificate, the Company shall cancel said Warrant Certificate
upon the surrender thereof and shall execute and deliver a new Warrant
Certificate of like tenor for the balance of the shares of Common Stock
purchasable thereunder.
3.2 EXERCISE BY SURRENDER OF WARRANT. In addition to the
method of payment set forth in Section 3.1 and in lieu of any cash payment
required thereunder, the Holder(s) of the Warrants shall have the right at any
time and from time to time to exercise the Warrants in full or in part by
surrendering the Warrant Certificate in the manner specified in SECTION 3.1 in
exchange for the number of Shares equal to the product of (x) the number of
Shares as to which the Warrants are being exercised multiplied by (y) a
fraction, the numerator of which is the Market Price (as defined in SECTION 3.3
below) of the Shares less the Exercise Price and the denominator of which is
such Market Price. Solely for the purposes of this paragraph, Market Price shall
be calculated either (i) on the date which the form of election attached hereto
is deemed to have been sent to the Company pursuant to SECTION 12 hereof
("Notice Date") or (ii) as the average of the Market Prices for each of the five
trading days preceding the Notice Date, whichever of (i) or (ii) is greater.
3
<PAGE>
3.3 DEFINITION OF MARKET PRICE. As used herein, the phrase
"Market Price" at any date shall be deemed to be the last reported sale price,
or, in case no such reported sale takes place on such day, the average of the
last reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or by the Nasdaq National Market ("NNM"),
or, if the Common Stock is not listed or admitted to trading on any national
securities exchanged or quoted by NNM, the average closing bid price as
furnished by the NASD through NNM or similar organization if NNM is no longer
reporting such information, or if the Common Stock is not quoted on NNM, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the
Warrants, the issuance of certificates for shares of Common Stock and/or other
securities, properties or rights underlying such Warrants, shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder thereof including, without limitation, any tax which may be
payable in respect of the issuance thereof, and such certificates shall (subject
to the provisions of Sections 5 and 7 hereof) be issued in the name of, or in
such names as may be directed by, the Holder thereof; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder, and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
4
<PAGE>
The Warrant Certificates and the certificates representing the
Shares underlying the Warrants (and/or other securities, property or rights
issuable upon the exercise of the Warrants) shall be executed on behalf of the
Company by the manual or facsimile signature of the then Chairman or Vice
Chairman of the Board of Directors or President or Vice President of the
Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
5. RESTRICTION ON TRANSFER OF WARRANTS. The Holder of a
Warrant Certificate, by its acceptance thereof, covenants and agrees that the
Warrants are being acquired as an investment and not with a view to the
distribution thereof; that the Warrants may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, for a period of one
(1) year from the date hereof, except to officers of the Representative.
6. EXERCISE PRICE.
6.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as
otherwise provided in Section 8 hereof, the initial exercise price of each
Warrant shall be $____ [120% of the initial public offering price] per share of
Common Stock. The adjusted exercise price shall be the price which shall result
from time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof.
6.2 EXERCISE PRICE. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price, depending upon
the context. 7. REGISTRATION RIGHTS. 7.1 REGISTRATION UNDER THE SECURITIES ACT
OF 1933. The Warrants, the Shares, and any of the other securities issuable upon
exercise of the Warrants have been registered under the Securities Act of 1933,
as amended (the "Act"), pursuant to the Company's Registration
5
<PAGE>
Statement on Form S-1 (Registration No. 333-_____) (the "Registration
Statement"). All of the representations and warranties of the Company contained
in the Underwriting Agreement relating to the Registration Statement, the
Preliminary Prospectus and Prospectus (as such terms are defined in the
Underwriting Agreement) and made as of the dates provided therein, are hereby
incorporated by reference. The Company agrees and covenants promptly to file
post-effective amendments to such Registration Statement as may be necessary in
order to maintain its effectiveness and otherwise to take such action as may be
necessary to maintain the effectiveness of the Registration Statement as long as
any Warrants are outstanding. In the event that, for any reason, whatsoever, the
Company shall fail to maintain the effectiveness of the Registration Statement,
upon exercise, in part or in whole, of the Warrants, certificates representing
the Shares underlying the Warrants, and any of the other securities issuable
upon exercise of the Warrants (collectively, the "Warrant Securities") shall
bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended
("Act"), and may not be offered or sold except pursuant to (i)
an effective registration statement under the Act, (ii) to the
extent applicable, Rule 144 under the Act (or any similar rule
under such Act relating to the disposition of securities), or
(iii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to counsel to the issuer, that an
exemption from registration under such Act is available.
7.2 PIGGYBACK REGISTRATION. If, at any time commencing
after the date hereof and expiring seven (7) years from the date hereof, the
Company proposes to register any of its securities under the Act (other than in
connection with a merger or pursuant to Form S-8) it will give written notice by
registered mail, at least thirty (30) days prior to the filing of each such
registration statement, to the Representative and to all other Holder of the
Warrants and/or the Warrant Securities of its intention to do so. If the
Representative or other Holder
6
<PAGE>
of the Warrants and/or Warrant Securities notify the Company within twenty (20)
business days after receipt of any such notice of its or their desire to include
any such securities in such proposed registration statement, the Company shall
afford the Representative and such Holder of the Warrants and/or Warrant
Securities the opportunity to have any such Warrant Securities registered under
such registration statement (sometimes referred to herein as the "Piggyback
Registration").
Notwithstanding the provisions of this SECTION 7.2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this SECTION 7.2 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
7.3 DEMAND REGISTRATION.
(a) At any time commencing after the date hereof and expiring
five (5) years from the date hereof, the Holder of the Warrants and/or Warrant
Securities representing a "Majority" (as hereinafter defined) of such securities
(assuming the exercise of all of the Warrants) shall have the right (which right
is in addition to the registration rights under Section 7.2 hereof), exercisable
by written notice to the Company, to have the Company prepare and file with the
Securities and Exchange Commission (the "Commission"), on one occasion, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Representative and Holder, in order to comply with the provisions of the Act, so
as to permit a public offering and sale of their respective Warrant Securities
for nine (9) consecutive months by such Holder and any
7
<PAGE>
other Holder of the Warrants and/or Warrant Securities who notify the Company
within ten (10) days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of
any registration request under this SECTION 7.3 by any Holder or Holder to all
other registered Holder of the Warrants and the Warrant Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under Section 7.2
and subsection (a) of this SECTION 7.3, at any time commencing after the date
hereof and expiring five (5) years thereafter, any Holder of Warrants and/or
Warrant Securities shall have the right, exercisable by written request to the
Company, to have the Company prepare and file, on one occasion, with the
Commission a registration statement so as to permit a public offering and sale
for nine (9) consecutive months by any such Holder of its Warrant Securities
provided, however, that the provisions of SECTION 7.4(b) hereof shall not apply
to any such registration request and registration and all costs incident thereto
shall be at the expense of the Holder or Holder making such request.
(d) Notwithstanding anything to the contrary contained herein,
if the Company shall not have filed a registration statement for the Warrant
Securities within the time period specified in SECTION 7.4(a) hereof pursuant to
the written notice specified in SECTION 7.3(a) of a Majority of the Holder of
the Warrants and/or Warrant Securities, the Company shall have the option, upon
the written notice of election of a Majority of the Holder of the Warrants
and/or Warrant Securities, to repurchase (i) any and all Warrant Securities at
the higher of the Market Price per share of Common Stock on (x) the date of the
notice sent pursuant to SECTION 7.3(a) or (y) the expiration of the period
specified in SECTION 7.4(a) and (ii) any and all
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<PAGE>
Warrants at such Market Price less the Exercise Price of such Warrant. Such
repurchase shall be in immediately available funds and shall close within two
(2) days after the later of (i) the expiration of the period specified in
SECTION 7.4(a) or (ii) the delivery of the written notice of election specified
in this SECTION 7.3(d).
7.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION.
In connection with any registration under Section 7.2 or 7.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Warrant Securities such number of prospectuses as shall
reasonably be requested.
(b) The Company shall pay all costs (excluding fees and
expenses of Holder(s)' counsel and any underwriting or selling commissions),
fees and expenses in connection with all registration statements filed pursuant
to SECTIONS 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses. The
Holder(s) will pay all costs, fees and expenses in connection with any
registration statement filed pursuant to SECTION 7.3(c). If the Company shall
fail to comply with the provisions of SECTION 7.4(a), the Company shall, in
addition to any other equitable or other relief available to the Holder(s), be
liable for any or all incidental or special damages sustained by the Holder(s)
requesting registration of their Warrant Securities.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Securities included in a
registration statement for offering
9
<PAGE>
and sale under the securities or blue sky laws of such states as reasonably are
requested by the Holder(s), provided that the Company shall not be obligated to
execute or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holder within the meaning of SECTION 15 of the Act or
SECTION 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify each of the Underwriters contained in SECTION 7
of the Underwriting Agreement.
(e) The Holder(s) of the Warrant Securities to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of SECTION
15 of the Act or SECTION 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holder, or their successors
or assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained
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<PAGE>
in SECTION 7 of the Underwriting Agreement pursuant to which the Underwriters
have agreed to indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any
securities other than the Warrant Securities to be included in any registration
statement filed pursuant to SECTION 7.3 hereof, or permit any other registration
statement to be or remain effective during the effectiveness of a registration
statement filed pursuant to SECTION 7.3 hereof, without the prior written
consent of the Holder of the Warrants and Warrant Securities representing a
Majority of such securities.
(h) The Company shall furnish to each Holder participating in
the offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such
11
<PAGE>
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities.
(i) The Company shall as soon as practicable after the
effective date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holder" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with SECTION 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriters, copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriters to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
or underwriter shall reasonably request.
(k) The Company shall enter into an underwriting agreement
with the managing underwriters selected for such underwriting by Holder holding
a Majority of the Warrant Securities requested to be included in such
underwriting, which may be the Representative. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and
12
<PAGE>
such managing underwriters, and shall contain such representations, warranties
and covenants by the Company and such other terms as are customarily contained
in agreements of that type used by the managing underwriter. The Holder shall be
parties to any underwriting agreement relating to an underwritten sale of their
Warrant Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holder.
Such Holder shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters except as they may relate to
such Holder and their intended methods of distribution.
(l) In addition to the Warrant Securities, upon the written
request therefor by any Holder(s), the Company shall include in the registration
statement any other securities of the Company held by such Holder(s) as of the
date of filing of such registration statement, including without limitation
restricted shares of Common Stock, options, warrants or any other securities
convertible into shares of Common Stock.
(m) For purposes of this Agreement, the term "Majority" in
reference to the Holder of Warrants or Warrant Securities, shall mean in excess
of fifty percent (50%) of the then outstanding Warrants or Warrant Securities
that (i) are not held by the Company, an affiliate, officer, creditor, employee
or agent thereof or any of their respective affiliates, members of their family,
persons acting as nominees or in conjunction therewith and (ii) have not been
resold to the public pursuant to a registration statement filed with the
Commission under the Act.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
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<PAGE>
8.1 SUBDIVISION AND COMBINATION. In case the Company shall
at any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
8.2 STOCK DIVIDENDS AND DISTRIBUTIONS. In case the Company
shall pay a dividend in, or make a distribution of, shares of Common Stock or of
the Company's capital stock convertible into Common Stock, the Exercise Price
shall forthwith be proportionately decreased. An adjustment made pursuant to
this Section 8.2 shall be made as of the record date for the subject stock
dividend or distribution.
8.3 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each
adjustment of the Exercise Price pursuant to the provisions of this SECTION 8,
the number of Warrant Securities issuable upon the exercise at the adjusted
exercise price of each Warrant shall be adjusted to the nearest full amount by
multiplying a number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of Warrant Securities issuable upon exercise of
the Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.4 DEFINITION OF COMMON STOCK. For the purpose of this
Agreement, the term "Common Stock" shall mean (i) the class of stock designated
as Common Stock in the Certificate of Incorporation of the Company as may be
amended as of the date hereof, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value.
14
<PAGE>
8.5 MERGER OR CONSOLIDATION. In case of any consolidation
of the Company with, or merger of the Company with, or merger of the Company
into, another corporation (other than a consolidation or merger which does not
result in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in SECTION 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
8.6 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the shares
of Common Stock issuable upon the exercise of the Warrants;
(b) If the amount of said adjustment shall be less than two
cents (2(cent)) per Warrant Security, provided, however, that
in such case any adjustment that would otherwise be required
then to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall
amount to at least two cents (2(cent)) per Warrant Security.
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<PAGE>
9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each
Warrant Certificate is exchangeable without expense, upon the surrender thereof
by the registered Holder at the principal executive office of the Company, for a
new Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not
be required to issue certificates representing fractions of shares of Common
Stock upon the exercise of the Warrants, nor shall it be required to issue scrip
or pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
11. RESERVATION AND LISTING OF SECURITIES. The Company shall
at all times reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issuance upon the exercise of the Warrants,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the
16
<PAGE>
Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. As
long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of the
Warrants to be listed (subject to official notice of issuance) on all securities
exchanges on which the Common Stock issued to the public in connection herewith
may then be listed and/or quoted on NNM.
12. NOTICES TO WARRANT HOLDER. Nothing contained in this
Agreement shall be construed as conferring upon the Holder the right to vote or
to consent or to receive notice as a stockholder in respect of any meetings of
stockholder for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holder of
its shares of Common Stock for the purpose of entitling them
to receive a dividend or distribution payable otherwise than
in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holder of its
Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for
shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
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(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property,
assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholder entitled to such dividend, distribution, convertible or exchangeable
securities or subscription rights, or entitled to vote on such proposed
dissolution, liquidation, winding up or sale. Such notice shall specify such
record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. NOTICES.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holder of the Warrants, to
the address of such Holder as shown on the books of the
Company; or
(b) If to the Company, to the address set forth in
SECTION 3 hereof or to such other address as the Company may
designate by notice to the Holder.
14. SUPPLEMENTS AND AMENDMENTS. The Company and the
Representative may from time to time supplement or amend this Agreement without
the approval of any holder of
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Warrant Certificates (other than the Representative) in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Representative may deem necessary or desirable and which the Company and
the Representative deem shall not adversely affect the interests of the Holder
of Warrant Certificates.
15. SUCCESSORS. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Company, the
Holder and their respective successors and assigns hereunder. 16. TERMINATION.
This Agreement shall terminate at the close of business on _______, 2003.
Notwithstanding the foregoing, the indemnification provisions of Section 7 shall
survive such termination until the close of business on _______, 2009. 17.
GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws. The Company, the Representative and
the Holder hereby agree that any action, proceeding or claim against it arising
out of, or relating in any way to, this Agreement shall be brought and enforced
in the courts of the State of New York or of the United States of America for
the Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company, the Representative and the
Holder hereby irrevocably waive any objection to such exclusive jurisdiction or
inconvenient forum. Any such process or summons to be served upon any of the
Company, the Representative and the
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Holder (at the option of the party bringing such action, proceeding or claim)
may be served by transmitting a copy thereof, by registered or certified mail,
return receipt requested, postage prepaid, addressed to it at the address set
forth in SECTION 13 hereof. Such mailing shall be deemed personal service and
shall be legal and binding upon the party so served in any action, proceeding or
claim. The Company, the Representative and the Holder agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
18. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including
the Underwriting Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
19. SEVERABILITY. If any provision of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
20. CAPTIONS. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not intended, nor should
they be construed as, a part of this Agreement and shall be given no substantive
effect.
21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the Representative and any other registered Holder(s) of the Warrant
Certificates or Warrant Securities any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the
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sole benefit of the Company and the Representative and any other registered
Holder of Warrant Certificates or Warrant Securities.
22. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed, as of the day and year first above written.
MANSUR INDUSTRIES INC.
By:
Name:
Title:
Attest:
Secretary
FIRST ALLIED SECURITIES, INC.
By:
Name:
Title:
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<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT
AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, __________, 2001
No. W- Warrants to Purchase
Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns,
is the registered holder of Warrants to purchase initially, at any time from
__________, 1997 [one year from the effective date of the Registration
Statement] until 5:30 p.m. New York time on ___________, 2001 [five years from
the effective date of the Registration Statement] ("Expiration Date"), up to
__________ fully-paid and non-assessable shares of common stock, ("Common
Stock") of MANSUR INDUSTRIES INC., a Florida corporation (the "Company"), (one
share of Common Stock referred to individually as a "Security" and collectively
as the "Securities") at the initial exercise price, subject to adjustment in
certain events (the "Exercise Price"), of $______ [120% of the initial public
offering price] per share of Common Stock upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of _______, 1996 among the Company, and FIRST ALLIED
SECURITIES, INC. (the "Warrant Agreement"). Payment of the Exercise Price shall
be made by certified or official bank check in New York Clearing House funds
payable to the order of the Company.
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No Warrant may be exercised after 5:30 p.m., New York time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holder (the words "holder" or "holder" meaning the registered
holder or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by
this Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in
the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
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IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of ___________, 1996
MANSUR INDUSTRIES INC.
[SEAL] By:
Name:
Title:
Attest:
Secretary
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
|_| shares of Common Stock;
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of Mansur Industries
Inc. in the amount of $____, all in accordance with the terms of Section 3.1 of
the Representative's Warrant Agreement dated as of _____, 1996 among Mansur
Industries Inc. and First Allied Securities, Inc.. The undersigned requests that
a certificate for such securities be registered in the name of whose address is
and that such Certificate be delivered to whose address is .
Dated:
Signature
(Signature must conform in all respects to
the Warrant Certificate.)
(Insert Social Security or Other Identifying
Number of Holder)
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[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED hereby sells, assigns
and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature:
(Signature must conform in all respects
to name of holder as specified on the
(Insert Social Security or Other
Identifying Number of Assignee)
A-5
EXHIBIT 10.1
MANSUR INDUSTRIES INC.
1996 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSE. The purpose of this 1996 Executive Incentive
Compensation Plan (the "Plan") is to assist Mansur Industries Inc. (the
"Company") and its subsidiaries in attracting, motivating, retaining and
rewarding high-quality executives and other employees, officers, directors and
independent contractors enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's stockholders, and providing
such persons with annual and long term performance incentives to expend their
maximum efforts in the creation of shareholder value. The Plan is also intended
to qualify certain compensation awarded under the Plan for tax deductibility
under Section 162(m) of the Code (as hereafter defined) to the extent deemed
appropriate by the Committee (or any successor committee) of the Board of
Directors of the Company.
2. DEFINITIONS. For purposes of the Plan, the following terms
shall be defined as set forth below, in addition to such terms defined in
Section 1 hereof.
(a) "Annual Incentive Award" means a conditional right granted
to a Participant under Section 8(c) hereof to receive a cash payment,
Stock or other Award, unless otherwise determined by the Committee,
after the end of a specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR),
Restricted Stock Deferred Stock, Stock granted as a bonus or in lieu of
another award, Dividend Equivalent, Other Stock-Based Award,
Performance Award or Annual Incentive Award, together with any other
right or interest granted to a Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts
which have been designated by a Participant in his or her most recent
written beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant's death or to
which Awards or other rights are transferred if and to the extent
permitted under Section 10(b) hereof. If, upon a Participant's death,
there is no designated Beneficiary or surviving designated Beneficiary,
then the term Beneficiary means person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive
such benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3
under the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" means Change in Control as defined
with related terms in Section 9 of the Plan.
(g) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor
provisions and regulations thereto.
(i) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall
consist solely of at least two directors, each of whom shall be (i) a
"disinterested person" within the meaning of Rule 16b-3 under the
Exchange Act, unless administration of the Plan by "disinterested
persons" is not then required in order for exemptions under Rule 16b-3
to apply to transactions under the Plan, and (ii) an "outside director"
as defined under Section
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162(m) of the Code, unless administration of the Plan by "outside
directors" is not then required in order to qualify for tax
deductibility under Section 162(m) of the Code.
(j) "Corporate Transaction" means a transaction as defined in
Section 9(b) of the Plan.
(k) "Covered Employee" means an Eligible Person who is a
Covered Employee as specified in Section 8(e) of the Plan.
(l) "Deferred Stock" means a right, granted to a Participant
under Section 6(e) hereof, to receive Stock, cash or a combination
thereof at the end of a specified deferral period.
(m) "Director" means a member of the Board.
(n) "Disability" means a permanent and total disability
(within the meaning of Section 22(e) of the Code), as determined by a
medical doctor satisfactory to the Committee.
(o) "Dividend Equivalent" means a right, granted to a
Participant under Section 6(g) hereof, to receive cash, Stock, other
Awards or other property equal in value to dividends paid with respect
to a specified number of shares of Stock, or other periodic payments.
(p) "Effective Date" means the effective date of the Plan,
which shall be the date the Company consummates a registered initial
public offering of its Stock.
(q) "Eligible Person" means each executive officer of the
Company (as defined under the Exchange Act) and other officers,
Directors and employees of the Company or of any subsidiary, and
independent contractors with the Company or any subsidiary. The
foregoing notwithstanding, no Non- Employee Director shall be an
Eligible Person for purposes of receiving any Awards under this Plan
other than Formula Grants of Options granted under Section 6(b)(iv) of
the Plan and Formula Grants of Restricted Stock granted under Section
6(d)(v) of the Plan, and no independent contractor shall be an Eligible
Person for purposes of receiving any Awards other than Options under
Section 6(b) of the Plan. An employee on leave of absence may be
considered as still in the employ of the Company or a subsidiary for
purposes of eligibility for participation in the Plan.
(r) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.
(s) "Executive Officer" means an executive officer of the
Company as defined under the Exchange Act.
(t) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or under
procedures established by the Committee. Unless otherwise determined by
the Committee, the Fair Market Value of Stock on any business day shall
be (i) if the Stock is listed or admitted for trading on any United
States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the
last reported sale price of the Stock on such exchange or reporting
system, as reported in any newspaper of general circulation, (ii) if
the Stock is quoted on the National Association of Securities Dealers
Automated Quotations System, or any similar system of automated
dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day
of the Stock on such system, or (iii) if neither clause (i) or (ii) is
applicable, the mean between the high bid and low quotations for the
Stock as reported by the National Quotation Bureau, Incorporated if at
least two securities dealers have inserted both bid and asked questions
for the Stock on at least 5 of the 10 preceding days.
(u) "Formula Grants" means the Formula Grant Options and
Formula Grant Restricted Stock granted to Non-Employee Directors
pursuant to Sections 6(b)(iv) and 6(d)(v) of the Plan.
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(v) "Incentive Stock Option" or "ISO" means any Option
intended to be designated as an incentive stock option within the
meaning of Section 422 of the Code or any successor provision thereto.
(w) "Incumbent Board" means the Board as defined in
Section 9(b) of the Plan.
(x) "Limited SAR" means a right granted to a Participant
under Section 6(c) hereof.
(y) "Non-Employee Director" shall mean a member of the
Board who is not an employee of the Company or any subsidiary.
(z) "Option" means a right granted to a Participant under
Section 6(b) hereof, to purchase Stock or other Awards at a specified
price during specified time periods.
(aa) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.
(ab) "Participant" means a person who has been granted an
Award under the Plan which remains outstanding, including a person who
is no longer an Eligible Person.
(ac) "Performance Award" means a right, granted to a Eligible
Person under Section 8 hereof, to receive Awards based upon performance
criteria specified by the Committee.
(ad) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, and shall include a "group" as defined in Section 13(d)
thereof
(ae) (intentionally omitted)
(af) "Restricted Stock" means Stock granted to a Participant
under Section 6(d) hereof, that is subject to certain restrictions and
to a risk of forfeiture.
(ag) "Retire" or "Retirement" means termination of service as
a Director after having attained at least age 62 and having served as a
Director for at least 5 years, other than by reason of death,
Disability or the Director's wilful misconduct or negligence.
(ah) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and
Rule 16a-l(c)(3), as from time to time in effect and applicable to the
Plan and Participants, promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act.
(ai) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant
to Section 10(c) hereof.
(aj) "Stock Appreciation Rights" or "SAR" means a right
granted to a Participant under Section 6(c) hereof.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered
by the Committee. The Committee shall have full and final authority, in
each case subject to and consistent with the provisions of the Plan, to
select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other
matters relating to, Awards, prescribe Award agreements (which need not
be identical for each Participant) and rules and regulations for the
administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and
determinations as the Committee may
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deem necessary or advisable for the administration of the Plan.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee
shall exercise sole and exclusive discretion on any matter relating to
a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that
transactions by such Participant shall be exempt under Rule 16b-3 under
the Exchange Act. Any action of the Committee shall be final,
conclusive and binding on all persons, including the Company, its
subsidiaries, Participants, Beneficiaries, transferees under Section
10(b) hereof or other persons claiming rights from or through a
Participant, and stockholders. The express grant of any specific power
to the Committee, and the taking of any action by the Committee, shall
not be construed as limiting any power or authority of the Committee.
The Committee may delegate to officers or managers of the Company or
any subsidiary, or committees thereof, the authority, subject to such
terms as the Committee shall determine, (i) to perform administrative
functions, (ii) with respect to Participants not subject to Section 16
of the Exchange Act, to perform such other functions as the Committee
may determine, and (iii) with respect to Participants subject to
Section 16, to perform such other functions of the Committee as the
Committee may determine to the extent performance of such functions
will not result in the loss of an exemption under Rule 16b-3 otherwise
available for transactions by such persons, in each case to the extent
permitted under applicable law and subject to the requirements set
forth in Section 8(d). The Committee may appoint agents to assist it in
administering the Plan.
(c) LIMITATION OF LIABILITY. The Committee and each member
thereof shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him or her by any executive
officer, other officer or employee of the Company or a subsidiary, the
Company's independent auditors, consultants or any other agents
assisting in the administration of the Plan. Members of the Committee
and any officer or employee of the Company or a subsidiary acting at
the direction or on behalf of the Committee shall not be personally
liable for any action or determination taken or made in good faith with
respect to the Plan, and shall, to the extent permitted by law, be
fully indemnified and protected by the Company with respect to any such
action or determination.
4. STOCK SUBJECT TO PLAN.
(a) OVERALL NUMBER OF SHARES SUBJECT TO AWARDS. Subject to
adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock that may be subject to the granting of Awards under the
Plan at any point in time during the term of the Plan shall be 375,000.
(b) APPLICATION OF LIMITATIONS. The limitation contained in
Section 4(a) shall apply not only to Awards that are settleable by the
delivery of shares of stock but also to Awards relating to shares of
Stock but settleable only in cash (such as cash-only SARs). The
Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the
case of tandem or substitute awards) and make adjustments if the number
of shares of Stock actually delivered differs from the number of shares
previously counted in connection with an Award.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than 250,000 shares of Stock, subject to adjustment as provided
in Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g),
6(h), 8(b) and 8(c). In addition, the maximum amount that may be earned as a
final Annual Incentive Award or other cash Award in any fiscal year by any one
Participant shall be $1,000,000, and the maximum amount that may be earned as a
final Performance Award or other cash Award in respect of a performance period
by any one Participant shall be $5,000,000.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions
set forth in this Section 6. In addition, the Committee may impose on
any Award or the exercise thereof, at the date of grant or
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thereafter (subject to Section 10(e) ), such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the
Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment by the Participant and
terms permitting a Participant to make Sections relating to his or her
Award. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an
Award that is not mandatory under the Plan. Except in cases in which
the Committee is authorized to require other forms of consideration
under the Plan, or to the extent other forms of consideration must be
paid to satisfy the requirements of Florida law, no consideration other
than services may be required for the grant (but not the exercise) of
any Award.
(b) Options. The Committee is authorized to grant Options
to Participants on the following terms and conditions
(i) EXERCISE PRICE. The exercise price per share of
Stock purchasable under an Option shall be determined by the
Committee, provided that such exercise price shall not be less
than the Fair Market Value of a share of Stock on the date of
grant of such Option except as provided under Section 7(a)
hereof.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall
determine the time or times at which or the circumstances
under which an Option may be exercised in whole or in part
(including based on achievement of performance goals and/or
future service requirements), the time or times at which
Options shall cease to be or become exercisable following
termination of employment or upon other conditions, the
methods by which such exercise price may be paid or deemed to
be paid, the form of such payment, including, without
limitation, cash, Stock, other Awards or awards granted under
other plans of the Company or any subsidiary, or other
property (including notes or other contractual obligations of
Participants to make payment on a deferred basis), and the
methods by or forms in which Stock will be delivered or deemed
to be delivered to Participants.
(iii) ISOS. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions of
Section 422 of the Code. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to ISOs
(including any SAR in tandem therewith) shall be interpreted,
amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify
either the Plan or any ISO under Section 422 of the Code,
unless the Participant has first requested the change that
will result in such disqualification.
(iv) FORMULA GRANTS OF OPTIONS TO NON-EMPLOYEE
DIRECTORS. Subject to adjustment as provided in the first
sentence of Section 10(c) hereof, each Non-Employee Director
shall receive (A) on the date of his or her appointment as a
Director of the Company, an Option to purchase 2,500 shares of
Stock, and (B) each year, on the day the Company issues its
earnings release for the prior fiscal year, an Option to
purchase 2,500 shares of Stock. Options granted to
Non-Employee Directors pursuant to this Section shall be for a
term of 10 years and shall become exercisable at the rate of
33-1/3% per year commencing on the first anniversary of the
date on which the Option is granted; provided, however, that
the Options shall be fully exercisable in the event that,
while serving as a Director, the NonEmployee Director dies,
suffers a Disability, or Retires. The per share exercise price
of all Options granted to Non-Employee Directors pursuant to
this paragraph (iv) shall be equal to the Fair Market Value of
a share of Stock on the date such Option is granted. Unless
otherwise extended in the sole discretion of the Committee,
the unexercised portion of any Option granted pursuant to this
paragraph (iv) shall become null and void (V) three months
after the date on which such Non-Employee Director ceases to
be a Director of the Company for any reason other than the
Non-Employee Director's wilful misconduct or negligence,
Disability, death or Retirement, (W) immediately in the event
of the Non-Employee Director's wilful misconduct or
negligence, (X) one year after the Non-Employee Director
ceases to be a Director by reason of his Disability, (Y) at
the expiration of its original term, if the Non-Employee
Director ceases to be a Director by reason of his Retirement,
and (Z)
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twelve months after the date of the Non-Employee Director's
death in the event that such death occurs prior to the time
the Option otherwise would become null and void pursuant to
this sentence.
(c) STOCK APPRECIATION RIGHTS. The Committee is authorized
to grant SAR's to Participants on the following terms and conditions:
(i) RIGHT TO PAYMENT. A SAR shall confer on the
Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of
one share of stock on the date of exercise (or, in the case of
a "Limited SAR", the Fair Market Value determined by reference
to the Change in Control Price, as defined under Section 9(c)
hereof), over (B) the grant price of the SAR as determined by
the Committee. The grant price of an SAR shall not be less
than the Fair Market Value of a share of Stock on the date of
grant except as provided under Section 7(a) hereof.
(ii) OTHER TERMS. The Committee shall determine at
the date of grant or thereafter, the time or times at which
and the circumstances under which a SAR may be exercised in
whole or in part (including based on achievement of
performance goals and/or future service requirements), the
time or times at which SARs shall cease to be or become
exercisable following termination of employment or upon other
conditions, the method of exercise, method of settlement, form
of consideration payable in settlement, method by or forms in
which Stock will be delivered or deemed to be delivered to
Participants, whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms and
conditions of any SAR. Limited SARs that may only be exercised
in connection with a Change in Control or other event as
specified by the Committee may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may
determine. SARs and Limited SARs may be either freestanding or
in tandem with other Awards.
(d) RESTRICTED STOCK. The Committee is authorized to
grant Restricted Stock to Participants on the following terms and
conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be
subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee
may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including
based on achievement of performance goals and/or future
service requirements), in such installments or otherwise, as
the Committee may determine at the date of grant or
thereafter. In no event shall the restricted period be less
than three years unless the Restricted Stock is subject to
performance conditions in accordance with Section 8 of this
Plan, in which case the restricted period shall not be less
than one year. Except to the extent restricted under the terms
of the Plan and any Award agreement relating to the Restricted
Stock, a Participant granted Restricted Stock shall have all
of the rights of a stockholder, including the right to vote
the Restricted Stock and the right to receive dividends
thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). During the restricted
period applicable to the Restricted Stock, subject to Section
10(b) below, the Restricted Stock may not be sold,
transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant.
(ii) FORFEITURE. Except as otherwise determined by
the Committee at the time of the Award, upon termination of a
Participant's employment during the applicable restriction
period, the Participant's Restricted Stock that is at that
time subject to restrictions shall be forfeited and reacquired
by the Company; provided that the Committee may provide, by
rule or regulation or in any Award agreement, or may determine
in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock shall be waived in
whole or in part in the event of terminations resulting from
specified causes.
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(ii) CERTIFICATES FOR STOCK. Restricted Stock granted
under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the
Participant, the Committee may require that such certificates
bear an appropriate legend referring to the terms, conditions
and restrictions applicable to such Restricted Stock, that the
Company retain physical possession of the certificates, and
that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.
(iv) DIVIDENDS AND SPLITS. As a condition to the
grant of an Award of Restricted Stock, the Committee may
require that any cash dividends paid on a share of Restricted
Stock be automatically reinvested in additional shares of
Restricted Stock or applied to the purchase of additional
Awards under the Plan. Unless otherwise determined by the
Committee, Stock distributed in connection with a Stock split
or Stock dividend, and other property distributed as a
dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock with
respect to which such Stock or other property has been
distributed.
(v) FORMULA GRANTS OF RESTRICTED STOCK TO
NON-EMPLOYEE DIRECTORS. (intentionally omitted)
(e) DEFERRED STOCK. The Committee is authorized to grant
Deferred Stock to Participants, which are rights to receive
Stock, cash, or a combination thereof at the end of a
specified deferral period, subject to the following terms and
conditions:
(i) AWARD AND RESTRICTIONS. Satisfaction of an Award
of Deferred Stock shall occur upon expiration of the deferral
period specified for such Deferred Stock by the Committee (or,
if permitted by the Committee, as elected by the Participant).
In addition, Deferred Stock shall be subject to such
restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at
the expiration of the deferral period or at earlier specified
times (including based on achievement of performance goals
and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee
may determine. In no event shall an Award of Deferred Stock
payable in Stock have a deferral period of less than three
years unless the Award is subject to performance conditions in
accordance with Section 8 of the Plan, in which case the
deferral period shall be for not less than one year. Deferred
Stock may be satisfied by delivery of Stock, cash equal to the
Fair Market Value of the specified number of shares of Stock
covered by the Deferred Stock, or a combination thereof, as
determined by the Committee at the date of grant or
thereafter. Prior to satisfaction of an Award of Deferred
Stock, an Award of Deferred Stock carries no voting or
dividend or other rights associated with share ownership.
(ii) FORFEITURE. Except as otherwise determined by
the Committee, upon termination of a Participant's employment
during the applicable deferral period thereof to which
forfeiture conditions apply (as provided in the Award
agreement evidencing the Deferred Stock), the Participant's
Deferred Stock that is at that time subject to deferral (other
than a deferral at the election of the Participant) shall be
forfeited; provided that the Committee may provide, by rule or
regulation or in any Award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions
relating to Deferred Stock shall be waived in whole or in part
in the event of terminations resulting from specified causes,
and the Committee may in other cases waive in whole or in part
the forfeiture of Deferred Stock.
(iii) DIVIDEND EQUIVALENTS. Unless otherwise
determined by the Committee at date of grant, Dividend
Equivalents on the specified number of shares of Stock covered
by an Award of Deferred Stock shall be either (A) paid with
respect to such Deferred Stock at the dividend payment date in
cash or in shares of unrestricted Stock having a Fair Market
Value equal to the amount of such dividends, or (B) deferred
with respect to such Deferred Stock and the amount
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or value thereof automatically deemed reinvested in additional
Deferred Stock, other Awards or other investment vehicles, as
the Committee shall determine or permit the Participant to
elect.
(f) BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. The
Committee is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of Company obligations to pay cash or deliver
other property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Participants subject to
Section 16 of the Exchange Act, the amount of such grants remains
within the discretion of the Committee to the extent necessary to
ensure that acquisitions of Stock or other Awards are exempt from
liability under Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms as shall be
determined by the Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to a Participant entitling the Participant to
receive cash, Stock, other Awards, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee
may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock,
Awards, or other investment vehicles, and subject to such restrictions
on transferability and risks of forfeiture, as the Committee may
specify.
(h) OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants
such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to,
Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable
debt securities, other rights convertible or exchangeable into Stock,
purchase rights for Stock, Awards with value and payment contingent
upon performance of the Company or any other factors designated by the
Committee, and Awards valued by reference to the book value of Stock or
the value of securities of or the performance of specified subsidiaries
or business units. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the
nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration, paid for at such times, by such
methods, and in such forms, including, without limitation, cash, Stock,
other Awards or other property, as the Committee shall determine. Cash
awards, as an element of or supplement to any other Award under the
Plan, may also be granted pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS.
Awards granted under the Plan may, in the discretion of the Committee,
be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted
under another plan of the Company, any subsidiary, or any business
entity to be acquired by the Company or a subsidiary, or any other
right of a Participant to receive payment from the Company or any
subsidiary. Such additional, tandem, and substitute or exchange Awards
may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require the
surrender of such other Award or award in consideration for the grant
of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other
plans of the Company or any subsidiary, in which the value of Stock
subject to the Award is equivalent in value to the cash compensation
(for example, Deferred Stock or Restricted Stock), or in which the
exercise price, grant price or purchase price of the Award in the
nature of a right that may be exercised is equal to the Fair Market
Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price
"discounted" by the amount of the cash compensation surrendered).
(b) TERM OF AWARDS. The term of each Award shall be for such
period as may be determined by the Committee; provided that in no event
shall the term of any Option or SAR exceed a period of ten years (or
such shorter term as may be required in respect of an ISO under Section
422 of the Code).
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(c) FORM AND TIMING OF PAVEMENT UNDER AWARDS; DEFERRALS.
Subject to the terms of the Plan and any applicable Award agreement,
payments to be made by the Company or a subsidiary upon the exercise of
an Option or other Award or settlement of an Award may be made in such
forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a
single payment or transfer, in installments, or on a deferred basis.
The settlement of any Award may be accelerated, and cash paid in lieu
of Stock in connection with such settlement, in the discretion of the
Committee or upon occurrence of one or more specified events (in
addition to a Change in Control). Installment or deferred payments may
be required by the Committee (subject to Section 10(e) of the Plan) or
permitted at the election of the Participant on terms and conditions
established by the Committee. Payments may include, without limitation,
provisions for the payment or crediting of a reasonable interest rate
on installment or deferred payments or the grant or crediting of
Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.
(d) EXEMPTIONS FROM SECTION 16(B) LIABILITY. It is the intent
of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-l(c)(3) to the extent necessary to
ensure that neither the grant of any Awards to nor other transaction by
a Participant who is subject to Section 16 of the Exchange Act is
subject to liability under Section 16(b) thereof (except for
transactions acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-l(c)(3) as then applicable to any such transaction, such provision
will be construed or deemed amended to the extent necessary to conform
to the applicable requirements of Rule 16b-3 or Rule 16a-l(c)(3) so
that such Participant shall avoid liability under Section 16(b). In
addition, the purchase price of any Award conferring a right to
purchase Stock shall be not less than any specified percentage of the
Fair Market Value of Stock at the date of grant of the Award then
required in order to comply with Rule 16b-3.
8. PERFORMANCE AND ANNUAL INCENTIVE AWARDS.
(a) PERFORMANCE CONDITIONS. The right of a Participant to
exercise or receive a grant or settlement of any Award, and the timing
thereof, may be subject to such performance conditions as may be
specified by the Committee. The Committee may use such business
criteria and other measures of performance as it may deem appropriate
in establishing any performance conditions, and may exercise its
discretion to reduce the amounts payable under any Award subject to
performance conditions, except as limited under Sections 8(b) and 8(c)
hereof in the case of a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m).
(b) PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES. If and to the extent that the Committee determines that a
Performance Award to be granted to an Eligible Person who is designated
by the Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m),
the grant, exercise and/or settlement of such Performance Award shall
be contingent upon achievement of preestablished performance goals and
other terms set forth in this Section 8(b).
(i) PERFORMANCE GOALS GENERALLY. The performance
goals for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of
performance with respect to each of such criteria, as
specified by the Committee consistent with this Section 8(b).
Performance goals shall be objective and shall otherwise meet
the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels
of performance targeted by the Committee result in the
achievement of performance goals being "substantially
uncertain." The Committee may determine that such Performance
Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of
the performance goals must be achieved as a condition to
grant, exercise and/or settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to
any one Participant or to different Participants.
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(ii) BUSINESS CRITERIA. One or more of the following
business criteria for the Company, on a consolidated basis,
and/or specified subsidiaries or business units of the Company
(except with respect to the total stockholder return and
earnings per share criteria), shall be used exclusively by the
Committee in establishing performance goals for such
Performance Awards: (1) total stockholder return; (2) such
total stockholder return as compared to total return (on a
comparable basis) of a publicly available index such as, but
not limited to, the Standard & Poor's 500 Stock Index or the
S&P Specialty Retailer Index; (3) net income; (4) pretax
earnings; (5) earnings before interest expense, taxes,
depreciation and amortization; (6) pretax operating earnings
after interest expense and before bonuses, service fees, and
extraordinary or special items; (7) operating margin; (8)
earnings per share; (9) growth in earnings per share; (10)
return on equity; (11) return on capital; (12) return on
investment; (13) operating earnings; (14) working capital or
inventory; and (15) ratio of debt to stockholders' equity. One
or more of the foregoing business criteria shall also be
exclusively used in establishing performance goals for Annual
Incentive Awards granted to a Covered Employee under Section
8(c) hereof.
(iii) PERFORMANCE PERIOD; TIMING FOR ESTABLISHING
PERFORMANCE GOALS. Achievement of performance goals in respect
of such Performance Awards shall be measured over a
performance period of up to ten years, as specified by the
Committee. Performance goals shall be established not later
than 90 days after the beginning of any performance period
applicable to such Performance Awards, or at such other date
as may be required or permitted for "performance-based
compensation" under Code Section 162(m).
(iv) PERFORMANCE AWARD POOL. The Committee may
establish a Performance Award pool, which shall be an unfunded
pool, for purposes of measuring Company performance in
connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of
a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during
the given performance period, as specified by the Committee in
accordance with Section 8(b)(iii) hereof. The Committee may
specify the amount of the Performance Award pool as a
percentage of any of such business criteria, a percentage
thereof in excess of a threshold amount, or as another amount
which need not bear a strictly mathematical relationship to
such business criteria.
(v) SETTLEMENT OF PERFORMANCE AWARDS; OTHER TERMS.
Settlement of such Performance Awards shall be in cash, Stock,
other Awards or other property, in the discretion of the
Committee. The Committee may, in its discretion, reduce the
amount of a settlement otherwise to be made in connection with
such Performance Awards. The Committee shall specify the
circumstances in which such Performance Awards shall be paid
or forfeited in the event of termination of employment by the
Participant prior to the end of a performance period or
settlement of Performance Awards.
(c) ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES. If and to the extent that the Committee determines that an
Annual Incentive Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should
qualify as "performance-based compensation" for purposes of Code
Section 162(m), the grant, exercise and/or settlement of such Annual
Incentive Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(c).
(i) ANNUAL INCENTIVE AWARD POOL. The Committee may
establish an Annual Incentive Award pool, which shall be an
unfunded pool, for purposes of measuring Company performance
in connection with Annual Incentive Awards. The amount of such
Annual Incentive Award pool shall be based upon the
achievement of a performance goal or goals based on one or
more of the business criteria set forth in Section 8(b)(ii)
hereof during the given performance period, as specified by
the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award
pool as a percentage of any such business
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criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(ii) POTENTIAL ANNUAL INCENTIVE AWARDS. Not later
than the end of the 90th day of each fiscal year, or at such
other date as may be required or permitted in the case of
Awards intended to be "performance-based compensation" under
Code Section 162(m), the Committee shall determine the
Eligible Persons who will potentially receive Annual Incentive
Awards, and the amounts potentially payable thereunder, for
that fiscal year, either out of an Annual Incentive Award pool
established by such date under Section 8(c)(i) hereof or as
individual Annual Incentive Awards. In the case of individual
Annual Incentive Awards intended to qualify under Code Section
162(m), the amount potentially payable shall be based upon the
achievement of a performance goal or goals based on one or
more of the business criteria set forth in Section 8(b)(ii)
hereof in the given performance year, as specified by the
Committee; in other cases, such amount shall be based on such
criteria as shall be established by the Committee. In all
cases, the maximum Annual Incentive Award of any Participant
shall be subject to the limitation set forth in Section 5
hereof.
(iii) PAYOUT OF ANNUAL INCENTIVE AWARDS. After the
end of each fiscal year, the Committee shall determine the
amount, if any, of (A) the Annual Incentive Award pool, and
the maximum amount of potential Annual Incentive Award payable
to each Participant in the Annual Incentive Award pool, or (B)
the amount of potential Annual Incentive Award otherwise
payable to each Participant. The Committee may, in its
discretion, determine that the amount payable to any
Participant as a final Annual Incentive Award shall be reduced
from the amount of his or her potential Annual Incentive
Award, including a determination to make no final Award
whatsoever. The Committee shall specify the circumstances in
which an Annual Incentive Award shall be paid or forfeited in
the event of termination of employment by the Participant
prior to the end of a fiscal year or settlement of such Annual
Incentive Award.
(d) WRITTEN DETERMINATIONS. All determinations by the
Committee as to the establishment of performance goals, the amount of
any Performance Award pool or potential individual Performance Awards
and as to the achievement of performance goals relating to Performance
Awards under Section 8(b), and the amount of any Annual Incentive Award
pool or potential individual Annual Incentive Awards and the amount of
final Annual Incentive Awards under Section 8(c), shall be made in
writing in the case of any Award intended to qualify under Code Section
162(m). The Committee may not delegate any responsibility relating to
such Performance Awards or Annual Incentive Awards.
(e) STATUS OF SECTION 8(B) AND SECTION 8(C) AWARDS UNDER CODE
SECTION 162(M). It is the intent of the Company that Performance Awards
and Annual Incentive Awards under Section 8(b) and 8(c) hereof granted
to persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute
"qualified performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the terms of
Sections 8(b), (c), (d) and (e), including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. The
foregoing notwithstanding, because the Committee cannot determine with
certainty whether a given Participant will be a Covered Employee with
respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by
the Committee, at the time of grant of Performance Awards or an Annual
Incentive Award, as likely to be a Covered Employee with respect to
that fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards does not
comply or is inconsistent with the requirements of Code Section 162(m)
or regulations thereunder, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements.
9. CHANGE IN CONTROL
(a) EFFECT OF "CHANGE IN CONTROL." In the event of a "Change
in Control," as defined in
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Section 9(b), the following provisions shall apply:
(i) Any Award carrying a right to exercise that was
not previously exercisable and vested shall become fully
exercisable and vested as of the time of the Change in Control
and shall remain exercisable and vested for the balance of the
stated term of such Award without regard to any termination of
employment by the Participant, subject only to applicable
restrictions set forth in Section 10(a) hereof;
(ii) Any optionee who holds an Option shall be
entitled to elect, during the 60-day period immediately
following a Change in Control, in lieu of acquiring the shares
of Stock covered by such Option, to receive, and the Company
shall be obligated to pay, in cash the excess of the Change in
Control Price over the exercise price of such Option,
multiplied by the number of shares of Stock covered by such
Option; provided, however, that no optionee who is subject to
Section 16 with respect to the Company at the time of the
Change in Control shall be entitled to make such an election
if the acquisition of the right to make such election would
represent a non-exempt purchase under Section 16(b) by such
optionee;
(iii) Limited SARs (and other SARs if so provided by
their terms) shall become exercisable for amounts, in cash,
determined by reference to the Change in Control Price.
(iv) The restrictions, deferral of settlement, and
forfeiture conditions applicable to any other Award granted
under the Plan shall lapse and such Awards shall be deemed
fully vested as of the time of the Change in Control, except
to the extent of any waiver by the Participant and subject to
applicable restrictions set forth in Section 10(a) hereof; and
(v) With respect to any such outstanding Award
subject to achievement of performance goals and conditions
under the Plan, such performance goals and other conditions
will be deemed to be met if and to the extent so provided by
the Committee in the Award agreement relating to such Award.
(b) DEFINITION OF "CHANGE IN CONTROL" A "Change in
Control" shall be deemed to have occurred upon:
(i) An acquisition by any Person of Beneficial
Ownership of the shares of Common Stock of the Company then
outstanding (the "Company Common Stock Outstanding") or the
voting securities of the Company then outstanding entitled to
vote generally in the election of directors (the "Company
Voting Securities Outstanding") if such acquisition of
Beneficial Ownership results in the Person's Beneficially
Owning 25% or more of the Company Common Stock outstanding or
25% or more of the combined voting power of the Company Voting
Securities Outstanding; or
(ii) The approval by the stockholders of the Company
of a reorganization, merger, consolidation, complete
liquidation or dissolution of the Company, sale or disposition
of all or substantially all of the assets of the Company, or
similar corporate transaction (in each case referred to in
this Section 9(b) as a "Corporate Transaction") or, if
consummation of such Corporate Transaction is subject, at the
time of such approval by stockholders, to the consent of any
government or governmental agency, the obtaining of such
consent (either explicitly or implicitly); provided, however,
that any merger, consolidation, sale, disposition or other
similar transaction to or with one or more Participants or
entities controlled by one or more Participants shall not
constitute a Corporate Transaction in respect of such
Participant(s); or
(iii) A change in the composition of the Board such
that the individuals who, as of the Effective Date, constitute
the Board (such Board shall be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided,
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however, for purposes of this Section 9(b), that any
individual who becomes a member of the Board subsequent to the
Effective Date whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least
a majority of those individuals who are members of the Board
and who were also members of the Incumbent Board (or deemed to
be such pursuant to this proviso) shall be considered as
though such individual were a member of the Incumbent Board;
and, provided, further, that any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest subject to Rule 14a-11 of
Regulation 14A under the Exchange Act, including any successor
to such Rule, or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board shall in no event be considered as a member of the
Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i)
and (ii) of this Section 9(b), the following shall not constitute a
Change in Control for purposes of the Plan: (1) any acquisition by or
consummation of a Corporate Transaction with any entity that was a
subsidiary of the Company immediately prior to the transaction or an
employee benefit plan (or related trust) sponsored or maintained by the
Company or an entity that was a subsidiary of the Company immediately
prior to the transaction if, immediately after such transaction
(including consummation of all related transactions,the surviving
entity is controlled by no Person other than such subsidiary, employee
benefit plan (or related trust) and/or other Persons who controlled the
Company immediately prior to such transaction; or (2) any acquisition
or consummation of a Corporate Transaction following which more than
50% of, respectively, the shares then outstanding of common stock of
the corporation resulting from such acquisition or Corporate
Transaction and the combined voting power of the voting securities then
outstanding of such corporation entitled to vote generally in the
election of directors is then Beneficially Owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were Beneficial Owners, respectively, of the Company Common Stock
Outstanding and Company Voting Securities Outstanding immediately prior
to such acquisition or Corporate Transaction in substantially the same
proportions as their ownership, immediately prior to such acquisition
or Corporate Transaction, of the Company Common Stock Outstanding and
Company Voting Securities Outstanding, as the case may be.
(c) DEFINITION OF "CHANGE IN CONTROL PRICE." The "Change
in Control Price" means an
amount in cash equal to the higher of (i) the amount of cash and fair
market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction
triggering the Change in Control under Section 9(b)(ii) hereof or any
liquidation of shares following a sale of substantially all assets of
the Company, or (ii) the highest Fair Market Value per share at any
time during the 60-day period preceding and 60-day period following the
Change in Control.
10. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. The Company
may, to the extent deemed necessary or advisable by the Committee,
postpone the issuance or delivery of Stock or payment of other benefits
under any Award until completion of such registration or qualification
of such Stock or other required action under any federal or state law,
rule or regulation, listing or other required action with respect to
any stock exchange or automated quotation system upon which the Stock
or other Company securities are listed or quoted, or compliance with
any other obligation of the Company, as the Committee may consider
appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject
to such other conditions as it may consider appropriate in connection
with the issuance or delivery of Stock or payment of other benefits in
compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations. The foregoing notwithstanding, in
connection with a Change in Control, the Company shall take or cause to
be taken no action, and shall undertake or permit to arise no legal or
contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of
benefits under any Award or the imposition of any other conditions on
such issuance, delivery or payment, to the extent that such
postponement or other condition would represent a greater burden on a
Participant than existed on the 90th day preceding the Change in
Control.
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<PAGE>
(b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Award or
other right or interest of a Participant under the Plan, including any
Award or right which constitutes a derivative security as generally
defined in Rule 16a-l(c) under the Exchange Act, shall be pledged,
hypothecated or otherwise encumbered or subject to any lien, obligation
or liability of such Participant to any party (other than the Company
or a subsidiary), or assigned or transferred by such Participant
otherwise than by will or the laws of descent and distribution or to a
Beneficiary upon the death of a Participant, and such Awards or rights
that may be exercisable shall be exercised during the lifetime of the
Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than ISOs
and SARs in tandem therewith) may be transferred to one or more
Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance
with the terms of such Award, but only if and to the extent such
transfers and exercises are permitted by the Committee pursuant to the
express terms of an Award agreement (subject to any terms and
conditions which the Committee may impose thereon, and further subject
to any prohibitions or restrictions on such transfers pursuant to Rule
16b-3). A Beneficiary, transferee, or other person claiming any rights
under the Plan from or through any Participant shall be subject to all
terms and conditions of the Plan and any Award agreement applicable to
such Participant, except as otherwise determined by the Committee, and
to any additional terms and conditions deemed necessary or appropriate
by the Committee.
(c) ADJUSTMENTS. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or
event affects the Stock such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or enlargement
of the rights of Participants under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection
with Awards granted thereafter, (ii) the number and kind of shares of
Stock by which annual per-person Award limitations are measured under
Section 5 hereof, (iii) the number and kind of shares of Stock subject
to or deliverable in respect of outstanding Awards and (iv) the
exercise price, grant price or purchase price relating to any Award
and/or make provision for payment of cash or other property in respect
of any outstanding Award. In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria
included in, Awards (including Performance Awards and performance
goals, and Annual Incentive Awards and any Annual Incentive Award pool
or performance goals relating thereto) in recognition of unusual or
nonrecurring events (including, without limitation, events described in
the preceding sentence, as well as acquisitions and dispositions of
businesses and assets) affecting the Company, any subsidiary or any
business unit, or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions
or in view of the Committee's assessment of the business strategy of
the Company, any subsidiary or business unit thereof, performance of
comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made
if and to the extent that such authority or the making of such
adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section
8(c) hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as "performance-based compensation"
under Code Section 162(m) and the regulations thereunder to otherwise
fail to qualify as "performance-based compensation" under Code Section
162(m) and regulations thereunder.
(d) TAXES. The Company and any subsidiary is authorized to
withhold from any Award granted, any payment relating to an Award under
the Plan, including from a distribution of Stock, or any payroll or
other payment to a Participant, amounts of withholding and other taxes
due or potentially payable in connection with any transaction involving
an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Participants to satisfy obligations
for the payment of withholding taxes and other tax obligations relating
to any Award. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect
thereof in satisfaction of a Participant's tax obligations, either on a
mandatory or elective basis in the discretion of the
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<PAGE>
Committee.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend,
alter, suspend, discontinue or terminate the Plan or the Committee's
authority to grant Awards under the Plan without the consent of
stockholders or Participants, except that any amendment or alteration
to the Plan shall be subject to the approval of the Company's
stockholders not later than the annual meeting next following such
Board action if such amendment represents a material change to the Plan
or such stockholder approval is required by any federal or state law or
regulation (including, without limitation, Rule 16b-3 or Code Section
162(m) ) or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted, and the Board
may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action
may materially and adversely affect the rights of such Participant
under any previously granted and outstanding Award. The Committee may
waive any conditions or rights under, or amend, alter, suspend,
discontinue or terminate any Award theretofore granted and any Award
agreement relating thereto, except as otherwise provided in the Plan;
provided that, without the consent of an affected Participant, no such
Committee action may materially and adversely affect the rights of such
Participant under such Award. Notwithstanding anything in the Plan to
the contrary, if any right under this Plan would cause a transaction to
be ineligible for pooling of interest accounting that would, but for
the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interest
accounting shall be available, including the substitution of Stock
having a Fair Market Value equal to the cash otherwise payable
hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting. Notwithstanding anything hereto to
the contrary, the provisions of Section 6(b)(iv) and Section 6(d)(v) of
this Plan which govern formula grants of Options and Restricted Stock
to Non-Employee Directors, shall not be amended more than once every
six months other than to comport with changes to the Code or the rules
promulgated thereunder or the Employee Retirement Income Security Act
of 1974, as amended, or the rules promulgated thereunder, or with rules
promulgated by the Securities and Exchange Commission, unless such
limit on amendments is not required under Rule 16b-3 or other
applicable law.
(f) LIMITATION ON RIGHTS CONFERRED UNDER PLAN. Neither the
Plan nor any action taken hereunder shall be construed as (i) giving
any Eligible Person or Participant the right to continue as an Eligible
Person or Participant or in the employ of the Company or a subsidiary;
(ii) interfering in any way with the right of the Company or a
subsidiary to terminate any Eligible Person's or Participant's
employment at any time, (iii) giving an Eligible Person or Participant
any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and employees, or (iv) conferring on
a Participant any of the rights of a stockholder of the Company unless
and until the Participant is duly issued or transferred shares of Stock
in accordance with the terms of an Award.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a
Participant or obligation to deliver Stock pursuant to an Award,
nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the
creation of trusts and deposit therein cash, Stock, other Awards or
other property, or make other arrangements to meet the Company's
obligations under the Plan. Such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant. The
trustee of such trusts may be authorized to dispose of trust assets and
reinvest the proceeds in alternative investments, subject to such terms
and conditions as the Committee may specify and in accordance with
applicable law.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company
for approval shall be construed as creating any limitations on the
power of the Board or a committee thereof to adopt such other incentive
arrangements as it may deem desirable including incentive arrangements
and awards which do not qualify under Code Section 162(m).
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<PAGE>
(i) PAYMENTS IN THE EVENT OF FORFEITURES; FRACTIONAL SHARES.
Unless otherwise determined by the Committee, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or
other consideration, the Participant shall be repaid the amount of such
cash or other consideration. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee
shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
(j) GOVERNING LAW. The validity, construction and effect of
the Plan, any rules and regulations under the Plan, and any Award
agreement shall be determined in accordance with the laws of the State
of Florida without giving effect to principles of conflicts of laws,
and applicable federal law.
(k) AWARDS UNDER PREEXISTING PLANS. Upon approval of the Plan
by stock-holders of the Company, as required under Section 10(1)
hereof, no further Awards shall be granted under any Preexisting Plan.
(l) PLAN EFFECTIVE DATE AND STOCKHOLDER APPROVAL; TERMINATION
OF PLAN. The Plan shall become effective on the Effective Date, subject
to subsequent approval by stockholders of the Company eligible to vote
in the election of directors, by a vote sufficient to meet the
requirements of Code Section 162(m) and 422, Rule 16b-3 under the
Exchange Act, applicable NASDAQ requirements, and other laws,
regulations, and obligations of the Company applicable to the Plan.
Awards may be granted subject to stockholder approval, but may not be
exercised or otherwise settled in the event stockholder approval is not
obtained. The Plan shall terminate at such time as no shares of Common
Stock remain available for issuance under the Plan and the Company has
no further rights or obligations with respect to outstanding Awards
under the Plan.
(m) AGREEMENT WITH UNDERWRITER. The Company will agree with
the Underwriter of the Company's initial public offering that for a
13-month period immediately following the effective date of this Plan,
the Company will not, without the consent of the Underwriter, adopt or
propose to adopt any plan or arrangement permitting the grant, issue or
sale of any shares of its Common Stock or issue, sell or offer for sale
any of its Common Stock, or grant any option for its Common Stock which
shall: (x) have an exercise price per share of Common Stock less than
(a) the initial public offering price of the Common Stock offered in
this Prospectus or (b) the fair market value of the Common Stock on the
date of grant; or (y) be granted to any direct or indirect beneficial
holder of more than 10% of the issued and outstanding Common Stock of
the Company. No option or other right to acquire Common Stock granted,
issued or sold during the 13-month period immediately following the
effective date of this Plan shall permit (a) the payment with any form
of consideration other than cash, (b) payment of less than the full
purchase or exercise price for such shares of Common Stock or other
securities of the Company on or before the date of issuance, or (c) the
existence of stock appreciation rights, phantom options or similar
arrangements.
A-16
EXHIBIT 10.2
MASTER LEASE AND DISTRIBUTION AGREEMENT
THIS MASTER LEASE AND DISTRIBUTION AGREEMENT is effective as of the 1st
day of August, 1996, notwithstanding the actual date of execution, by and
between THE VALVOLINE COMPANY, a division of ASHLAND INC., a Kentucky
corporation, with offices located at 3499 Dabney Drive, Lexington, Kentucky
40509 (hereinafter referred to as "Valvoline"). FIRST RECOVERY, a division of
Ecogard, Inc., a Delaware corporation, with offices located at 3499 Dabney
Drive, Lexington, Kentucky 40509 (hereinafter referred to as "First Recovery"),
and MANSUR INDUSTRIES, INC., a Florida corporation, with offices located at 8425
S.W. 129 Terrace, Miami, Florida 33156 (hereinafter referred to as "Mansur").
WHEREAS, Mansur has developed and patented a recycling parts washer
under U.S. Patents No. 5,349,974 and 5,388,601, and has other patents pending
with respect to such machinery, more particularly defined below as "the
Equipment"; and
WHEREAS, Valvoline desires that First Recovery shall obtain certain
rights to distribute the Equipment, subject to and in accordance with the
provisions hereof:
WHEREAS, Valvoline and First Recovery have represented to Mansur that
First Recovery has the ability, experience and resources to market and
distribute the Equipment on a national basis; and
WHEREAS, the parties desire to enter into a pilot program to evaluate
the market for and performance of the Equipment and First Recovery's ability to
market and distribute the Equipment, which program may provide the basis for the
parties to enter into a broader, longer term agreement, subject to negotiation
of a mutually acceptable agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants, agreements and conditions hereinafter set forth and the mutual
benefits to be derived therefrom, the sufficiency and adequacy of which is
hereby acknowledged, First Recovery and Mansur hereby agree as follows:
1. SCOPE OF SERVICE
1.1 Subject to the terms and conditions hereof, including
without limitation, the early termination provisions hereof, during the Term (as
defined in Paragraph 2 hereof), Mansur shall lease to First Recovery one
thousand (1,000) recycling parts washer units, which units are more particularly
identified in Exhibit A to this Agreement, attached hereto and incorporated
herein by reference (the "Equipment"), on the schedule set forth herein. All
Equipment will carry the manufacturer's warranty specified herein.
<PAGE>
1.2 During the second and third month of the Term, Mansur
shall lease to First Recovery one hundred (100) units of Equipment, at the rate
of fifty units each month (the one hundred (100) units are hereinafter referred
to as "the Initial Inventory"). In First Recovery's sole discretion, the Initial
Inventory of Equipment may be used by First Recovery for free trial placements
at potential customer locations as a marketing tool to secure customer leases of
the Equipment, or may be leased by First Recovery to its customers. First
Recovery shall use its reasonable and best efforts to solicit customers in the
Territory, (as defined in Paragraph 4 hereof), to lease Equipment.
1.3 During the fourth and fifth month of the Term, Mansur
shall lease to First Recovery one hundred (100) units of Equipment, at the rate
of fifty (50) units each month. During the sixth through thirteenth month of the
Term, Mansur shall lease to First Recovery and aggregate of eight hundred (800)
units of Equipment, at the rate of one hundred (100) units each month.
1.4 The Initial Inventory shall be leased to First Recovery
at the reduced monthly rates specified for Initial Inventory outlined on Exhibit
B, attached hereto and incorporated herein by reference, and all other units of
Equipment to be leased hereunder during the Term shall be leased to First
Recovery at the standard monthly rates specified in such Exhibit B. All
Equipment, whether Initial Inventory or otherwise, shall be lease to First
Recovery for five years. All leases to First Recovery shall be made pursuant to
this Agreement. First Recovery shall be obligated for all lease payment and all
other terms and conditions hereunder, regardless whether the Equipment is
subleased to its customers. First Recovery shall bear all credit or other
performance risk in connection with its customers. The effective date of the
lease of Initial Inventory shall be the date of which First Recovery receives
the Equipment and the effective date of the lease of all other Equipment shall
be the earlier to occur of (i) the date on which First Recovery subleases the
unit of Equipment to its customer, and (ii) thirty (30) days after First
Recovery receives the unit of Equipment. The units of Equipment that are leased
by Mansur to First Recovery, except the one hundred (100) units of Initial
Inventory, shall hereinafter be referred to as "the Leased Inventory".
1.5 Of the one hundred (100) units of Initial Inventory,
ten (10) shall be shipped for delivery in August 1996, forty (40) shall be
shipped for delivery in September 1996 and fifty (50) shall be shipped for
delivery in October 1996 F.O.B. to a location designated by First Recovery.
Thereafter, unless the Agreement is terminated in accordance with its terms,
shipments of the Equipment to First Recovery shall be made in accordance with
the schedule set forth in Paragraph 1.3 by shipping F.O.B. to a location
designated by First Recovery. Any units of Equipment requested in excess of the
amounts set forth in Paragraph 1.3 shall be pursuant to purchase orders
submitted by First Recovery at least 90 days in advance of the requested
delivery date. Such additional requests will be subject to acceptance by Mansur,
provided that Mansur shall use its reasonable and best efforts to allocate up to
thirty-three percent (33%) of its total production to meet the requests of First
Recovery. If a notice of termination is given during the Term hereof, Mansur
shall not ship any units of Equipment during the period from the date notice of
termination is given to the date of termination.
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<PAGE>
1.6 All Equipment shipped by Mansur to First Recovery shall
be new, clean and free of any parts washing solution.
1.7 Individual units of Equipment shall be tracked by both
parties by serial number to determine the location and lease status of each
individual unit. The parties shall reconcile such information at the end of
each calendar quarter.
1.8 First Recovery shall have the right, but not the
obligation, to place stickers or other identifying documentation with First
Recovery's trademarks or other company information on the Equipment, so long as
such identification has been approved by Mansur, such approval not to be
unreasonably withheld, and that such identification shall not obscure Mansur's
"System One" trademark or any other names and marks on the Equipment evidencing
Mansur's proprietary interests therein (or those of a third-party lease
financing company), or create any interest of First Recovery whatsoever in the
Equipment, other than as explicitly set forth herein.
1.9 Other than the solicitation and distribution rights set
forth herein, and its leasehold interest in the units of Equipment, First
Recovery has and shall have no rights whatsoever with respect to the Equipment
or Mansur's proprietary technology and trade secrets. If, in the course of its
performance hereunder, First Recovery acquires any confidential information with
respect to Mansur's Equipment, marketing plan, customers, or any other matter,
First Recovery shall maintain such information as strictly confidential, shall
not unitize or divulge such information in any way and, upon termination of this
Agreement, shall return or destroy all documents or records containing such
confidential information.
2. TERM.
This Agreement shall be for an initial term of thirteen (13)
months from the effective date set forth above (the "Term"), unless earlier
terminated pursuant to the provisions hereof. Either party may terminate this
Agreement with or without cause, upon sixty (60) days prior written notice to
the other party that this Agreement shall terminate.
3. TITLE RISK OF LOSS.
Title to the Equipment shall at all times remain in Mansur or
its assignee under any lease financing program. Risk of loss to each unit of the
Equipment shall pass to First Recovery for units that are in First Recovery's or
its customers' control and possession, upon First Recovery's receipt of the unit
of Equipment at First Recovery's designated facility as set forth in Paragraph
1.5. Risk of loss to the Equipment shall transfer back to Mansur for any units
that are returned to Mansur by First Recovery in accordance with the provisions
hereof at the time that the Equipment leaves First Recovery's control and
possession, so long as First Recovery has given reasonable notice of shipment
and shipment is by insured common carrier.
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<PAGE>
4. TERRITORY.
For purposes of the pilot program as set forth in this
Agreement, and subject to the provisions of Paragraph 6.3 hereof, First
Recovery's marketing and distribution efforts related to the Equipment shall be
limited to the specific geographical territory identified on Exhibit C attached
hereto and incorporated herein by reference (the "Territory"). During the Term
hereof, Mansur shall refer all inquires relating to the Equipment from potential
customers in the Territory to First Recovery. Subject to the provisions of
Paragraph 6.3 with respect to certain options of First Recovery after the
expiration of the Term, First Recovery shall refer all inquiries with respect to
the Equipment from potential customers outside the Territory to Mansur, and
First Recovery shall lease no Equipment outside the Territory, and Mansur shall
lease no Equipment directly within the Territory.
5. SERVICE AND MAINTENANCE OF EQUIPMENT.
5.1 Once a unit of Equipment has been placed by First
Recovery with a customer, First Recovery shall be responsible at its cost and
expense for providing service and maintenance for the Equipment. First Recovery
intends to supply the Equipment only with virgin mineral spirits purchased from
Ashland Chemical Company, a division of Ashland Inc., and Mansur shall ensure
that the Equipment shall be capable of using such product. Should any unit of
Equipment need replacement parts, Mansur shall promptly provide the needed
replacement part to First Recovery at Mansur's sole cost.
5.2 Mansur shall provide First Recovery with the necessary
technical training to enable First Recovery to service and maintain the
Equipment on a timely basis. Such training shall be at Mansur's sole cost, with
the exception of lodging and travel costs for personnel of First Recovery, which
shall be borne by First Recovery.
6. UNCONDITIONAL GUARANTEE/TERMINATION.
6.1 (a) Mansur unconditionally warrants the Equipment as
follows:
MANUFACTURER'S UNCONDITIONAL WARRANTY
The Equipment specified herein is unconditionally warranted to
be fit for the purpose intended by the manufacturer for the
full term of the lease. The warranty shall cover all parts. If
the Equipment cannot be repaired within a reasonable period of
time, the manufacturer will immediately replace it with like
Equipment at no additional charge.
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<PAGE>
(b) First Recovery will provide the following
service warranty to its customers:
SERVICE GUARANTEE
First Recovery shall arrange for or provide all necessary
maintenance and servicing of the Equipment, for the full term
of the lease specified herein.
(c) The warranty provided in Paragraph 6.1 is a
limited warranty and does not apply to any products other than Equipment,
conditions resulting from improper use of the Equipment or operation of the
Equipment outside the specified environmental conditions, or conditions
resulting from modifications to Equipment other than modifications made by
Mansur. THE ABOVE WARRANTY IS THE EXCLUSIVE WARRANTY WITH RESPECT TO THE
EQUIPMENT, AND NO OTHER WARRANTY, EXPRESS OR IMPLIED, SHALL APPLY.
6.2 After the expiration or termination of this Agreement,
if the parties do not enter into another agreement for the marketing and
distribution of the Equipment, First Recovery may, at its sole option, continue
to lease the Equipment it had leased to customers during the term hereof for the
remaining portion of the then current five (5) year term, as well as two (2)
optional successive renewal periods of five (5) years each; provided that each
renewal is made at then current prices (subject to the applicable discount from
current list price at which First Recovery is leasing units other than the
Initial as set forth in Exhibit B). During such lease period, Mansur shall
replace each unit of Leased Inventory at the end of each five (5) year lease or
renewal term, whichever is applicable, with the most recent development or
technological advancement of the relevant model of the Equipment. The replaced
unit shall be returned to Mansur and the list of inventory shall reflect the
Equipment change by serial number. If First Recovery exercises its right as set
forth above, then the terms and conditions of the Agreement shall survive
termination of this Agreement only as such terms and conditions relate to or are
applicable to the leased inventory. In the alternative, First Recovery may, at
its sole option, exercised by written notice within thirty (30) days of the
expiration or termination hereof, assign to Mansur all, but not less than all,
the leases for the Equipment that First Recovery has entered into with its
customers at the net present value of First Recovery's expected profit over the
remaining portion of the then current five (5) year term of such leases at a
twelve percent (12%) discount rate and return to Mansur all other Inventory and
all of First Recovery's leases with Mansur shall terminate without further
obligation by First Recovery. First Recovery may not assign to Mansur any lease
with respect to any unit of Equipment pursuant to which the First Recovery's
customer thereunder is obligated to pay First Recovery, on a monthly basis,
during the remaining term thereof, an amount lower than the amount First
Recovery is obligated to pay to Mansur, on a monthly basis, during the remaining
term of its lease with respect to such unit of Equipment.
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<PAGE>
6.3 After expiration or termination of this Agreement, if
First Recovery has leased at least one thousand (1,000) units of Equipment
during the Term hereof, and First Recovery has not exercised the option set
forth in the next to last sentence of Paragraph 6.2, First Recovery shall have
the option, during a period of one (1) year after the expiration or termination
hereof (the "Option Period"), to lease a number of additional units of Equipment
from Mansur calculated as follows: for each unit of Equipment leased hereunder
by First Recovery prior to the notice of termination hereof, First Recovery
shall have the right to lease four (4) units of Equipment during the Option
Period for an initial five (5) year term, plus two (2) successive renewal
periods of five (5) years each at First Recovery's sole option. If First
Recovery chooses to exercise this option, First Recovery shall place the leased
units only at First Recovery customer locations anywhere in the contiguous
United States, but only if such locations were operated by customers of First
Recovery on the date of the expiration or termination of the Agreement. Since
Mansur may enter into exclusive agreements with other parties, First Recovery
shall not offer the units except as expressly provided hereby and the terms and
conditions of this Agreement shall survive termination of the Agreement only as
such terms and conditions relate to or are applicable to units of Equipment
placed in such locations.
7. EXCLUSIVITY.
During the Term of this Agreement, First Recovery shall have
the exclusive right to market and distribute the Equipment in the Territory.
Mansur shall market and distribute the Equipment directly to customers outside
the Territory. Mansur shall not enter into an agreement for distribution of
Equipment with any third party while this Agreement is in effect. For the
purposes of the preceding sentence, this Agreement shall not be deemed to be in
effect during periods of limited effectiveness as set forth in Section 6.2 and
6.3 hereof.
8. PATENT.
Mansur represents, warrants and covenants to First Recovery
that it owns a valid, existing and current patent on the Equipment, and that, to
the best of its knowledge, the design of the Equipment does not infringe upon
any rights of any third party. Mansur shall defend, indemnify and hold harmless
First Recovery, its parent, subsidiaries and affiliate corporations, and its and
their officers, directors, employees and agents (hereinafter referred to as the
"Indemnified Parties"), from and against any and all claims, liabilities, suits,
proceedings, judgments, orders, fines, penalties, damages, losses, costs and
expenses, including reasonable attorneys' fees, relating to the design of,
patentability of, or patent on the Equipment which any of the Indemnified
Parties may hereafter incur, become responsible for or pay cut as a result of
First Recovery's marketing and distribution of the Equipment, so long as First
Recovery provides Mansur with timely notice of, and an opportunity to defend any
claim that may give rise to an indemnification claim.
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<PAGE>
9. INSURANCE
9.1 Without limiting, negating or reducing Mansur's
undertaking to indemnify, defend and hold harmless the Indemnified Parties as
set forth in Paragraph 8 or 11 of this Agreement, Mansur shall obtain and
continue in full force and effect throughout the term of this Agreement,
including any renewals, so long as such insurance is available on commercially
practicable terms, the following insurance coverage:
Products Liability $5,000,000 per occurrence;
$5,000,000 aggregate
9.2 The required insurance coverage shall be maintained
with insurance companies qualified to provide coverage where business is
conducted pursuant to this Agreement, Mansur shall provide First Recovery with
thirty (30) days prior written notice of any change, modification or termination
in or of the above insurance coverages. If such change, modification or
termination results in insurance coverage that is unsatisfactory to First
Recovery, then First Recovery may terminate this Agreement immediately upon
written notice to Mansur, or, if satisfactory insurance can be maintained by
First Recovery at costs consistent with the costs previously acceptable to and
borne by Mansur, First Recovery may, with Mansur's prior consent, obtain such
insurance and be reimbursed therefor by Mansur. Upon request, Mansur shall
provide First Recovery with an insurance certificate evidencing the required
coverages and naming First Recovery as an additional insured.
10. REPRESENTATIONS AND WARRANTIES.
10.1 Mansur represents, warrants and covenants to First
Recovery, effective as of the date of this Agreement and again as of the date of
each shipment of Equipment to First Recovery as follows:
(a) Mansur owns a valid and current patent for the
Equipment that, to the best of its knowledge, does not infringe on the
intellectual property rights of any third party and;
(b) Mansur believes that its patent should prevent
any third party from manufacturing identical or similar equipment and Mansur
will be entitled to seek enforcement of its patent against infringes on that
patents; and
(c) Mansur has the requisite skills and shall
secure any necessary arrangements or facilities to manufacture the Equipment on
a mass basis sufficient to fulfill its obligations hereunder and will utilize
its best efforts to fill requested orders for the Equipment on a timely basis,
subject to the previsions hereof; and
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<PAGE>
(d) that Mansur backs the Equipment with an
unconditional guarantee, as set forth herein. To the best of Mansur's knowledge,
the Equipment is materially free from defects, can be used in accordance with
the manufacturers' instructions without material risk of fire, ignition or
explosion, is manufactured with an appropriate barrier between the parts washer
fluid used and any voltage or ignition source and performs in all material
respects in accordance with its published specification standards as set forth
in Exhibit A, attached hereto and incorporated herein by reference; and
(e) within ninety (90) days of the execution (not the
effective date) of this Agreement, Mansur will apply for the approval of
Underwriter's Laboratories or Factory Mutual for the design of the Equipment, as
appropriate; and
(f) in manufacturing and shipping the Equipment,
Mansur shall comply in all material respects with all laws, ordiances, orders,
rules, regulations, and actions of the United States of America and of any state
or political subdivision thereof and of any other governmental unit or agency
that may now or hereafter be applicable to Mansur's obligations under this
Agreement.
10.2 First Recovery represents, warrants and covenants to
Mansur, effective as of the date of this Agreement and again as of the date of
each shipment of Equipment to First Recovery as follows:
(a) it has all requisite power to conduct its
business as now conducted and to perform its obligations under this agreement;
(b) it currently has customers nationwide who, in the
aggregate, lease at least 2,500 "non-recycling" parts cleaners;
(c) execution and delivery hereof, and performance
hereunder, will not violate or create a default under any mortgage, indenture,
note, agreement or other instrument to which First Recovery is a party;
(d) it maintains and will continue to maintain during
the term of this Agreement places of business, equipment and marketing and
service personnel used in storing, shipping marketing and maintaining the
Equipment;
(e) it will use its best efforts to develop the
market for the Equipment, such efforts to be no less rigorous than those used by
it in relation to its other services provided in the Territory;
(f) it complies and will comply with all applicable
laws, rules and regulations relating transporting, storing, advertising,
promoting and leasing the Equipment;
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<PAGE>
(g) it shall notify Mansur promptly upon becoming
aware of any adverse information relating to the safety or effectiveness of the
Equipment;
(h) subject to the provisions of Paragraph 6.3, it
will not market or distribute the Equipment outside the Territory; and
(i) in performing its obligations hereunder, First
Recovery shall comply in all material respects with all laws, ordiances, orders,
rules, regulations, and actions of the United States of America and of any state
or political subdivision thereof and of any other governmental unit or agency
that may now or hereafter be applicable to First Recovery's obligations under
this Agreement.
11. INDENMIFICATION.
Mansur shall indemnify, defend and hold harmless First
Recovery, its parent, subsidiaries and affiliates from and against any and all
claims, liabilities, suits, proceedings, judgments, orders, fines, penalties,
damages, losses, costs, and expenses, including reasonable attorney fees, which
it may hereafter incur, become responsible for or pay out as a result of death
or bodily injuries to any person, destruction or damage to any property or
contamination of or adverse effects on the environment, arising out of or
resulting from Mansur's design and manufacture of the Equipment, any negligent
act or omission of Mansur, or any breach of any provision of this Agreement by
Mansur, except to the extent that such claims, liabilities, suits, proceedings,
judgments, orders, fines, penalties, damages, losses, costs and expenses are
caused by or results from the direct fault or negligence of First Recovery. For
purposes of this Paragraph, the term "Mansur" shall include Mansur's affiliates,
employees, invitees, agents and contractors,
First Recovery shall indemnify, defend and hold harmless
Mansur, its parent, subsidiaries and affiliates from and against any and all
claims, liabilities, suits, proceedings, judgments, orders, fines, penalties,
damages, losses, costs, and expenses, including reasonable attorney fees, which
it may hereafter incur, become responsible for or pay out as a result of death
or bodily injuries to any person, destruction or damage to any property or
contamination of or adverse effects on the environment, arising out of or
resulting from any negligent act or omission of First Recovery, or any breach of
any provision of this Agreement by First Recovery, except to the extent that
such claims, liabilities, suits, proceedings, judgments, orders, fines,
penalties, damages, losses, costs and expenses are caused by or result from the
direct fault or negligence of Mansur. For purposes of this Paragraph, the term
"First Recovery" shall include First Recovery's affiliates, employees, invitees,
agents and contractors.
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<PAGE>
12. INDEPENDENT CONTRACTOR
Each party is and shall remain an independent contractor in
the performance of its obligations under this Agreement. The provisions of this
Agreement shall not be construed as authorizing or reserving to either party any
right to exercise any control or direction over the operations, activities,
employees and agents of the other in connections with this Agreement, it being
understood and agreed that the entire control and direction of such operations,
activities, employees and agents shall remain with such party. Neither party to
this Agreement shall have the authority to employ any person as agent or
employee for or on behalf of the other party to this Agreement for any purpose,
and neither party to this Agreement, nor any person performing any duties under
or engaging in any work at the request of such party, shall be deemed to be an
employee or agent of the other party to this Agreement.
13. FORCE MAJEURE.
The performance or observance by either party of any
obligations of such party under this Agreement may be suspended by it, in whole
or in part, in the event of any of the following that prevents such performance
or observance: Act of God, war, riot, fire, explosion, accident, flood,
sabotage, strike, lockout injunction, inability to obtain fuel, power, raw
materials, labor, containers or transportation facilities, national defense
requirements, or any other cause (whether similar or dissimilar) beyond the
reasonable control of such party; provided, however, that the party so prevented
from complying with its obligations hereunder shall immediately notify in
writing the other party hereof and such party so prevented shall exercise
diligence in an endeavor to remove or overcome the cause of such inability to
comply, and provided further that neither party shall be required to settle a
labor dispute against its own best judgment.
14. ASSIGNMENT.
Except as set forth herein, neither party may assign its
rights or delegate its duties under this Agreement or sublet the work to be
provided hereunder to a third party without the prior written consent of the
other, which consent shall not be unreasonably withheld, conditioned or delayed,
except that First Recovery may effect an assignment of this Agreement to a
parent, subsidiary or affiliate corporation upon written notice to Mansur and
Mansur may assign its rights hereunder in any lease financing transaction or
arrangement upon written notice to First Recovery so long as Mansur remains
primarily liable for the performance of its obligations under this Agreement.
15. MISCELLANEOUS.
This Agreement constitutes the full understanding of the
parties, a complete allocation of risks between them and a complete and
exclusive statement of the terms and conditions of their agreement; and all
prior agreements, negotiations, dealings and understandings, whether written or
oral, regarding the subject matter hereof, are superseded by and merger into
this Agreement.
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<PAGE>
15.2 No conditions, usage of trade, course of dealing or
performance understanding or agreement purporting to modify, vary, explain or
supplement the terms or conditions of this Agreement shall be binding unless
hereafter made in writing and signed by the party to be bound, and no
modification shall be effected by the acknowledgment or acceptance of any forms
containing terms or conditions at variance with or in addition to those set
forth in this Agreement.
15.3 No waiver by either party with respect to any breach or
default or of any right or remedy and no course of dealing or performance shall
be deemed to constitute a continuing waiver of any other breach or default or of
any other right or remedy, unless such waiver be expressed in writing signed by
the party to be bound.
15.4 Section headings as to the contents of particular
sections are for convenience only and are in no way to be construed as part of
this Agreement or as a limitation of the scope of the particular sections to
which they refer.
15.5 The validity, interpretation and performance of this
Agreement and any dispute connected herewith shall be governed and construed in
accordance with the laws of the State of New York.
15.6 In the event any term or provision of this Agreement,
or any portion thereof, or any application of any term or provision shall be
invalid or unenforceable, the remainder of this Agreement or any other
application of such term or provision shall not be affected thereby.
15.7 All rights conferred by this Agreement shall be binding
upon, inure to the benefit of, and be enforceable against the respective
successors and permitted assigns of the parties hereto.
15.8 All notices, requests, and approvals required or
permitted under this Agreement shall be deemed validly given if in writing and
addressed to the party for whom intended at the address of such party set forth
above, and shall be effective upon the earlier to occur of personal delivery or
three (3) business days following such notice, request or approval having been
deposited in the U.S. mail, postage prepaid, Certified or Registered, return
receipt required.
15.9 Both parties shall hold as confidential the terms and
conditions of this Agreement, and shall not disclose such terms and conditions
to any third party except as required by law and with prior written notice to
the other party.
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<PAGE>
IN WITNESS WHEREOF, First Recovery and Mansur have caused their
respective authorized representative to execute this Agreement effective as of
the date first above written.
WITNESS: THE VALVOLINE Company, a division
of ASHLAND INC.
/s/ ANN ETHERTON By: /s/ J. M. HUSTON
- ------------------ --------------------
its: VICE PRESIDENT
- ------------------ --------------------
WITNESS: FIRST RECOVERY, a division of
ECOGARD, INC.
/S/ KATHY D. GIEERN By: /s/ J. M. HUSTON
- ------------------- ---------------------
its: PRESIDENT
- -------------------- ---------------------
WITNESS: MANSUR INDUSTRIES, INC.
/s/ ROMELYN BAILEY By: PAUL I. MANSUR
- -------------------- ---------------------
/S/ LYDIA HUBBELL its: CHIEF EXECUTIVE OFFICER
- -------------------- ---------------------
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<PAGE>
EXHIBIT A
TO
AGREEMENT
BETWEEN
FIRST RECOVERY, A DIVISION OF ECOGARD, INC.
AND
SYSTEM ONE, A DIVISION OF MANSUR INDUSTRIES, INC.
Dated AUGUST 1, 1996
(See attached brochure and description of
the Equipment.)
<PAGE>
[PICTURE]
MANSUR
- ----------
MPM SERIES
[Caption for picture is illegible.]
<PAGE>
EXHIBIT B
TO
AGREEMENT
BETWEEN
FIRST RECOVERY, A DIVISION OF ECOGARD, INC.
AND
SYSTEM ONE, A DIVISION OF MANSUR INDUSTRIES, INC.
Dated AUGUST 1, 1996
TYPE OF EQUIPMENT MONTHLY LEASE RATES
Model 500 $ 37.00
Model 570 47.00
Model 550 47.00
Model 555 47.00
The monthly lease rate for the Initial Inventory shall be at one half the
monthly lease rates set forth above.
<PAGE>
EXHIBIT C
TO
AGREEMENT
BETWEEN
FIRST RECOVERY, A DIVISION OF ECOGARD, INC.
AND
SYSTEM ONE, A DIVISION OF MANSUR INDUSTRIES, INC.
Dated AUGUST 1, 1996
The territory shall include the following counties
located in the State of Texas:
Brazoria
Chambers
Collin
Dallas
Denton
Ellis
Fort Bend
Galveston
Harris
Johnson
Kaufman
Liberty
Montgomery
Parker
Tarrant
Waller
Wise
EXHIBIT 10.3
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement"), is made and entered into
as of the (___) day of June, 1996, by and between MANSUR INDUSTRIES INC., a
Florida corporation (the "Company"), and (the "Indemnitee").
Recitals
A. The Company desires to retain the services of the Indemnitee as a
(__________) of the Company.
B. As a condition to the Indemnitee's agreement to serve the Company as
such, the Indemnitee requires that he be indemnified from liability to the
fullest extent permitted by law.
C. The Company is willing to indemnify the Indemnitee to the fullest
extent permitted by law in order to retain the services of the Indemnitee.
NOW, THEREFORE, for and in consideration of the mutual premises and
covenants contained herein, the Company and the Indemnitee agree as follows:
SECTION 1. MANDATORY INDEMNIFICATION IN PROCEEDINGS OTHER THAN THOSE BY OR
IN THE RIGHT OF THE COMPANY. Subject to Section 4 hereof, the Company shall
indemnify and hold harmless the Indemnitee from and against any and all claims,
damages, expenses (including attorneys' fees), judgments, penalties, fines
(including excise taxes assessed with respect to an employee benefit plan),
amounts paid in settlement and all other liabilities actually and reasonably
incurred or paid by him in connection with the investigation, defense,
prosecution, settlement or appeal of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise (other than an action by or in the right of the
Company) and to which the Indemnitee was or is a party or is threatened to be
made a party by reason of the fact that the Indemnitee is or was an officer,
director, shareholder, employee or agent of the Company, or is or was serving at
the request of the Company as an officer, director, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan, or other enterprise, or by reason of anything done or not done by
the Indemnitee in any such capacity or capacities, provided that the Indemnitee
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
<PAGE>
SECTION 2. MANDATORY INDEMNIFICATION IN PROCEEDINGS BY OR IN THE RIGHT OF
THE COMPANY. Subject to Section 4 hereof, the Company shall indemnify and hold
harmless the Indemnitee from and against any and all expenses (including
attorneys' fees) and amounts paid in settlement actually and reasonably incurred
or paid by him in connection with the investigation, defense, prosecution,
settlement or appeal of any threatened, pending or completed action, suit or
proceeding by or in the right of the Company to procure a judgment in its favor,
whether civil, criminal, administrative, investigative or otherwise, and to
which the Indemnitee was or is a party or is threatened to be made a party by
reason of the fact that the Indemnitee is or was an officer, director,
shareholder, employee or agent of the Company, or is or was serving at the
request of the Company as an officer, director, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or not done by
the Indemnitee in any such capacity or capacities, provided that (i) the
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company, and (ii) no indemnification
shall be made under this Section 2 in respect of any claim, issue or matter as
to which the Indemnitee shall have been adjudged to be liable to the Company for
misconduct in the performance of his duty to the Company unless and only to the
extent that the court in which such action, suit or proceeding was brought (or
any other court of competent jurisdiction) shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, the Indemnitee is fairly and reasonably entitled to indemnity for
such expenses which such court shall deem proper.
SECTION 3. REIMBURSEMENT OF EXPENSES FOLLOWING ADJUDICATION OF NEGLIGENCE.
The Company shall reimburse the Indemnitee for any expenses (including
attorney's fees) and amounts paid in settlement actually and reasonably incurred
or paid by him in connection with the investigation, defense, settlement or
appeal of any action or suit described in Section 2 hereof that results in an
adjudication that the Indemnitee was liable for negligence, gross negligence or
recklessness (but not willful misconduct) in the performance of his duty to the
Company; provided, however, that the Indemnitee acted in good faith and in a
manner he believed to be in the best interests of the Company.
SECTION 4. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
Sections 1 and 2 hereof (unless ordered by a court) and any reimbursement made
under Section 3 hereof shall be made by the Company only as authorized in the
specific case upon a determination (the "Determination") that indemnification or
reimbursement of the Indemnitee is proper in the circumstances because the
Indemnitee has met the applicable standard of conduct set forth in Section 1, 2
or 3 hereof, as the case may be. Subject to Sections 5.6, 5.7, 5.8 and 8 of this
Agreement, the Determination shall be made in the following order of preference:
(1) first, by the Company's Board of Directors (the "Board") by
majority vote or consent of a quorum consisting of directors ("Disinterested
Directors") who
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<PAGE>
are not, at the time of the Determination, named parties to such action, suit or
proceeding; or
(2) next, if such a quorum of Disinterested Directors cannot be
obtained, by majority vote or consent of a committee duly designated by the
Board (in which designation all directors, whether or not Disinterested
Directors, may participate) consisting solely of two or more Disinterested
Directors; or
(3) next, if such a committee cannot be designated, by any
independent legal counsel (who may be any outside counsel regularly employed by
the Company); or
(4) next, if such legal counsel determination cannot be obtained,
by vote or consent of the holders of a majority of the Company's Common Stock
that are represented in person or by proxy at a meeting called for such purpose.
4.1 NO PRESUMPTIONS. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Indemnitee did not act in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the Company, and with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
4.2 BENEFIT PLAN CONDUCT. The Indemnitee's conduct with respect to an
employee benefit plan for a purpose he reasonably believed to be in the
interests of the participants in and beneficiaries of the plan shall be deemed
to be conduct that the Indemnitee reasonably believed to be not opposed to the
best interests of the Company.
4.3 RELIANCE AS SAFE HARBOR. For purposes of any Determination
hereunder, the Indemnitee shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his conduct was unlawful, if his action is based
on (i) the records or books of account of the Company or another enterprise,
including financial statements, (ii) information supplied to him by the officers
of the Company or another enterprise in the course of their duties, (iii) the
advice of legal counsel for the Company or another enterprise, or (iv)
information or records given or reports made to the Company or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company or another enterprise.
The term "another enterprise" as used in this Section 4.3 shall mean any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise of which the Indemnitee is or was serving at the request of the
Company as an officer, director, partner, trustee, employee or agent. The
provisions of this Section 4.3 shall not be deemed to be exclusive or to limit
in any way the
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<PAGE>
other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in Sections 1, 2 or 3 hereof, as the
case may be.
4.4 SUCCESS ON MERITS OR OTHERWISE. Notwithstanding any other
provision of this Agreement, to the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described in Section 1 or 2 hereof, or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal thereof. For purposes of this
Section 4.4, the term "successful on the merits or otherwise" shall include, but
not be limited to, (i) any termination, withdrawal, or dismissal (with or
without prejudice) of any claim, action, suit or proceeding against the
Indemnitee without any express finding of liability or guilt against him, (ii)
the expiration of 120 days after the making of any claim or threat of an action,
suit or proceeding without the institution of the same and without any promise
or payment made to induce a settlement, or (iii) the settlement of any action,
suit or proceeding under Section 1, 2 or 3 hereof pursuant to which the
Indemnitee pays less than $25,000.
4.5 PARTIAL INDEMNIFICATION OR REIMBURSEMENT. If the Indemnitee is
entitled under any provision of this Agreement to indemnification and/or
reimbursement by the Company for some or a portion of the claims, damages,
expenses (including attorneys' fees), judgments, fines or amounts paid in
settlement by the Indemnitee in connection with the investigation, defense,
settlement or appeal of any action specified in Section 1, 2 or 3 hereof, but
not, however, for the total amount thereof, the Company shall nevertheless
indemnify and/or reimburse the Indemnitee for the portion thereof to which the
Indemnitee is entitled. The party or parties making the Determination shall
determine the portion (if less than all) of such claims, damages, expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement for
which the Indemnitee is entitled to indemnification and/or reimbursement under
this Agreement.
4.6 LIMITATIONS ON INDEMNIFICATION. No indemnification pursuant to
Sections 1 or 2 hereof shall be paid by the Company if a judgment (after
exhaustion of all appeals) or other final adjudication determines that the
Indemnitee's actions, or omissions to act, were material to the cause of action
so adjudicated and constitute:
(a) a violation of criminal law, unless the Indemnitee had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful;
(b) a transaction from which the Indemnitee derived an improper
personal benefit within the meaning of Section 607.0850(7) of the Florida
Business Corporation Act;
- 4 -
<PAGE>
(c) in the event that the Indemnitee is a director of the
Company, a circumstance under which the liability provisions of Section 607.0834
of the Florida Business Corporation Act are applicable; or
(d) willful misconduct or conscious disregard for the best
interests of the Company in a proceeding by or in the right of the Company to
procure a judgment in its favor or in a proceeding by or in the right of a
shareholder of the Company.
SECTION 5. PROCEDURES FOR DETERMINATION OF WHETHER STANDARDS HAVE BEEN
SATISFIED.
5.1 COSTS. All costs of making the Determination required by Section
4 hereof shall be borne solely by the Company, including, but not limited to,
the costs of legal counsel, proxy solicitations and judicial determinations. The
Company shall also be solely responsible for paying (i) all reasonable expenses
incurred by the Indemnitee to enforce this Agreement, including, but not limited
to, the costs incurred by the Indemnitee to obtain court-ordered indemnification
pursuant to Section 8 hereof, regardless of the outcome of any such application
or proceeding, and (ii) all costs of defending any suits or proceedings
challenging payments to the Indemnitee under this Agreement.
5.2 TIMING OF THE DETERMINATION. The Company shall use its best
efforts to make the Determination contemplated by Section 4 hereof promptly. In
addition, the Company agrees:
(a) if the Determination is to be made by the Board or a
committee thereof, such Determination shall be made not later than 15 days after
a written request for a Determination (a "Request") is delivered to the Company
by the Indemnitee;
(b) if the Determination is to be made by independent legal
counsel, such Determination shall be made not later than 30 days after a Request
is delivered to the Company by the Indemnitee; and
(c) if the Determination is to be made by the shareholders of the
Company, such Determination shall be made not later than 90 days after a Request
is delivered to the Company by the Indemnitee.
The failure to make a Determination within the above-specified time period shall
constitute a Determination approving full indemnification or reimbursement of
the Indemnitee. Notwithstanding anything herein to the contrary, a Determination
may be made in advance of (i) the Indemnitee's payment (or incurring) of
expenses with respect to which indemnification or reimbursement is sought,
and/or (ii) final disposition of the action, suit or proceeding with respect to
which indemnification or reimbursement is sought.
- 5 -
<PAGE>
5.3 REASONABLENESS OF EXPENSES. The evaluation and finding as to the
reasonableness of expenses incurred by the Indemnitee for purposes of this
Agreement shall be made (in the following order of preference) within 15 days
after the Indemnitee's delivery to the Company of a Request that includes a
reasonable accounting of expenses incurred:
(a) first, by the Board by majority vote or consent of a quorum
consisting of Disinterested Directors; or
(b) next, if such a quorum cannot be obtained, by majority vote
or consent of a committee duly designated by the Board (in which designation all
directors, whether or not Disinterested Directors, may participate), consisting
solely of two or more Disinterested Directors; or
(c) next, if such a committee cannot be designated, by any
independent legal counsel (who may be any outside counsel regularly employed by
the Company);
provided, however, that if a determination as to reasonableness of expenses is
not made under any of the foregoing subsections (a), (b) and (c), such
determination shall be made, not later than 90 days after the Indemnitee's
delivery of such Request, by vote or consent of the holders of a majority of the
Company's Common Stock that are represented in person or by proxy at a meeting
called for such purpose.
All expenses shall be considered reasonable for purposes of this Agreement if
the finding contemplated by this Section 5.3 is not made within the prescribed
time. The finding required by this Section 5.3 may be made in advance of the
payment (or incurring) of the expenses for which indemnification or
reimbursement is sought.
5.4 PAYMENT OF INDEMNIFIED AMOUNT. Immediately following a
Determination that the Indemnitee has met the applicable standard of conduct set
forth in Section 1, 2 or 3 hereof, as the case may be, and the finding of
reasonableness of expenses contemplated by Section 5.3 hereof, or the passage of
time prescribed for making such determination(s), the Company shall pay to the
Indemnitee in cash the amount to which the Indemnitee is entitled to be
indemnified and/or reimbursed, as the case may be, without further authorization
or action by the Board; provided, however, that the expenses for which
indemnification or reimbursement is sought have actually been incurred by the
Indemnitee.
5.5 SHAREHOLDER VOTE ON DETERMINATION. Notwithstanding the provisions
of Section 607.0850 of the Florida Business Corporation Act, the Indemnitee and
any other shareholder who is a party to the proceeding for which indemnification
or reimbursement is sought shall be entitled to vote on any Determination to be
made by the Company's shareholders, including a Determination made pursuant to
Section 5.7 hereof. In addition, in connection with each meeting at which a
shareholder Determination will be
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<PAGE>
made, the Company shall solicit proxies that expressly include a proposal to
indemnify or reimburse the Indemnitee. Any Company proxy statement relating to a
proposal to indemnify or reimburse the Indemnitee shall not include a
recommendation against indemnification or reimbursement.
5.6 SELECTION OF INDEPENDENT LEGAL COUNSEL. If the Determination
required under Section 4 is to be made by independent legal counsel, such
counsel shall be selected by the Indemnitee with the approval of the Board,
which approval shall not be unreasonably withheld. The fees and expenses
incurred by counsel in making any Determination (including Determinations
pursuant to Section 5.8 hereof) shall be borne solely by the Company regardless
of the results of any Determination and, if requested by counsel, the Company
shall give such counsel an appropriate written agreement with respect to the
payment of their fees and expenses and such other matters as may be reasonably
requested by counsel.
5.7 RIGHT OF INDEMNITEE TO APPEAL AN ADVERSE DETERMINATION BY BOARD.
If a Determination is made by the Board or a committee thereof that the
Indemnitee did not meet the applicable standard of conduct set forth in Section
1, 2 or 3 hereof, upon the written request of the Indemnitee and the
Indemnitee's delivery of $500 to the Company, the Company shall cause a new
Determination to be made by the Company's shareholders at the next regular or
special meeting of shareholders. Subject to Section 8 hereof, such Determination
by the Company's shareholders shall be binding and conclusive for all purposes
of this Agreement.
5.8 RIGHT OF INDEMNITEE TO SELECT FORUM FOR DETERMINATION. If, at
any time subsequent to the date of this Agreement, "Continuing Directors" do not
constitute a majority of the members of the Board, or there is otherwise a
change in control of the Company (as contemplated by Item 403(c) of Regulation
S-K), then upon the request of the Indemnitee, the Company shall cause the
Determination required by Section 4 hereof to be made by independent legal
counsel selected by the Indemnitee and approved by the Board (which approval
shall not be unreasonably withheld), which counsel shall be deemed to satisfy
the requirements of clause (3) of Section 4 hereof. If none of the legal counsel
selected by the Indemnitee are willing and/or able to make the Determination,
then the Company shall cause the Determination to be made by a majority vote or
consent of a Board committee consisting solely of Continuing Directors. For
purposes of this Agreement, a "Continuing Director" means either a member of the
Board at the date of this Agreement or a person nominated to serve as a member
of the Board by a majority of the then Continuing Directors.
5.9 ACCESS BY INDEMNITEE TO DETERMINATION. The Company shall afford
to the Indemnitee and his representatives ample opportunity to present evidence
of the facts upon which the Indemnitee relies for indemnification or
reimbursement, together with other information relating to any requested
Determination. The Company shall also afford the
- 7 -
<PAGE>
Indemnitee the reasonable opportunity to include such evidence and information
in any Company proxy statement relating to a shareholder Determination.
5.10 JUDICIAL DETERMINATIONS IN DERIVATIVE SUITS. In each action or
suit described in Section 2 hereof, the Company shall cause its counsel to use
its best efforts to obtain from the Court in which such action or suit was
brought (i) an express adjudication whether the Indemnitee is liable for
negligence or misconduct in the performance of his duty to the Company, and, if
the Indemnitee is so liable, (ii) a determination whether and to what extent,
despite the adjudication of liability but in view of all the circumstances of
the case (including this Agreement), the Indemnitee is fairly and reasonably
entitled to indemnification.
SECTION 6. SCOPE OF INDEMNITY. The actions, suits and proceedings
described in Sections l and 2 hereof shall include, for purposes of this
Agreement, any actions that involve, directly or indirectly, activities of the
indemnitee both in his official capacities as a Company director or officer and
actions taken in another capacity while serving as director or officer,
including, but not limited to, actions or proceedings involving (i) compensation
paid to the Indemnitee by the Company, (ii) activities by the Indemnitee on
behalf of the Company, including actions in which the Indemnitee is plaintiff,
(iii) actions alleging a misappropriation of a "corporate opportunity," (iv)
responses to a takeover attempt or threatened takeover attempt of the Company,
(v) transactions by the Indemnitee in Company securities, and (vi) the
Indemnitee's preparation for and appearance (or potential appearance) as a
witness in any proceeding relating, directly or indirectly, to the Company. In
addition, the Company agrees that, for purposes of this Agreement, all services
performed by the Indemnitee on behalf of, in connection with or related to any
subsidiary of the Company, any employee benefit plan established for the benefit
of employees of the Company or any subsidiary, any corporation or partnership or
other entity in which the Company or any subsidiary has a 5% ownership interest,
or any other affiliate of the Company, shall be deemed to be at the request of
the Company.
SECTION 7. ADVANCE FOR EXPENSES.
7.1 MANDATORY ADVANCE. Expenses (including attorneys' fees, court
costs, judgments, fines, amounts paid in settlement and other payments) incurred
by the Indemnitee in investigating, defending, settling or appealing any action,
suit or proceeding described in Section 1 or 2 hereof shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding.
The Company shall promptly pay the amount of such expenses to the Indemnitee,
but in no event later than 10 days following the Indemnitee's delivery to the
Company of a written request for an advance pursuant to this Section 7, together
with a reasonable accounting of such expenses.
7.2 UNDERTAKING TO REPAY. The Indemnitee hereby undertakes and agrees
to repay to the Company any advances made pursuant to this Section 7 if and to
the
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<PAGE>
extent that it shall ultimately be found that the Indemnitee is not entitled to
be indemnified by the Company for such amounts.
7.3 MISCELLANEOUS. The Company shall make the advances contemplated by
this Section 7 regardless of the Indemnitee's financial ability to make
repayment, and regardless whether indemnification of the Indemnitee by the
Company will ultimately be required. Any advances and undertakings to repay
pursuant to this Section 7 shall be unsecured and interest-free.
SECTION 8. COURT-ORDERED INDEMNIFICATION. Regardless whether the
Indemnitee has met the standard of conduct set forth in Sections 1, 2 or 3
hereof, as the case may be, and notwithstanding the presence or absence of any
Determination whether such standards have been satisfied, the Indemnitee may
apply for indemnification (and/or reimbursement pursuant to Section 3 or 12
hereof) to the court conducting any proceeding to which the Indemnitee is a
party or to any other court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court considers necessary,
may order indemnification (and/or reimbursement) if it determines the Indemnitee
is fairly and reasonably entitled to indemnification (and/or reimbursement) in
view of all the relevant circumstances (including this Agreement).
SECTION 9. NONDISCLOSURE OF PAYMENTS. Except as expressly required by
Federal securities laws, neither party shall disclose any payments under this
Agreement unless prior approval of the other party is obtained. Any payments to
the Indemnitee that must be disclosed shall, unless otherwise required by law,
be described only in Company proxy or information statements relating to special
and/or annual meetings of the Company's shareholders, and the Company shall
afford the Indemnitee the reasonable opportunity to review all such disclosures
and, if requested, to explain in such statement any mitigating circumstances
regarding the events reported.
SECTION 10. COVENANT NOT TO SUE. LIMITATION OF ACTIONS AND RELEASE OF
CLAIMS. No legal action shall be brought and no cause of action shall be
asserted by or on behalf of the Company (or any of its subsidiaries) against the
Indemnitee, his spouse, heirs, executors, personal representatives or
administrators after the expiration of 2 years following the date the Indemnitee
ceases (for any reason) to serve as either an executive officer or director of
the Company, and any and all such claims and causes of action of the Company (or
any of its subsidiaries) shall be extinguished and deemed released unless
asserted by filing of a legal action within such 2-year period.
SECTION 11. INDEMNIFICATION OF INDEMNITEE'S ESTATE. Notwithstanding any
other provision of this Agreement, and regardless whether indemnification of the
Indemnitee would be permitted and/or required under this Agreement, if the
Indemnitee is deceased, the Company shall indemnify and hold harmless the
Indemnitee's estate, spouse, heirs, administrators, personal representatives and
executors (collectively the "Indemnitee's Estate") against, and the Company
shall assume, any and all claims, damages,
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<PAGE>
expenses (including attorneys' fees), penalties, judgments, fines and amounts
paid in settlement actually incurred by the Indemnitee or the Indemnitee's
Estate in connection with the investigation, defense, settlement or appeal of
any action described in Section 1 or 2 hereof. Indemnification of the
Indemnitee's Estate pursuant to this Section 11 shall be mandatory and not
require a Determination or any other finding that the Indemnitee's conduct
satisfied a particular standard of conduct.
SECTION 12. REIMBURSEMENT OF ALL LEGAL EXPENSES. Notwithstanding any
other provision of this Agreement, and regardless of the presence or absence of
any Determination, the Company promptly (but not later than 30 days following
the Indemnitee's submission of a reasonable accounting) shall reimburse the
Indemnitee for all attorneys' fees and related court costs and other expenses
incurred by the Indemnitee (but not for judgments, penalties, fines or amounts
paid in settlement) in connection with the investigation, defense, settlement or
appeal of any action described in Section 1 or 2 hereof (including, but not
limited to, the matters specified in Section 6 hereof).
SECTION 13. MISCELLANEOUS.
13.1 NOTICE PROVISION. Any notice, payment, demand or communication
required or permitted to be delivered or given by the provisions of this
Agreement shall be deemed to have been effectively delivered or given and
received on the date personally delivered to the respective party to whom it is
directed, or when deposited by registered or certified mail, with postage and
charges prepaid and addressed to the parties at the respective addresses set
forth below opposite their signatures to this Agreement, or to such other
address as to which notice is given.
13.2 ENTIRE AGREEMENT. Except for the Company's Articles of
Incorporation, this Agreement constitutes the entire understanding of the
parties and supersedes all prior understandings, whether written or oral,
between the parties with respect to the subject matter of this Agreement.
13.3 SEVERABILITY OF PROVISIONS. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of each such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid, and enforceable.
13.4 APPLICABLE LAW. This Agreement shall be governed by and construed
under the laws of the State of Florida.
- 10 -
<PAGE>
13.5 EXECUTION IN COUNTERPARTS. This Agreement and any amendment may
be executed simultaneously or in two or more counterparts, each of which
together shall constitute one and the same instrument.
13.6 COOPERATION AND INTENT. The Company shall cooperate in good
faith with the Indemnitee and use its best efforts to ensure that the Indemnitee
is indemnified and/or reimbursed for liabilities described herein to the fullest
extent permitted by law.
13.7 AMENDMENT. No amendment, modification or alteration of the terms
of this Agreement shall be binding unless in writing, dated subsequent to the
date of this Agreement, and executed by the parties.
13.8 BINDING EFFECT. The obligations of the Company to the Indemnitee
hereunder shall survive and continue as to the Indemnitee even if the Indemnitee
ceases to be a director, officer, employee and/or agent of the Company. Each and
all of the covenants, terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the successors to the Company and, upon the
death of the Indemnitee, to the benefit of the estate, heirs, executors,
administrators and personal representatives of the Indemnitee.
13.9 GENDER AND NUMBER. Wherever the context shall so require, all
words herein in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural and all plural words shall
include the singular.
13.10 NONEXCLUSIVITY. The rights of indemnification and reimbursement
provided in this Agreement shall be in addition to any rights to which the
Indemnitee may otherwise be entitled by statute, bylaw, agreement, vote of
shareholders or otherwise.
13.11 EFFECTIVE DATE. The provisions of this Agreement shall cover
claims, actions, suits and proceedings whether now pending or hereafter
commenced and shall be retroactive to cover acts or omissions or alleged acts or
omissions which heretofore have taken place.
(signatures on following page)
- 11 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
ADDRESS: THE COMPANY:
MANSUR INDUSTRIES INC.
By:____________________________________
Name:
Title:
ADDRESS: THE INDEMNITEE:
_______________________________________
_______________________________________
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<PAGE>
SCHEDULE 10.3
The indemnification agreements entered into by the Company are
substantially indentical in all material respects except as to each of the
following idemnified directors:
Pierre G. Mansur
Paul I Mansur
Elias Mansur
Joseph E. Jack
Dr. Jan Hedberg
- 13 -
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the first day of September, 1995, by and between
MANSUR INDUSTRIES INC., a Florida corporation (hereinafter called the
"Employer") and PIERRE G. MANSUR, an individual (hereinafter called "Employee").
RECITALS:
A. The Employer desires to assure itself of the services of the Employee
and to that end desires to enter into a contract of employment with the
Employee upon the terms and conditions herein set forth; and
B. The Employee is desirous of entering into such a contract of
employment.
NOW, THEREFORE, in consideration of the premises, representations, warranties
and the mutual covenants herein set forth, the parties hereto agree as follows:
1. EMPLOYMENT DUTIES.
(a) Employer hereby hires Employee during the Employment Period (defined
below) as President and Chief Operating Officer or in such other position as the
Employer may, from time to time determine, to perform such services and duties
as are customary for the President and Chief Operating Officer of such a
corporation and as further described in the Bylaws of the Employer.
(b) During the Employment Period, the Employee shall faithfully
perform the Employee's duties to the best of the Employee's ability and in
accordance with the directions and orders of the Employer; and the Employee
shall devote to the performance of such duties such amount or working time,
attention and energies as the Employee deems necessary. In addition to the
duties assigned to the Employee by the Employer, during the Employment period
the Employee shall perform such other duties as are commensurate with the
Employee's position and title, including, by way of illustration and not in
limitation, overseeing the overall management of the Company with strong
emphasis on continuing aggressive research and development programs, performing
all necessary financial and administrative functions, exercising the Employee's
best business judgement, safeguarding the assets of the Employer, corporate
record keeping activities, and following, maintaining and implementing, without
limitation, the business plans, budget (as modified or amended from time to time
by the Employer), and seeking, if necessary clarification of any such procedures
and directives.
2. EMPLOYMENT TERM.
(a) "The Employment Period" shall be a period of two (2) years from
the date of effectiveness of this Employment Agreement which is first day of
September, 1995 and any extensions of such period.
(b) At least ninety (90) days prior to the expiration of the initial
Employment Period or any Renewal Period as that term is hereinafter defined, the
Employer shall notify the Employee of its intention to extend the Employment
Period for an additional two years (2) (the "Renewal Period"). If the
Employer notifies the Employee of its intention to extend the Employment Period,
the Employer shall inform the Employee of any modifications to the salary,
employee plans and fringe benefit arrangements for the extended Employment
Periods at least
<PAGE>
sixty (60) days prior to the expiration of the Employment Period and the
Employee shall, at least thirty (30) days prior to the expiration of the
Employment Period, submit in writing notification of his acceptance of the
Employer's offer to extend the Employment Period. Failure of the Employer to
provide notice in a timely manner as provided in the first section of 2(b)
hereof shall result in the automatic extension of this Agreement for one year
with all the same terms and provisions hereof, except that the Base Salary (as
defined in Section 2 hereof) for the Renewal Period shall be increased by twenty
percent (20%) over the Base Salary for the Employment Period or the immediately
preceding Renewal Term, and that increased amount shall be the new Base Salary,
payable in monthly equal increments.
(c) In the event of the Employee's death prior to the expiration of
the Employment Period, all obligations of the Employer under this agreement
shall terminate except of the Employer's obligations to pay for services
rendered by the Employee prior to his death.
(d) Employee may terminate this Agreement at anytime upon one hundred
twenty (120) days notice to the Company of his intention to resign as President
and Chief Operating Officer. All salary earned but unpaid at the date of his
resignation shall become due and payable upon the date of his resignation.
3. COMPENSATION.
(a) As compensation for the performance of the Employee of his
obligations under this Employment Agreement, the Employer shall pay to the
Employee a salary in the amount of Sixty Six Thousand Dollars ($66,000.00) per
year payable in monthly installments of Five Thousand Five Hundred Dollars
($5,500.00)each.
(b) Employee is authorized to incur, in his discretion, reasonable
business expenses in connection with the performance of his duties under this
Agreement, including travel and entertainment expenses and the Employer shall
reimburse Employee for any expenses so incurred, including reasonable
transportation expenses incurred by the Employee in the performance or
initiation and promotion of the Employer's business.
(c) Further, during the Employment Period the Employee may participate
in such employee incentives, plans or fringe benefit arrangements as the
Employer shall make available to the Employee or others.
4. DISCLOSURE OF INFORMATION.
Employee acknowledges that the Employer maintains highly confidential and
proprietary information that will be accessible to Employee at all times and
that such information constitutes valuable and unique property of the Employer.
During the term of this Agreement and for a period of three (3) years following
the Employee's termination of employment, Employee will not disclose any
confidential information, including without limitation, information regarding
the Employer's patents, research and development, manufacturing process or any
knowledge or information with respect to confidential or trade secrets of the
Employer which may be deemed to be in the public domain. Nothing contained
herein shall be construed as authorizing Employee to disclose confidential
information either during the employment period with Employer or at any time
thereafter, or in any way diminish the Employer's complete rights and ownership
of its confidential or proprietary information, patents, research and
development, manufacturing process or any other proprietary information or trade
secrets.
2
<PAGE>
5. NON-COMPETITION.
During the term of this Agreement and for three (3) years thereafter, Employee
will not directly or indirectly, whether as principal, agent, trustee or through
the agency of any corporation, partnership, association or agent, engage in any
business in substantial competition with the Employer or its affiliates, nor
shall Employee become an officer, director or employee of any corporation,
partnership or any other business in substantial competition with the Employer
or its affiliates.
6. NOTICE.
Except as and to the extent specifically provided herein to the contrary, any
notice, approval, consent, demand, application or other communication between
the parties hereto required or permitted hereunder shall be in writing and shall
be sufficiently given if delivered in person, or mailed by certified mail, with
return receipt requested and postage prepaid, or delivered to a bonded air
courier service for overnight delivery, addressed as follows or to such other
address as any party hereto shall notify the other parties hereto:
(a) If to the Employer, to: (b) If to Employee, to:
MANSUR INDUSTRIES, INC. PIERRE G. MANSUR
8425 Southwest 129th Terrace 11117 Southwest 79th Avenue
Miami, Florida 33156 Miami, Florida 33156
Notices shall be deemed to have been delivered upon the earlier of actual
receipt or five (5) days after deposit in the United States mail or one day
after deposit with a bonded air courier service for delivery next day delivery.
7. MODIFICATION.
No modification, amendment or waiver of any of the provisions of the Employment
Agreement shall be effective unless made in writing specifically referring to
this Employment Agreement and signed by all parties.
8. ENTIRE AGREEMENT.
This instrument constitutes the entire agreement of the parties hereto with
respect to Employee's employment and the compensation therefor.
9. WAIVER.
The failure to enforce at any time any of the provisions of this Employment
Agreement or to require at any time performance by any party of any of the
provisions hereof shall in no way be construed to be a waiver of such provisions
or to affect either the validly of this Employment Agreement, or any part
hereof, or the right of each party thereafter to enforce each and every
provision in accordance with the terms of this Employment Agreement.
3
<PAGE>
1O. SEVERABILITY.
The invalidity or unenforceability of any particular provision of this
Employment Agreement shall not effect the other provision hereof, and this
Employment Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
11. SUCCESSORS.
This Employment Agreement shall be binding upon and shall inure to the benefit
of the Employer and any Successor of the Employer. For the purposes of this
Employment Agreement, the term "successor" shall mean any person, firm,
corporation or other business entity which at any time, whether by merger,
purchase or otherwise, shall acquire all or substantially all of the assets or
business of the Employer as a whole. This Employment Agreement shall also be
binding upon and shall inure to the benefit of the Employee and Employee's legal
representatives except that the Employee's obligations to perform such future
services and rights to receive payment therefor are hereby expressly declared to
be non-assignable and non-transferable.
12. GOVERNING LAW.
This Employment Agreement is entered into the State of Florida and shall be
construed in accordance with the laws of the State of Florida. The parties
hereto consent to the jurisdiction of the state courts of the state of Florida
and the appropriate United States District Court for Florida for all purposes in
connection with any litigation between or among the parties hereto. Employee
hereby irrevocably waives any objection which he now or hereafter may have to
the laying of venue of any action or proceeding arising out of or relating to
this Employment Agreement brought in the United States District Court for
Florida and any objection on the ground that any such action or proceeding in
either of such Courts has been brought in an inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed as of the date and year first above written.
EMPLOYER:
MANSUR INDUSTRIES INC.
/s/ PAUL I. MANSUR
- ------------------
Paul I. Mansur, Chief Executive Officer
EMPLOYEE:
/s/ PIERRE G. MANSUR
- --------------------
Pierre G. Mansur
4
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the first day of September, 1995, by and between
Mansur Industries Inc., a Florida corporation (hereinafter called the
"Employer") and Paul I. Mansur, an individual (hereinafter called "Employee").
RECITALS:
A. The Employer desires to assure itself of the services of the Employee
and to that end desires to enter into a contract of employment with the
Employee upon the terms and conditions herein set forth; and
B. The Employee is desirous of entering into such a contract of employment.
NOW, THEREFORE, in consideration of the premises, representations, warranties
and the mutual covenants herein set forth, the parties hereto agree as follows:
1. EMPLOYMENT DUTIES.
(a) Employer hereby hires Employee during the Employment Period (defined
below) as Chief Executive Officer or in such other position as the Employer may,
from time to time determine, to perform such services and duties as are
customary for the Chief Executive Officer of such a corporation and as further
described in the Bylaws of the Employer.
(b) During the Employment Period, the Employee shall faithfully perform
the Employee's duties to the best of the Employee's ability and in accordance
with the directions and order of the Employer, and the Employee shall devote to
the performance of such duties such amount or working time, attention and
energies as the Employee deems necessary. In addition to the duties assigned to
the Employee by the Employer, during the Employment period the Employee shall
perform such other duties as are commensurate with the Employee's position and
title, including, by way of illustration and not in limitation, overseeing the
overall management of the Company including all financial, administrative,
marketing and operations functions, exercising the Employee's best business
judgement, safeguarding the assets of the Employer, corporate record keeping
activities, and following, maintaining and implementing, without limitation, the
business plans, budget (as modified or amended from time to time by the
Employer), and seeking, if necessary clarification of any such procedures and
directives.
2. EMPLOYMENT TERM.
(a) "The Employment Period" shall be a period of two (2) years from the
date of effectiveness of this Employment Agreement which is first day of
September, 1995 and any extensions of such period.
(b) At least ninety (90) days prior to the expiration of the initial
Employment Period or any Renewal Period as that term is hereinafter
defined, the Employer shall notify the Employee of its intention to extend the
Employment Period for an additional two years (2) (the "Renewal Period").
If the Employer notifies the Employee of its intention to extend the Employment
Period, the Employer shall inform the Employee of any modifications to the
salary, employee plans and fringe benefit arrangements for the extended
Employment Periods at least
<PAGE>
sixty (60) days prior to the expiration of the Employment Period and the
Employee shall, at least thirty (30) days prior to the expiration of the
employment Period, submit in writing notification of his acceptance of the
Employer's offer to extend the Employment Period. Failure of the Employer to
provide notice in a timely manner as provided in the first section of 2(b)
hereof shall result in the automatic extension of this Agreement for one year
with all the same terms and provisions hereof, except that the Base Salary (as
defined in Section 2 hereof) for the Renewal Period shall be increased by twenty
percent (20%) over the Base Salary for the Employment Period or the immediately
preceding Renewal Term, and that increased amount shall be the new Base Salary,
payable in monthly equal increments.
(c) In the event of the Employee's death prior to the expiration of the
Employment Period, all obligations of the Employer under this agreement shall
terminate except of the Employer's obligations to pay for services rendered by
the Employee prior to his death.
(d) Employee may terminate this Agreement at anytime upon one hundred
twenty (120) days notice to the Company of his intention to resign as Chief
Executive Officer. All salary earned but unpaid at the date of his resignation
shall become due and payable upon the date of his resignation.
3. COMPENSATION.
(a) As compensation for the performance of the Employee of his
obligations under this Employment Agreement, the Employer shall pay to the
Employee a salary in the amount of Forty Eight Thousand Dollars ($48,000.00) per
year payable in monthly installments of Four Thousand Dollars ($4,000.00) each.
(b) Employee is authorized to incur, in his discretion, reasonable
business expenses in connection with the performance of his duties under this
Agreement, including travel and entertainment expenses and the Employer shall
reimburse Employee for any expenses so incurred, including reasonable
transportation expenses incurred by the Employee in the performance or
initiation and promotion of the Employer's business.
(c) Further, during the Employment Period the Employee may participate
in such employee incentives, plans or fringe benefit arrangements as the
Employer shall make available to the Employee or others.
4. DISCLOSURE OF INFORMATION.
Employee acknowledges that the Employer maintains highly confidential and
proprietary information that will be accessible to Employee at all times and
that such information constitutes valuable and unique property of the Employer.
During the term of this Agreement and for a period of three (3) years following
the Employee's termination of employment, Employee will not disclose any
confidential information, including without limitation, information regarding
the Employer's patents, research and development, manufacturing process or any
knowledge or information with respect to confidential or trade secrets of the
Employer which may be deemed to be in the public domain. Nothing contained
herein shall be construed as authorizing Employee to disclose confidential
information either during the employment period with Employer or at any time
thereafter, or in any way diminish the Employer's complete rights and ownership
of its confidential or proprietary information, patents, research and
development, manufacturing process or any other proprietary information or trade
secrets.
2
<PAGE>
5. NON-COMPETITION.
During the term of this Agreement and for three (3) years thereafter, Employee
will not directly or indirectly, whether as principal, agent, trustee or through
the agency of any corporation, partnership, association or agent, engage in any
business in substantial composition with the Employer or its affiliates, nor
shall Employee become an officer, director or employee of any corporation,
partnership or any other business in substantial competition with the Employer
or its affiliates.
6. NOTICE.
Except as and to the extent specifically provided herein to the contrary, any
notice, approval, consent, demand, application or other communication between
the parties hereto required or permitted hereunder shall be in writing and shall
be sufficiently given if delivered in person, or mailed by certified mail, with
return receipt requested and postage prepaid, or delivered to a bonded air
courier service for overnight delivery, addressed as follows or to such other
address as any party hereto shall notify the other parties hereto:
(a) If to the Employer, to: (b) If to Employee, to:
MANSUR INDUSTRIES INC. PAUL I. MANSUR
8425 Southwest 129th Terrace 6050 NW 93rd Doral Place
Miami, Florida 33156 Miami, Florida 33178
Notices shall be deemed to have been delivered upon the earlier of actual
receipt or five (5) days after deposit in the United States mail or one day
after deposit with a bonded air courier service for delivery next day delivery.
7. MODIFICATION.
No modification, amendment or waiver of any of the provisions of the Employment
Agreement shall be effective unless made in writing specifically referring to
this Employment Agreement and signed by all parties.
8. ENTIRE AGREEMENT.
This instrument constitutes the entire agreement of the parties hereto with
respect to Employee's employment and the compensation therefor.
9. WAIVER.
The failure to enforce at any time any of the provisions of this Employment
Agreement or to require at any time performance by any party of any of the
provisions hereof shall in no way be construed to be a waiver of such provisions
or to affect either the validity of this Employment Agreement, or any part
hereof, or the right of each party thereafter to enforce each and every
provision in accordance with the terms of this Employment Agreement.
3
<PAGE>
1O. SEVERABILITY.
The invalidity or unenforceability of any particular provision of this
Employment Agreement shall not effect the other provision hereof, and this
Employment Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
11. SUCCESSORS.
This Employment Agreement shall be binding upon and shall inure to the benefit
of the Employer and any successor of the Employer. For the purposes of this
Employment Agreement, the term "successor" shall mean any person, firm,
corporation or other business entity which at any time, whether by merger,
purchase or otherwise, shall acquire all or substantially all of the assets or
business of the Employer as a whole. This Employment Agreement shall also be
binding upon and shall inure to the benefit of the Employee and Employee's legal
representatives except that the Employee's obligations to perform such future
services and rights to receive payment therefor are hereby expressly declared to
be non-assignable and non-transferable.
12. GOVERNING LAW.
This Employment Agreement is entered into the State of Florida and shall be
construed in accordance with the laws of the State of Florida. The parties
hereto consent to the jurisdiction of the state courts of the state of Florida
and the appropriate United States District Court for Florida for all purposes in
connection with any litigation between or among the parties hereto. Employee
hereby irrevocably waives any objection which he now or hereafter may have to
the laying of venue of any action or proceeding arising out of or relating to
this Employment Agreement brought in the United States District Court for
Florida and any objection on the ground that any such action or proceeding in
either of such Courts has been brought in an inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed as of the date and year first above written.
EMPLOYER:
MANSUR INDUSTRIES INC.
/s/ PIERRE G. MANSUR
Pierre G. Mansur, Chairman of the Board
EMPLOYEE:
/s/ PAUL I. MANSUR
Paul I. Mansur
4
EXHIBIT 10.6
MANSUR
INDUSTRIES
PAUL L. MANSUR
CHIEF EXECUTIVE OFFICER
November 21, 1995
Mr. Charles W. Profilet
640 East Lake Dasha Drive
Plantation, Florida 33324-3134
RE: EMPLOYMENT AGREEMENT
Dear Mr. Profilet:
Mansur Industries Inc. (the "Company") is pleased to offer you the top
management position of VICE PRESIDENT BUSINESS DEVELOPMENT, commencing on or
about November 27th, 1995, subject to the conditions set forth below.
The responsibilities of the position will include all aspects of overall
management of the Company's sales, marketing and other business development
efforts as outlined in Appendix A attached hereto. The position will report to
the President.
The following represents the starting compensation package that the Company is
offering:
1 - Base Salary: $80,000.00 per annum payable semi-monthly.
2 - Incentives: Commissions payable monthly on total Company new units sold
in the United States (excluding units placed as a result of
acquisitions) ranging from $5.00 per unit for parts washers
to $25.00 per unit for jet washers. Incentives are based on
full 60 month leases. Leases under 60 months shall earn
incentives on a pro-rata basis. Incentives are payable
monthly upon receipt of payment from the customer or the
leasing company. All or any fractional part of monthly
incentives earned may be converted, at your option, to
Company stock at the current publicly traded closing price of
the stock on the date of the incentive payment, less a ten
(10%) percent discount, such discount to be periodically
reviewed and adjusted by the Board of Directors. The right to
convert any part of your monthly incentives into Company
stock is conditioned upon a successful Initial Public
Offering (the "IPO") and, pursuant to the regulations of the
SEC, on the obtainment of an opinion from Company counsel
that you meet the qualifications to purchase such shares.
Nothing contained herein shall be deemed an offer with
respect to purchase of Company stock. Prior to the Company's
IPO, incentives may be accumulated and converted on the basis
of the IPO OFFERING PRICE.
3 - Reallocation During the first year of your employment, to equitably
Option: compensate you for initial sales ramp up, manufacturing
undercapacity or other possible delays outside of your
control and responsibility, you may elect to allocate a
portion of your incentive compensation to Company stock on
the basis of the following formula: $1.50 in unit commission
incentives for parts washers (and corresponding pro-rata
reduction on other products), may be reallocated, at your
option, during the first year of your employment, to a
monthly award of Company stock equal to $1,500 of stock (at
the publicly traded closing price of the stock on the date of
each monthly incentive payment). Prior to the Company's IPO,
incentives may be accumulated and converted on the basis of
the IPO OFFERING PRICE.
<PAGE>
Page 2 Mr. Charles W. Profilet November 21, 1995
4 - Profit Participation in the Company's annual executive profit
Sharing: sharing awards when and if adopted, to be determined
annually by a committee of the Board of Directors.
5 - Stock Plans: Participation in the Company's annual executive stock awards
or stock option awards, when and if adopted, to be determined
annually by a committee of the Board of Directors. The date
of implementation of the stock option plan to be determined
by the Board of Directors after the Company's IPO.
6 - Other A salary continuance guarantee, effective 90 days after your
Benefits: employment commences, will guarantee you the payment of your
full base salary until the earlier of your securing new
employment or six months, if you are terminated by the
Company during the first year of employment for any reason
other than acts of dishonesty, malfeasance or other
impropriety.
Two weeks paid vacation first year. Additional vacation in
accordance with Company policy when adopted.
Car allowance of $400.00 per month to be paid by the Company.
Health insurance coverage will be excluded.
Mobile telephone expenses paid by the Company subject to a
maximum of $200.00 per month.
Standard Company travel and sales related expenses to be paid
by the Company.
The offer for employment is subject, in all respects, to the execution of non-
circumvention nondisclosure agreements.
The Company looks forward to your joining its top management team.
Very truly yours,
/s/ PAUL L. MANSUR
- ------------------
Paul L. Mansur
AGREED TO BY: Charles W. Profilet
/s/ CHARLES W. PROFILET
- ------------------------
Charles W. Profilet
EXHIBIT 10.7
VENDOR LEASE PLAN AGREEMENT
This Lease Agreement is between OAKMONT FINANCIAL SERVICES, a Heritage
Credit Services Company ("Oakmont") and MANSUR INDUSTRIES INC. ("Mansur").
1. LEASE PROGRAM. Oakmont offers several leasing and financing
programs to assist manufacturers, distributors and dealers in facilitating
the acquisition of equipment by their customers. Mansur wishes to have Oakmont
provide a leasing and financing program for Mansur's customers, and Oakmont and
Mansur have agreed that Oakmont will offer this program under the terms
described in this agreement.
2. LEASE CONSUMMATION. Oakmont will from time to time notify
Mansur of Oakmont's then current acceptable lease and financing terms, rates and
credit standards. With respect to any lease or financing (any such lease or
financing a "lease") Mansur wishes to arrange, Mansur will, before delivery of
the related equipment (the "equipment"), furnish Oakmont with an equipment
description, the transaction proposed terms, any credit information Mansur has
regarding each lessee or purchaser in connection with the transaction
(individually or collectively as the context indicates the "lessee") and such
other information as Oakmont may request. Upon receipt of all requested
materials, Oakmont will review the package and advise Mansur of Oakmont's
decision. Documentation as to approved leases will be prepared by Oakmont and
procured by Oakmont and/or Mansur as Oakmont directs. Mansur will not, unless
otherwise consented to by Oakmont, deliver any equipment before receipt of
Oakmont's approval or rejection advice. When the documents required by Oakmont
as to a transaction are received by Oakmont, with each property completed within
the specified commitment period, Oakmont will complete the transaction and fund
the advance for the transaction which will be calculated in the manner agreed to
by the parties from time to time.
3. ACCEPTANCE BY OAKMONT. Oakmont is not obligated to accept any
transaction submitted to Oakmont by Mansur unless the transaction in Oakmont's
sole judgement complies with Oakmont's then applicable criteria. If Oakmont
accepts the transaction, Mansur will not offer the transaction to a third party.
If Oakmont declines any five (5) leases within a thirty (30) day period, which
leases are financed by a third party leasing company on the terms declined by
Oakmont, Mansur may, upon ten (10) days notice to Oakmont, terminate this
agreement.
4. MANSUR'S WARRANTIES. In addition to any warranties Mansur may make
pursuant to Oakmont's purchase order for the equipment, Mansur makes the
following further representations and warranties related to each lease, each
such warranty and representation to speak as of the funding by Oakmont of the
advance respecting the transaction:
(a) To the best of Mansur's knowledge the lessee will use
equipment principally for commercial purposes:
(b) The lease and all signatures thereon are genuine if procured
by Mansur, to the best of Mansur's knowledge the lease has been duly authorized
and executed by the lessee, if completed in accordance with information provided
Oakmont by Mansur, the lease correctly sets forth the rentals or installment
payments which Mansur indicated to the lessee as applicable to the equipment,
the equipment is fully and correctly described in the lease and has been
delivered to the lessee at the location or locations set forth in, and accepted
by the lessee for all purposes of, the lease and to the best of Mansur's
knowledge the lease constitutes the valid and binding obligation of the lessee;
<PAGE>
(c) Each other instrument executed in connection with the lease
giving rights to Oakmont and procured by Mansur, including guaranties, and all
signatures thereon are genuine and to the best of Mansur's knowledge each such
instrument has been duly authorized and executed by all parties obligated to
Oakmont and constitutes the valid and binding obligation of such parties;
(d) There are no representations and warranties not set forth
in the lease that have been made by Mansur to the lessee with respect to the
lease of the equipment other than those of which Oakmont is aware and, without
limiting the foregoing, Mansur has not made any representation not set forth
in the lease that the lease is terminable by the lessee if the lessee is
unsatisfied with the equipment for any reason or that the lessee may trade-in
the equipment;
(e) All dealings by Mansur with the lessee, including in
connection with any advertisements or purchase orders relative to the lease,
and the execution of the lease if procured by Mansur have been in accordance
with all applicable laws and regulations;
(f) The conduct of Mansur in developing the lease transaction
shall not subject Oakmont to suit or administrative proceeding under any state
or federal law, rule or regulation, it being understood, without limiting the
generality of the foregoing, that the lease transaction shall be assumed to
constitute "credit" as that term is defined and used in the Equal Credit
Opportunity Act (or applicable State Law), implementing regulations and official
interpretations of the Federal Reserve Board Staff;
(g) The lessee has and shall have no defense, offset or
counterclaim as to the enforcement of the lease arising out of the conduct of
Mansur, and without limiting the generality of the foregoing, Mansur is not in
default in any of Mansur's obligations to the lessee;
(h) Mansur does not know of any fact which indicates the
uncollectibility of the lease:
(i) The lessee's application correctly sets forth all
information given Mansur by the lessee, Mansur has provided Oakmont any other
credit information Mansur has with respect to the leases and all such
information is true and correct to the best of Mansur's knowledge;
(j) Except monies which Oakmont has agreed are to be retained
by Mansur, Mansur has not received any monies from the lessee related to the
equipment which Mansur has not transferred to Oakmont, property endorsed to
Oakmont where appropriate, or which were loaned to Mansur to the lessee; and
(k) If the transaction is an equipment lease, title to the
equipment has vested in Oakmont free and clear of any liens of persons claiming
by, through or under Mansur, and if the transaction is a financing, such title
has vested in the lessee.
5. MANSUR'S CONTINUING OBLIGATIONS. Mansur shall:
(a) at the request of Oakmont or the lessee, provide at
commercially reasonable prices, full, complete and adequate service, including
warranty service, for the relevant equipment in conformity with standard trade
practices;
<PAGE>
(b) takes such action as is necessary or as Oakmont may request
to evidence and perfect this agreement and Oakmont's rights contemplated hereby;
(c) turn over promptly to Oakmont in the form received, properly
endorsed to Oakmont where appropriate, any monies received by Mansur relative
to a lease following its funding by Oakmont, unless the lease has been purchased
by Mansur under paragraph 9;
(d) not represent that it is the agent of Oakmont nor make any
reference to Oakmont in any advertising materials of Mansur without Oakmont's
prior written consent;
(e) not repossess any equipment or accept redelivery of any
equipment from a lessee without the prior consent of Oakmont; and
(f) upon request of Oakmont, utilizing a reasonable and
nondiscriminatory approach, assist Oakmont in remarketing any, repossessed or
surrendered equipment with a new lessee. Oakmont shall pay Mansur a fee equal to
two (2) months of lease payments for services rendered by Mansur in remarketing
any repossessed or surrendered equipment.
6. SALE OF EQUIPMENT AT FMV TO MANSUR UPON EXPIRATION OF LEASE TERM.
Provided all rental and other moneys due Oakmont have been fully paid, upon the
expiration of the customer's lease term, Oakmont agrees to provide Mansur with
an option to repurchase from Oakmont, for a cash purchase price equal to the
fair market value of the Equipment plus applicable sales tax, all Equipment
which is the subject of the lease. The fair market value shall be an amount
mutually agreed upon by Oakmont and Mansur; provided that if the parties are
unable to agree upon the fair market value, such fair market value shall be
determined by an appraiser selected by mutual agreement. Upon payment by Mansur,
Oakmont shall assign and release to Mansur any and all interest Oakmont may have
in the equipment. Delivery of any equipment repurchased by Mansur shall be the
sole responsibility of Mansur.
7. DOCUMENTATION DISCLAIMER. Mansur and Oakmont acknowledge that the
documents required and provided by Oakmont in connection with the documentation
of a transaction hereunder have been prepared by Oakmont for the purpose of
Oakmont's leasing or financing activities. Mansur further acknowledges that
Oakmont makes no warranty of any nature whatsoever, express or implied, with
respect to the form, substance or enforceability of any such documentation. Use
by Mansur of any such documentation for its own purpose is at Mansur's own risk.
If Mansur uses any such documentation for such purposes, Mansur shall make
certain that no reference whatsoever to Oakmont appears thereon.
8. NOTICES. Notices hereunder must be in writing addressed to the
respective party at the appropriate address set forth at the foot hereof or such
other address of which the party may give the other notice and shall be mailed,
certified U.S. mail with postage prepaid. Notices shall be effective two (2)
days after such mailing. Each party shall provide the other notice of a change
in such party's address.
9. TERMINATION. This agreement shall be for an initial term of one (1)
year and shall automatically be renewed for successive one (1) year terms. Each
party may terminate this agreement, with or without cause, upon sixty (60) days
notice to the other party unless terminated under the provisions of paragraph 3
hereof. Termination of this agreement will not affect the right and obligations
of either party as to previously consummated or approved leases, including as
respects paragraph 10; provided that if termination follows a breach by Mansur
of any Mansur's warranties or agreements under this agreement, Oakmont may
terminate its obligations as to any previously approved but unfunded
transactions.
<PAGE>
10. REMEDIES. The purchase of interests in equipment covered by this
lease agreement is non-recourse except as provided in this paragraph. If Mansur
breaches any warranty under paragraph 4 hereof and such breach in not cured
within ten (10) days of Oakmont's notice to Mansur thereof, Mansur will purchase
the lease and Oakmont's rights under all related agreements and Oakmont's
interest in the equipment for an amount equal to what would then be the lessee's
obligations under the remedies paragraph of the lease, assuming no recovery from
disposition of the equipment, less any applicable deposit which Oakmont will
retain plus applicable taxes. Upon receipt of the applicable payment, the lease
and Oakmont's rights under the related documents will be sold without any
warranty and the equipment will be sold as is where is, without any warranty,
except in each case a warranty against transfer of any rights of Oakmont other
than as a result of consummation of the lease. Until Oakmont has received the
purchase price, it is the intent of parties that Mansur will have no interest in
the interests to be purchased. If, however, after demand by Oakmont but prior to
payment Mansur is deemed to have acquired any such interest, Oakmont will have
security interest therein under the Uniform Commercial Code as a security for
the performance by Mansur of Mansur's obligations hereunder. Mansur will remain
liable for any deficiency following disposition. Mansur will also be liable for
any damages suffered by Oakmont as a result of the breach by Mansur of any of
Mansur's warranties or agreements hereunder.
11. AMENDMENTS. This agreement may be amended by a writing signed by
both parties. Acceptance of an amendment by the parties shall be manifested by
and be effective upon the date of the first transmittal to Oakmont of an
application to consummate a lease or submission of a documentation package.
12. GENERAL PROVISIONS. This agreement constitutes the entire agreement
of the parties as to the leasing and financing program Oakmont will make
available to Mansur. In the event either party institutes legal proceedings to
enforce any of the terms of this agreement, the prevailing party in such
proceedings will be entitled to recover its attorneys' fees and costs incurred
therein. It is the intent of the parties that this agreement be enforced to the
fullest extent, and any provision of this agreement deemed by a court to be
unenforceable will be deemed deleted to the extent only of such
unenforceability. The singular number includes the plural, and the neuter gender
the masculine or feminine where the context requires. This agreement inures to
the benefit of, and is binding upon, the heirs, legatees, personal
representatives, successors and assigns of the parties, it being understood,
however, that neither Mansur nor Oakmont may assign its rights or duties
hereunder without the prior written consent of the other party. Time is of the
Essence of this agreement. The headings to the paragraphs of this agreement are
for convenience only and are not to be used in the interpretation of this
agreement.
OAKMONT FINANCIAL SERVICES MANSUR INDUSTRIES INC.
8325 N.W. 53rd Street, #223 8425 S.W. 129th Terrace
Miami, Florida 33166 Miami, Florida 33156
By:/s/ CHARLES E. BRAZIER By:/s/ PAUL I. MANSUR
Charles E. Brazier Paul I. Mansur
Executive Vice President Chief Executive Officer
<PAGE>
LEASE AGREEMENT FORM
LEASE AGREEMENT
TERMS AND CONDITIONS
IN LARGE PRINT
TERMS AND CONDITIONS
1. LEASE. Lessor leases to Lessee and Lessee leases from Lessor for the lease
term specified herein and for any extension or renewal thereof (collectively
"Term") and on the terms and conditions stated in this agreement ("Lease") the
Equipment identified herein and in any schedule ("Schedule") incorporating this
Lease by reference that the parties agree in writing to make a part of this
Lease. The Lease of Equipment described in this Lease and the lease of Equipment
described in each Schedule shall constitute separate leasing transactions, each
of which is referred to herein as a lease.
2. LEASE PAYMENTS. The obligation to make Lease Payments begins on the date when
Lessee receives Equipment. Lessee shall make Lease Payments, in advance, on the
date or dates specified by Lessor in a notice to Lessee. Lease Payments shall be
paid at the office of Lessor or at any other place specified by Lessor. Any
Security Deposit and/or Advance Lease Payment is due on signing of the lease
specifying such amount. If any part of a payment is more than five days late,
Lessee shall pay a late charge of 10% of the payment, all or a portion of which
is late (or such lesser rate as is the maximum rate allowable under applicable
law.)
3. WARRANTIES. The equipment specified herein is unconditionally warranted by
the manufacturer, NOT the Lessor, for the full Term herein. Lessee acknowledges
and agrees that Lessor is NOT the manufacturer of the Equipment leased herein.
Lessor makes no warranties, express or implied, including warranties of
merchantability or fitness for a particular purpose with respect to patent or
copyright infringement, title, or the like, however, Lessor transfers to Lessee
for the Term the warranties made by the manufacturer or Supplier to Lessor.
Lessee shall comly with and enforce such warranties. Lessor is not liable to
Lessee for any modification or rescission of any such warranties.
4. DELIVERY AND ACCEPTANCE. Supplier will ship the Equipment directly to
Lessee. Lessee shall take delivery and upon installation and delivery of the
Equipment will sign and deliver to Lessor the Delivery and Acceptance Receipt
submitted by Lessor. Lessee shall be deemed to have irrevocably accepted the
Equipment under the lease upon the earlier of: A) delivery to Lessor of the
signed Delivery and Acceptance Receipt; or B) 10 days after delivery of the
Equipment, if lessee has not prior to such 10th day, delivered to Lessor written
notice of any non-acceptance of the Equipment, specifying the reasons therefore
and fully referencing the lease. If Lessee properly rejects the Equipment in
accordance with the forgoing, Lessor and Lessee shall be relieved of all
obligations or liabilities under the lease, Lessor shall retain any Advance
Lease Payment as liquidated damages for loss of a bargain and not as a penalty,
and Lessee shall be responsible for paying for the Equipment and fulfilling all
other obligations of the buyer under any applicable purchase order. The
validity of the lease will not be affected by any delay in Lessee's receipt of
the Equipment.
5. CONDTION; USE; LOCATION; RETURN. Lessee shall install and keep the Equipment
in good working condition, normal wear and tear excepted. Anything that Lessee
adds, replaces or attaches to the Equipment immediately becomes part of the
Equipment and the property of Lessor. LESSEE SHALL COMPLY WITH ALL LAWS and
regulations governing use of the Equipment, hold Lessor harmless against actual
or asserted violations thereof and pay all costs and expenses in connection with
or arising from any such actual or asserted violation. Lessee shall
1
<PAGE>
advise the manufacturer of any changes or additions to the Equipment needed to
comply with any laws or regulations. Lessee acknowledges and agrees that Lessor
is NOT responsible for any such changes or additions. Unless Lessee has Lessor's
prior written permission to move the Equipment, Lessee will keep and use it only
at the Equipment Location. On request, Lessee shall advise Lessor of the exact
location of the Equipment. Lessor may for the purpose of inspections, at all
reasonable times, enter upon any job, building or place where the Equipment is
located and, if in the opinion of Lessor, it is being used or cared for
improperly, without notice, remove it. Unless otherwise agreed in writing, on
termination or expiration of the Term, Lessee will immediately return the
Equipment to Lessor in as good a condition as received, less normal wear and
tear.
6. FINANCE LEASE STATUS. The parties agree that if Article 2A - Leases of the
Uniform Commercial Code ("Code") is deemed to apply, each lease will be
considered a "finance lease". By executing a lease, Lessee acknowledges either
that (a) Lessor has informed or advised Lessee, in writing, either previously or
by this Lease of: (i) the identity of the "supplier", (ii) that Lessee may have
rights under the "supply contract"; and (iii) that Lessee may contact the
supplier for a description of any such rights Lessee may have under the supply
contract; or (b) on or before signing such a lease, Lessee has reviewed and
approved the supply contract covering the Equipment purchased from the supplier.
Terms in this Paragraph 7 set off in quotation marks when used for the first
time herein shall have the meaning ascribed to such terms by the Code. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, LESSEE WAIVES ANY AND ALL RIGHTS AND
REMEDIES CONFERRED UPON A LESSEE BY ARTICLE 2A OF CODE.
7. LESSEE WARRANTIES; SURVIVAL. Lessee represents, warrants and covenants to
Lessor that: (a) unless it is an individual, Lessee is validly existing and in
good standing under applicable state law, (b) Lessee has the power and authority
to enter into this Lease, all leases and all other related documents hereunder
(collectivelly, "Fundamental Agreements"); (c) The person authorized to sign the
lease has the authority to grant the powers of attorney set forth in Paragraph 9
and 11 below; (d) such Fundamental Agreements are enforceable against Lessee in
accordance with their terms; (e) there are no pending or threatened actions or
proceedings that could have a material adverse effect on Lessee or any
Fundamental Agreement; (f) each Fundamental Agreement shall be effective against
all creditors of Lessee under applicable law, including fraudulent conveyance
and bulk transfer laws, and shall raise no presumption of fraud; and (g) Lessee
shall furnish Lessor with such financial statments, opinions of counsel,
resolutions, and other documents and information as Lessor may reasonably
request. Lessee shall be deemed to have reaffirmed the foregoing warranties each
time it executes any Fundamental Agreement. All representations, warranties and
covenants made by Lessee under a Fundamental Agreement shall survive the
termination of the lease and shall remain in full force and effect. All of
Lessor's rights, privileges, and indemnities, to the extent they are fairly
attributable to events or conditions occurring or existing on or prior to the
termination of the lease, shall survive such termination and be enforceable by
Lessor and its successors and assigns. If more than one Lessee is named in a
lease, the liability of each shall be joint and several.
8. INSURANCE. Throughout the Term, Lessee shall maintain (i) property insurance
insuring the Equipment for its full replacement value against loss, theft,
damage and destruction and naming
2
<PAGE>
Lessor as loss payee and (ii) general public liability and third party property
naming Lessor as an additional insured. Within 21 days from Lessees signing a
lease, Lessee will provide Lessor with certificates or other evidence of such
insurance which shall be in a form, amount and with companies reasonable
acceptable to Lessor and shall provide that Lessor shall be given 30 days' prior
written notice of any material alteration or cancellation thereof. If Lessee
does not provide evidence of property insurance acceptable to Lessor, Lessor may
but will not be required to, buy such insurance and add the cost, including any
customary charges or fees associated with the placement, maintenance or service
of such insurance (collectively, "Insurance Charge"), to the Lease Payment
amount due from Lessee. Lessee agrees to pay the Insurance Charge in equal
installments allocated to each remaining Lease Payment (with interest on such
allocations up the maximum rate permitted by applicable law). Nothing in this
Lease creates any insurance relationship between Lessor and any other person or
party. Lessor is not required to effect any insurance coverage and Lessor may
terminate or allow to lapse any coverage with having any liability to Lessee.
Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make claims for,
receive payment of, and execute and endorse all documents, checks or drafts for
loss, theft, damage or destruction to the Equipment under any property
insurance. In all circumstances, Lesee shall cooperate with Lessor or Lessor's
agent with respect to the placement of insurance and processing of claims.
9. TAXES AND CERTAIN FEES; LESSOR PERFORMANCE; WAIVER. Lessee shall promptly pay
all fees, assessments, taxes and charges governmentally imposed upon the
purchase, ownership, possession, leasing, renting, operation, control, use or
maintenance of the Equipment, whether assessed against Lessor, Lessee or the
Equipment, and relating to the Term, whether due before or after the end of the
Term, excluding taxes on or measured by the net income of Lessor. All personal
property tax, use tax or other tax returns will be by Lessor, and Lessee agrees
to pay Lessor a fee for processing such payments and filings. Lessor does not
have to contest any valuation of, or tax imposed on, the Equipment. If Lessee
fails to perform any of its obligations under this Lease, Lessor may perform any
act or make any payment that Lessor deems reasonably necessary for the
maintenance and preservation of the Equipment or Lessor's interest therein;
provided, however, that Lessor's performance of any act or payment shall not be
deemed a waiver of, or release Lessee from, the obligations at issue. All sums
so paid by Lessor, together with expenses (including legal fees and costs)
incurred by Lessor in connection therewith, shall be paid to Lessor by Lessee
immediately upon demand. Lessor's failure to require performance in any instance
or Lessor's written waiver of any provision shall not waive any other breach of
the same of any other provision.
10. TITLE; RECORDING; DOCUMENTATION FEE; NOTICES. Lessor shall hold title to the
Equipment. Lessee will keep the Equipment free and clear from any levy,
attachment, lien encumbrance or charge other judicial process; will give lessor
immediate writtten notice of any breach of this provision; and will reimburse
Lessor for and, at Lessor's request, defend Lessor against any loss or damage
caused thereby. Unless otherwise provided, the parties agree that this
transaction shall be a true lease. However, if this transaction is deemed to
constitute a lease for security, Lessee grants Lessor a purchase money security
interest in the Equipment and in all attachments, accessions, additions,
substitutions, products, replacements, rentals and proceeds (including insurance
proceeds) (collectively, "Collateral"). Lessee shall execute and timely deliver
to Lessor financing statements or other document Lessor deems necessary to
perfect or protect Lessor's security interest in the Collateral. Lessee
authorize LESSOR TO FILE
3
<PAGE>
A COPY OF THIS LEASE OF ANY SCHEDULE AS A FINANCING STATEMENT AND APPOINTS
LESSOR (AND AS AN AGENT FOR LESSOR, SUCH THIRD PARTY FILING SERVICE COMPANY AS
IS NOTED IN PARAGRAPH 1 ABOVE, UNDER "ADDITIONAL PROVISIONS") AS LESSEE'S
ATTORNEY-IN-FACT TO EXECUTE AND FILE, ON LESSEE'S BEHALF, FINANCING STATEMENTS
COVERING THE COLLATERAL. The Equipment is and will remain personal property no
matter what its use or attachment to realty, but Lessee will not let it be
attached to realty in any way that might cause it to become part of such realty.
Lessee shall pay Lessor's Fee for lease documentation and processing and for any
governmental filings. All notices shall be given in writing and shall be
effective when deposited in the U.S. mail, addressed to a party at its address
shown on the front page of this Lease or at any other address such party
specifies in writing, with first class postage prepaid.
11. DEFAULT. Any of the Following constitutes as a Default: (a) Lessee Fails to
pay any Lease Payment or any other amount owned to Lessor within 5 days after
its due date; (b) Lessee Fails to perform or observe any other representation,
warranty, covenant, condition or agreement under any lease or any other
agreement with Lessor and fails to cure such breach within 10 days after notice;
(c) any representation or warranty made by Lessee hereunder or in any other
instrument provided to Lessor by Lessee, proves to be incorrect in any material
respect when made; (d) a proceeding under any bankruptcy, reorganization,
arrangement of debts, insolvency or receivership law or assignment for benefit
of creditors is filed by or against Lessee; (e) Lessee become insolvent or fails
generally to pay its debts as they become due, or the Equipment is levied
against, seized, or a bulk sale of Lessee's inventory or assets is about to or
has taken place; (f) Lessee voluntarily or involuntarily dissolves or is
dissolved, or terminates or is terminated; (g) Lessee's financial condition
changes such that in Lessor's opinion, the credit risk of a lease transaction
with the Lessee is increased; (h) any guarantor dies or revokes a guaranty
required by Lessor, (i) any guarantor of any obligations hereunder is the
subject of any event listed clauses (a) through (g) above; or (i) an institution
revokes, refuses to honor, or refuses to renew or extend any letter of credit
required by Lessor.
12. REMEDIES. If a default ocurs, Lessor has the right to exercise any or all
of following remedies: (a) terminate any or all leases with Lessee; (b) declare
all Lease Payments and other amounts under any such leases(s) immediately due
and payable; (c) take possession of, or render unusable, any Equipment under any
such lease(s) wherever such Equipment may be located, without demand or notice,
without any court order or other process of law and without liability to Lessee
for any damages occasioned by such action, and no such action shall constitute
a termination of any such leases(s); (d) permit Lessor to take immediate
possession of such Equipment; (e) proceed by court action to enforce performance
BY LESSEE of any such lease(s) and/or recover all damages and expenses incurred
by Lessor by reason of any Default; (f) terminate any other agreement that
Lessor may have with Lessee; or (g) exercise any other right or remedy available
to Lessor at law or in equity. As liquidated damages for loss of a bargain and
not as a penalty, and in lieu of any further Lease Payments under any lease(s)
so terminated, upon Lessor's demand, Lessee shall pay Lessor's Return (as
defined in Paragraph 14 below), calculated as of the date of the Default, to
Lessor. Also, Lessee shall pay Lessor all costs and expenses (including legal
fees and costs), incurred by Lessor in enforcing any of the terms or provisions
of any such lease(s). Upon repossession or surrender of any such Equipment,
Lessor shall have the right to lease, sell or otherwise dispose of such
Equipment in a commercially reasonable manner, with or without notice at a
public or private sale, and apply the net proceeds thereof (after deducting
all expenses (including legal fees and costs) incurred
4
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in connection therewith) to the amounts owed to Lessor hereunder, provided,
however that Lessee shall remain liable to Lessor for any deficiency that
remains after any sale, lease or other disposal of such Equipment. Lessee
agrees that with respect to any notice of sale required by law to be given,
10 days' notice shall constitute reasonable notice. These remedies are
cumulative of every other right or remedy give hereunder not now or hereafter
exiting at law or in equity, and may be enforced concurrently therewith. Any
delay or failure to enforce Lessor's rights hereunder does not prevent Lessor
from enforcing any rights at a later time. Lessor, at its option, may apply
any security deposit or advance payment monies against Lessee's obligations
hereunder.
13. RISK OF LOSS. Lessee bears the risk of loss, theft, or damage to the
Equipment (collectively, "Loss"), effective on shipment for delivery to Lessee,
Lessee will advise Lessor in writing within 10 days of any Loss. Except as
provided below, a Loss does not relieve Lessee of the obligation to make Lease
Payments and pay other amounts owed under a lease. In the event of Loss, Lessor,
at its option, may; (a) require Lessee, where practicable, to restore the
Equipment to good condition reasonably satisfactory to Lessor; or (b) require
Lessee to pay Lessor its anticipated return ("Lessor's Return"), which shall
consist of the following amounts: (i) the Lease Payments (and other amounts) due
and owing under the lease at the time of such Loss; plus (ii) all Lease Payments
from the date of such Loss to the end of the Term; plus (iii) the Casualty Value
of such Equipment. "Casualty Value" is determined by multiplying the Casualty
Percentage by the Equipment Cost. Unless another percentage is specified in
Additional Provisions in Paragraph 1 above, or otherwise provided hereunder, the
"Casualty Percentage" is 20%. In the event that any amount calculate hereunder
is required under applicable law to be discounted to present value, it shall be
so discounted at a rate of 5% per annum. With respect to Equipment subject to a
Loss, upon Lessor's full receipt of such Lessor's return: (i) the lease shall
terminate, (ii) Lessee shall be relieved of its obligations under the lease, and
(iii) Lessee shall be entitled to Lessor's interest in such Equipment "AS IS,
WHERE IS" and without any warranty, express or implied from Lessor, other than
the absence of any liens by, through, or under Lessor.
14. NONCANCELLABLE NET LEASE. This lease and all schedules hereto shall be
noncancellable net leases. Lessee has an unconditional obligation to pay all
lease payments and other amounts when due. Lessee is not entitled to abatements,
reductions, recoupments, crossclaims, counterclaims or any other defenses to any
lease payments or other amounts due hereunder. Whether those defenses arise out
to claims by Lessee against Lessor. Lessor's assignee, supplier, this lease, any
schedule, any other Lease, or otherwise. Neither defects in equipment, damage to
it, not its loss, theft, destruction or late delivery shall terminate this or
any other lease or relieve Lessee of its payment obligations hereunder.
15. ASSIGNMENT. LESSEE HAS NO RIGHT TO SELL, TRANSFER OR ASSIGN ANY INTEREST IT
HAS IN THIS LEASE OR THE EQUIPMENT. LESSOR MAY, WITHOUT NOTICE, SELL, TRANSFER
OR ASSIGN ITS INTEREST IN THIS LEASE, THE EQUIPMENT OR ANY LEASE PAYMENTS OR
OTHER SUMS DUE HEREUNDER. If Lessor makes any such assignment or transfer, the
new owner will have of the Lessor's rights and benefits but none of Lessor's
obligations. The rights of the new owner will not be subject to any claims,
defenses, or set-offs that Lessee may have against Lessor. Lessee
acknowledges that any assignment or tranfer by Lessor shall not materially
change Lessee's duties or obligations under this Lease
5
<PAGE>
not materially increase the burdens or risks imposed on Lessee.
16. CAPTIONS, CONFLICTS, CHOICE OF LAW, VENUE, NON-JURY TRIAL. Captions are for
convenience only and do not alter the text. The provisions of this Lease are
severable and the remainder shall not be affected if any provision is held
unenforceable, invalid or illegal. This Lease inures to the benefit of and is
binding on successors or permitted assigns of Lessor and Lessee. THIS LEASE AND
EACH SCHEDULE IS PERFORMABLE IN FLORIDA AND SHALL BE GOVERNED BY AND SUBJECT TO
THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF
THE STATE OF FLORIDA. LESSOR AND LESSEE CONSENT TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN FLORIDA, AND WAIVE ANY OBJECTIONS
RELATING TO IMPROPER VENUE OR FORUM NON CONVENIENT TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT. AT LESSOR'S SOLE ELECTION AND DETERMINATION, ANY
LEGAL, EQUITABLE, OR ARBITRATION ACTION MAY ALSO BE BROUGHT IN ANY OTHER COURT
OF COMPETENT JURISDICTION IN ANY STATE IN WHICH LESSOR HAS AN OFFICE AND LESSEE
WAIVES ANY OBJECTION RELATING TO IMPROPER VENUE OR FORUM NON CONVENIENT TO THE
CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT. LESSEE, ANY GUARANTOR AND LESSOR
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY SO THAT TRIAL SHALL BE BY AND ONLY
TO THE COURT.
17. ATTORNEY FEES. LESSEE AND ANY GUARANTOR AGREE TO PAY LESSOR'S REASONABLE
ATTORNEY FEES AS DAMAGES AND NOT COSTS IN ALL PROCEEDINGS ARISING OUT OF THE
LEASE. SUCH PROCEEDINGS INCLUDE, BUT ARE NOT LIMITED TO, ANY CIVIL ACTION,
COUNTERCLAIMS MEDIATION, POST JUDGMENT COLLECTION, BANKRUPTCY OR APPEAL.
REASONABLE ATTORNEY FEES ARE HEREBY STIPULATED AND LIQUATED BY ALL PARTIES
HERETO AT TWENTY-FIVE PERCENT (25%) OF THE TOTAL AMOUNT PLACED BY LESSOR WITH AN
ATTORNEY FOR COLLECTION. AT LESSOR'S SOLE OPTION, LESSOR MAY ELECT TO CHARGE
LESSEE AND ANY GUARANTOR THE ACTUAL ATTORNEY FEES CHARGED TO LESSOR IN ALL
PROCEEDING ARISING OUT OF THE LEASE.
18. LIABILITY. Lessee shall indemnify, hold harmless and, if lessor requests,
defend Lessor against all Claims directly or indirectly arising out of or
connected with the Equipment, any lease or any related document or instrument.
"Claims" means all losses, liabilities, damages, penalties, expenses (including
legal fees and costs), claims, actions and suits, whether in contract or in
tort, whether caused by Lessor's negligence or otherwise and whether based on a
theory of strict liability of Lessor or otherwise, including, but not limited
to, matters regarding; (a) the selection, manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, maintenance, use, condition,
return or operation of Equipment: (b) any latent defects or other defects in
Equipment, whether or not discoverable by Lessee; or (c) patent, trademark or
copyright infringement.
19. CONSTRUCITON OF LEASE AND AMOUNT DUE HEREUNDER. In the event that this
Lease (or any lease made hereunder) is construed to involve a loan of money and
any amounts due hereunder are deemed to constitue interest, then without waiving
any claim or defense to the contrary, no such amounts due hereunder which are
contracted for, charged or collected
6
<PAGE>
shall exceed 18% per annum or other lessor maximum rate of interest allowed from
time to time by applicable state or federal law (the "Highest Lawful Rate").
Regardless of any provision of this Lease or related agreements to the contrary,
the aggregate of all such amounts due hereunder which are contracted for,
charged or collected shall under no circumstances exceed the Highest Lawful
Rate, and in the event Lessor ever collects, or applies, as interest, any such
amounts in excess of the Highest Lawful Rate, such amounts shall be deemed a
prepayment of such portion of amounts due hereunder as are deemed to constitute
the principal of a loan, and if all amounts so deemed to constitute principal
have been or are thereby paid in full, any remaining excess shall immediately be
refunded to Lessee. In determing whether or not amounts deemed to consitute
interest contracted for, charged or collected exceed the Highest Lawful Rate, to
the Maximum extent permitted by law, (a) amounts due hereunder shall be
characterized as principal, or as a non-usurious expense, fee or premium rather
than interest, (b) amounts deemed to constitute interest due hereunder after
acceleration by reason a default or otherwise, or prepaid, shall not be deemed
to constitute interest (but any portion of such amounts deemed to constitute
interest contracted for, charged or collected in connection with such
acceleration or prepayment may never exceed the Highest Lawful Rate) and (c) all
amounts deemed to constitute interest shall be amortized, prorated, allocated
and spread, in equal parts, throughout the entire term of this Lease so that the
interest rate is uniform throughout the entire term of this Lease. Lessor may
from time to time implement any interest rate ceiling under applicable state or
federal law and/or revise the index, formula or provision used to compute the
interest rate applicable to this Lease, but not in excess of the Highest Lawful
Rate by notice to Lessee if and to the extent permitted by and in the manner
provided in such law.
20. CREDIT INFORMATION. LESSEE HEREBY AUTHORIZED LESSOR OR ANY AFFILIATE OF
LESSOR TO OBTAIN CREDIT BUREAU REPORTS, AND MAKE OTHER CREDIT INQUIRIES, AS
LESSOR DEEMS NECESSARY. ON WRITTEN REQUEST, LESSOR WILL INFORM LESSEE WHETHER
LESSOR REQUESTED A CONSUMER CREDIT REPORT AND THE NAME AND ADDRESS OF ANY
CONSUMER CREDIT REPORTING AGENCY THAT FURNISHED A REPORT. WITHOUT FURTHER
NOTICE TO LESSEE, LESSOR MAY USE OR REQUEST SUBSEQUENT CREDIT BUREAU REPORTS
TO UPDATE ITS INFORMATION OR IN CONNECTION WITH A RENEWAL OR EXTENSION OF
LESSEE'S REQUEST FOR LESSOR'S SERVICES. LESSEE REPRESENTS AND WARRANTS THAT THIS
IS A COMMERCIAL AND BUSINESS TRANSACTION AND NOT A CONSUMER TRANSACTION.
7
EXHIBIT 10.8
PURCHASE ORDER
PURCHASER: MANSUR INDUSTRIES INC. ("Mansur' or "Purchaser")
SUPPLIER: EMJAC INDUSTRIES INC. ("Emjac" or "Supplier')
PRICE: $619.00 PER MODEL 500/570 UNIT;
for up to the first 1,000 collective units,
$743.92 per unit.
$754.34 PER MODEL 550/555 UNIT;
for up to the first 1,000 collective units,
$906.66 per unit.
Prices for up to the first 1,000 collective units is
subject to Emjac's agreement to use its best efforts
to reduce manufacturing costs and reduce the price of
the units to which the higher price is applicable at
the earliest opportunity. The price per unit shall be
reduced by $168.01 ($99.00 per unit for the holding
tank and $68.01 per unit for the wash tank) upon the
completion and integration of plastic/nylon tanks
supplied by Mansur. All prices FOB Emjac's warehouse.
GOODS AND
PRODUCTS: See Exhibit "A" attached hereto
PAYMENT
TERMS: $150,000.00 advance payment upon acceptance by
Mansur of the prototype machine (the "Advance"), of
which $50.00 shall be applied as advance partial
payment on each of the first 3,000 units. Balance
on completed inventories payable net 15 days from
date of invoice.
PROTOTYPE: One prototype machine (the "Prototype Machine") to
be delivered by Emjac to Mansur no later than June
7, 1996. This Purchase Order is subject to
acceptance of the Prototype Machine by Mansur,
after Emjac makes all necessary changes or
adjustments required to meet product specifications
and Mansur standards.
DELIVERY: Goods must be completed and ready for delivery in
accordance with the schedule of delivery Exhibit
"B" attached hereto. Delivery to be made promptly
upon notification from Mansur, as directed by Mansur.
Delivery is not included in Purchase Price.
<PAGE>
TERMS AND
CONDITIONS: 1. Time is of the essence in Supplier's performance.
If Supplier does not complete and deliver Goods
by the dates specified herein, subject to the
timely delivery by Purchaser of (i) the necessary
manufacturing specifications and drawings and
(ii) the proper direct materials and component
parts free of any defects, the Purchase Price
shall be reduced by 10% on those units delivered
late. Purchaser reserves the right to procure
elsewhere, in whole or in part, any goods which
Supplier fails to deliver or provide in strict
accordance with the agreed delivery schedule. In
such event, Purchaser shall be entitled to
recover from Supplier any additional costs
incurred by Purchaser.
2. If Purchaser, at Purchaser's discretion, does
not approve the Prototype Machine and Supplier
does not promptly make changes to make the
Prototype Machine acceptable to Purchaser,
Purchaser shall not be obligated to purchase
goods from Supplier, and Supplier shall
immediately refund to Purchaser all payments made
by Purchaser, less Supplier's cost of making the
Prototype Machine, not to be in excess of
$1,000.00.
3. Certain specifications and drawings for the
Products have been furnished by Purchaser to
Supplier, receipt of which is hereby acknowledged
by Supplier, and shall continue to be routinely
furnished by Purchaser to Supplier as required,
such specifications and drawings to remain the
sole property of the Purchaser including any and
all improvements, changes and/or modifications
with respect to the Products listed on Schedule
A.
4. Supplier will manufacture in its own factory and
sell exclusively to Purchaser the Products on the
basis of Purchaser's specifications and drawings,
and incorporating such changes and improvements
therein as the parties may agree upon from time
to time. The parties agree that final assembly,
inspection and packing will at all times be done
by Supplier in its own factory.
5. Manufacturing services provided by Supplier shall
include all sheet metal fabrication, painting,
final assembly, testing all manufactured
component parts and final quality and performance
assurance testing. All sheet metal costs are
included in the manufacturing fee; however, if
the cost of sheet metal increases or decreases
during the term hereof, the fee shall be adjusted
accordingly, on a dollar for dollar basis, using
a base price for the purpose of this provision of
$0.30 per pound, excluding an agreed 20% markup
by Emiac on direct materials purchased by Emjac.
6. All component parts and materials shown on the
plans or specifications as being supplied by
Purchaser shall be installed or assembled by
Supplier in the Products without markup.
<PAGE>
7. Purchaser shall be responsible for all hard
tooling required for manufacturing operations.
Supplier shall advise Purchaser in advance of the
estimated cost of all hard tooling. Upon approval
of Purchaser, Purchaser shall be responsible for
payment therefor. Upon such payment, all hard
tooling shall be and remain the property of
Purchaser and shall be delivered to Purchaser at
its request.
8. At no expense to Purchaser, Supplier shall
prepare a full set of manufacturing drawings to
ANSI standards. All drawings shall be and remain
the property of Purchaser and shall be delivered
to Purchaser at its request.
9. Supplier expressly warrants and guarantees, in
addition to all other statutory and implied
warranties and guarantees, that all Products
shall be (i) of the highest quality and in strict
compliance with all applicable specifications,
samples, or other descriptions furnished and
approved by Purchaser; (ii) free from defects in
material and workmanship; and (iii) fit and
sufficient for their intended purposes.
10. Supplier shall not assign this contract without
Purchasers prior written consent. This Contract
shall be governed by Florida law and Supplier
submits to jurisdiction and venue in Dade County,
Florida.
11. Purchaser reserves the right to terminate the
contract for its own convenience, in whole or in
part, for any reason. In the event of such
termination for convenience, Supplier shall
comply with all requirements of Purchaser and
agrees that its compensation shall be limited to
only those costs, if any, which shall have been
incurred in the manufacture of the goods through
the date of termination. Notwithstanding the
foregoing, if the termination occurs prior to the
delivery of 3,000 Units, Emjac shall be entitled
to full payment for units produced through the
date of termination and retain any unapplied
Advance as liquidated damages.
12. Supplier shall provide standard shipping skids
and shrink wrap units so as to meet all
requirements of sale carriage and transportation
at no charge to the Purchaser. Any special
crating, boxing or other special packaging
requirements shall be paid for by the Purchaser.
Risk of loss shall be with Supplier until
delivery is received and accepted by Purchaser.
13. Nothing in this Agreement shall prevent the
Purchaser from purchasing Products of the kind
contemplated by this Agreement from persons other
than the Supplier, whether or not such others
shall be in competition with Supplier.
<PAGE>
14. Supplier hereby agrees, upon the request of
Purchaser, to cooperate in obtaining all
Underwriter Laboratories (UL) multiple listings
required or desirable in connection with the
manufacture and sale of the Products and to
execute and deliver such other documents, and
take such other action, as shall be reasonably
requested to carry out the transactions
contemplated by this Agreement.
15. Supplier understands and acknowledges that the
Products are proprietary to Purchaser and hereby
covenants, warrants and represents to Purchaser
that, during the Term of this Agreement and for
all periods without limitation following its
termination: (i) all Products manufactured by it
hereunder, including the Prototype Machine, shall
not be sold, delivered or otherwise disposed of,
by Supplier or any of its Affiliates or
Subsidiaries, to any individual or entity except
Purchaser; (ii) the design, the specifications
and drawings for such Products shall not be sold,
delivered or otherwise disposed of, by Supplier
or any of its Affiliates or Subsidiaries, to any
individual or entity except Purchaser; and (iii)
all materials and information provided by
Purchaser to Supplier shall remain the property
of Purchaser and shall be maintained as
confidential and not disclosed to any person or
entity without the express written consent of
Purchaser.
16. Purchaser retains all rights to all trademarks,
trade names and proprietary information relating
to the Product. The Confidentiality Agreements by
and between Purchaser and Emjac, Emile Dorta
personally and David Dorta personally dated
February 1, 1996 shall remain in full force and
effect.
WITNESS the due execution hereof as of the 7th day of May, 1996.
SUPPLIER:
EMJAC INDUSTRIES INC.
By:______________________________________
Emile Dorta, President
PURCHASER:
MANSUR INDUSTRIES INC.
By:______________________________________
Paul I. Mansur, Chief Executive Officer
<PAGE>
EXHIBIT A
PRODUCTS
3,000 Assorted Units
SYSTEMONE RECYCLING PARTS WASHERS
MODEL 500
MODEL 550
MODEL 555
MODEL 570
<PAGE>
EXHIBIT B
SCHEDULE OF DELIVERY
Minimum Maximum
Month Units Units
August 1996 100 100
September 100 200
October 100 300
November 200 400
December 200 500
January 1997 200 500
February 300 500
March 300 500
April 300 500
May 400 500
June 400 500
July 400 500
TOTAL 3000 5000
Emjac shall deliver units in accordance with the minimum units schedule. Mansur
shall notify Emjac, no less than 60 days prior to the scheduled delivery month,
of any increase in units ordered over the minimum unit level, up to the maximum
units indicated above for the respective scheduled month.
EXHIBIT 10.9
LEASE
THIS AGREEMENT, hereinafter called the lease, entered into as of the 29th day
October 1994, between Marvin L Duncan hereinafter called the Lessor, party of
the first part, and Mansur Industries Inc. hereinafter called the Lessee, or
tenant, party of the second part.
Witnesseth, that the said Lessor does this day lease unto said Lessee, and said
Lessee does hereby hire and take as tenant under said Lessor, that certain
space, located at 8415 & 8425 SW 129 Terrace, being all of the building, located
on Lot 15, Bl.l, South Kendall Industrial No. 1 Plat Book 57, Page 59, Public
Record of Dade County Florida. To be used and occupied for a warehouse, office,
manufacturing and sales space and for no other uses or purposes for a term of
Twenty four (24) months beginning on the first (1) day of January 1995 and
ending on the thirty first (31) day of December 1996, at and for the agreed
total rental of $114,796.00 plus tax, payable $5094.00 per month, beginning
January 1,1995 and a like sum on the first (1) day of each month thereafter
until paid.
The Lessor acknowledges receipt of the sum of $10,188.00 which will be held by
Lessor as security for the faithful performance of this lease. If the Lessee
breaches this lease in any particular, the foregoing security deposit shall be
retained by the Lessor as liquidated damages for such breach. If at the end of
the lease term, the Lessee has faithfully performed all of the covenants of this
lease, the aforementioned security deposit shall be paid to the lessee within
forty five (45) days.
All payments are to be made to the Lessor on the first (1) day of each and every
month without demand, at 621 SE 45th Terrace, Ocala Florida, or at such other
place or to such other person as the Lessor may from time to time designate to
the Lessee in writing.
The following express stipulations and conditions are made a part of this lease
and are hereby assented to by the Lessee:
FIRST: The Lessee shall not assign this lease, nor sublet the premises, or any
part thereof, nor permit the same, or any part thereof, to be used for any other
purpose than as above stipulated, nor to penetrate the roof of the building for
any purpose or in any manner, nor make any alterations therein, except
improvements to the offices, without the written consent of the Lessor, and all
additions, fixtures or improvements which may be made by the Lessee, except
movable office furniture, shall become the property of the Lessor and remain
upon the premises as a part thereof and be surrendered with the premises at the
termination of this lease term.
<PAGE>
SECOND: All personal property placed or moved into the premises above described
shall be at the risk of the Lessee or the owner thereof,and the Lessor shall not
be liable for any damage to the said personal property or to the Lessee arising
from the bursting or leaking of water pipes,or from any act of negligence of any
other person whomsoever.
THIRD: The Lessee shall promptly execute and comply with all the statutes,
ordinances, regulations and requirements of the FEDERAL,STATE,COUNTY and
LOCAL Governments and any and all their departments and bureaus applicable to
the said premises,for the correction, prevention and abatement of nuisances, or
other grievances in,upon,or connected with the said premises during the term of
this lease and shall also promptly comply with all the rules, orders and
regulations of the METROPOLITAN DADE COUNTY FIRE DEPARTMENT for the prevention
of fires at Lessee's own cost and expense. Lessee agrees to pay any increase in
fire insurance premiums over and above the premium amounts now in effect if such
increase is caused by the Lessee's use or occupancy of the premises. This
increase, if any, plus tax, shall be paid to the Lessor, monthly, along with the
rental payment.
FOURTH: IN the event the premises shall be destroyed or so damaged or injured by
fire or other casualty during the term of the lease, whereby the same shall be
rendered, in the opinion oi the lessee, untenantable, then the Lessor shall have
the right to render such premises tenantable with repairs within ninety (90)
days therefrom. If said premises are not rendered tenantable by the lessor
within the said time, it shall be optional with either party hereto to cancel
this lease, and, in the event of such cancellation, the rent shall be paid only
through the date of such fire or casualty. The cancellation herein mentioned
shall be in writing.
FIFTH: The prompt payment of the rent for the said premises upon the dates named
and the faithful observance of the stipulations and conditions written in this
lease, and which are hereby made a part of this covenant, are the conditions
upon which this lease are made and accepted, and any failure on the part of the
Lessee to comply with the terms of this lease shall, at the option of the
Lessor, work a forfeiture of this agreement.
<PAGE>
SIXTH: If the Lessee shall abandon or vacate the premises before the end of
the term of this lease, or shall suffer the rent to be in arrears, the Lessor
may, at his option, forthwith cancel this lease, or he may enter the premises as
the agent of the Lessee, without being liable in any way therefore, and relet
the premises, with or without any furniture that may be therein, as the agent of
the Lessee, at such rent and upon such terms and such duration of time as the
Lessor may determine, and Lessor shall receive such rent and thereof, applying
the same to the payment of the rent due by these presents, and if the full
rental herein provided shall not be realized by the Lessor over and above the
reasonable expenses to the Lessor in such reletting, the said Lessee shall
pay any deficiency, and if more than the full rental is realized, Lessor will
pay over to the Lessee the excess of demand until the term of this lease has
expired.
SEVENTH: Lessee agrees to pay the reasonable costs of the collection and
reasonable attorneys fees on any part of the said rental that may be collected
by suit or by attorney after the same is past due.
EIGHTH: The Lessee agrees that it will pay all charges for gas, water, sewer,
trash, collection and electricity.
NINTH: It is understood and agreed that any merchandise, furniture or
equipment left in the premises when Lessee vacates shall be deemed to have
been abandoned by the Lessee, and such abandonment by the Lessee automatically
relinquishes any right or interest therein. Lessor is authorized to sell,
dispose, or destroy same, if such merchandise, furniture, and equipment is
not removed by Lessee.
TENTH: It is hereby understood and agreed between Lessor and Lessee that all
presently existing electrical wiring, plumbing, windows, partitions, air
conditioning units and permanent attachments to the premises, that are now or
may be installed by the Lessee shall remain a part of the premises at the
expiration of the lease term.
ELEVENTH: The Lessor or any of his agents shall have the right to enter the
said premises during all reasonable hours to examine the same, to make such
repairs, additions or alterations as may be deemed necessary for the safety,
comfort or preservation of said building, or to exhibit said premises, and to
put or keep upon the doors or windows thereof a notice "FOR RENT" at any time
within thirty (30) days before the expiration of the lease term. The right of
entry shall likewise exist for the purpose of removing placards, signs,
fixtures, alterations or additions which do not conform to this lease, or with
rules, orders, regulations, statutes or ordinances to which the premises may be
subject.
<PAGE>
TWELFTH: Lessee hereby accepts the premises in the condition they are at the
beginning of the lease term and agrees to maintain said premises in the same
condition,order and repair as they are at the beginning of said term,excepting
only reasonable wear and tear arising from the use thereof under this lease,and
to make good to said Lessor immediate upon demand any damage to
plumbing,electric lights, or any fixture,appliance or appurtenances of said
premises,or of the building,caused by any act or negligence of Lessee,or of any
person or persons in the employ or under the control of the Lessee.The Lessor
hereby represents and warrants that the premises and the building and all
electrical wiring,plumbing,fixtures,machinery,and the like are in good working
order and repair at the beginning of the lease term.
THIRTEENTH: It is expressly agreed and understood by and between the parties to
this lease that the Lessor shall not be liable for any damage or injury by water
which may be sustained by the tenant or other person,or for any other damage or
injury resulting from the carelessness,negligence or improper conduct on the
part of any other tenant or agent or employees of tenant or any other tenant,or
by the reason of the breakage,leakage or obstruction of the water,sewer or soil
pipes or other leakage in or about the building.
FOURTEENTH: If the Lessee shall become insolvent,or if bankruptcy proceedings
shall commence by or against the Lessee and are not terminated within sixty (60)
days,the Lessor is hereby irrevocably authorized,at his option,to forthwith
cancel this lease as for a default.Lessor may elect to accept rent from such
receiver,trustee or other judicial officer during the term of their occupancy in
their fiduciary capacity without effecting Lessor's rights as contained in this
agreement,but no receiver,trustee or other judicial officer shall ever have any
right,title or interest in or to the above described property by virtue of this
agreement.
FIFTEENTH: Lessor agrees to keep the exterior and the structural interior part
of the premises in good repair.Lessee shall give the Lessor seven (7) days
written notice of needed repairs,and Lessor shall have a reasonable time
thereafter to make them.However,if any part of the exterior or interior of the
premises is injured or damaged by any breaking and/or entering of said
premises,or by any attempt to break and/or enter said premises by any third
person or persons,Lessee agrees to promptly cause all necessary repairs to be
made at Lessee's expense so as to promptly restore said premises to its
condition immediately prior to said breaking and/or entering or said attempt to
break and/or enter.
<PAGE>
SIXTEENTH: This lease shall bind the Lessor and its assigns or successors,and
the heirs,assigns,administrators,legal representatives,executors or
successors,as the case may be of the Lessee.
SEVENTEENTH: It is understood and agreed between the parties hereto,that time is
of the essence of this lease and that applies to all terms and conditions
contained herein.
EIGHTEENTH: It is understood and agreed by and between the parties hereto that
written notice mailed certified,return receipt requested,or delivered to the
premises hereunder shall constitute sufficient notice to the Lessee,and written
notice mailed certified,return receipt requested,or delivered to Marvin L
Duncan,621 SE 45 Terrace,Ocala Florida,34471,shall constitute sufficient notice
to the Lessor.
NINETEENTH: The rights of the Lessor under the foregoing shall be cumulative,and
failure on the part of the Lessor to exercise promptly any rights given
hereunder shall not operate to forfeit any of the said rights.
TWENTIETH: It is further understood and agreed between the parties that any
charge against the Lessee by the Lessor for services or work done on the
premises by order of the Lessee or otherwise accruing pursuant to the terms of
the lease, shall be considered as rent due and shall be included in any lien for
rent due and unpaid.
TWENTY-FIRST: It is hereby understood and agreed that any signs or advertising
to be used,including awnings,in connection with the premises leased hereunder
shall be first submitted to the Lessor for approval before installation of same.
TWENTY-SECOND: The Lessee agrees to keep the front of the premises clean and
clear of waste cans,containers, equipment,machinery etc. and agrees to keep all
of the exterior of the premises clean and clear,except for the automobiles and
trucks used by the Lessee,or others in connection with the business of the
Lessee, and further agrees to control the parking and traffic by his employee's
or customers,so as not to restrict the normal ingress and egress of trucks and
automobiles used by an adjoining Lessee or others in connection with the
business of an adjoining Lessee.
<PAGE>
TWENTY-THIRD: Lessee agrees to keep the non-structural interior of said
premises,all windows,screens,awnings,doors and non-structural interior
walls,pipes,machinery, plumbing,electrical wiring and other fixtures and
interior appurtenances,in good condition and repair at Lessee's
expense,fire,windstorm and others acts of God excepted.All glass,both interior
and exterior,is at the sole risk of Lessee and Lessee agrees to replace any
glass broken during the term of this lease.Lessor shall solely be responsible
for all structural repairs to the premises'and building.
TWENTY-FOURTH: The Lessee agrees to include the Lessor as an additional
insured,as his interest may appear,for public liability and property damage
insurance for the premises,for an amount not less than $1,000,000 each
occurrence and $1,000,000 aggregate liability.
TWENTY-FIFTH: If the sums mentioned herein are paid promptly when due,Lessee
shall have the option of renewing this lease for two (2) two (2) year terms,by
giving the Lessor,sixty (60) days written notice, on the same terms and
condition as provided in this lease,except that the rent provided herein shall
increase by ten (10) percent during each extended term.
TWENTY-SIXTH: Not withstanding anything in this lease to the contrary, if the
sums mentioned herein are paid promptly when due and Lessee has complied with
the terms and conditions of this lease, Lessee shall have the option of
cancelling this lease without penalty upon providing minimum one hundred fifty
(150) days advance written notice to Lessor to vacate.
In witness whereof,the parties hereto have hereunto executed this agreement for
the purpose herein expressed,the day and year first written above
Mansur Industries Inc.
/s/ [ELLIGIBLE] /s/ PIERRE G. MANSUR
--------------- ----------------------------
Witness Pierre G. Mansur, President
/s/ [ELLIGIBLE]
---------------
Witness
/s/ MARY EMILY LEE
---------------
Mary Emily Lee
Witness
/s/ LINDA A. DAIGLE /s/ MARVIN L. DUNCAN
--------------- ----------------------------
Linda A. Daigle Marvin L. Duncan, Lessor
Witness
EXHIBIT 10.10
Security Agreement
For Business Loans other than Inventory Loans in all States (except Texas) by
The CIT Group/Equipment Financing, Inc. or Dealer. In Louisiana, form 5-SA-2305
must accompany this Agreement.
1. GRANT OF SECURITY INTEREST; Description of Collateral.
Debtor grants to Secured Party a security interest in the property described
below. along with all present and future attachments and accessories thereto and
replacements and proceeds thereof, including amounts payable under any insurance
policy, all hereinafter referred to collectively as "Collateral": (Describe
Collateral fully including make, kind of unit, model and serial numbers and any
other pertinent information.)
One (1) Trumpf TC 200 CNC Punching Machine, S/N 070080 with Tooling Package
including all substitutions, additions, attachments, replacements, accessions,
and the proceeds of all of the foregoing.
2. What Obligations the Collateral Secures.
Each item of the Collateral shall secure not only the specific amount which
Debtor promises to pay in Paragraph 3 below, but also all other present and
future Indebtedness or obligations of Debtor to Secured Party of every kind and
nature whatsoever.
3. Promise to Pay; Terms and Place of Payment.
Debtor promises to pay Secured Party the total sum of $341,397.00 which
represents principal and interest precomputed over the term hereof, payable in
60 (total number) combined principal and interest payments as follows:
EqualSuccessive Monthly Payments $ 5,689.95 beginning on ________,l9___,
and the same amount on the same date of each month thereafter until fully paid,
provided, however, that the final payment shall be in the amount of the then
unpaid balance of principal and interest.
Other Than Equal Successive Monthly Payments
Payment shall be made at the address of Secured Party shown herein or such other
place as Secured Party may designate from time to time.
4. Use and Location of Collateral.
Debtor warrants and agrees that the Collateral is to be used primarily for:
[ ] business or commercial purposes (other than agricultural),
[ ] agricultural purposes (see definition on the final page), or
[ ] both agricultural and business or commercial purposes.
Location: 8125 SW 129th Terrace Miami Dade FL
City County State
Debtor and Secured Party agree that regardless of the manner of affixation, the
Collateral shall remain personal property and not become part of the real
estate. Debtor agrees to keep the Collateral at the location set forth above and
will notify Secured Party promptly in writing of any change in the location of
the Collateral within such State, but will not remove the Collateral from such
State without the prior written consent of Secured Party (except that in the
State of Pennsylvania, the Collateral will not be moved from the above location
without such prior written consent).
5. Late Charges.
Any payment not made when due shall, at the option of Secured Party, bear late
charges thereon calculated at the rate of 1 1/2% per month, but in no event
greater than the highest rate permitted by relevant law.
6. Debtor's Warranties and Representations.
Debtor warrants and represents:
(a) that Debtor is justly indebted to Secured Party for the full amount of the
indebtedness described in Paragraph 3;
(b) that, except for the security interest granted hereby, the Collateral is
free from and will be kept free from all liens, claims, security interests
and encumbrances;
<PAGE>
6. Debtor's Warranties and Representations (Continued)
(c) that no financing statement covering the Collateral or any proceeds thereof
is on file in favor of anyone other than Secured Party, but if such other
financing statement is on file, it will be terminated or subordinated;
(d) that all information supplied and statements made by Debtor in an financial,
credit or accounting statement or application for credit prior to,
contemporaneously with or subsequent to the execution of this Security
Agreement with respect to this transaction are and shall be true, correct,
valid and genuine; and
(e) that Debtor has full authority to enter into this Security Agreement and in
so doing it is not violating its charter or by-laws, any law or regulation
or agreement with third parties, and it has taken all such action as may be
necessary or appropriate to make this Security Agreement binding upon it.
7. Debtor's Agreements.
Debtor agrees:
(a) to defend at Debtor's own cost any action, proceeding, or claim affecting
the Collateral;
(b) to pay reasonable attorneys' fees (at least 15% of the unpaid balance if not
not prohibited by law) and other expenses incurred by Secured Party in
enforcing its rights against Debtor under this Security Agreement;
(c) to pay promptly all taxes, assessments, license fees and other public or
private charges when levied or assessed against the Collateral or this
Security Agreement; and this obligation shall survive the termination of
this Security Agreement;
(d) that, if a certificate of title is required or permitted by law, Debtor
shall obtain such certificate with respect to the Collateral, showing the
security interest of Secured Party thereon and in any event do everything
necessary or expedient to preserve or perfect the security interest of
Secured Party;
(e) that Debtor will not misuse, fail to keep in good repair, secrete, or
without the prior written consent of Secured Party, sell, rent, lend,
encumber or transfer any of the Collateral notwithstanding Secured Party's
right to proceeds;
(f) that Secured Party may enter upon Debtor's premises or wherever the
Collateral may be located at any reasonable time to inspect the Collateral
and Debtor's books and records pertaining to the Collateral, and Debtor
shall assist Secured Party in making such inspection; and
(g) that the security interest granted by Debtor to Secured Party shall continue
effective irrespective of the payment of the amount in Paragraph 3, or in
any promissory note executed in connection herewith, so long as there are
any obligations of any kind, including obligations under guaranties or
assignments, owed by Debtor to Secured Party, provided, however, upon any
assignment of this Security Agreement the Assignee shall thereafter be
deemed for the purpose of this Paragraph the Secured Party under this
Security Agreement.
8. Insurance and Risk of Loss.
All risk of loss, damage to or destruction of the Collateral shall at all times
be on Debtor. Debtor will procure forthwith and maintain at Debtor's expense
insurance against all risks of loss or physical damage to the Collateral for the
full insurable value thereof for the life of this Security Agreement plus breach
of warranty insurance and such other insurance thereon in amounts and against
such risks as Secured Party may specify, and shall promptly deliver each policy
to Secured Party with a standard long-form mortgagee endorsement attached
thereto showing loss payable to Secured Party; and providing Secured Party with
not less than 30 days written notice of cancellation; each such policy shall be
in form, terms and amount and with Insurance carriers satisfactory to Secured
Party; Secured Party's acceptance of policies in lesser amounts or risks shall
not be a waiver of Debtor's foregoing obligations. As to Secured Party's
interest in such policy, no act or omission of Debtor or any of its officers,
agents, employees or representatives shall affect the obligations of the insurer
to pay the full amount of any loss.
Debtor hereby assigns to Secured Party any moneys which may become payable under
any such policy of insurance and irrevocably constitutes and appoints Secured
Party as Debtors attorney in fact (a) to hold each original insurance policy,
(b) to make, settle and adjust claims under each policy of insurance, (c) to
make claims for any moneys which may become payable under such and other
insurance on the Collateral including returned or unearned premiums and (d) to
endorse Debtor's name an any check, draft or other instruments received in
payment of claims or returned or unearned premiums under each policy and to
apply the funds to the payment of the indebtedness owing to Secured Party;
provided, however, Secured Party is under no obligation to do any of the
foregoing.
Should Debtor fail to furnish such insurance policy to Secured Party, or to
maintain such policy in full force, or to pay any premium in whole or in part
relating thereto, then Secured Party, without waiving or releasing any default
or obligation by Debtor, way (but shall be under no obligation to) obtain and
maintain insurance and pay the premium therefor on behalf of Debtor and charge
the premium to Debtor's indebtedness under this Security Agreement. The full
amount of any such premium paid by Secured Party shall be payable by Debtor upon
demand, and failure to pay same shall constitute an event of default under this
Security Agreement.
9. Events of Default; Acceleration.
A very important element of this Security Agreement is that Debtor make all its
payments promptly as agreed and that the Collateral continue to be in good
condition and adequate security for the indebtedness. The following are events
of default under this Security Agreement which will allow Secured Party to take
such action under this Paragraph and under Paragraph 10 as it deems necessary:
(a) any of Debtor's obligations to Secured Party under any agreement with
Secured Party is not paid promptly when due;
(b) Debtor breaches any warranty or provision hereof, or of any note or of
any other instrument or agreement delivered by Debtor to Secured Party in
connection with this or any other transaction;
<PAGE>
9. Events of Default; Acceleration (Continued)
(c) Debtor dies, becomes insolvent or ceases to do business as a going concern;
(d) it is determined that Debtor has given Secured Party materially misleading
information regarding its financial condition;
(e) any of the Collateral is lost or destroyed;
(f) a petition or complaint in bankruptcy or for arrangement or reorganization
or for relief under any insolvency law is filed by or against Debtor or
Debtor admits its inability to pay its debts as they mature;
(g) property of Debtor is attached or a receiver is appointed for Debtor,
(h) whenever Secured Party in good faith believes the prospect of payment or
performance is impaired or in good faith believes the Collateral is
insecure;
(i) any guarantor, surety or endorser for Debtor dies or defaults in any
obligation or liability to Secured Party or any guaranty obtained in
connection with this transaction is terminated or breached.
If Debtor shall be in default hereunder, the indebtedness herein described and
all other indebtedness then owing by Debtor to Secured Party under this or any
other present or future agreement (collectively, the "Indebtedness") shall, if
Secured Party shall so elect, become immediately due and payable and the unpaid
principal balance of the indebtedness described in Paragraph 3, or in any
promissory note executed in connection herewith, shall bear interest at the rate
of 18% per annum (but in no event greater than the highest rate permitted by
relevant law) until paid in full. In no event shall the Debtor, upon demand by
Secured Party for payment of the Indebtedness, by acceleration of the maturity
thereof or otherwise, be obligated to pay any interest in excess of the amount
permitted by law. Any acceleration of Indebtedness, is elected by Secured Party,
shall be subject to all applicable laws, including laws relating to rebates and
refunds of unearned charges.
10. Secured Party's Remedies After Default; Consent to Enter Premises.
Upon Debtor's default and at any time thereafter, Secured Party shall have all
the rights and remedies of a secured party under the Uniform Commercial Code
and any other applicable laws, including the right to any deficiency remaining
after disposition of the Collateral for which Debtor hereby agrees to remain
fully liable. Debtor agrees that Secured Party, by itself or its agent, may
without notice to any person and without judicial process of any kind, enter
into any premises or upon any land owned, leased or otherwise under the real or
apparent control of Debtor or any agent of Debtor where the Collateral may be or
where Secured Party believes the Collateral may be, and disassemble, render
unusable and for repossess all or any item of the Collateral, disconnecting and
separating all Collateral from any other property. Debtor expressly waives all
further rights to possession of the Collateral after default and all claim for
injuries suffered through or loss caused by such entering and/or repossession.
Secured Party may require Debtor to assemble the Collateral and return it to
Secured Party at a place to be designated by Secured Party which is reasonably
convenient to both parties.
Secured Party may sell or lease the Collateral at a time and location of its
choosing provided that the Secured Party acts in good faith and in a
commercially reasonable manner. Secured Party will give Debtor reasonable notice
of the time and place of any public sale of the Collateral or of the time after
which any private sale or any other intended disposition of the Collateral is to
be made. Unless otherwise provided by law, the requirement of reasonable notice
shall be met if such notice is mailed, postage prepaid. to the address of Debtor
shown herein at least ten days before the time of the sale or disposition.
Expenses of retaking, holding, preparing for sale, selling and the like shall
include reasonable attorneys' fees and other legal expenses. Debtor understands
that Secured Party's rights are cumulative and not alternative.
11. Waiver of Defaults; Agreement Inclusive.
Secured Party may in its sole discretion waive a default, or cure, at Debtor's
expense, a default. Any such waiver in a particular instance or of a particular
default shall not be a waiver of other defaults or the same kind of default at
another time. No modification or change in the Security Agreement or any related
note, instrument or agreement shall bind Secured Party unless in writing signed
by Secured Party. No oral agreement shall be binding.
12. Financing Statements; Certain Expenses.
If permitted by law, Debtor authorizes Secured Party to file a financing
statement with respect to the Collateral signed only by Secured Party, and to
file a carbon, photograph or other reproduction of this Security Agreement or of
a financing statement. At the request of Secured Party, Debtor will execute any
financing statements, agreements or documents, in form satisfactory to Secured
Party which Secured Party may deem necessary or advisable to establish and
maintain a perfected security interest in the Collateral, and will pay the cost
of filing or recording the same in all public offices deemed necessary or
advisable by Secured Party. Debtor also agrees to pay all costs and expenses
incurred by Secured Party in conducting UCC, tax or other other searches against
the Debtor or the Collateral and such other fees as may be agreed.
13. Waiver of Defenses Acknowledgment.
If Secured Party assigns this Security Agreement to a third party ("Assignee"),
then after such assignment:
(a) Debtor will make all payments directly to such Assignee at such place as
Assignee may from time to time designate in writing;
(b) Debtor agrees that it will settle all claims, defenses, setoffs and
counterclaims it may have against Secured Party directly with Secured Party
and will not set up any such claim, defense, setoff or counterclaim against
Assignee, Secured Party hereby agreeing to remain responsible therefor;
(c) Secured Party shall not be Assignee's agent for any purpose and shall have
no authority to change or modify this Security Agreement or any related
document or instrument; and
(d) Assignee shall have all of the rights and remedies of Secured Party
hereunder but none of Secured Party's obligations.
<PAGE>
14. Miscellaneous.
Debtor waives all exemptions. Secured Party may correct patent errors herein
and fill in such blanks as serial numbers, date of first payment and the like.
Any provisions hereof contrary to, prohibited by or invalid under applicable
laws or regulations to be inapplicable and deemed omitted herefrom, but shall
not invalidate the remaining provision's hereof.
Except as otherwise provided herein or by applicable law, the Debtor shall have
no right to prepay the indebtedness described in Paragraph 3, or in any
promissory note executed in connection with this Security Agreement. Debtor and
Secured Party each hereby waive any right to a trial by jury in any action or
proceeding with respect to, in connection with, or arising out of this Security
Agreement, or any note or document delivered pursuant to this Security
Agreement. Debtor acknowledges receipt of a true copy and waives acceptance
hereof. If Debtor is a corporation, this Security Agreement is executed pursuant
to authority of its Board of Directors. Except where the context otherwise
requires, "Debtor" and "Secured Party" include the heirs, executors or
administrators, successors or assigns of those parties but nothing herein shall
authorize Debtor to assign Security Agreement or its rights in and to the
Collateral. If more than one Debtor executes this Security Agreement their
obligations under this Security Agreement shall be joint and several.
If at any time this transaction would be usurious under applicable law, then
regardless of any provision contained in this Security Agreement or in any other
agreement made in connection with this transaction, it is agreed that:
(a) the total of all consideration which constitutes interest under applicable
law that is contracted for, charged or received upon this Security Agreement
or any such other agreement shall under no circumstances exceed the maximum
rate of interest authorized by applicable law and any excess shall be
credited to the Debtor; and
(b) if Secured Party elects to accelerate the maturity of, or if Secured Party
permits Debtor to prepay the Indebtedness, any amounts which because of such
action would constitute interest may never include more than the maximum
rate of interest authorized by applicable law, and any excess interest, if
any, provided for in this Security Agreement or otherwise, shall be credited
to Debtor automatically as of the date of acceleration or prepayment.
15. Special Provisions.
See Special Provisions Instructions below.
The debtor shall have the right to pre-pay the contract for the amount then
owing under the following schedule: during the first twelve (12) month period on
a true actuarial basis plus 2%; during the remainder of the contract for the
amount then owing on a true actuarial basis. No unearned income shall apply
and the Rule of 78(or any form thereof) shall not apply. This special provision
clause shall supersede any other provision contained in this contract to the
contrary.
Dated:_____________,19_____ Debtor:
Secured Party:
The CIT Group/Equipment Financing, Inc. Mansur Industries Inc.
______________________________________ __________________________________
Name of individual, corporation Name of individual, corporation
or partnership or partnership
By____________________ By/s/ PIERRE MANSUR
Title___________ Title: President
1180 West Swedesford Road 8425 SW 129th Terrace
_________________________ ___________________________
Address Address
Berwyn PA 19312 Miami FL 33156
_________________________ ___________________________
City State Zip Code City State Zip Code
_______________________________________________________________________________
If Debtor is partnership, enter:
Partners' names Home addresses
_______________________________________________________________________________
SPECIAL PROVISIONS INSTRUCTIONS - The notations to be entered in the Special
Provisions section o document for use in ALABAMA, FLORIDA, GEORGIA, IDAHO,
NEVADA, NEW HAMPSHIRE and OREGON are shown In the applicable State pages of the
Loans and Motor Vehicles Manual.
_______________________________________________________________________________
NOTICE: Do not use this form for transactions for personal, family or household
purposes. For agricultural and other transactions subject to Federal or State
regulations, consult legal counsel to determine documentation requirements.
Agricultural purposes generally means farming, including dairy farming, but it
also includes the transportation, harvesting, and processing of farm, dairy, or
forest products if what is transported, harvested, or processed is farm, dairy,
or forest products grown or bred by the user of the equipment Itself. It does
not apply, for instance, to a logger who harvests someone else's forest, or a
contractor who prepares land or harvests products on someone else's farm.
_______________________________________________________________________________
IN LOUISIANA, form 5-SA-2305 (Addendum to Security Agreements 5-SA-1700,
5-SA-1702 and 5-SA-1703) must accompany this Agreement.
<PAGE>
STATE OF FLORIDA
UNIFORM COMMERCIAL CODE FINANCING STATEMENT FORM UCC-1 (REV.1993)
This Financing Statement is presented to a filing officer for filing pursuant
to the Uniform Commercial Code:
1. Debtor (Last Name First if an Individual) 1a. Date of Birth or FEI#
Mansur Industries, Inc.
1b. Mailing Address 1c. City, State 1d. Zip Code
8425 SW 129th Terrace Miami, FL 33156
2. Additional Debtor or Trade Name (Last Name First if an Individual
2a. Date of Birth or FEI#
2b. Mailing Address 2c. City, State 2d. Zip Code
3. Secured Party (Last Name First if an Individual)
The CIT Group/Equipment Financing, Inc.
3a. Mailing Address 3b. City, State 3c. Zip Code
1180 W. Swedesford Road Berwyn, PA 19312
4. Additional Secured Party (Last Name First if an Individual)
4a. Mailing Address 4b. City, State 4c. Zip Code
5. This Financing Statement covers the following types or Items or property,
[include description of real property on which located and owner or record
when required. If more space is required, attach additional sheet(s)]
One (1) Trumpf TC 200 CNC Punching Machine, S/N 070080 with Tooling Package
including all substitutions, additions, attachments, replacements,
accessions, and the proceeds of all of the foregoing.
6. Check only if Applicable:
___Products of collateral are also covered.
___Proceeds of collateral are also covered.
___Debtor is transmitting utility.
7. Check appropriate box: (One box must be marked)
___All documentary stamp taxes due and payable or to become due and payable
pursuant to s.201.22F.S., have been paid.
___Florida Doocumentary Stamp Tax is not required.
8. In accordance with s.679.402(2), F.S., this statement is filed without the
Debtor's signature to perfect a security interest in collateral:
___already subject to a security interest in another jurisdiction when it
was brought into this state or debtor's location changed to this state.
___which is proceeds of the original collateral described above in which a
security interest was pefected.
___as to which the filing has lapsed, Date filed__________________ and
previous UCC-1 file number_________________________________.
___acquired after a change of name, identity, or corporate structure of the
debtor.
9. Number of additional sheets presented: ____________________
10. Signature(s) of Debtor(s)
Mansure Industries, Inc.
/s/ PIERRE MANSUR, President
11. Signature(s) of Secured Party or if Assigned, by Assignee(s)
The CIT Group/Equipment Financing, Inc.
12. Return Copy to:
Address
Address
City, State, Zip
This Space for Use of Filing Officer
<PAGE>
____________________, 19____
THE CIT GROUP/EQUIPMENT FINANCING, INC.
1180 West Swedesford Road
_________________________
Address
Berwyn, PA 19312
_________________________
City & State
Gentlemen:
You are irrevocably instructed to disburse the proceeds of your loan to us,
evidenced by our Security Agreement of even date, as follows:
Payee Names and Addresses Amount
_____________________________________________ _________________
Trumpf, Inc.
The CIT Group/Equipment Financing, Inc. $251,910.00
(Non-Refundable Processing Fee)
$1,000.00
$
$
$
$
$
Total Proceeds $252,910.00
Very truly yours,
Mansur Industries, Inc.
_______________________________________________
By: /s/PIERRE MANSUR Title: PRESIDENT
Page 1 of 1
EXHIBIT 10.11
THE INSURED PIERRE GERARD MANSUR
POLICY OWNER MANSUR INDUSTRIES INC
FACE AMOUNT $1,000,000
INITIAL TERM
EXPIRY DATE NOV 9 1994
POLICY NUMBER 93 04; 982
THE EQUITABLE Life Assurance Society of the United States Agrees
/bullet/ To PAY the insurance benefits of this policy to the Beneficiary
upon receiving proof that the Insured died before the Term
Expiry Date; and
/bullet/ To PROVIDE YOU (THE POLICY OWNER) with the other rights and
benefits of this policy.
These agreements are subject to the provisions of this policy.
TEN DAYS TO EXAMINE POLICY - If for any reason you are not satisfied with
your policy, you may cancel it by returning the policy to us within 10 days
after you receive it. If you do, we will refund the premium that was paid.
/s/ RICHARD H. JENRETTE
Richard H. Jenrette, Chairman and Chief Executive Officer
/s/ MOLLY K. HEINES
Molly K. Heines, Vice President and Secretary
Yearly Renewable Term Plan. Insurance payable upon death before Term Expiry
Date. Renewable annually until Final Term Expiry Date shown on Page 3.
Renewal premiums may change subject to guaranteed maximums (see "Premium
Changes" on Page 4). Premiums payable to Term Expiry Date or earlier death.
Conversion Privilege. This is a non-participating policy.
No. 133-54
<PAGE>
Contents
Insurance Benefits 2
Term expiry date-Renewal 2
Policy owner and beneficiary 4
Premiums, grace, lapse, premium changes 4
Reinstatement 5
Conversion privilege 5
General provisions 6
Payment options 6
Any additional benefit riders and a copy of the application are at the back of
this policy.
IN THIS POLICY:-
"We ", "our" and "us" mean The Equitable Life Assurance Society of the United
States.
"You" and "your" mean the Owner of the policy at the time an Owner's right is
exercised.
INSURANCE BENEFITS
We will pay the insurance benefits of this policy to the Beneficiary when we
receive proof of the Insured's death.
These insurance benefits include the following amounts, which we will determine
as of the date of the Insured's death:
o the Face Amount of this policy shown on Page 3.
o PLUS any other ) benefits then due from riders
to this policy:
o PLUS or MINUS any adjustment for the last premium.
We will add interest to the resulting amount for the period from the date of
death to the date of payment. We will compute the interest at a rate we
determine but not less than the greater of (a) the rate we are paying on the
date of payment under the Deposit Option of Page 7: or (b) the rate required by
any applicable law.
We will pay these benefits only if premiums have been paid as called for by this
policy.
Payment of these benefits may also be affected by other provisions of this
policy. See Page 6 where we specify our right to contest the policy, what
happens if age or sex has been misstated, and the suicide exclusion. Special
exclusions or limitations (if any) are listed on Page 3.
TERM EXPIRY DATE .- RENEWAL
Term Expiry Date is the Initial Term Expiry Date shown on Page 3 unless the
policy is renewed. If it is renewed, the Term Expiry Date is the next policy
anniversary after the latest renewal. but not later than the Final Term Expiry
Date specified on Page 3.
You may renew this policy on any Term Expiry Date before the Final Term Expiry
Date. To do this you must pay the first premium for the new period on or before
the date it begins or within 31 days after that date. Scheduled and guaranteed
maximum renewal premiums are shown on Page 3. See Page 4 about changes in
scheduled renewal premiums.
<PAGE>
THE INSURED PIERRE GERALD MANSUR REGISTER DATE NOV 9, 1993
POLICY OWNER MANSUR INSUDTRIES INC DATE OF ISSUE NOV 9, 1993
FACE AMOUNT $1,000,000 ISSUE AGE, SEX 42, MALE
INITIAL TERM FINAL TERM
EXPIRY DATE NOV 9, 1994 EXPIRY DATE NOV 9, 2051
POLICY NUMBER 93 042 982 BENEFICIARY
MANSUR INDUSTRIES INC EMPLOYER
--------- BENEFITS AND PREMIUMS ----------
BENEFITS SEMI-ANUAL PREMIUM PERIOD PERIOD
LIFE INSURANCE $1,716.00 1 YEAR
THE FIRST PREMIUM IS $1,716.00 AND IS DUE ON OR BEFORE DELIVERY OF THE POLICY.
SUBSEQUENT PREMIUMS ARE DUE ON MAY 9, 1994 IN ACCORDANCE WITH THE ABOVE
PREMIUM TABLE.
---------- SEMI-ANNUAL RENEWAL PREMIUMS ----------
GUARANTEED
RENEWAL SCHEDULED MAXIMUM
DATE RENEWAL RENEWAL
NOV. 9 PREMIUM* PREMIUM
------ ----------- -----------
1994 $ 1,836.00 $ 2,416.00
1995 1,966.00 2,826.00
1996 2,126.00 3,366.00
1997 2,316.00 3,986.00
1998 2,506.00 4,676.00
1999 2,726.00 5,386.00
2000 2,966.00 6,126.00
2001 3,216.00 6,886.00
2002 3,436.00 7,316.00
2003 3,696.00 7,756.00
2004 3,996.00 8,186.00
2005 4,336.00 8,626.00
2006 4,686.00 9,326.00
2007 5,166.00 10,426.00
2008 5,676.00 11,646.00
2009 6,216.00 12,826.00
2010 6,796.00 13,776.00
2011 7,436.00 14,606.00
2012 8,086.00 15,356.00
2013 8,816.00 16,096.00
2014 9,626.00 16,896.00
2015 10,556.00 17,786.00
2016 11,596.00 19,306.00
2017 12,846.00 21,156.00
2018 14,266.00 23,276.00
2019 15,816.00 25,536.00
2020 17,496.00 28,246.00
2021 18,786.00 30,316.00
2022 20,896.00 33,646.00
2023 22,906.00 36,796.00
2024 25,066.00 40,206.00
2025 27,376.00 43,936.00
N/YRTET3 (1) MIM-RSO
133-54-3 PAGE 3 93-11-09 93-11-09 1322
(CONTINUED ON NEXT PAGE)
<PAGE>
THIS PAGE 3 - CONTINUED IS A PART OF POLICY NUMBER 93 042 982.
---------- SEMI-ANNUAL RENEWAL PREMIUMS ----------
GUARANTEED
RENEWAL SCHEDULED MAXIMUM
DATE RENEWAL RENEWAL
NOV. 9 PREMIUM* PREMIUM
------ ----------- -------------
2026 29,356.00 47,326.00
2027 32,796.00 53,076.00
2028 36,846.00 59,786.00
2029 40,816.00 67,496.00
2030 45,106.00 76,226.00
2031 50,036.00 86,416.00
2032 54,696.00 96,186.00
2033 59,876.00 107,476.00
2034 65,726.00 120,506.00
2035 72,196.00 135,076.00
2036 79,256.00 151,026.00
2037 82,616.00 158,406.00
2038 94,226.00 184,476.00
2039 101,936.00 201,386.00
2040 110,026.00 218,766.00
2041 118,486.00 236,506.00
2042 127,746.00 255.386.00
2043 137,526.00 274,676.00
2044 148,296.00 295,206.00
2045 163,686.00 324,276.00
2046 192,976.00 380,186.00
2047 234,046.00 456,916.00
2048 277,336.00 494,486.00
2049 323,236.00 494,486.00
2050 372,186.00 494,486.00
EE PREMIUM CHANGES - PAGE 4
________________________________
(2-2) MIM-RSO
N/YRTET3 PAGE 3-CONTINUED 93-11-09 93-11-09 1322
<PAGE>
ENDORSEMENT
In the event you need to present inquiries, obtain information about coverage or
need assistance in resolving complaints about this policy, please contact your
Agent. If you have additional questions, you may contact The Equitable or
Equitable Variable at the following address and telephone number, The Equitable
or Equitable Variable, Charlotte Service Center, 6301 Morrison Boulevard,
Charlotte, North Carolina 28211; Telephone: (704) 362-6200.
Please have your policy number available for any inquiries.
5.33-59 PAGE 3 - Continued
<PAGE>
POLICY OWNER AND BENEFICIARY
OWNER. The Owner of this policy is the Insured unless otherwise stated in the
application or later changed. As Owner, you can exercise all the rights in this
policy while the Insured is living. You do not need the consent of anyone who
has only a conditional or future ownership interest in this policy.
BENEFICIARY. The Beneficiary is as stated in the application, unless later
changed. If two or more persons are named, those surviving the Insured will
share equally ,unless otherwise stated.
We will pay any benefit for which there is no stated Beneficiary living at the
death of the Insured to the children of the Insured who then survive, in equal
shares. If none survive, we will pay the estate of the Insured.
CHANGES. While the Insured is living, you may change the Owner or Beneficiary by
written notice in a form satisfactory to us. You can get such a form from our
agent or by writing to us. The change will take effect on the date you sign the
notice, except that it will not apply to any payment we make or other action we
take before we receive the notice. If you change the Beneficiary, any previous
arrangement you made under the Payment Options provision on Page 7 is cancelled.
You may choose a Payment Option for the new Beneficiary in accordance with that
provision.
ASSIGNMENT. You may assign this policy, but we will not be bound by an
assignment unless we leave received it in writing. Your rights and those of any
other person referred to in this policy will be subject to the assignment. We
assume no responsibility for the validity of any assignment. An absolute
assignment will be considered as a change of ownership to the assignee.
PREMIUMS
AMOUNTS AND DUE DATES. Page 3 shows the amount and .due date of the premium for
the first policy year. It also shows scheduled renewal premiums based on the
initial rate scale; guaranteed maximum renewal premiums; and the premium due
dates for renewal periods. Scheduled renewal premiums are subject to change as
stated in the Premium Changes section. Each premium is payable on or before its
due date at our Home Office or premium collection office.
You may write and ask us to change the frequency of premium payment. If we
approve the change, the new premium will be determined on the rate scale for
this policy.
GRACE PERIOD. We allow a grace period of 31 days for payment of each premium,
after the first premium. The insurance will continue during the grace
period.
LAPSE. If a premium is not paid by the end of its grace period. the policy will
lapse as of the premium due date. If this occurs, all insurance ends at the
end of the grace period.
PREMIUM CHANGES. We have the right to change the scheduled renewal premiums for
the policy for any policy year. We will send you written notice of any such
change before the next premium payment is due. The actual premium for any policy
year may vary, but will never be more than the guaranteed maximum renewal
premium shown on Page 3 for that year. We will review the scheduled premiums
each year.
We will adjust the renewal premium only on a uniform basis for insureds of the
same insurance age, sex and class of risk, whose policies have been in force for
the same length of time. We will not change the premium or class of risk because
of an adverse change in the Insured's health, occupation or avocation. We will
base a premium change solely on future expectations as to mortality, investment
earnings, persistency and expenses. Our procedures and standards for premium
changes are on file, as required, with the insurance supervisory official of the
jurisdiction in which this policy is delivered.
PAGE 4
<PAGE>
REINSTATEMENT. You may reinstate this policy within five years after lapse, but
not later than the Final Term Expiry Date, if: (1) you provide evidence of
insurability satisfactory to us-, and (1) you pay all overdue premiums with
interest at 6% per year compounded annually.
PREMIUM ADJUSTMENT. We will add to the insurance benefits any part of the last
premium paid that applies to a period beyond the policy month in which the
Insured dies. If the Insured dies during the grace period of an unpaid premium,
we will deduct from the benefits the part of the overdue premium for one policy
month. These are the adjustments for the last premium referred to on Page 2.
CONVERSION PRIVILEGE
You may exchange this policy on any premium due date on or before the Term
Expiry Date for a new policy on the life of the Insured without evidence of
insurability: (1) if the date of exchange is on or before the policy anniversary
nearest the lnsured's 75th birthday; and (2) if all premiums have been (duly
paid; and (3) if there is a Disability Premium Waiver rider in effect in this
policy, the Insured is not totally disabled as defined in that rider. However,
see the section "Conversion During Disability.'
The Register Date of the new policy will be the date of exchange. Premiums for
the new policy will be based our rates in effect on that date. They will be for
the lnsured's then attained insurance age and for the same class of risk as for
this policy-. The first premium for the new policy must be paid on or within 31
days before the date of exchange.
THE NEW POLICY. The new policy will have an insurance amount equal to the amount
of insurance in effect on this policy. Or, you may choose any lower amount
allowed by our rules in effect on the date of exchange.
The new policy may be on any plan of insurance we offer on the date of exchange,
subject to our rules then in effect as. to plan, age and class of risk.
If additional benefit riders are in effect in this policy on the date of
exchange, you may choose that the new policy contain similar riders subject to
our rules in effect on its Register Date.
Except as to any additional benefit riders included in the new policy, the
suicide exclusion and incontestability periods of the new policy will be
determined from the date of issue of this policy instead of from the date of
issue of the new policy. We will tell you the amount of the first premium for
the new policy upon request.
CONVERSION DURING DISABILITY. We will issue a new policy with a Disability
Premium Waiver rider in exchange for this policy on any Current Term Expiry
Date you choose that is before the policy anniversary nearest the Insured's 65th
birthday if: 1) a Disability Premium Waiver rider is in effect in this policy on
the date of exchange: and 2) the Insured is then totally disabled as defined in
that rider.
If no earlier exchange is made, we will issue a new policy with a Disability
Premium Waiver rider in exchange for this policy on the policy anniversary
nearest the Insured's 65th birthday if premiums have been waived for at least
the five preceding policy years under a Disability Premium Waiver rider in this
policy.
The new policy will have an insurance .amount equal to the amount of insurance
in effect on this policy. It will be on the level premium whole life plan with
premiums payable for life that we then issue, subject to our rules in effect on
its Register Date as to plan. Its Register Date will be the date of exchange.
Premiums for the new policy will be based on our rates in effect on that date.
They will be for the Insured's then attained insurance age and for the same
class of risk as for this policy.
We will waive premiums for the new policy as stated in its Disability Premium
Waiver rider while total disability continues. (We will not waive premiums on or
after the policy anniversary nearest the lnsured's 65th birthday for a total
disability that began on or after the policy anniversary of this policy nearest
the lnsured's 60th birthday.)
PAGE 5
<PAGE>
GENERAL PROVISIONS
THE CONTRACT. We provide this insurance in consideration of payment of the
required premiums. This policy and the attached copy of the application for
it make LIP the entire contract.
The contract may not be modified, nor may any of our rights or requirements be
waived, except in writing signed by our President or one of our Vice Presidents.
INCONTESTABILITY. We have the right to contest the validity of this policy based
on material misstatement made in the application for this policy. However, we
will not contest the validity of this policy after it has been in effect during
the lifetime of the Insured for two years from the Date of Issue shown on Page
3. No statement shall be used to contest a claim unless contained in the
application.
All statements made in the application are representations and not warranties.
See any additional benefit riders for modifications of this provision that apply
to them.
AGE AND SEX. If the Insured's age or sex has been misstated, any benefits will
be those that the premium paid would have purchased at the correct age and sex.
SUICIDE EXCLUSION. If the Insured commits suicide, while sane or insane, within
two years after the Date of Issue shown on Page 3, our liability will be limited
to the Payment of' a single sum equal to the premiums paid.
POLICY PERIODS AND ANNIVERSARIES. Policy years, policy months, policy
anniversaries and premium periods are measured from the Register Date. Each
policy month begins on the same day in each calendar month as in the Register
Date.
POLICY CHANGES. You may change this policy to another plan of insurance or add
additional benefit riders or make other changes, subject to our rules at the
time of change.
PAYMENT OPTIONS
Instead of having the insurance benefits paid immediately in one sum, you can
choose another form of payment for all or part of the benefit. If you do not
arrange for this before the Insured dies, the Beneficiary will have this right
when the Insured dies. Arrangements you make, however, cannot be changed by the
Beneficiary after the Insured's death.
The options are:
1. DEPOSIT OPTION: The sum is left on deposit for a period mutually agreed
upon. We pay interest at the end of every month, every 3 months, every
6 months or every 12 months, as chosen.
2. INSTALLMENT OPTIONS:
A. FIXED PERIOD: We pay the sum in equal installments for a specified
number of years (not more than 30). The installments will be at least
those shown in the Table of Guaranteed Payments on Page 8.
B. FIXED AMOUNT: We pay the sum in installments as mutually agreed upon
until it, together with interest on the unpaid balance, is used up.
3. LIFE INCOME OPTIONS:
We pay the sum as a monthly income for life in an amount we determine. The
amount of the monthly payment will be at least that shown in the Table of
Guaranteed Payments on Page 8. We guarantee payments for life and in any
event for 10 years (called "10 Years Certain"), 20 years (called "20 Years
Certain"), or until the payments we make equal the amount applied (called
"Refund Certain"), according to the "certain" period chosen.
4. OTHER: We will apply the sum under any other option requested that we
make available at the time of the Insured's death.
PAGE 6
<PAGE>
We guarantee interest under Option I at the rate of 3% a year and under
Option 2 at 31/2 % a year. We may raise these guaranteed rates. We may also
allow excess interest under Options I and 2.
The payee under an option may name and change a successor payee for any
amount we would otherwise pay the payee's estate.
Any arrangements involving more than one of the options, or a payee who is
not a natural person (for example, a corporation) or who is a fiduciary, must
have our approval. Also, details of all arrangements will be subject to our
rules at the time the arrangement takes effect. These include rules on: the
minimum amounts we will apply under an option and minimum amounts for
installment payments; withdrawal or commutation rights; naming payees and
successor payees; and proving age and survival.
Choices (or any later changes) under these options will be made and will
take effect in the same way as a change of Beneficiary. Amounts applied under
these options will not be subject to the claims of creditors or to legal
process. to the extent permitted by law.
PAGE 7
<PAGE>
PART 1: APPLICATION FOR LIFE INSURANCE TO:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(THE EQUITABLE) HOME OFFICE: 787 Seventh Avenue, New York, NY 10019
1. PROPOSED INSURED Please print in ink. (THE EQUITABLE)
Home Office: 787 Seventh Avenue, New York, NY 10019
b. Name: MR. PIERRE GERARD MANSUR
c. Date of Birth: Mo. 12 Day 29 Year 1951
d. Age Nearest Birthday 42
e. Sex X M
f. Place of Birth: Aruba Netherland
g. Soc. Sec No. 073448390
h. Previous/Other Name (If Applicable) N/A
i. U.S. Citizen X Yes
j. Current Occupation(s): (1) Title: Pres. Mansur (2) Duties: Executive
(3) How Long: 2 Yrs.
k. Residence
Care of: CIO
Current 11117 SW 79th AVENUE
MIAMI, FL 33134
Years There: 2
Previous: N/A
l. Tel. (1) Home 305-667-4849 (2) Business 305-232-6768
m. Currently empoyed? X Yes
n. Employer Name: Mansur Industries, Inc.
o. Years Employed: 2
p. Employer Address: 8425 S.W. 129 Terrace, Miami, Florida 33156
2. APPLICANT (If not proposed Insured)
a. Name: First Middle Last
b. Relationship to Proposed Insured
c. Date of Birth Mo. Day Year
d. Sex M F
e. Place of Birth:
f. Current Occupation(s): (1) Title (2) Duties If less than 1 year at
current occupation, give previous in Special Instructions
g. Address: Same as Question 1.k Residence or Question 1.p Business
Residence: No. and Street, Apt/Suite/Bldg
City, State, Zip
Business: No. and Street
City, State, Zip
3.POLICY OWNER
a. The Owner is: (1) Proposed Insured (2) Applicant (3) X Other
(a) Individual
(b) X Corporation
(c) Partnership
(d) Trust Dated Mo. Day Year
(e) Qualified (Illigible)
(f) Guardian
(g) Executor
(h) Name of Person First Middle Last
Name of Firm or Plan: MANSUR INDUSTRIES, INC.
(i) If an individual, indicate: Mr. Mrs. Ms. Miss Other
(j) Relationship to Insured EMPLOER
b. Owner's Mailing Address: Same as Current Residence (1.k) or Applicant's
Residence (2.g) Other:
Care of CIO
8425 SW 129 Terrace
Miami, FL 33156
c. Answer if Policyowner is not Proposed Insured:
(1) Soc. Sec. Or Tax I.D. Number 650226813
(2) Date of Birth: Same as 2.c or Mo. Day Year
(3) Phone: 305-232-6768
d. Successor Owner (if desired) Give full name: [section in the middle of
the page is missing so text here is omitted as it would be
fragmented]
BENEFICIARY FOR INSURANCE ON PROPOSED INSURED. Include Name and Relationship to
Proposed Insured.
a. Primary Beneficiary(ies): Name(s)
(1) MANSUR INDUSTRIES, INC. Relationship EMPLOYER
b. Contingent Beneficiary(ies)
(1) (2)
Note: Unless otherwise requested, the contingent beneficiary will be the
surviving children of the Insured in equal shares. If none survive, payment will
be made to the insured's estate. The Beneficiary(ies) under any Term Insurance
Rider on any Additional Insured or on a Child will be as stated in those riders,
unless otherwise designated in Special Instructions. In any such designation,
give full lname and relatinship of beneficiary(ies)to the Insured.
180-301N-F
<PAGE>
5. PLAN DESCRIPTION AND PREMIUM PAYMENT METHOD
a. [TERM - EQUITABLE TERM II]
b. Amount of Insurance $ 1,000,000
c. Premium Mode: Annual X Semi-Annual Quarterly System-Matic
(Complete S-M form)
d. Loan Interest Rate Adjustable Fixed [N/A]
e. Salary Allotment
(1) Unit Name
(2) Register Date
(3) Unit/Sub Unit No.
(4) Payroll No.
(5) Allotor's Name (If other than Proposed Insured) (6) Allotor's No.
(7) Divisible by 2 4
f. Military Allotment: Branch
Register Date
6. OPTIONAL BENEFITS
___Accidental Death Benefit* (specify amount) $ ___Disability Premium
Waiver* (Not Available for Survivorship WL) ___Automatic Premium Loan (Not
for Term Policies) ___Option to Purchase Add'l Ins. (Issue ages to 37 only)
$ ___Paid-up Additional Rider: (i) Single Premium $
(ii) Recurring Premium $ paid mode
___Summplemental Insurance Rider $
Target Death Benefit $
* JUVENILLE LIMITATION: If applied for, the Accidental Death Benefit is payable
only if the Child dies as a result of an accident after the Child's first
birthday; the Disability Waiver Benefits are effective only if the Child
becomes totally disabled onor after the Child's 5th birthday.
TERM RIDERS: [ONLY ONE MAY BE ELECTED FOR INSURED. NONE AVAILABLE IF PROPOSED
INSURED AS A CHILD ISSUE AGE 0-14)]
Decreasing Term:
[ ] Family Income: Years $ Per Month
[ ] Renewable Term (1) On Insured $
(2) On Add'l Insured ** $
[ ] Children's Term** $ Unit
**If coverage is elected complete applicable parts of Question 8, and answer
Question 10 through 16 with respect to the Additional Insured and/or Children
for Term Insurance Rider.
SURVIVORSHIP WL RIDERS:
[ ] Supplemental Insurance Rider $
Target Death Benefit $
[ ] Survivorship PUA Rider (i) Single Premium $
(ii) Recurring premium $ paid mode
[ ] Yearly Renewable Term at First Death $
[ ] Option to Split Upon Divorce [ ] Estate Protector
7. DIVIDEND ELECTIONS (Not available for Term Policies) [ ] Additions (MUST
CHOOSE IF SELECTED) [ ] Accumulations [ ] Plan "AD" Term Dividend [ ] Plan "B"
Provision [ ] Premiums, Balance to Additions [ ] Cash
8. COMPLETE FOR PROPOSED ADDITIONAL INSURED, CHILDREN'S TERM RIDER, JUVENILE
INSURANCE OR SUPPLMENTAL PROTECTIVE BENEFIT Also answer Questions 10 through
16 with respect to Proposed Additional Insured, Children under Children's
Term Rider, or Applicant if electing Supplemental Protective Benefit.
a. Title: [ ] Mr. [ ] Mrs. [ ] Ms. [ ] Miss [ ] Other Title
b. Proposed Add'l Insured:
First Middle Last
Date of Birth Mo. Yr. Age Nearest Birthday Sex [ ]M [ ] F
Place of Birth:
Soc. Sec. No. Previous/ Other Name (If Applicable)
Relationship of Owner to Add'l Insured: State of Residence:
Current Occupation(s)(1)Title: (2)Duties: (3)How Long?
If less than 1 year at current occupation, give previous in Special
Instructions Children for Term Insurance Rider (Use Special Instructions if
more space is needed.)*
First Middle Last
Date of Birth M. Day Yr. Sex [ ] M [ ] Relationship to Owner
First Middle Last
Date of Birth M. Day Yr. Sex [ ] M [ ] Relationship to Owner
First Middle Last
Date of Birth M. Day Yr. Sex [ ] M [ ] Relationship to Owner
First Middle Last
*Note: To be eligible, children (including stepchildren and legally adopted
children) must not have reached their 18th birthday. Coverage does not
begin until a child is 15 days old.
d. For Juvenile Insurance (Ages 0-14)(1) Will there be more life insurance in
force on this Child than on any other child in the family? [ ] Yes [ ] No
If "Yes", explain (2) Total Life Insurance in effect on Applicant: $ e. [ ]
Supplemental Protective Benefit. Give Applicant's (i) Height Ft. In.
(ii) Weight lb.
9. OPAI. COMPLETE IF EXERCISING OPTION TO PURCHASE ADDITIONAL INSURANCE
IF OPTION IS UNDER INDIVIDUAL POLICY:
a. Regular; (2) [ ] Birth or Adoption; Child's Name ;
Date of Birth or Adoption / /; (3) [ ] Alternate
b. original policy no. .
c. Option Date / /
d. Option Amount $
e. If applying for disability Premium waiver, is Propsed Insured now totally
disabled as defined in the Disability Premium Waiver Provision of the
original policy indicated above in b.? [ ] Yes [ ] No
f. OPTION IS UNDER A GROUP POLICY: a. Existing original policy no.
b. Option Date / /
c. Employer's Name
d. Maximum Amount Available Under Option $
This application is made under a provision in the existing policy indicated in
9.b. above permitting the purchase of additional individual life insurance (the
"Option Provision"). If this application is made within the time allowed and in
accordance with the other terms in the Option Provision, including timely
payment of the full first premium for the additional insurance, then the
additional insurance shall take effect upon the terms of the policy the Insurer
would issue. Otherwise, the additional insurance shall not take effect. (ANSWER
QUESTIONS 10 THROUGH 16 ONLY IF EVIDENCE OF AVAILABILITY IS REQUIRED IN
CONNECTION WITH AN OPTIONAL BENEFIT OR ANY EXCESS OF THE INSURANCE AMOUNT
APPLIED FOR OVER THE INSURANCE AMOUNT PERMITTED BY THE OPTION PROVISION.)
<PAGE>
OTHER INFORMATION For any "Yes" response, provide full details under Section 17
HOW MANY PERSON PROPOSED FOR INSURANCE: YES NO
10. a. Ever had a driver's license suspended or revoked, or within the
last 3 years been convicted of 2 or more moving violations or
driving under the influence of alcohol or drugs? X
b. Any plans to travel or reside outside the United States? X
c. Any other life insurance now in effect or application now
pending? X
(Give companies and amounts and policy numbers if Equitable.)
d. Been disabled for 2 or more weeks within the last 2 years? X
11. a. In the last year flown other than as a passenger or plan to
do so? X
If "Yes," enter total flying time at present hours; last
12 mos. hours; next 12 mos. est. hours.
b. Engaged within the last year or any plan to engage in motor
racing on land or water, underwater diving, skydiving,
ballooning, hang gliding, parachuting or flying ultra-
light aircraft? (If "Yes," complete Avocation Supplement.) X
c. Ever had an application for life or health insurance that
was declined, required an extra premium or other modification? X
d. Replaced or changed any existing insurance or annuity (or
plan to do so) assuming the insurance applied for will be
issued? (If "Yes", state companies, plans and amounts.) X
ANSWER QUESTIONS 12-16 ONLY IF NON-MEDICAL For any "Yes" response,
provide full details under Section 17.
12. a. Proposed insured: Height Ft. In.; Weight lb.
b. Additional insured: Height Ft. In.; Weight lb.
HAS ANY PERSON PROPOSED FOR INSURANCE:
13. a. Ever had or been treated for heart trouble, stroke, high
blood pressure, chest pain, diabetes, tumor, cancer,
respiratory or neurological disorder?
b. In the last 5 years, consulted a physician, or been examined
or treated at a hospital or other medical facility?
(Include medical check-ups in the last 2 years. Do not
include colds, minor injuries or normal pregnancy.)
14. In the last 12 months: a. Smoked cigarettes? X
b. Used any other form of tobacco? X
15. In the last 10 years:
a. Used, except as legally prescribed by a physician,
tranquilizers, barbiturates or other sedatives; marijuana,
cocaine, hallucinogens or other mood-altering drugs;
heroin, methadone or other narcotics; amphetamines or
other stimulants; or any other illegal or controlled
substances?
b. Received counseling or treatment regarding the use of
alcohol or drugs including attendance at meetings or
membership in any self-helf group or program such as
Alcoholics Anonymous or Narcotics Anonymous?
16. In the last 10 years, been:
a. Diagnosed by a member of the medical profession as having
Acquired Immune Deficiency Syndrome (AIDS) or AIDS-Related
Complex (ARC)?
b. Treated by a member of the medical profession for AIDS
or ARC?
17. DETAILS/ADDITIONAL INFORMATION For each "Yes" answer give Question
Number, name of person(s) affected, and full details. For 13-16
include conditions, dates, durations, treatment and results, and
names and addresses of physicians and medical facilities. Attach
additional sheet, if more space needed.
QUES. NO. NAME OF PERSON DETAILS
1f Pierre Pierre is a U.S. citizen
18. SPECIAL INSTRUCTIONS/ADDITIONAL INFORMATION
a. [ ] Preliminary Term to: Month Day Year
b. [ ] Date ot save insurance age:
c. [ ] Issue with Qualified Plan Riders [ ] Trusted [ ] Non-Trusted
[ ] Unisex Rates
Other: Applicant Smokes Cigarettes
Note: Insured is an owner of Mansur Industries.
<PAGE>
19. COMPLETE IF MONEY IS PAID OR AN APPROVED PAYMENT AUTHORIZATION IS
SIGNED BEFORE THE POLICY IS DELIVERED: Have the undersigned read and do they
agree to the conditions of The Equitable's Temporary Insurance Agreement,;(I)
THE REQUIREMENT THAT ALL OF THE CONDITIONS IN THAT Agreement must be met before
any temporary insurance takes effect, and (ii) the $500,000 insurance amount
limitation? (checked Yes)
Yes No (, If "No," or if any Person Proposed for Insurance has been diagnosed
or treated for Acquired Immune Deficiency Syndrome (AIDS) or AIDS-Related
Complex (ARC) by a member of the medical profession within the last 10 years
or had cancer, a stroke or a heart attack within the last year, a premium may
not be paid nor any approved payment authorization signed before the policy is
delivered).
X Amount Paid: $1716.00.(DRAW CHECKS PAYABLE TO THE EQUITABLE.)
(initialed box) APPROVED PAYMENT AUTHORIZATION SIGNED
20.SOCIAL SECURITY OR TAX I.D. NUMBER CERTIFICATION. 1, the proposed
policyowner, by my signature below, certify under penalties of perjury
that (I) the number shown in question 3.c. (1) or 1.g. of this form
is my correct taxpayer identification number , and (ii) I am not
(checked) subject to a backup withholding order issued by the Internal
Revenue Service. I understand that failure to furnish the correct
information may subject me to Federal backup withholding.
AGREEMENT. Each signer of this application agrees that:
(1). The statements and answers in all parts of this application are true
and complete to the best of my (our) knowledge and belief, The
Equitable may rely on them in acting on this application.
(2). The Equitable's Temporary Insurance Agreement states the conditions
that must be met before any insurance takes effect it money is paid
or an approved payment authorization is signed, before the policy is
delivered. Temporary Insurance is not provided for a policy or benefit
applied for under the terms of a guaranteed insurability option or a
conversion privilege.
(3). Except as stated in the Temporary Insurance Agreement, no insurance
shall take effect on this application ' (a) until a policy is delivered
and the full initial premium for it is paid, or an approved payment
authorization is signed, while the person(s) proposed for insurance is
(are) living: (b) before any Register Date specified in this
application; and (c) unless to the best of my (our) knowledge and
belief the statements and answers in all parts of this application
continue to be true and complete, without material change, as of the
time such premium is paid or an approved payment authorization is
signed.
(4). No agent or medical examiner has authority to modify this Agreement or
the Temporary Insurance Agreement, nor to waive any of The Equitable's
rights or requirements. The Equitable shall not be bound by any
information unless it is stated in Application Part 1 or Part 2.
ACKNOWLEDGEMENT AND AUTHORIZATIONS
UNDERWRITING PRACTICES. I (We) have received a statement of the underwriting
practices of The Equitable which describes how and why The Equitable obtains
information on my insurability, to whom such information may be reported and how
I may obtain it. The statement also contains the notice required by the Fair
Credit Reporting Act.
AUTHORIZATIONS.
TO OBTAIN MEDICAL INFORMATION. I (we) authorize any physician, hospital,
medical practitioner or other facility, insurance company, and the
Medical Information Bureau to release to The Equitable and its legal
representative any and all information they may have about any
diagnosis, treatment and prognosis regarding my physical or mental condition.
TO OBTAIN NON-MEDICAL INFORMATION. I (we) authorize any employer, business
associate, government unit, financial institution, Consumer Reporting Agency.
and the Medical Information Bureau to release to The Equitable and its legal
representative any information they may have about my occupation, avocations,
finances, driving record, character and general reputation. I (we) authorize The
Equitable to obtain investigative consumer reports, as appropriate.
TO USE AND DISCLOSE INFORMATION. I (we) understand that the information that I
(we) authorize The Equitable to obtain will be used by The Equitable to help
determine my insurability or my eligibility for benefits under an existing
policy. I (we) authorize The Equitable to release information about my
insurability to its insurers, contractors and affiliates, my (our) Equitable
Agent, and to the Medical Information Bureau, all as described in the statement
of The Equitable's underwriting practices or to other persons or businesses
performing business or legal services in connection with my application or claim
of eligibility for benefits. or as may be otherwise lawfully required, or as I
(we) may further authorize. I (we) understand that I (we) have the right to
learn the contents of any report of information (generally, through my
physician, in the cabs of medical information).
COPY OF AUTHORIZATIONS. I (we) have a right to ask for and receive a true copy
of this Acknowledgment and Authorizations signed by me (us). I (we) agree that a
reproduced copy will be as valid as the original.
DURATION. I (we) agree that these authorizations will be valid for 12 months
from the date shown below.
Dated at City: Miami X /s/ Pierre G. Mansur
State: Florida Signature of Proposed Insured or of Applicant if
on 10/4/93 1993 Proposed Insured is a Child, Issue Age 0-14.
Nature of Agent X____________________________________
Signature of Proposed Additional Insured, if any
X____________________________________
Signature of Applicant if not Proposed Insured or
Owner
X /s/ Pierre G. Mansur, CEO,
MANSUR INDUSTRIES, INC
Signature(s) of Owner if not Proposed Insured or
Applicant)
(If a corporation, show firm's name and signature
of authorized officer)
No. A 31640
<PAGE>
LARGE AMOUNT SUPPLEMENT To:
X The Equitable Life Assurance Society of the United States
0 Equitable Variable Life Insurance Company
0 The Equitable of Colorado, Inc.
Instructions: Complete Section I and applicable Section(s) 11 (Personal
Insurance ) or III (Business Insurance)
PROPOSED INSURED's
NAME Pierre Gerard Mansur ASU (Alpha)/App. No.512/A 31640
First Middle Last
Section I - General Information
(Complete in all instances)
A. Insurance In Force (All Companies) B. Insurance Applied For (All Companies)
Purpose Face Amount Face Amount
Personal $ 500k Term $ 0
Business $0 $1,000,000
Total In Force 500k Amount applied for
elsewhere is []competitive [] additional
C. Financial Information:
1. Income:
Gross Annual Compensation:
(e.g. Salary, Commissions,
Bonuses, etc.) $ 1OO,OO0 $0
(Current Rate) (Rate 1 year previously)
Gross Annual Investment
and Other Income:
(e.g. Dividends, Interest,
Net Real Estate Income, etc.) $ 0 $0
(Past 12 months) (Preceding 12 months)
Total Cash Income before taxes $100,000 $0
2. Net Personal Worth: Current
Assets: $2,000,000
Liabilities (including mortgages):$ 30,000
Net Worth: $1,970,000
SECTION II - PERSONAL INSURANCE
(Complete only when Applying for Personal Insurance)
PURPOSE (Check appropriate box(s) and answer all supplemental questions.)
0 Family Income 0 Education Fund
0 Gift 0 Mortgage Protection
0 Personal Loan Collateral (other than mortgage protection) Answer
supplemental questions under Business Loan Collateral in Section III, C3.
0 Estate Settlement
Taxable Estate $ ______________
Estimated Settlement Costs (taxes and administration expenses) $______
Total Liquid Assets $
0 Other (specify)
The above statements and answers are true and complete to the best of my
knowledge and belief I agree that such statements and answers shall be made part
of the application for insurance or request for policy change or reinstatement,
as the case may be. The Insurer may rely on them in acting on this application.
Dated at Miami FL on 10/4 1993
x Pierre G. Mansur
Signature of Proposed Insurer, or Applicant if Proposed Insured is a
Child
Witnessed by illegible
Signature of Agent
<PAGE>
SECTION III - BUSINESS INSURANCE
(Complete only when applying for Business Insurance)
A. Type of Organization :
Sole Proprietorship Partnership X Corporation
Proposed Insured's Percentage Ownership: 80 %
B. Financial Information:
Total Business Assets: Total Liabilities:
$ 1,500.000 $500,000
Total Business Net Worth:
$1,500,000 $900,000
(Current year) (Previous Full Year)
Estimated Fair Market Value $______________
GROSS ANNUAL SALES
Last Full Calendar Year
-$0-
Previous Full Calendar Year
-$0-
Answering this question is optional; however,
if the amount applied for exceeds the appropriate
amount of insurance limit as described on card 4 of the Agent's Guide to
Financial Underwriting, this question must be answered Net Profit After Taxes
(Last 3 Years
19___$__________________
19___$__________________
19___$__________________
C. Purpose: (Check appropriate box(s) and answer all supplemental questions.)
YES NO
1.[] BUY-SELL/STOCK REDEMPTION
Is there a written buy-sell/stock redemption
Is this a section 303 Redemption? (If yes, complete Estate
Settlement portion of Section II.
Are all other parties to agreement already covered by or
applying for comparable amounts of insurance? (If no, explain
in Section D.)
2. X KEY PERSON:
Are all other key persons covered by or applying for
comparable amounts of insurance? (If no, explain in
Section D.)
Why is Proposed Insured considered "Key"?
(Provide details in Section D.)
3.Business Loan Collateral:
Is insurance required by the creditor? 0 Yes 0 NO
Name of creditor/lending institution___________________________
What is the purpose and amount of the loan?
Date loan was committed ______
If not yet committed, explain.
4.Deferred Compensation/Salary Continuation
Is there a written plan? 0 Yes X No
Are all other eligible individuals covered by or applying for
comparable amount of insurance? 0 Yes X No
5.Other (specify)
D. ADDITIONAL INFORMATION:
2 Sole Key Employee
2 He is the inventor & Designer of a newly patented
industrial machine.
The above statements and answers are true and complete to the best of my
knowledge and belief. I agree that such statements and answers shall be made
part of the application for insurance or request for policy change or
reinstatement, as the case may be. The Insurer may rely on them in acting on the
application. Or making the policy change if reinstatement.
Dated at: Miami Florida on 10-12-93 X Pierre G. Mansur Signature of Proposed
Insured
<PAGE>
APPLICATION PART 2 TO:[ ] THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES [ ] EQUITABLE
VARIABLE LIFE INSURANCE COMPANY [ ] THE EQUITABLE
OF COLORADO, INC.
REASON FOR SUBMISSION OF THIS FORM:
[ ] New Policy [ ] Policy change [ ] Reinstatement
1. a. Proposed Insured First Name Middle Initial Last Name
(PLEASE PRINT) PIERRE G. MANSUR
b. Height: 5 ft. 11 in.
c. Weight: 172 lbs.
d. Birth Date: Mo. 12 Day 29 Yr. 51
e. [x] Male [ ] Female
2. a. Name and address of personal physician (or
medical facility used instead): (If none, so state) (NONE)
b. Date and reason last consulted if within the last 5 years:
c. What treatment was given or recommended? (If none, so state)
(For all "Yes" answers to questions 3-9, circle items that apply.)
3. Has Proposed Insured ever had or been treated for: YES NO
a. Disease or disorder of eyes, ears, nose or throat? X
b. Dizziness, fainting, convulsions, paralysis or stroke;
psychiatric, psychological or emotional disturbance;
mental or nervous disease or disorder? X
c. shortness of breath; blood spitting; bronchitis, asthma,
emphysema, tuberculosis or other chronic respiratory
disease or disorder? X
d. Chest pain, palpitation, high blood pressure, rheumatic fever,
heart murmur, heart attach or other disease or disorder of the
heart or blood vessels? X
e. Ulcer, hernia, colitis, intestinal bleeding, jaundice,
hemorrhoids, or other disease or disorder of the stomach,
intestines, liver or gallbladder? X
f. Sugar, albumin, blood or pus in urine; stone or other disease or
disorder of kidney or bladder? X
g. Diabetes, cyst, tumor, or cancer; thyroid or glandular disorder;
skin disease or disorder? X
h. Neuritis, arthritis, gout, or disease of the muscles or bones,
including the back, or joints? X
i. Deformity, lameness or amputation? X
j. Allergies; anemia; other blood or lymph disease or disorder? X
k. Disorder of prostate, reproductive organs, breasts, menstruation
or pregnancy? X
4. Is Proposed Insured now under observation or taking treatment? X
a. Diagnosed by a member of the medical profession as having
Acquired Immune Deficiency syndrome (AIDS) or AIDS-Related
complex (ARC)? X
b. Treated by a member of the medical profession for AIDS or ARC? X
6. Has Proposed Insured, within the last 10 years:
a. Used, expect as legally prescribed by a physician, tranquilizers;
barbiturates or other sedatives; marijuana, cocaine, hallucinogens
or other mood-altering drugs; heroin, methadone or other narcotics;
amphetamines or other stimulants; or any other illegal or controlled
substances? X
b. Received counseling or treatment regarding the use of alcohol or
drugs? X
7. Has Proposed Insured's weight changed by more than [illegible] pounds
in the last 6 months? X
8. Other than as stated in answers to Questions 2-6, has Proposed
Insured, within the last 5 years:
a. Consulted or been examined or treated by any physician or
practitioner? X
b. Had any illness, injury, or surgery? X
c. Been a patient in or been examined or treated at a hospital, clinic,
sanatorium, or other medical facility? X
d. Had electrocardiogram, X-ray, other diagnostic test? X
e. Been advised to have any diagnostic test, hospitalization,
treatment or surgery which was not completed? X
9. Has Proposed Insured, within the last 12 months:
a. Smoked cigarettes? X
b. Used any other form of tobacco? (Give full details.) X
Age if Age at
10.Family History: Living Cause of Death Death
Father 0 Rheumatic heart disorder 44
Mother 69 -- --
Brothers/Sisters 42 -- --
DETAILS FOR "YES" ANSWERS. Include: I. Question Number.
II. Diagnosis and Treatment III. Results. IV. Dates and Duration.
V. Names and Addresses of all attending physicians and medical
facilities. (If additional space is needed, please attach a
separate sheet, dated signed and witnessed as below.)
#3D & 4 TAKES TENOVMIN FOR HIGH BLOOD PRESSURE SINCE ABOUT FIVE
OR SIX YEARS AGO. HE TAKES HALF OF A TAB A DAY. PRESERVI - DAY
BY DAY. RICHARDS MARAVA MD IN BROOKLYN, NEW YORK, NO COMPLICATIONS.
SA SMOKES CLOSE TO A PACK OF CIGARRETES DAILY.
The above statements and answers are true and complete to the best of my
knowledge and belief. I agree that such statements and answers shall be part of
the application for insurance or request for policy change or reinstatement, as
the case may be. The Insurer may relay on them in acting on the application or
making the policy change or reinstatement.
Dated at Miami, FLA 10-12-93
City State Mo. Day Yr.
X /s/ PIERRE G. MANSUR
Signature of Proposed Insured
Witness (Must be Examiner or Nurse/Technician): [ILLEGIBLE]
<PAGE>
<TABLE>
<CAPTION>
Table of Guaranteed Payments
(MINIMUM AMOUNT FOR EACH $1,000 APPLIED)
OPTION 2A OPTION 3
FIXED PERIOD INSTALLMENTS MONTHLY LIFE INCOME
Number Monthly Annual
of Year's
Installments Installments Installments 10 years Certain 20 Years Certain Refund Certain
Age Male Female Male Female Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.70 $1000.00 50 $4.50 $3.96 $4.27 $3.89 $4.28 3.87
2 43.08 508.60 51 4.58 4.02 4.32 3.94 4.35 3.93
3 29.21 344.86 52 4.67 4.09 4.38 4.00 4.42 3.99
4 22.28 263.04 53 4.75 4.16 4.44 4.06 4.50 4.05
5 18.12 213.99 54 4.85 4.24 4.50 4.12 4.58 4.11
55 4.94 4.32 4.56 4.18 4.66 4.18
6 15.36 181.32 56 5.04 4.40 4.62 4.24 4.74 4.25
7 13.38 158.01 57 5.15 4.49 4.68 4.31 4.83 4.33
8 11.91 140.56 58 5.26 4.58 4.74 4.38 4.93 4.41
9 10.76 127.00 59 5.37 4.68 4.81 4.45 5.03 4.49
10 9.84 116.18
60 5.49 4.78 4.86 4.52 5.13 4.58
61 5.62 4.89 4.92 4.59 5.24 4.67
11 9.09 107.34 62 5.75 5.00 4.98 4.66 5.35 4.77
12 8.47 99.98 63 5.88 5.12 5.04 4.73 5.48 4.88
13 7.94 93.78 64 6.03 5.25 5.09 4.80 5.60 4.99
14 7.49 88.47
15 7.11 83.89 65 6.17 5.39 5.14 4.88 5.74 5.10
66 6.32 5.53 5.19 4.95 5.88 5.22
67 6.48 5.68 5.24 5.01 6.03 5.35
16 6.77 79.89 68 6.64 5.83 5.28 5.08 6.18 5.49
17 6.47 76.37 69 6.80 6.00 5.32 5.14 6.38 5.64
18 6.20 73.25 70 6.97 6.17 5.33 5.20 6.33 5.79
20 5.76 67.98 71 7.15 6.34 5.38 5.26 6.71 5.96
72 7.32 6.53 5.41 5.30 6.11 6.13
73 7.50 6.72 5.43 5.35 7.12 6.32
21 5.37 65.74 74 7.67 6.92 5.45 5.38 7.34 6.52
22 5.40 63.70
23 5.24 61.85 75 7.85 7.12 5.47 5.42 7.58 6.73
24 5.10 60.17 76 8.02 7.32 5.48 5.44 7.82 6.96
25 4.97 58.62 77 8.19 7.53 5.40 5.46 8.00 7.21
78 8.36 7.75 5.50 5.48 8.38 7.47
79 8.52 7.96 5.50 5.49 8.67 7.75
80 8.67 8.16 5.51 5.50 9.00 8.05
26 4.84 57.20 81 8.81 8.36 5.51 5.51 9.34 8.39
27 4.73 55.90 82 8.94 8.55 5.51 5.51 9.70 8.73
28 4.63 54.69 83 9.06 8.73 5.51 5.51 10.10 9.12
29 4.54 53.57 84 9.16 8.90 5.51 5.51 10.52 9.53
30 4.45 52.53 85 & over 9.26 9.05 5.51 5.51 10.96 9.97
</TABLE>
If installments are paid every 3 months, they will be 25.32% of the annual
installments If they are paid every 6 months, they will be 50.43
of the annual instruments.
Amounts for Monthly Life Income are based on age nearest birthday when income
starts. Amounts for ages not shown will be furnished on request.
No. 133-54-8 PAGE 8
<PAGE>
TERM
INSURANCE POLICY
The Equitable Life Assurance Society of the United States
787 Seventh Avenue, New York, N. Y. 10019
Yearly Renewable Term Plan. Insurance payable upon death before Term Expiry
Date. Renewable annually until Final Term Expiry Date shown on Page 3.
Renewal premiums may change subject to guaranteed maximums (see "Premium
Changes" on Page 4). Premiums payable to Term Expiry Date or until earlier
death. Conversion Privilege. This is a non-participating policy.
No. 133-54
EXHIBIT 10.12
THE INSURED PAUL I. MANSUR
POLICY OWNER MANSUR INDUSTRIES INC
FACE AMOUNT $1,000,000
POLICY NUMBER J 96 010 417
TERM INSURANCE POLICY
THE EQUIPMENT OF COLORADO, INC.
AGREES
To pay the insurance benefits of this policy to the Beneficiary upon
receiving proof that the Insured died before the Final Term Expiry
Date; and
To provide YOU (THE POLICY OWNER) with the other rights and benefits
These agreements are subject to the provisions of this policy.
Ten Days to Examine Policy - If for any reason you are not satisfied with your
policy, you may cancel it by returning the policy to us within 10 days after you
receive it. If you do, we will refund the premium that was paid.
/s/ Samuel B. Shlesinger
SAMUEL B. SHLESINGER, CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER
/s/ Linda Galasso
LINDA GALASSO, SECRETARY
Renewable Term Plan. Insurance payable upon death before Final Term Expiry Date.
Renewable until Final Term Expiry Date shown on Page 3. RENEWAL PREMIUMS AFTER
THE TENTH POLICY ANNIVERSARY MAY CHANGE SUBJECT TO GUARANTEED MAXIMUMS (SEE
"PREMIUM CHANGES" ON PAGE 4). Premiums payable to Final Term Expiry Date or
until earlier death.
Conversion Privilege. This is a non-participating policy.
<PAGE>
CONTENTS
Insurance Benefits 2
Policy Owner and Beneficiary 4
Premiums 4
Conversion Privilege 5
General Provisions 6
Payment Options 6
Table of Guaranteed Payments 8
Any additional benefit riders and a copy of the application are at the back, of
this policy.
IN THIS POLICY:
" We", "our" and "us" mean The Equitable of Colorado, Inc.
"You" and "your" mean the Owner of the policy at the time an Owner's right is
exercised.
INSURANCE BENEFITS
We will pay the insurance benefits of this policy to the Beneficiary when we
receive proof of the Insured's death.
These insurance benefits include the following amounts, which we will determine
as of the date of the Insured's death:
- the Face Amount of this policy shown on Page 3;
- PLUS any other benefits due from riders to this policy;
- PLUS OR MINUS any adjustment for the last premium.
We will add interest to the resulting amount for the period from the date of
death to the date of payment. We will compute the interest at a rate we
determine, but not less than the greater of (a) the rate we are paying on the
date of payment under the Deposit Option on Page 7; or (b) the rate required by
any applicable law.
We will pay these benefits only if premiums have been paid as called for by this
policy.
Payment of these benefits may also be affected by other provisions of this
policy. See Page 6 where we specify our right to contest the policy, what
happens if age or sex has been misstated, and the suicide exclusion. Special
exclusions or limitations (if any) are listed on Page 3.
Page 2
<PAGE>
THE INSURED PAUL I MANSUR
POLICY OWNER MANSUR INDUSTRIES INC
FACE AMOUNT $1,000,000
FINAL TERM
EXPIRY DATE MAY 3, 2046
POLICY MMBER J 96 010 417
REGISTER DATE MAY 3, 1996
DATE OF ISSUE MAY 24, 1996
ISSUE AGE,SEX 45, MALE
BENEFICIARY MANSUR INDUSTRIES
------------ BENEFITS AND PREMIUMS ------------
BENEFITS SEMI-ANNUAL PREMIUM PREMIUM PERIOD
LIFE INSURANCE $1,032.00 10 YEARS
THE FIRST PREMIUM IS $1,032.00 AND IS DUE ON OR BEFORE DELIVERY OF THE POLICY.
SUBSEQUENT PREMIUMS ARE DUE ON NOV 3, 1996 AND EVERY 6 MONTHS THEREAFTER.
----------- BENEFITS AND PREMIUMS ------------
RENEWAL SCHEDULED GUARANTEED
DATE RENEWAL MAXIMUM RENEWAL
MAY 3 PREMIUM* PREMIUM
2006 $ 3,542.00 $ 7,312.00
2007 3,732.00 8,012.00
2008 4,022.00 8,732.00
2009 4,362.00 9,502.00
2010 4,732.00 10,332.00
2011 5,172.00 11,252.00
2012 5,672.00 12,282.00
2013 6,252.00 13,442.00
2014 6,932.00 14,762.00
2015 7,742.00 16,242.00
2016 8,692.00 17,852.00
2017 9,812.00 19,022.00
2018 11,162.00 20,202.00
2019 12,742.00 21,392.00
2020 14,622.00 22,612.00
2021 16,722.00 23,942.00
2022 19,432.00 26,162.00
2023 22,492.00 30,212.00
2024 26,062.00 34,212.00
2025 30,222.00 38,602.00
2026 34,072.00 42,582.00
2027 38,932.00 48,662.00
2028 44,512.00 55,622.00
2029 50,822.00 63,522.00
2030 57,952.00 72,442.00
2031 66,262.00 82,822.00
2032 74,242.00 92,802.00
2033 83,442.00 104,302.00
2034 94,042.00 117,552.00
PAGE 3
(CONTINUED ON NEXT PAGE)
<PAGE>
THIS PAGE 3-CONTINUED IS A PART OF POLICY NUMBER 96 010 417.
----------- SEMI-ANNUAL RENEWAL PREMIUMS ------------
RENEWAL SCHEDULED GUARANTEED
DATE RENEWAL MAXIMUM RENEWAL
MAY 3 PREMIUM* PREMIUM
2035 105,892.00 132,362.00
2036 118,852.00 148,562.00
2037 124,952.00 156,182.00
2038 146,012.00 182,512.00
2039 159,732.00 199,662.00
2040 173,832.00 217,292.00
2041 188,232.00 235,272.00
2042 206,152.00 257,692.00
2043 225,602.00 281,992.00
2044 246,762.00 308,442.00
2045 277,752.00 347,172.00
*SEE PREMIUM CHANGES-PAGE 4
PAGE 3-CONTINUED PAGE 3-CONTINUED
<PAGE>
THIS PAGE 3 - CONTINUED IS PART OF POLICY NUMBER
--------- ENDORSEMENT ---------
In the event you need.to present inquiries, obtain information about coverage or
need assistance in resolving complaints about this policy, please contact your
Agent. If you have additional .questions, you may contact The Equitable, The
Equitable of Colorado or Equitable Variable at the following address and
telephone number, The Equitable, The Equitable of Colorado or Equitable
Variable, Charlotte Service Center, 6301 Morrison Boulevard, Charlotte, North
Carolina 28211; Telephone: (800) 777-6510.
Please have your policy number available for any inquiries.
S.33-59
NOTICE TO FLORIDA RESIDENTS
If the owner or insured, this policy is age 64 or older, under Florida Law, you
may designate a secondary addressee to receive copies of notices. To request
this, please send the name and address of the person you are designating to
receive notices to our service center at the address shown above.
PAGE 3 - CONTINUED
<PAGE>
POLICY OWNER AND BENEFICIARY
OWNER. The Owner of this policy is the insured unless otherwise stated in the
application, or later changed. As Owner, you can exercise all the rights in this
policy while the Insured is living. You do not need the consent of anyone who
has policy a conditional or future ownership interest in this policy.
BENEFICIARY. The Beneficiary is as stated in the application, unless later
changed. If two or more persons are named, those surviving the Insured will
share equally unless otherwise stated.
We will pay any benefit for which there is no stated Beneficiary living at the
death of the Insured to the children of the Insured who then survive, in equal
shares. If none survive, we will pay the estate of the Insured.
CHANGES. While the Insured is living, you may change the Owner or Beneficiary by
submitting written notice in a form satisfactory to us. You can get such a form
from our agent or by writing to us. The change will take effect on the date you
sip the notice, except that it will not apply to any payment we make or other
action we take before we receive the notice in our Administrative Office. If you
change the Beneficiary, any previous arrangement you made under the Payment
Options provision on Page 6 is cancelled. You may choose a Payment Option for
the new Beneficiary in accordance with that provision.
ASSIGNMENT. You may assign this policy, if we agree, but we will not be bound by
an assignment unless we have received it in writing. Your rights and those of
any other person referred to in this policy will be subject to the assignment.
We assume no responsibility for the validity of any assignment. An absolute
assignment will be considered as a change of ownership to the assignee.
PREMIUMS
AMOUNTS AND DUE DATES. Page 3 shows the amounts and due dates of the premiums
payable until the Final Term Expiry Date. It shows scheduled renewal premiums
based on the initial rate scale; guaranteed maximum renewal premiums; and the
premium due dates for renewal periods. For the first ten policy years, the
premiums shown on Page 3 are level and guaranteed. Beginning with the eleventh
policy year, scheduled renewal premiums are subject to change as stated in the
Premium Changes section. Each premium is payable on or before its due date at
our Home Office or premium collection office.
You may write and ask to change the frequency of premium payment. If we approve
the change, the new premium will be determined on the rate scale for this
policy.
GRACE PERIOD. We allow a grace period of 31 days for payment of each premium,
after the first premium. The insurance will continue during the grace period.
LAPSE. If a premium is not paid by the end of its grace period, the policy
will lapse as of the premium due date. If this occurs, all insurance ends at
the end of the grace period.
PREMIUM CHANGES. Beginning with the eleventh policy year, we have the right to
change the scheduled renewal premiums for the policy. We will send you written
notice of any such change before the next premium payment is due. The scheduled
premium for any policy year after the tenth policy anniversary may vary, but
will never be more than the guaranteed maximum renewal premium shown on Page 3
for that year.
We will adjust the renewal premium only on a uniform basis for insureds of the
same insurance age, sex and class of risk, whose policies have been in force for
the same length of time. We will not change the premium or class of risk because
of an adverse change in the Insured's health, occupation or avocation. We will
base a premium change solely on future expectations as to mortality, investment
earnings, persistency, taxes and expenses. Our procedures and standards for
premium changes,are on file, as required, with the insurance supervisory
official of the jurisdiction in which this policy is delivered.
PAGE 4
<PAGE>
REINSTATEMENT. You may reinstate this policy within five years after a lapse,
but not later than the Final Term if: (1) you provide evidence of insurability
satisfactory to us; and (2) you pay all overdue premiums with interest 6% per
year compounded annually.
PREMIUM ADJUSTMENT. We will add to the insurance benefits any part of the last
premium paid that applies to a period beyond the policy month in which the
Insured dies. If the Insured dies during the grace period of an unpaid premium,
we will deduct from the benefits the part of the overdue premium for one policy
month. These are the adjustments for the last premium referred to on Page 2.
CONVERSION PRIVILEGE
You may exchange this policy on any premium due date on or before the fifth
policy anniversary for a new policy on the life of the Insured without evidence
of insurability: (1) if the day of the policy anniversary nearest the Insured's
75th birthday; and (2) if all premiums have been duly paid; and (3) if there is
a Disability Premium Waiver rider in effect in this policy, the Insured is not
totally disabled as defined in that rider. However, see the section "Conversion
During Disability".
The Register Date of the new policy will be the date of exchange. Premiums for
the new policy will be based on our rates in effect on that date. They will be
for the Insured's then attained insurance age and for the same class of risk as
for this policy. 'The first premium for the new policy must be paid on or within
31 days before the date of exchange.
THE NEW POLICY. The new policy will have an insurance amount equal to the amount
of insurance in effect on this policy. Or, you may choose any lower amount
allowed by our rules in effect on the date of exchange.
The new policy may be on any plan of insurance we offer on the date of exchange,
subject to our rules then in effect as to plan, age and class of risk. You may
not choose a policy of term insurance, one that includes term insurance, or one
that pr6vides insurance on more than one life.
If additional benefit riders are in effect on this policy on the date of
exchange, you may choose that the new policy contain similar riders subject to
our rules in effect on its Register Date.
Except as to any additional benefit riders included in the new policy, the
suicide exclusion and incontestability periods of the new policy will be
determined from the date of issue of this policy instead of from the date of
issue of the new policy.
CONVERSION DURING DISABILITY. We will issue a new policy with a Disability
Premium Waiver rider in exchange for this policy on any policy anniversary you
choose on or before the fifth policy anniversary provided (1) the date of
exchange is before the policy anniversary nearest the Insured's 65th birthday;
(2) a Disability Premium Waiver rider is in effect in this policy on the date of
exchange; and (3) the Insured is then totally disabled as defined in that rider.
The new policy will have an insurance amount equal to the amount of insurance in
effect on this policy. It will be on a life insurance plan that we then issue,
subject to our rules in effect on its Register Date as to plan. You may not
choose a policy of term insurance, one that includes term insurance, or one that
provides insurance on more than one life. Its Register Date will be the date of
exchange. Premiums for the new policy will be based on our rates in effect on
that date. They will be for the Insured's then attained insurance age and for
the same class of risk as for this policy.
We will waive premiums for the new policy as stated in its Disability Premium
Waiver rider while total disability continues. (We will not waive premiums on
and after the policy anniversary nearest the Insured's 65th birthday for a total
disability that began on or after the policy anniversary of this policy nearest
the Insured's 60th birthday.)
PAGE 5
<PAGE>
GENERAL PROVISIONS
THE CONTRACT. We provide this insurance in consideration of payment of the
required premiums. This policy and the attached copy of the application for
it make up the entire contract.
The contract may not be modified, nor may any of our rights or requirements be
waived, except in writing signed by our President or one of our Vice Presidents.
INCONTESTABILITY. We have the right to contest the validity of this policy based
on material misstatements made in the application for this policy. However, we
will not contest the validity of this policy after it has been in effect during
the lifetime of the Insured for two years from the Date of Issue shown on Page
3. No statement shall be used to contest a claim unless contained in the
application.
All statements made in the application are representations and not warranties.
See any additional benefit riders for modifications of this provision that apply
to them.
AGE AND SEX. If the Insured's age or sex has been misstated, any benefits will
be those that the premium paid would have purchased at the correct age and sex.
SUICIDE EXCLUSION. If the Insured commits suicide, while sane or insane, within
two years after the Date of Issue shown on Page 3, our liability will be limited
to the payment of a single sum equal to the premiums paid.
POLICY PERIODS AND SAREES. Policy years, policy months, policy anniversaries and
premium periods are measured from the Register Date. Each policy month begins on
the same day in each calendar month as in the Register Date.
POLICY CHANGES. You may change this policy to another plan of insurance or add
additional benefit riders or make other changes, subject to our rules at the
time of change.
PAYMENT OPTIONS
Instead of having the insurance benefits paid immediately in one sum, you can
choose another form of payment for all or part of the benefit. If you do not
arrange for this before the Insured dies, the Beneficiary will have this right
when the Insured dies. Arrangements you make, however, cannot be changed by the
Beneficiary after the Imured's death.
The options are:
1. DEPOSIT OPTION: The sum is left on deposit for a period mutually agreed
upon. We pay interest at the end of every month, every 3 months, every 6
months or every 12 months, as chosen.
2. INSTALLMENT OPTIONS:
A. FIXED PERIOD: We pay the sum in equal installments for a specified
number of years (not more than 30). The installments will be at least
those shown in the Table of Guaranteed Payments on Page 8.
B. FIXED AMOUNT: We pay the sum in installments as mutually agreed upon
until it, together with interest on the unpaid balance, is used up.
3. LIFE INCOME OPTIONS:
We pay the sum as a monthly income for life in an amount we determine.
The amount of the monthly payment will be at least that shown in the
Table of Guaranteed Payments on Page 8. We guarantee payments for life
and in any event for 10 years (called "10 Years Certain"), 20 years
(called "20 Years Certain"), or until the payments we make equal the
amount applied (called "Refund Certain"), according to the "certain"
period chosen.
available at the time of the Insured's death.
PAGE 6
<PAGE>
We guarantee interest 2 1/2% a year. We may raise the guaranteed rates. We
may also allow excess interest under Options 1 and 2.
The payee under an option may name and change a successor payee for any amount
we would otherwise pay the payee's estate.
Any arrangements involving more than one of the options, or a payee who is not a
natural person (for example, a corporation) or who is a fiduciary, must have our
approval. Also, details of all arrangements will be subject to our rules at the
time the arrangement takes effect. These include rules on: the minimum amount we
will apply under an option and minimum amounts for installment payments;
withdrawal or commutation rights; naming payees and successor payees; and
proving age and survival.
Choices (or any later changes) under these options will be made and will take
effect in the same way as a change of Beneficiary. Amounts applied under these
options will not be subject to the claims of creditors or to legal process, to
the extent permitted by law.
PAGE 7
<PAGE>
ACCELERATED DEATH BENEFIT RIDER
DISCLOSURE. The receipt of thc Benefit Amount may be taxable. You should seek
assistance from tax advisor prior to electing the benefit.
IN THIS RIDER "WE", "OUR' AND "US" MEAN THE EQUITABLE OF COLORADO, INC. "YOU"
MEANS THE OWNER OF THE POLICY AT THE TIME AN OWNER'S RIGHT IS EXERCISED. 'THIS
POLICY' MEANS THE POLICY TO WHICH ATTACHED.
POLICY NUMBER.- 9 6 0 1 0 4 1
THIS RIDER'S BENEFIT. We will pay an accelerated death benefit in the amount
requested by the Owner, if the Insured is terminally ill, subject to the
provisions of this rider. We will pay an accelerated death benefit under this
policy only once and in one lump sum.
The maximum accelerated death benefit you may receive is the lesser of:
1. 75% of the death benefit payable under this policy, less any policy
loan and loan interest, and
2. $500,000.
The maximum aggregate amount of Accelerated Death Benefit payments that will be
paid under all policies issued by us on the life of the Insured is $500,000.
For purposes of this benefit, the death benefit does not include any accidental
death benefits, non-convertible term riders or convertible term riders not in
their conversion period or any benefits payable because of the death of any
person other than the Insured.
There is no premium or cost of insurance charge for this rider.
We reserve the right to deduct a processing charge of up to $250.00 per policy
from the accelerated death benefit payment.
We reserve the right to set a minimum of $5,000 on the amount you may receive
under this rider.
To be eligible for this benefit you must provide satisfactory evidence to us
that the Insured's life expectancy is six months or less. This evidence must
include, but is not limited to, certification by a physician licensed to
practice medicine in the United States or Canada and who is acting within the
scope of such license. A physician does not include the Owner, the Inured or a
member of either's family.
HOW THIS RIDER RELATES TO THE POLICY. This rider is a part of the policy. Its
benefits are subject to all the terms of this rider and the policy. This rider
has no cash or loan value. This rider is non-participating.
INTEREST. Interest will be charged go the amount of the Accelerated Death
Benefit and on any unpaid premium we advance after the payment of, an
Accelerated Death Benefit. The interest rate at the time the Accelerated Death
Benefit payment is made, will not exceed the greater of the following on such
date:
1. the yield on a 90-day treasury bill; or
2. the maximum adjustable policy loan interest rate permitted in the
state in which this policy is delivered.
Effect Of Accelerated Death Benefit Payment On The Policv. The Accelerated Death
Benefit payment, plus any accrued interest will be treated as a lien against the
policy values. The amount of the lien will be pro-rated against the policy's net
cash surrender value, if any, and the net amount at risk. (The net amount at
risk is defined as the death benefit of the policy minus the cash surrender
value, if any.) The amount payable at death under the policy will be reduced by
the full amount of the lien and any other indebtedness outstanding under policy.
The Owner's access to the policy's cash surrender value of the lien secured
against the cash surrender value and any other outstanding policy loans and loan
interest.
If premiums are required to be paid under the policy, they will continue to be
due after the payment of the is not paid when due, the amount of the unpaid
premium will be added to the lien.
If a Disability Premium Waiver Rider is in effect under the policy, this
policy's premiums will be waived as of the date we approve an Accelerated Death
Benefit a payment.
PAGE 8
<PAGE>
RIDER LIMITATIONS. Your right be paid under the Accelerated Death Benefit Rider
is subject to the following conditions:
1. The policy must be in force other than as extended term insurance.
2. For term insurance policies, there must be at least one year left
before the final term expiry date.
3. You must make a claim in writing in a form that is satisfactory to
us.
4. If the policy is collaterally assigned, except to us as security
for a policy loan or an Accelerated Death Benefit lien, we must
receive a full release of this assignment for the election of this
benefit.
5. An Accelerated Death Benefit payment must be approved in writing by
any irrevocable beneficiary.
6. For joint last to die po4cles, a claim may be made under the rider
only after the death of the first of the Insureds to die.
7. You may not be eligibli6 for the Accelerated Death Benefit if we are
notified that:
a) you are required by law to elect this rider's benefit in order
to meet the claims of creditors, whether in bankruptcy or
otherwise; or
b) you are required by a government agency to elect this rider's
benefit in order to apply for, obtain. or keep a government
benefit or entitlement.
8. You may request only one Accelerated Death Benefit Amount to be paid
per policy.
9. We may require examination of the Insured by our medical
representatives at our expense as part of any proof to establish
eligibity for benefits under this rider.
WHEN THIS RIDER WILL TERMINATE. You may terminate this rider by asking us in
writing in a form satisfactory to us and by sending the rider to our
Administrative Office. The effective date of the termination will be the
beginning of the policy month which coincides with or next follows the date we
receive your request. Once this rider has been terminated, another Accelerated
Death Benefit Rider cannot be attached to the policy.
This rider will terminate when the policy terminates. If at any time the amount
of the lien equals the total death benefit the policy will terminate.
Termination will occur 31 days after we have mailed notice to the last known
address of the Owner, unless the full amount of the lien is repaid within 31
days of the notice.
THE EQUITABLE OF COLORADO., INC.
/s/ LINDA GALASSO /s/ SAMUEL B. SHLESINGER
Linda Galasso, Secretary Samuel B. Shiesinger, Chairman,
President & Chief Executive Officer
PAGE 9
<PAGE>
Application Part I For Life Insurance
THE EQUITABLE OF.COLORAD0, INC.
1. PROPOSED INSURED a. Printe name to appear on policy.
PaulI. I. Mansur
First Middle Initial Last
_X_Mr. __Miss __Ms. __Other Title_________
a. List all current occupations - Give Title(s) and Duties
C.E.O. - Executive Duties
d. Date of Birth: Mo 01 Day 12 Yr. 51
e. Age Nearest Birthday: 45
f. Place of Birth: State of Florida
g. Residence: State of Florida
h. U.S. Citizen? _X_Yes _____No
(If "No," Country_________________)
i. _X_Male ___Female
2. PLAN AMOUNT OF INSURANCE
Term 10 $1,000,000
3. OPTIONAL BENEFITS
___Accidental Death Benefit* (Specify Amount):
___Disability Premium Waiver*
___Automatic Premium Loan (Not for Term policies)
___Increasing Term Rider
___One Time Additional Premium of $______ for Additional Death Benefit
___Recurring Additional Premium of $______ for Additional Death Benefit
*See limitations in item 9.d.
4. BENEFICIARY for Insurance on Proposed Insured. Include Full Name and
Relationship Insured. Mansur Industries, Inc. - Employer
Unless otherwise requested, the contingent beneficiary will be the
surviving children of the Insured, in equal shares. If none survive,
payment will be made to the Insured's estate.
5. OWNER Owner's Soc. Sec. Or Tax No. 6 5 0 2 2 6 8 1 3
The Owner is ____Proposed Insured
___Applicant for Child (See 9.c.)
_X_Other (Give Full Name): Mansur Industries, Inc.
If "Other," complete the following:
___Mr. ___Miss ___Mrs. ___Ms. ___Other Title_______
Relationship to Insured: Employer
Specify a successor Owner if desired____________________
If the Proposed Insured or the Applicant for a Child is not the Owner and
if all persons designated die before the Insured, the Owner will be the
estate of the last of such persons to die except where the Insured is a
Child (see Note in 9.c.).
6. MAILING ADDRESS ___Business (Give Full Name) ___Residence
Mansur Industries, Inc.
(Name)
8425 SW 129 Terrace
(No.) (Street) (Apt.)
Miami FL
(City) (State)
331566519
(Zip)
7. PREMIUM PAYMENT PLAN
___Annual _X_Semi-Annual ___Quarterly
___Monthly ___System-Matic(Attach S-M Form)
8. SPECIAL INSTRUCTIONS
a. ___Preliminary Term to: Mo____Day____Yr.____
b. ___Date to save insurance age:___________________
c. Other:
9. COMPLETE IF PROPOSED INSURED IS A CHILD (ISSUE AGES 0-14).
a. Will there be more life insurance in effect on the Child than any other
child in the family?
___Yes ___No
If Yes, explain:
b. APPLICANT-COMPLETE IF OTHER THAN CHILD.
i. First Name Middle Initial Last Name
ii. ___Mr. ___Miss ___Mrs. ___Ms.
___Other Title___________________________
iii. Date of Birth ___________________________19______
Month Day Year
iv. ___Male ___Female
v. Relationship to Child:__________________
vi. Total Life Insurance now in effect:
$------------------------
c. OWNER. If the Applicant is to be the Owner, after the Applicant's death the
Child will be the owner unless otherwise designated in
Special Instructions (in any such designation include OWNER'S FULL NAME,
RELATIONSHIP to Child, and Social Security or Tax Number). NOTE: CONSIDER
DESIGNATING AN ADULT SECONDARY OWNER TO REDUCE THE CHANCE OF A MINOR CHILD
BECOMING THE OWNER. F ALL PERSONS DESIGNATED DIE BEFORE THE CHILD, THE
OWNER WILL BE THE CHILD.
d. LIMITATIONS ON CHILD'S ADB AND DPW BENEFITS. If the Accidental Death
Benefit is applied for on the Child, the benefit is payable only if the
Child dies after the Child's first birthday.
If the Disability Premium Waiver Benefit applied for on the Child, the
benefit is effective only if the Child becomes totally disabled on or after
the Child's 5th birthday.
/s/ IAN J. SCHARF IAN J. SCHARF 319-50-226
Agent's Name Agent's Signature Florida License Number
<PAGE>
10. OTHER INFORMATION - Has the Proposed Insured:
a. Ever had a driver's license suspended or revoked or, within the last three
years, been convicted of two or more moving violations or driving under the
influence of alcohol or drugs? (Give full details - including dates, types
of violation, and reason for license suspension or violation.)
_____Yes __X_No
b. Any plan to travel or reside outside the U.S.?
_____Yes __X_No
c. Any other life insurance now in effect or application now pending?
(State companies and amounts.)
__X_Yes ____No
d. Been disabled for 2 weeks or more within the last 2 years?
_____Yes __X_No
11.
a. In the last year flown other than as a passenger or plan to do so?
_____Yes __X_No
If "Yes:" Total flying time at present_____________Hours;
Last 12mos._____Hours; Next 12 mos._____Est. Hours.
(Complete Aviation Supplement for pilot instruction; competitive, test,
stunt or military flying; or crop dusting.)
b. Engaged within the last year,
or any plan to engage in motor racing on land or water, underwater diving,
sky diving, ballooning, hang-gliding, parachuting or flying ultra-light
aircraft? (If Yes, complete Avocation Supplement.)
_____Yes __X_No
c. Ever had an application for life or health insurance declined, that
required an extra premium or was otherwise modified? (Give full details.)
_____Yes __X_No
d. Replaced or changed any existing insurance or annuity (or any plan to do
so) assuming the insurance applied for will be issued? (State companies,
plans and amounts.)
_____Yes __X_No
Answer Questions 12 through 16 only if Non-Member. 12. Proposed Insured:
Height_____ Ft.___ In.___
Weight______lbs.
Has the Proposed Insured:
13a. Ever had or been treated for heart trouble, stroke, high blood
pressure, chest pain, diabetes, tumor, cancer, respiratory or neurological
disorder? (Give full details.)
_____Yes ____No
b. In the last 5 years, consulted a physician, or been examined or treated
at a hospital or other medical facility? (Include medical check-ups in the
last 2 years. Do not include colds, minor injuries, or normal pregnancy.)
(Give full details.)
_____Yes ____No
14. In the last 12 months:
a. Smoked cigarettes?
_____Yes __X_No
b. Used any other form to tobacco? (Give full details.)
_____Yes __X_No
15. In the last 10 years:
a. Used, except as legally prescribed by a physician, tranquilizers;
barbiturates or other sedatives; marijuana, cocaine, hallucinogens or other
mood-altering drugs; heroin, medthdone or other narcotics; maphetamines or
other stimulants, or any other illegal or controlled substances?
_____Yes ____No
b. Received counseling or treatment regarding the use of alcohol or drugs:
_____Yes ____No
16. In the last 10 years, been:
a. Diagnosed by a member of the medical profession as having Acquired
Immune Deficiency Syndrome (AIDS) or AIDS-Related Complex (ARC)?
_____Yes ____No
b. Treated by a member of the medical profession for AIDS or ARC?
_____Yes ____No
17. DETAILS. For each answer give Question number and full details. FOR 13
THROUGH 16 ALSO INCLUDE CONDITIONS, DATES, DURATIONS, TREATMENTS AND
RESULTS, AND NAMES AND ADDRESSES OF PHYSICIANS AND MEDICAL FACILITIES.
No. Name of Person Affected Details 10C Paul Has Life of Virginia - $25,000
Face - Not Replacing ---- Paul Issue with Living Benefits Rider. I have
received Living Benefits Rider Brochure 94-03. Paul Mansur SS# ###-##-####
------------------------------------------------------------------------
Any Person who
knowlingly and with
intent to injure,
defraud, or deceive
any insurer files a
statement of claim or
an application
containing any false,
incomplete, or
misleading
information is guilty
of a felony of the
third degree.
18. COMPLETE IF MONEY IS PAID BEFORE THE POLICY IS DELIVERED:
Have undersigned read and do they agree to the conditions of the Temporary
Insurance Agreement of The Equitable of Colorado, Inc., including (I) the
requirement that all of the conditions in that Agreement must be met before
any temporary insurance takes effect, and (ii) the $250,000 insurance
amount limitation? __X_Yes ____No (IF "NO," OR IF ANY PERSON PROPOSED FOR
INSURANCE HAS HAD ACQUIRED IMMUNE DEFICIENCY SYNDROME (AIDS) OR
AIDS-RELATED COMPLEX (ARC) WITHIN THE LAST 10 YEARS OR HAD CANCER, A STROKE
OR A HEART ATTACK WITHIN THE LAST YEAR, A PREMIUM MAY NOT BE PAID BEFORE
THE POLICY IS DELIVERED.)
__X_AMOUNT PAID: $1,372.00. (DRAW CHECKS TO ORDER OF THE EQUITABLE OF
COLORADO, INC.)
19. SOCIAL SECURITY OR TAX I.D. NUMBER CERTIFICATION
I, the proposed policy owner(s), cerify under penalties of perjury that (i)
the number(s) shown in Question 5 of this form is my (our) correct taxpayer
identification number, and (ii) I ____am _X_am not subject to a backup
withholding order issued by the IRS.
In this agreement, "we" and "our" mean The Equitable of Colorado, Inc.
AGREEMENT. Each signer of this application agrees that:
(1) The statements and answers in all parts of this application are true
and complete to the best of my knowledge and belief. We may rely on
them in acting on this application.
(2) Our Temporary Insurance Agreement states the conditions that must be
met before any insurance takes effect, if money is paid before
the policy is delivered.
(3) Except as stated in the Temporary Insurance Agreement, no insurance
shall take effect on this application: (a) until a policy is
delivered and the full initial premium for it is paid while the
Proposed Insured is living; and (b) unless to the best of my knowledge
and belief the statements and answers in all parts of this application
continue to be true and complete, without material change, as of the
time such premium is paid.
(4) No agent or medical examiner has authority to modify this Agreement or the
Temporary Insurance Agreement, nor to waive any of our rights or
requirements. We shall not be bound by any information unless it is stated
in application Part 1 or Part 2.
Date at MIAMI_________FLORIDA on 04-29 1996
X_/S/__PAUL I. MANSUR
Signature of Proposed Insured or of Applicant if Proposed Insured is a Child,
Issue Age 0-14.
X_/S/__PIERRE G. MANSUR______PRESIDENT - MANSUR INDUSTRIES, INC.
Signature(s) of Purchaser/Owner if not Proposed Insured or Applicant. (If corp.,
show firm's name and signature of authorized officer.)
SIGNATURE OF AGENT /s/ IAN J. SCHARF
<PAGE>
LARGE AMOUNT SUPPLEMENT TO:
_____THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
_____EQUITABLE VARIABLE LIFE INSURANCE COMPANY
__X__THE EQUITABLE OF COLORADO, INC.
INSTRUCTIONS: Complete Section I AND Section(s) (Personal Insurance) or III
(Business Insurance).
PROPOSED INSURED'S
NAME_____PAUL_____I._____MANSUR ASU (Alpha)/App.No.________547_________
First Middle Last
SECTION I - GENERAL INFORMATION
(Complete in all instances)
A. INSURANCE IN FORCE (All Companies) B. INSURANCE APPLIED FOR (All Companies)
PURPOSE FACE AMOUNT FACE AMOUNT
Personal $250,000 $0
Business $0 $1,000,000 - THIS ONE
Total in Force $250,000 Amount applied for elsewhere is
___competitive _X_additional.
C. FINANCIAL INFORMATION:
1. Income:
Gross Annual Compensation:
(e.g. Salary, Commissions, Bonuses,etc.) $100,000 $100,000
(Current Rate) (Current Rate)
Gross Annual Investment and Other Income:
(e.g. Dividends, Interest, Net Real Estate Income, etc.)
$0 $0
(Past 12 months) (Preceding 12
months)
Total Cash Income before taxes $100,000 $100,000
2. Net Personal Worth: CURRENT
Assets: $2,000,000
Liabilities (including mortgages): $ 30,000
Net Worth: $1,970,000
SECTION II - PERSONAL INSURANCE
(Complete only when applying for Personal Insurance)
PURPOSE: (Check appropriate box(es) and answer all supplemental
questions.)
___Family Income ___Education Fund ___Gift ___Mortgage Protection
___Personal Loan Collateral (other than mortgage protection):
Answer supplemental questions under Business Loan Collateral in
Section III, C3.
___Estate Settlement
Taxable Estate $_______________
Estimated Settlement Costs (taxes and administration expenses)
$_____________________
Total Liquid Assets $______________________
___Other (specify)________________________
The above statements and answers are true and complete to the best of my
knowledge and belief. I agree that such statements and answers shall be made
part of the application for insurance or request for policy or reinstatement, as
the case may be. The Insurer may rely on them in acting on this application.
Dated____________________ on ____4/29_____ 1996
/s/ PAUL I. MANSUR
Signature of Proposed Insured, or Applicant if Proposed Insured is a Child
Witnessed by:______________________________________
Signature of Agent
1
<PAGE>
APPLICATION PART 2 TO:
___THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
___EQUITABLE VARIABLE LIFE INSURANCE COMPANY
___THE EQUITABLE OF COLORADO, INC.
PARAMEDICAL Reason for submission of this form:
___New Policy___Policy Change ___Reinstatement
1.
a. Proposed Insured First Name Middle Initial Last Name
(PLEASE PRINT) Paul I. Mansur
b. Height: _5_ft._8_in.
c. Weight: 175 lbs.
d. Birth Date: Mo. __01__Day_12__Yr._51_
e. ____Male ____Female
2.
a. Name and address of personal physician (or medical facility instead):
(IF NONE, SO STATE):
Sharon Rodriquez, MD, 1150 Campo Sano Avenue, Suite 410,
Coral Gables, FL 33146 Telephone: 668-2181
b. Date and reason last consulted if within the last 5 years:
03-1996 Regular check-up
c. What treatment was given or recommended? (IF NONE, SO STATE):
Monopril 20 mg. And Zocot 10 mg.
(For all "Yes" answers to Questions 3-9, circle items that apply.)
3. Has Proposed Insured
ever had or been treated for: YES NO
a. Disease or disorder of
eyes, ears, nose or throat? X
b. Dizziness, fainting, convulsions,
paralysis or stroke; psychiatric,
psychological or emotional disturbance;
mental or nervous disease or disorder? X
c. Shortness of breath; blood spitting;
bronchitis, asthma, emphysema, tubercuosis
or other chronic respiratory
disease or disorder? X
d. Chest pain, palpitation, HIGH BLOOD
PRESSURE, rheumatic fever, heart murmur,
heart attack or other disease or
disorder of the heart or blood vessels? X
e. Ulcer, hernia, colitis, intestinal bleeding;
jaundice, hemorrhoids, or other disease or
disorder of the stomach, intestines,
liver or gallbladder? X
f. Sugar, albumin, BLOOD or pus in urine,
stone or other disease or disorder of
kidney or bladder? X
g. Diabetes; cyst, tumor, or cancer; thyroid
or glandular disorder; skin disease or disorder? X
h. Neuritis, arthiritis, gout, or disease or
disorder of the muscles or bones,
including the back, or joints? X
i. Deformity, lameness or amputation? X
j. Allergies; anemia; other blood or
lymph disease
or disease?
k. Disorder of protate, reproductive organs,
breasts, menstruation or pregnancy? X
4. Is Proposed Insured now under observation
or taking treatment?
X
5. Has Proposed Insured, within the last 10 years, been:
a. Diagnosed by a member of the medical profession as
having Acquired Immune Deficiency Syndrome (AIDS)
or AIDS-Related Complex (ARC)? X
b. Treated by a member of the medical profession for
AIDS or ARC?
6. Has Proposed Insured, within the last 10 years:
a. used, except as legally prescribed by a
physician, tranquilizers; barbiturates
or other sedatives; marijuana, cocaine,
hallucinogens or other mood-altering drugs;
heroin, methadone or other narcotics;
amphetamines or other stimulants; or any
other illegal or controlled substances: X
b. Received counseling or treatment
regarding the use of alcohol or drugs? X
7. Has Proposed Insured's weight changed by
more than ? pounds in the last 6 months? X
8. Other than as stated in answers to
Questions 2-6, has Proposed
Insured within the last 5 years:
a. Consulted or been examined or treated
by any physician or pracitioner? X
b. Had any illness, injury, or surgery?
c. Been a patient in or been examined or
treated at a hospital, clinic,
sanatorium, or other diagnostic test? X
d. Had electrocardiogram, X-ray, other
diagnostic test? X
e. Been advised to have any diagnostic test,
hospitalization, treatment or surgery
which was not completed? X
9. has Proposed Insured, within the last 12 months:
a. Smoked cigarettes?
b. used any other form of tobacco?
(Give full details.) X
10. Family History Age if Living Cause of Death Age at Death
Father Heart Attack 44
Mother Cancer 69
Brothers/Sisters 44
DETAILS FOR "YES" ANSWERS. Include: i. Question Number. ii. Diagnosis and
Treatment. iii. Results. iv. Dates and Duration. v. Names and Addresses
of all attending physicians and medical facilities. (If additional space is
needed, please attach a separate sheet, dated, signed and witnessed as below.)
F. Barbara A. Monlford MD
7150 W. 20 Ave., Suite 610
Hialeah, FL 33016
Phone: 558-6518
06-1995 Blood in Urine (Mieroscopic).
4 Refer to 2C
The above statements and answers are true and complete to the best of my
knowledge and belief, I agree that such statements and answers
shall be part of the application for insurance or request for policy change or
reinstatement, as the case may be. The insurer may rely on them in acting on the
application or making the policy change or reinstatement.
Dated at __MIAMI___FL___on__05___03___1996 /s/ PAUL I. MANSUR
City State Mo. Day Yr. Signature of Proposed Insured
Witness (MUST BE EXAMINED) /s/ illiegible
<PAGE>
TABLE OF GUARANTEED PAYMENTS
(MINIMUM AMOUNT FOR EACH $1,000 APPLIED)
<TABLE>
<CAPTION>
Option 2A Option 3
FIXED PERIOD INSTALLMENTS MONTHLY LIFE INCOME
Number 10 Years Certain 20 Years Certain Refund Certain
of Years' Monthly Annual
Installments Installment Installment Age Male Female Male Female Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.28 $1000.00 50 $3.48 $3.19 $3.42 $3.17 $3.37 $3.14
2 42.66 506.17 51 3.54 3.23 3.47 3.21 3.42 3.17
3 28.79 341.60 52 3.59 3.28 3.51 3.25 3.46 3.21
4 21.86 259.33 53 3.65 3.32 3.56 3.29 3.51 3.25
5 17.70 210.00 54 3.70 3.37 3.61 3.33 3.56 3.29
6 14.93 177.12 55 3.77 3.42 3.66 3.37 3.61 3.34
7 12.95 153.65 56 3.83 3.47 3.72 3.42 3.67 3.38
8 11.47 136.07 57 3.90 3.58 3.83 3.52 3.78 3.48
9 9.39 122.40 58 3.97 3.58 3.83 3.52 3.78 3.48
10 9.39 111.47 59 4.04 3.64 3.88 3.57 3.84 3.53
11 8.64 102.54 60 4.12 3.70 3.94 3.62 3.90 3.58
12 8.02 95.11 61 4.20 3.76 4.00 3.68 3.97 3.64
13 7.49 88.83 62 4.29 3.83 4.06 3.74 4.04 3.69
14 7.03 83.45 63 4.38 3.90 4.12 3.79 4.11 3.75
15 6.64 78.80 64 4.48 3.98 4.18 3.85 4.19 3.82
16 6.30 74.73 65 4.58 4.06 4.25 3.92 4.26 3.88
17 6.00 71.15 66 4.68 4.14 4.31 3.98 4.35 3.95
18 5.73 67.97 67 4.79 4.23 4.37 4.04 4.43 4.02
19 5.49 65.13 68 4.90 4.32 4.43 4.11 4.52 4.10
20 5.27 62.58 69 5.02 4.42 4.50 4.18 4.62 4.18
21 5.08 60.28 70 5.14 4.52 4.56 4.25 4.71 4.26
22 4.90 58.19 71 5.26 4.63 4.62 4.31 4.82 4.35
23 4.74 56.29 72 5.39 4.75 4.67 4.38 4.92 4.44
24 4.60 54.55 73 5.52 4.87 4.73 4.45 5.03 4.53
25 4.46 52.95 74 5.66 4.99 4.78 4.51 5.14 4.63
26 4.34 51.48 75 5.80 5.12 4.83 4.58 5.27 4.74
27 4.22 50.12 76 5.95 5.26 4.88 4.64 5.39 4.84
28 4.12 48.87 77 6.10 5.40 4.93 4.70 5.53 4.96
29 4.02 47.70 78 6.25 5.55 4.97 4.75 5.66 5.08
30 3.93 46.61 79 6.40 5.70 5.01 4.80 5.80 5.20
80 6.56 5.85 5.04 4.86 5.96 5.33
81 6.72 .01 5.08 4.90 6.11 5.45
82 6.88 6.18 5.11 4.95 6.27 5.60
83 7.04 6.34 5.13 4.99 6.43 5.73
84 7.20 6.51 5.16 5.03 6.62 5.89
85 & over 7.36 6.67 5.18 5.07 6.81 6.04
</TABLE>
If installments are paid every 3 months, they will be 25.23% of the annual
installments. If they are paid every 6 months, they will be 50.31% of the annual
installments. Amounts for Monthly Life Income are based on age nearest birthday
when income starts. Amounts for ages not shown will be furnished on request.
Page 8
<PAGE>
TERM INSURANCE POLICY
The Equitable of Colorado, Inc.
370 17th Street, Suite 4950, Denver, CO 80202
Renewable Term Plan. Insurance payable upon death before Final Term Expiry Date.
Renewable until Final Term Expiry Date shown on Page 3. Renewal premiums after
the tenth policy anniversary may change subject to guaranteed maximums (see
"Premium Changes" on Page 4). Premiums payable to Final Term Expiry Date or
until earlier death. Conversion Privilege. This is a non-participating policy.
No. CO106-94
EXHIBIT 10.13
United States Patent
POWER SPRAY WASHER
<PAGE>
United States Patent Patent Number: 5,277,208
Mansur Date of Patent: Jan.11, 1994
[54] MULTI-PROCESS POWER SPRAY WASHER APPARATUS
[76] Inventor: Pierre G. Mansur, 12210 SW. 130th
St.. Miami, Fla. 33186
[21] Appl. No.: 884,406
[22] Filed: May 18, 1992
[51] Int. Cl.5...............B08B 3/02; B08B 13/00
[52] U.S. Cl...................134/56 R; 134/99.2;
134/107;134/108;134/109; 134/111; 134/153;
. 210/167;210/297;210/387
[58] Field of Search ........... 134/56;210/167,297,
210/387
[56] References Cited
U.S. PATENT DOCUMENTS
3,378,018 4/1968 Lanter...................134/109
3.624,750 11/1971 Peterson.................134/153 X
3.765.430 10/1973 Muller...................134/109
4.143,669 3/1979 Minkin...................134/153
4,217.920 8/1990 Ballard..................134/153 X
4.652.368 3/1997 Ennis et al..............134/109 X
4.769.158 9/1998 Eckert...................210/297 X
4.948.502 8/1990 Anderson.................210/387
FOREIGN PATENT DOCUMENTS
710672 2/1980 U.S.S.R 134/109
761035 9/1990 U.S.S.R 134/109
PRIMARY EXAMINER - Philip R. Coe
ATTORNEY, AGENT, OR FIRM - Malloy & Malloy
[57] ABSTRACT
A self-contained and integrated multi-process power spray washer apparatus to be
used to clean articles placed therein, the washer apparatus including a central
washing chamber which is large enough to enclose and rotate an article to be
cleaned therein. A primary filter removes contaminants from a cleaning solution
immediately after it has been used, and a solution reservoir receives and holds
filtered cleaning solution from the primary filter. A fin forced electronic
burner heats the cleaning solution contained in the reservoir, and Provides a
heat source for contaminant incineration. An oil skimmer removes oil and grease
from an upper surface of the cleansing solution held in the reservoir, and a
secondary centrifugal filter through which cleansing solution is pumped from the
reservoir additionally filters the solution. A high power sprayer sprays the
recycled and clean cleansing solution into the washing chamber at a
substantially high volume and pressure so as to substantially clean the item
contained within the washing chamber. A fresh water rinse cycle provides for a
final fresh water rinse of the article being cleaned and the recycling of the
contaminated water prior to reuse or proper drainage. Accordingly, three steps
of a cleaning process associated with the present invention include spray
washing, recycling and disposal which are fully integrated in the self contained
power spray washer apparatus.
14 Claims, 1 Drawing Sheet
[DRAWING]
<PAGE>
U.S. PATENT Jan 11, 1994 5,277,208
[DRAWING, Fig.1]
[DRAWING, Fig.2]
<PAGE>
1
MULTI-PROCESS POWER SPRAY WASHER
APPARATUS
BACKGROUND OF THE INVENTION
Field of the Invention
This invention relates to a self-contained and integrated multiprocess power
spray washer apparatus, to be used to clean any and all parts or articles placed
therein, and is structured to power spray wash parts, filter and recycle
cleansing solutions, and dispose of all contaminant by-product, thereby
providing a cost efficient, highly effective, and environmentally acceptable
means of cleaning engine parts and the like which require thorough cleaning
prior to use.
Summary of the Invention
The present invention is directed towards a self-contained and integrated
multi-process power spray washer apparatus to be used to clean any and all parts
placed therein. The apparatus includes primarily a central washing chamber
which is sufficiently large to enclose and rotate completely the item to be
cleaned, thereby utilizing the cleansing solution at a substantially high
pressure and volume which maximizes the effects of the cleaning. Additionally,
the washer apparatus includes a primary filter which is structured and disposed
to receive used cleansing solution from the central washing chamber and
substantially remove contaminants therefrom. This primary filter is
interconnected with a solution reservoir such that the filtered cleansing
solution may flow therefrom into the solution reservoir. Within the solution
reservoir, the cleansing solution is heated by in integrated burner so as to
maximize the effects of the cleansing solution. The cleansing solution within
the solution reservoir is further cleaned by an oil skimmer which removes oil
and grease from the cleansing solution. Further included as part of the washer
apparatus is a secondary centrifugal filter. This secondary centrifugal filter
is structured such that cleansing solution is pumped from the solution reservoir
therethrough, wherein the solution is further cleansed of contaminants. After
passing through the secondary centrifugal filter, the cleansing solution is
pumped through a high power sprayer which sprays the cleansing solution into the
washing chamber at substantially high volumes and pressures, thereby cleaning
the item contained within the washing chamber. The object of the present
invention is to provide a power spray washing apparatus which will thoroughly
clean any and all parts. including engine blocks and the like which often have
large quantities of dirt, grease, and contaminants built up thereon. Another
object of the present invention is to provide a spray washer apparatus which
enables the cleansing solution to be recycled and reused, yet be effective
throughout all of the multiple uses. Yet another object of the present invention
is to provide a power spray washer apparatus which is environmentally acceptable
and eliminates contaminant waste.
BRIEF DESCRIPTION OF THE DRAWINGS
For a fuller understanding of the nature of the present invention, reference
should be had to the following detailed description taken in connection with the
accompanying drawings in which:
2
FIG. 1 is a front, partial cutaway perspective view of the power spray washer
apparatus.
FIG. 2 is a partial cutaway, side view of the power spray washer apparatus.
Like reference numerals refer to like parts throughout the several views of
the drawings.
DETAILED DESCRIPTION OF THE
PREFERRED EMBODIMENT
Shown in FIGS. 1 and 2, the present invention is directed towards a
self-contained and integrated multiprocess power spray washer apparatus
generally indicated as 10, to be used to thoroughly clean any and all parts
which may have substantial dirt, grease, and contaminates built up thereon. The
spray washer apparatus 10 includes a large central washing chamber 20 capable of
completely enclosing the item to be cleaned. Located within the central washing
chamber 20 is a pull out, rotating turntable 24 which is structured to be able
to support objects of substantial weight thereon. The rotating turntable 24 is
structured such that all sides of the item to be cleaned will be thoroughly
sprayed, and as it may be easily pulled out and slid back within the washing
chamber 20, the large and heavy items to be cleaned may be conveniently
positioned thereon before insertion into the washing chamber 20. In order to
assure maximum sealing efficiency within the washing chamber 20, and in order to
minimize the floor space required for the spray washer apparatus 10, a pair of
inwardly opening doors 25 are utilized to allow access into the washing chamber
20. Included at a lower portion of the washing chamber 20 is a drainage opening
28. The drainage opening 28 is structured such that cleansing solution used
within the washing chamber 20 may flow therethrough into a primary filter 30.
The primary filter 30 utilizes a filtration sheet 31 which is structured to
remove a majority of the contaminants contained in the used cleansing solution,
and allow passage of the filtered cleansing solution therethrough. The
filtration sheet 31 is positioned at a distal end 32 thereof on an automatic
roller 33 which contains the clean filtration sheet 31. The filtration sheet 31
is positioned so as to pass substantially over a drainage area 35. Used
cleansing solution flows into the drainage area 35 and is filtered by the
filtration sheet 31, however, since the portion of the filtration sheet 31 which
is over the drainage area 35 will eventually become saturated with contaminants,
a fluid level meter 36 is included over the drainage area 35 such that when a
predetermined quantity of cleansing solution backs up within the drainage area
35, thereby indicating the filtration sheet 31 is saturated, it will trigger the
automatic roller 33. Once triggered, the automatic roller 33 causes a clean
portion of the filtration sheet 31 to be positioned atop the drainage area 35,
and causes the saturated proximate end 34 of the filtration sheet 31 to pass
into a disposal holding area 40. Further, suction fan 2 located in cleansing
solution reservoir 50 provides negative pressure to augment the flow of
cleansing solution through filtration sheet 31. Additionally, a safety release
overflow outlet 39 above filtration sheet 31 and a hood 37 encapsulating the
drainage area 35 prevent any overflows. After passage through the drainage area
35, the filtered cleansing solution passes into the solution reservoir 50
positioned beneath the washing chamber 20. The contaminant saturated portion 34
of the filtration sheet 31 after passage into the disposal holding area 40 can
be removed and positioned within a heavy duty
<PAGE>
5,277,208
3
incinerator chamber 41, having ceramic lining 43, wherein the saturated portion
34 of the filtration sheet 31 will be incinerated by a fan forced burner 42. The
incineration formed by this process passes through an exhaust duct and out of
the spray washer apparatus 10. In addition to incinerating the filtration sheet
31. the fan forced burner 42 also functions as heating means to beat cleansing
solution held within the solution reservoir 50, thereby maximizing the
efficiency of the cleansing solution. Once within the solution reservoir 50, an
oil skimmer 55 is utilized to remove remaining oil or contaminants from the
cleansing solution. The above steps are part of what may be referred to as a
cleansing cycle or operation. After the cleansing cycle or operation, to be
described in even greater detail hereinafter, has been completed, a filtering
cycle may be started by adding flocculent and/or coagulant chemical catalysts
contained in catalyst holding tank 12 into the cleaning solution reservoir 50 so
as to react with the cleaning solution and initiate the coagulant and/or
flocculent chemical process which coagulates or flocculates the finer
contaminants for pick up by the mechanical, rotating 360' sweep 19 which may
again be activated during the filtering cycle. The rotating sweep 19 once again
activated directs the contaminated solution into an upper portion of the washing
chamber 20 through a diverter flow tube 27, and into a suction and discharge
chamber 15. This flow is induced by a suction mechanism 13 which creates a
desired turbulent free flow of the solution for discharge through discharge
opening 17 into drainage opening 28 therethrough into primary filter 30 so as to
separate the flocculated and/or coagulated contaminants from the recycled
solution. However, during the cleansing cycle or operation the cleansing
solution containing gravity settled contaminants is picked up from the solution
reservoir 50 through mechanical rotating 360' sweep 19 at the extreme solution
reservoir 50 bottom into pump 60, and through solution conduits 62 and 64 into a
secondary centrifugal filter 70. The secondary centrifugal filter 70 revolves
the cleansing solution at high speeds causing any remaining contaminated
cleansing solution to pass to a lower portion 71 thereof, and out through a
drainage outlet 72. This contaminated cleansing solution passes from the
drainage outlet 72 into an extremely fine filter element 73 so as to separate
the contaminants from the recycled solution which is automatically directed back
to the holding tank 50. After passage through the secondary centrifugal filter
70, the clean, reused cleansing solution passes into a high power sprayer 80.
The high power sprayer 60 includes a plurality of nozzles 82 which are
structured to optimize a solution spray pattern into the central washing chamber
20. After introduction of the cleansing solution into chamber 20, and the
cleaning of an item therein, an additional part of the cleansing cycle includes
a fresh water rinse cycle, performed within central washing chamber 20. After
rinsing the item being cleaned, the initially fresh rinse washer, now containing
contaminants, is routed or allowed to drain through a diverter door 5 on the
drainage opening 28 which directs contaminated fresh water rinse fluid through a
discharge tube to entry 79 and into a rinse cycle filter 75 which combines a
filter roll element plus heavy metal removal media, with activated charcoal
discharged from the apparatus 10 through a discharge opening 77. Contaminants
within the rinse water are thereby properly eliminated. Conveniently positioned
outside of the central washing chamber 20 is a control panel which includes a
plurality of gauges to check solution temperature, levels and the like, and may
further be programmed to perform automated,
4
timed cleaning cycles. Finally, the entire power spray washer apparatus 10 is
heavily polyurethane insulated to reduce heat emission and retain the cleansing
solution at a desired temperature.
Now that the invention has been described, what is claimed is:
1. To be used to power clean any and all parts, a self-contained and
integrated multi-process power spray washer apparatus comprising:
a central washing chamber, said chamber being sufficiently large to enclose
an item to be cleaned therein,
a primary filter, said primary filter structured to remove flocculated and/or
coagulated contaminants from a cleansing solution,
a solution reservoir, structured to receive the filtered cleansing solution
from said primary filter,
heating means to heat said cleansing solution in said reservoir,
an oil skimmer structured and disposed to remove remaining oil and grease from
said cleansing solution in said reservoir,
a secondary centrifugal filter through which said cleansing solution is
pumped, said secondary centrifugal filter being structured to remove
additional contaminants from said cleaning solution prior to reuse, and
a high power sprayer to spray said cleansing solution, after passage through
said secondary centrifugal filter, into said washing chamber at a
substantially high volume and high pressure so as to clean the item
contained within said chamber.
2. An apparatus as recited in claim 1 wherein said central washing chamber
includes a pull out, rotating turntable whereon said item to be cleaned may be
positioned and rotated within said chamber so as to place all sides of said item
under the direct spray of said high power sprayer.
3. An apparatus as recited in claim 2 wherein said turntable is capable of
supporting thereon items of substantial weight.
4. An apparatus as recited in claim 3 wherein said central chamber includes a
pair of inwardly opening doors structured and disposed to maximize sealing
efficiency and minimize floor space requirements.
5. An apparatus as recited in claim 4 wherein said primary filter includes a
filtration sheet pulled from a roll on an automatic roller and across a drainage
area, a used portion thereof being discarded into a disposal holding area.
6. An apparatus as recited in claim 5 wherein said drainage area includes a
fluid level meter means positioned so as to detect when said cleansing solution
attains a predetermined height and said filtration sheet has become saturated by
contaminants and will no longer allow passage of filtered cleanser therethrough
into said solution reservoir, and said meter triggering said automatic roller
when the fluid level reaches the predetermined height so as to move a fresh area
of said filtration sheet from said roll over said drainage area and direct
saturated areas of said filtration sheet into said disposal holding area.
7. An apparatus as recited in claim 6 wherein said heating means includes a
fan forced electronic burner.
<PAGE>
5,277,208
5
8. An apparatus as recited in claim 7 further including a disposal
incineration area having a heavy duty, ceramic lined incinerator, exhaust means,
and being structured and disposed to incinerate said saturated filtration paper
using said electronic burner.
9. An apparatus as recited in claim 8 further including a mechanical rotating
360 sweep suction mechanism at an extreme bottom of said solution reservoir to
assist the flow of contaminants and cleansing solution throughout said
apparatus.
10. An apparatus as recited in claim 9 wherein said secondary centrifugal
filter is structured and disposed to direct contaminants to a lower portion
thereof, and send filtered cleansing solution into said high power sprayer.
11. An apparatus as recited in claim 10 wherein said lower portion of said
secondary filter includes a drain-
6
age outlet to direct the contaminants into a fine filter element so as to
separate the contaminants from the recycled solution prior to being directed
back into said solution reservoir.
12. An apparatus as recited in claim 11 further including a chemical catalyst
added into said solution reservoir to chemically induce removal of contaminants
from the cleansing solution.
13. An apparatus as recited in claim 12 which includes an integral fresh water
rinse cycle with provisions for diverting fresh water rinse through several
stages of filtration removing the majority of contaminants for reuse or proper
drainage.
14. An apparatus as recited in claim 13 wherein said high power sprayer
includes a plurality of nozzles structured and disposed to optimize asolution
spray pattern.
EXHIBIT 10.14
United States Patent
GENERAL PARTS WASHER
<PAGE>
United States Patent
PATENT NUMBER: 5,349,974
Mansur
Date of Patent: Sep. 27, 1994
GENERAL PARTS WASHER
Inventor. Pierre G. Mansur, Miami, Fla.
Assignee: Mansur Industries Inc., Miami, Fla.
Appl. No.: 207,136
Filed: Mar. 4, 1994
Int. Cl.$ BO8B 3/02
U.S. Cl. 134/107; 134/108;
134/111
Field of Search 134/105, 107, 108, 109,
134/111; 202/170
References Cited
U.S. PATENT DOCUMENTS
2,834,359 5/1958 Kearney 134/108 X
3,598,131 8/1971 Weihe, Jr 134/107
3,718,147 2/1973 Laroche 134/108 X
3,996,949 12/1076 Boynton 134/108 X
4,008.729 2/1977 Chizinsky 134/107
4,290,439 9/1981 Charpentier 134/107
4,353.323 10/1982 Koblenzer 134/107 X
4,596,634 6/1986 McCord 134/107 X
4,865,061 9/1989 Fowler e al. 134/108
FOREIGN PATENT DOCUMENTS
662742 3/1929 France 134/105
2394334 2/1979 France 134/109
PRIMARY EXAMINER - Philip R. Coe
ATTORNEY, AGENT. OR FIRM - Robert M. Downey
ABSTRACT
An apparatus for washing automotive, aviation, marine and general parts with a
volatile solvent during maintenance, repair and rebuilding operations. The
apparatus includes a wash basin with a drain to facilitate return of the solvent
to a holding tank having a pump therein for recirculating the solvent back to
the wash basin through a discharge spout for washing parts. A first valve
assembly between the drain and holding tank closes during periods of non-use to
prevent vapors from escaping to the atmosphere. During a timed recycling
process, a second valve assembly releases used, contaminated solvent from the
holding tank into a distillation pot where the solvent is heated under vacuum to
produce vapors. The vapors pass through a condenser where they are cooled to a
liquid state, yielding pure solvent, which is directed into the holding tank for
future parts washing as demanded.
11 Claims, 6 Drawing Sheets
[DRAWING]
<PAGE>
U.S. Patent Sep. 27, 1994 Sheet 2 of 6 5,349,974
[DRAWING, FIG. 3]
[DRAWING, FIG. 4]
<PAGE>
U.S. Patent Sep. 27, 1994 Sheet 3 of 6 5,349,974
[DRAWING, FIG. 5] [DRAWING, FIG. 6]
[DRAWING, FIG. 7] [DRAWING, FIG. 8]
<PAGE>
U.S. Patent Sep. 27, 1994 Sheet 4 of 6 5,349,974
[DRAWING, FIG. 9] [DRAWING, FIG. 10]
[DRAWING, FIG. 11] [DRAWING, FIG. 12]
<PAGE>
U.S. Patent Sep. 27, 1994 Sheet 5 of 6 5,349,974
[DRAWING, FIG. 13]
<PAGE>
U.S. Patent Sep. 27, 1994 Sheet 6 of 6 5,349,974
DISTILLATION CYCLE WASH CYCLE ON
TIMER DISTILLATION
6 DAY/24 HR WASH ON
PROGRAMMABLE ON
VAPOR CONTAINMENT
SOLVENT CONTAINMENT VALVE OPEN
VALVES OPEN
SOLVENT PUMP ON
TIMER DELAY
WASH OR RINSE
VALVES CLOSE
FIG15A
TIMER DELAY
VACUUM PUMP ON
VACUUM FAULT ALL
SENSOR OK OFF WASH CYCLE OFF
ALL HETING ELEMENTS ON WASH OFF
TEMP. SENSOR SET POINT SOLVENT PUMP OFF
ONE HEATING ELEMENT OFF TIMER DELAY
BLOWER ON VAPOR VALVE CLOSE
VAPOR TEMP. SENSOR FIG15B
ALL OFF
FIG14
<PAGE>
5,349,974
GENERAL PARTS WASHER
BACKGROUND OF THE INVENTION
1. Field of the Invention
This invention relates to an apparatus for washing articles with a liquid
solvent, and more particularly, to a general parts washer providing for
recycling of contaminated, dirty solvent during a timed recycling process to
produce pure, non-contaminated solvent on a regular basis for use in washing
parts during maintenance, repair, and rebuilding operations.
2. Description of the Related Art
During maintenance, repair and rebuilding operations in virtually all industrial
and commercial environments, it is necessary to wash a wide variety of parts and
articles in order to remove grease, oil, dirt and other contaminants. Typically,
volatile solvents are used in almost all small parts cleaning operations as they
have been found to be most effective in removing grease and other accumulated
residue from metal parts and other articles.
In order to facilitate washing of various parts with a volatile solvent
such as a hydrocarbon or halogenated hydrocarbon, there is presently available a
sink which is removably supported on top of a 55 gallon drum filled with
cleaning solvent. A pump is provided which pumps the solvent from the drum to a
spicket in the sink where it is used to rinse parts. From the sink, the solvent
is drained back into the drum During washing operations, the solvent becomes
immediately contaminated after the first use. However, the contaminated solvent
is continuously used during cleaning operations until a next scheduled solvent
replacement, which is usually on a monthly basis. The regular replacement of
contaminated solvent is ordinarily provided by a service, which also supplies
the washing apparatus, on a service contract basis. To replace the solvent, the
sink is removed from the drum containing the contaminated solvent and is placed
on another drum containing fresh solvent. The contaminated drum of solvent must
then be taken away and disposed of in a manner complying with EPA containment
disposal guidelines. This procedure is inefficient, costly and time consuming,
leaving a busy manufacturing or repair facility with no other alternative than
to perform parts cleaning operations using dirty, contaminated solvent between
scheduled solvent replacement dates.
Various types of systems and apparatus have been proposed and/or developed
for cleaning metal parts and like articles using volatile solvents. In many
applications, the solvent is heated to produce vapors. The various articles to
be cleaned are either bathed in the vapors or in a condensed stream of volatile
solvent. Some of these various apparatus systems are disclosed in the following
U.S. Pat. Nos.: Chizinsky, U.S. Pat. No. 4,008,729; Laroche, U.S. Pat. No.
3,718,147; McCord, U.S. Pat. No. 4,596,634; Boynton. U.S. Pat. No. 3,996,949;
and Koblenzer, U.S. Pat. No. 4,353,323. Generally, all of the cleaning apparatus
disclosed in these patents include a base reservoir where the solvent is
contained and heated to produce vapors. As the vapors rise, they are condensed
to a liquid solvent which drips back down into the base reservoir. Articles
placed, within the various apparatus are cleaned by either the rising vapor or
the condensed solvent. In any event, the solvent in the reservoir accumulates
contaminates in a short period of time and, eventually, the contaminated solvent
must be removed, properly disposed of and replaced with clean solvent.
Therefore, there still exists the problem associated with the time and expense
of contaminate disposal.
Accordingly, there is a definite need in all industries requiring
parts cleaning during maintenance, manufacturing, repair and rebuilding
operations, for a parts washing apparatus including a sink or basin for washing
parts with a volatile solvent and means for recycling the solvent to provide
pure, non-contaminated solvent on a daily basis.
SUMMARY OF THE INVENTION
The present invention is directed to an apparatus for washing (cleaning)
articles such as general machine and engine parts, which provides pure, fresh
solvent on demand.
More particularly, the present invention includes a timed recycling
process which recycles contaminated, dirty solvent on a regular basis to provide
pure solvent for cleaning, thus eliminating the need for regular replacement and
disposal of contaminated solvent. Accordingly, the present invention provides a
practical and economical means of complying with contaminate disposal guide
lines of the Environmental Protection Agency.
In accordance with the general parts washing apparatus of the present
invention, there is provided a cabinet having an upper wash basin including an
at least partially surrounding wall structure defining a splash guard, an open
top and a removable front wall portion. The wash basin further includes a floor
which slopes slightly downward from the side front and rear towards a centrally
disposed drain to facilitate recovery of solvent after use. A lower portion of
the cabinet is defined by side wall panels and a base disposed in surrounding
relation to a cabinet interior. Once the solvent has passed through the drain
and a filter, the solvent returns to a holding tank within the cabinet interior
below the wash basin. A pump recirculates the solvent from the holding tank to a
spout which discharges the solvent into the wash basin for rinsing articles
during what might be termed a wash cycle.
During a timed recycling process, containment valves are opened, releasing
the solvent from within the holding tank to a distillation pot. After a timed
delay, the valves are closed and a vacuum pump is activated, creating a vacuum
in the distillation pot and holding tank while the solvent is heated to a
boiling point. The vacuum in the distillation pot is maintained effectively
lowering the solvent boiling point temperature, as vapors rise from the
distillation pot through a condenser tube. The condenser tube passes through a
cooling zone created by a blower where the vapors condense to a liquid state,
producing pure recycled solvent. This fresh solvent is then led into the holding
tank for subsequent use during wash cycle.
A lid covers the distillation pot, in sealed relation thereto, during the
recycling process. To facilitate cleaning, the distillation pot can be lowered,
removing the lid, and pulled out from the lower cabinet, whereupon accumulated
contaminate can be more efficiently and effectively removed from within the pot.
Accordingly, with the foregoing in mind it is a primary object of the
present invention to provide a general parts washing apparatus for use in
cleaning parts during maintenance, repair and rebuilding operations,
<PAGE>
which includes means for recovering and recycling cleaning solvent so as to
provide a user with "on-demand" pure solvent on a daily basis for cleaning.
It is another object of the present invention to provide a general parts
washing apparatus, as described above, which eliminates the need for constant
replacement and disposal of contaminated cleaning solvent, while providing a
practical and economical means of complying with environmental protection agency
contaminant disposal guidelines.
It is a further object of the present invention to provide a general parts
washing apparatus adapted to recycle volatile solvent so as to provide fresh,
pure solvent on a regular basis and which is further relatively compact and
inexpensive.
It is still a further object of the present invention to provide a general
parts washing apparatus, as described above, which operates on common 120 volts
and which further requires no special water or air requirements. It is yet
another object of the present invention to provide a general parts washing
apparatus, as described above, which complies with all government imposed safety
requirements.
It is still another object of the present invention to provide a general
parts washing apparatus as described above, which is further engineered and
designed to permit a user to siphon residual contaminates from the distillation
pot bottom without manually accessing the pot.
These and other objects and advantages of the present invention will be
more readily apparent in the description which follows.
BRIEF DESCRIPTION OF THE DRAWINGS
For a fuller understanding of the nature of the present invention, reference
should be had to the following detailed description taken in connection with the
accompanying drawings in which:
FIG. 1 is a front, top perspective view of the general parts washing
apparatus of the present invention.
FIG. 2 is an isolated view, in partial section, taken along the plane of
line 2-2 of FIG. 1.
FIG. 3 is a front elevation, in partial section, taken along the plane of
line 3-3 of FIG. 1.
FIG. 4 is a side elevation, in partial section, taken along the line 4-4 of
FIG. 1.
FIG. 5 is a top plan view, in partial section, taken along the plane of line
5-5 of FIG. 3.
FIG. 6 is a top plan view, in partial section, taken along the plane of line
6-4 of FIG. 3 illustrating a top of the distillation pot.
FIG. 7 is a top plan view, in partial section taken along the plane of line
7-7 of FIG. 3 showing heating elements in the distillation pot.
FIG. 8 is a isolated elevational view in partial section, illustrating a
vapor containment valve assembly and solvent containment valve assembly of, the
present invention.
FIG. 9 is an isolated detailed elevational view, in partial section taken
along the plane of line 9-9 of FIG. 8 illustrating, in detail, the vapor
containment valve assembly and solvent containment valve assembly.
FIG. 10 is an isolated view, in partial section, showing the solvent
containment valve assembly in an open position.
FIG. 11 is an isolated front elevation of an upper portion of the solvent
containment valve assembly showing a motor, cam member, inner valve stem and
outer valve stem thereof.
FIG. 12 is an isolated side elevation, in partial section, showing the vapor
containment valve assembly in an open position.
FIG. 13 is a schematic diagram illustrating a sequence of operation of
components of the washing apparatus during a wash cycle and a solvent recycling
distillation cycle.
FIG. 14 is a flow diagram illustrating a sequence of operation throughout the
solvent recycling distillation cycle.
FIG. 15A is a flow diagram illustrating a sequence of operation during the
wash cycle.
FIG. 15B is a flow diagram illustrating a sequence of deactivation of the
wash cycle during intervals of non-use. Like reference numerals refer to like
parts throughout the several views of the drawings.
DETAILED DESCRIPTION OF THE
PREFERRED EMBODIMENT
Referring to the several views of the drawings, and initially FIGS. 1, 3 and
4, there is generally illustrated the general parts washing apparatus 10 of the
present invention. The apparatus 10 includes a cabinet 12 including an upper
portion defining a wash basin 14 and a lower portion 16 including a base 17,
side walls 18, 18' rear wall 19 and a front wall 20. The front wall 20 is at
least partially comprised of a door 22 which is hinged to move between an open
and closed position facilitating access to a cabinet interior. The side walls
18, 18' and rear wall 19 extend upwardly beyond a floor 26 of the wash basin 14
so as to partially surround the wash basin, defining a splash guard. A wall
panel 24 is removably fitted within opposite channels 25. 25' formed between an
upper portion of the front wall 20 and opposite side walls 18, 18'. During
washing operation the front wall panel 24 can be pulled upwardly and removed
from a remainder of the apparatus 10. In this manner, access to the wash basin
14 is unobstructed from a front of the apparatus 10.
The floor 26 in the wash basin 14 is sloped from the side rear and front,
downwardly towards a central zone where there is located a drain 28, including a
drain plate 29 through which solvent drains after use for washing articles in
the basin 14. After passage through the drain plate 29, the solvent is directed
through a filter 30 fitted directly below the drain plate. From the filter, the
solvent is led through a return canal 32 which leads to a solvent holding tank
40. A vapor containment valve 34 is provided at the connection of the return
canal 32 to the solvent holding tank 40. During periods of non-use the vapor
containment valve 34 is closed, thus preventing solvent vapors from escaping to
atmosphere from within the holding tank The holding tank 40 is sized and
configured to contain a predetermined amount of solvent therein for continuous
recycling and reuse during cleaning operations.
A pump 44 within the holding tank 40, located at a bottom thereof,
recirculates the solvent in the holding tank through a return conduit 46 leading
to a three way valve 48 interconnecting between the return conduit and a spout
50 and a hose 52 having a wash brush 54 attached to an end thereof. A valve
lever 56 facilitates operation of the valve to direct flow of solvent to either
or both the spout 50 and hose 52 for subsequent discharge into the wash basin
14. The brush 54 attached to
<PAGE>
the hose 52 is specifically designed to permit fluid flow there through so that
articles may be brushed and simultaneously with solvent to remove accumulated
grease, dirt and other contaminants from the articles being washed. Once
discharged from either the spout 50 or brush 54 for rinsing the various articles
being cleaned, the solvent returns to the holding tank through the drain 26 and
return canal 32. An electric switch is provided and is easily accessible on an
exterior of the apparatus 10 (not shown for purposes of clarity) to facilitate
de-activation of the pump 40 during periods of nonuse. To this point, a wash
cycle (sec FIG. 23, 15A & 15B) has been defined which continues during parts
washing operations.
After daily parts washing operations or on such other time intervals as may be
desired the solvent contained within the holding tank 40 (now contaminated after
use for washing various articles in the wash basin) is released through a
transfer canal 58 into a distillation pot 60 located in a lower portion of the
cabinet interior. Referring to FIGS. 9 and 10, at the initiation of a timed
solvent recycling process the vapor containment valve 34 is closed by motor M1
or solenoid which rotates a cam 36, resulting in upward movement of valve stem
37 and causing the valve head 38 to mate against the valve seat 39, and thus
preventing the vapors from escaping to atmosphere. Simultaneously, motor M2 or
solenoid is activated causing rotation of cam member 64, thereby operating a
dual head solvent containment valve assembly 66. Upon initiation of the solvent
recycling process (as shown in the flow diagrams of FIGS. 13 and 14), partial
rotation of cam member 64 forces a first inner valve stem 70 downwardly to
release a lower solvent containment valve head 72 from engagement with a two-way
valve seat 76. Simultaneously, partial movement of cam member 64 forces a lever
80 attached to an outer second valve stem 82 outwardly causing the second an
outer valve stem 82 to be lifted upwardly, resulting in an upper solvent
containment valve head 84 being removed from the two way valve seat 76. Upon
opening of the solvent containment valve assembly 66, by simultaneous movement
of the upper 94 and lower 72 valve heads away from the two-way valve seat 76,
the containment, solvent is released from the holding tank 40 through the
transfer canal 58 leading to the distillation pot 60. The bottom 41 of the
solvent holding tank 40 is specifically configured to slope toward the solvent
contaminated valve assembly 66, as seen in FIG. 8, so that upon opening of the
containment valve assembly, the solvent will readily flow through the transfer
canal 58, flushing any accumulated bottom sediment in the holding tank through
the transfer canal and into distillation pot 60. In this manner accumulation of
sediment from the bottom 41 of the holding tank and around the two way valve
seat 76 is discouraged.
The distillation pot 60 includes a double wall structure around the sides and
bottom including an inner wall 90 and bottom 92 and outer wall 94 and bottom 96
having insulation 98 disposed therebetween, as best seen in FIGS. 3 and 4. A
removable lid 100 is suspended with the cabinet by brackets 102 welded to the
inner surface of opposite side walls 18, 18' and the top of the lid 100. To
facilitate removal and attachment of the lid 100 in sealed engagement over an
open top of the distillation pot, a removal assembly 104 is provided including a
wheel 106 having a plurality of arms 107 extending therefrom and a vertically
oriented threaded stem 108 which threadably engages within a threaded, hollow,
concentric bore 110 extending at least partially through a central vertical post
112 of the distillation pot 60. The wheel 106 remains supported upon a platform
114 on the top of the lid 100 with the threaded stem 108 extending downwardly
therethrough for threaded engagement within the threaded bore 110 of the central
post 112 of the distillation pot-60. Upon rotation of the wheel 106 in a
particular direction, by grasping the 107 and pulling, the threaded stem 108 may
be caused to threadably advance within the hollow bore 110 of the central post
112, resulting in the distillation pot 60 being raised towards the lid 100 until
a top edge 120 or the side wall of the pot 60 mates with an under side 122 of
the lid. Alternatively, rotation of the wheel in an opposite, direction results
in lowering of the distillation pot 60, effectively removing the lid. A seal
ring 124 may be fitted within a groove formed in an upper edge 120 of the side
wall structure of the distillation pot for mating, sealing engagement with the
underside surface 122 of the lid 100, thus providing an air tight sealed
connection.
In order to initiate threaded engagement of the stem 108 within the hollow
bore 110 of the central post 112 upon attaching the lid to the distillation pot,
a cam lever assembly 130 is provided including a shaft 132 having a first end
134 with a knob 135 attached and an opposite end 136 fitted to a cam member 138
which is pivotally attached to a support bracket 140 above the wheel 106. Upon
inward movement of the shaft 132 by pressing inwardly on the knob 135, the cam
member 138 is caused to rotate such that one end of the cam member 138 forces
the wheel 106 and threaded stem 108 downwardly into threaded engagement with the
threaded bore 110 of the central post. In order to facilitate upward movement of
the wheel 106 and threaded stem 108 when removing the lid, biasing means are
provided between the support platform and wheel (not shown for purposes of
clarity). To remove the lid, the knob 134 and attached shaft 132 are pulled
outwardly, causing the cam 138 to rotate out of engagement with the wheel. Upon
disengagement of the threaded stem 108 from within the central post, the biasing
means urges the wheel 106 and stem 108 upwardly to clear the central post 112
and upper edge 120 of the side walls of the distillation pot 60.
A plurality of beating elements 150 are provided in the distillation pot 60,
including preferably four heating elements attached to the underside of inner
bottom 92 of the distillation pot and a fifth heating element 150' disposed
within the central post. The heating elements 150, 150' are activated during the
recycling process in order to boil the solvent to produce vapors.
A condenser tube 160 includes a first end 162 attached through the lid 100 in
fluid communication with an interior of the distillation pot 60 and an opposite
end 164 connecting to the solvent holding tank. A mid-section of the condenser
tube passes through a cooling zone and defines a condenser 166. The cooling zone
is cooled by air flow created by a blower 170. Air is drawn through the cooling
zone within which the condenser (mid-section of the condenser tube) is located,
and forced out of the rear of the cabinet. A vacuum pump 180 within the cabinet
interior interconnects to the holding tank 40 for creating a vacuum in the
holding 65 tank 40 and distillation pot 60 via the interconnecting condenser
tube 160.
In accordance with the above description, the solvent recylcing process is
shown in the flow chart in the drawings. Activation of the distillation process
is set on a programmable timer provided with a 24 hour, seven day clock. Thus,
when the timer reaches the programmed activation time, the recycle process is
initiated whereupon motor M2 is activated to partially rotate the cam member 64
resulting in the solvent containment valve assembly 66 being opened. A delay
timer keeps the solvent containment valve assembly opened for a sufficient time
to allow the solvent in the holding tank 40 to be transferred to the
distillation pot 60. After the delay, the solvent containment valves 72, 84 are
closed. After a second delay, the vacuum pump 180 is activated to create a
vacuum within the holding tank and distillation pot. A vacuum sensor determines
whether there is a fault in the system and if so, the entire system is shut down
and a remainder of the recycling pump is prevented until the fault is corrected.
If a sufficient vacuum is sensed, the heating elements 150, 150' are turned on
to heat the solvent in the distillation pot. Upon reaching a predetermined
temperature, the heating element in the central post of the distillation pot is
turned off. Thereafter, the blower 170 is activated and vapor begins to form in
the distillation pot and rise through the condenser tube 160, whereupon the
vapor is condensed to a liquid state, yielding purified solvent. The purified
solvent is lead into the holding tank 40 where it accumulates throughout the
recycling process. A vapor temperature sensor in the distillation pot determines
when the solvent has been substantially vaporized at which point, the vacuum
pump 18, heating elements 15O, 150' and sensors are turned off. At this stage,
the holding tank 40 is substantially filled with fresh, purified solvent for use
during the next wash cycle.
After several distillation cycles, the distillation pot will accumulate a
concentrated amount of contaminate. To facilitate removal of this contaminate
and cleaning of the distillation pot, the front door 22 of the cabinet 12 is
opened and the lid 100 removed from the distillation pot 60, whereupon the pot
can be rolled out from within the cabinet permitting unobstructed thereto. Now
that the invention has been described, What is claimed is:
1. An apparatus for washing articles with a solvent comprising:
a cabinet including an upper portion defining a wash basin and a lower
portion including a base and side walls disposed in surrounding relation
to a cabinet interior,
said wash basin including at least a partially surrounding wall structure
defining a splash guard, and a floor having a drain means therein to
drain the solvent from within said wash basin,
a holding tank within said cabinet interior structured and disposed to
contain a predetermined charge of the solvent therein,
return means interconnecting between said drain means and said holding tank
for directing the solvent from said drain means into said holding tank,
a spout for discharging the solvent into said wash basin,
a pump structured and disposed to circulate the solvent from said holding
tank to said spout for discharge into said wash basin,
a distillation pot disposed within said cabinet interior and including an
insulated side wall structure and bottom and a removable insulated lid
structured for scaled, air tight engagement with said side wall structure
in covering relation to an open top of said distillation pot,
a transfer canal connecting between said holding tank and said distillation
pot for selectively transferring contaminated solvent from said holding
tank to said distillation pot, solvent containment valve means
selectively operable between an open position to release the contaminated
solvent into said distillation pot and a closed position preventing the
solvent from entering said distillation pot,
a vacuum pump interconnected to said holding tank and structured and
disposed to create a vacuum within said holding tank and said
distillation pot,
heating means within said distillation pot structured and disposed for
boiling the contaminated solvent contained therein so as to produce a
solvent vapor,
a condenser including a condensing tube having a first end connected to
said distillation pot for receiving the solvent vapor therein, a
mid-portion disposed in a cooling zone within said cabinet interior and a
second opposite end connecting with said holding tank for directing
purified, condensed liquid solvent into said holding tank, and
a blower disposed within said cooling zone for directing an air current
therethrough to cool said mid portion of said condensing tube, and
thereby causing the solvent vapor to condense to a liquid state so as to
produce the purified, solvent.
2. An apparatus for washing articles with a solvent comprising:
a wash basin including a floor with drain means therein structured and
disposed for draining the solvent from within said wash basin,
a holding tank for containing the solvent,
solvent discharge means for circulating and discharging solvent from said
holding tank into said wash basin,
return means or directing the solvent from said drain means to said holding
tank,
a distillation pot including a surrounding, insulated side wall structure
and bottom and a removable insulated top lid,
transfer means for selectively transferring contaminated solvent from said
holding tank to said distillation pot,
a vacuum pump connected to said holding tank for creating a vacuum in said
holding tank and said distillation pot,
heating elements in said distillation pot structured and disposed for
boiling the contaminated solvent contained therein to produce solvent
vapors, and
a condenser structured and disposed to receive and subsequently condense
the solvent vapors to yield pure, non-contaminated solvent, said
condenser being further structured and disposed to dispense the condensed
pure solvent into said holding tank for subsequent circulation and
discharge into said wash basin facilitate washing and rinsing of the
articles therein.
3. An apparatus recited in claim 2 wherein said floor of said wash basin is
sloped from opposite sides, a front and a rear of said wash basin
downwardly towards a central zone.
4. An apparatus as recited in claim 3 wherein said drain means includes a
drain plate fitted to said floor at said central zone, wherein the solvent
discharged into said wash basin is directed to said drain plate for passage
through said drain means into said holding tank.
<PAGE>
5. An apparatus as recited in claim 2 wherein said return means includes a
canal interconnecting between said drain means and said holding tank
6. An apparatus as recited in claim herein said drain means includes filter
means structured and disposed for passage of the solvent therethrough for
removing sediment and particulate from the solvent prior to entering said
holding tank.
7. An apparatus as recited in claim wherein said return means further includes
a vapor containment valve assembly structured and disposed to be operable
between in open position, permitting the solvent to flow through said canal to
said holding tank, and a closed position, preventing flow of solvent from said
wash basin to said holding tank and further preventing flow of solvent fumes and
vapors from escaping from said holding tank to atmosphere.
8. An apparatus as recited in claim 2 wherein said solvent discharge means
includes a pump within said holding tank and a conduit connecting between said
pump and a discharge spout, said discharge spout being structured and disposed
for discharging solvent pumped from said holding tank into said wash basin.
9. An apparatus as recited in claim 2 further including a solvent containment
valve assembly adjacent said transfer means and selectively operable between a
closed position to contain the solvent within said holding tank and an open
position to release the solvent from said holding tank for passage through said
transfer means and into said distillation pot.
10. An apparatus as recited in claim 9 wherein said solvent containment valve
assembly includes a dual valve structure including a first valve head and stem
and a second valve head and stem movable in opposing relation to one another for
mating engagement and disengagement with a two-sided valve seat.
11. An apparatus as recited in claim 2 wherein said distillation pot includes
means, for moving said side wall structure and bottom relative to said lid for
selectively separating and attaching said lid in sealed, covering relation to an
open top of said distillation pot.
EXHIBIT 10.15
United States Patent Application for
IMPROVED GENERAL PARTS WASHER
<PAGE>
[SEAL] UNITED STATES DEPARTMENT OF COMMERCE
Patent and Trademark Office
Address: Box ISSUE FEE
COMMISSIONER OF PATENTS AND TRADEMARKS
Washington, D.C. 20231
34M270402
ROBERT M. DOWNEY
700 BRICKELL AVENUE
SUITE 1480 NOTICE OF ALLOWANCE
MIAMI, FL AND ISSUE FEE DUE
Note attached communication from the Examiner
This notice is issued in view of applicant's communication filed
<TABLE>
<CAPTION>
SERIES CODE/SERIAL NO. FILING DATE TOTAL CLAIMS EXAMINER AND GROUP ART UNIT DATE MAILED
<S> <C> <C> <C> <C>
First Named 2/24/95 12 COE, 3405 04/02/96
Applicant MANSUR PIERRE G.
</TABLE>
TITAL OF
INVENTION GENERAL PARTS WASHER
<TABLE>
<CAPTION>
ATTY'S DOCKET NO. CLASS-SUBCLASS BATCH NO. APPLN. TYPE SMALL ENTITY FEE DUE DATE DUE
<S> <C> <C> <C> <C> <C> <C>
3 MANSPA195 134-104.100 V52 UTILITY YES $625.00 07/02/96
</TABLE>
THE APPLICATION IDENTIFIES ABOVE HAS BEEN EXAMINED AND IS ALLOWED FOR ISSUANCE
AS A PATENT.
PROSECUTION ON THE MERITS IS CLOSED.
THE ISSUE FEE MUST BE PAID WITHIN THREE MONTHS FROM THE MAILING DATE OF THIS
NOTICE OR THIS APPLICATION SHALL BE REGARDED AS ABANDONED. THIS STATUTORY
PERIOD CANNOT BE EXTENDED
HOW TO RESPOND TO THIS NOTICE:
I. Review the SMALL ENTITY Status If the SMALL ENTITY is shown as NO:
shown above. If the SMALL ENTITY A. Pay FEE DUE shown above or
is shown as YES, verify your B. File verified statement of Small
current SMALL ENTITY status: Entity Status before, or with,
pay of 1/2 the FEE DUE shown
A. If the status is changed, pay above.
twice the amount of the FEE
DUE shown above and notify the
patent and Trademark Office of
the change is status, or
B. If the Status is the same, pay
the FEE DUE shown above.
II. Part B of this notice should be completed and returned to the Patent and
Trademark Office (PTO) with your ISSUE FEE. Even if the ISSUE FEE has
already been paid by charge to deposit account, Part B should also be
completed and returned. If you are charging the ISSUE FEE to your deposit
account, Part C of this notice should also be completed and returned.
III. All communication regarding this application must give series code (or
filing date), serial number and batch number. Please direct all
communication prior to issuance to Box ISSUE FEE unless advised to
contrary.
IMPORTANT REMINDER: Patents issuing on applications filed on or after December
12, 1980 may require payment of maintenance fees. It is
patentee's responsibility to ensure timely payment of
maintenance fees when due.
PTOL-85 (REV. 12-93) (0651-003) 3. YOUR COPY
EXHIBIT 10.16
United States Patent
SPRAY GUN WASHER
<PAGE>
UNITED STATES PATENT Patent Number: 5,388,601
Mansur Date of Patent: Feb. 14, 1995
SPRAY GUN WASHING APPARATUS
Inventor: Pieffe G. Mansur, 8425 SW. 129
Terrace, Miami, FL 33156
Appl. No.: 212,813
Filed: Mar. 15, 1994
Int. Cl.6 ....................... B08B 3/10
U.S. Cl. ....................... 134/56R; 134/105; 134/107; 134/169R;
134/169C; 134/170; 134/109
Field of Search ................. 134/105, 107, 108, 109, 134/170, 169R, 166c,
169c, 200, 56R; 68/18C
References Cited
U.S. PATENT DOCUMENTS
1,697,767 1/1929 Hirst....................68/18 C
2,070,204 2/1937 Hetzer...................68/18 C
2,243,093 5/1941 Flahive .................68/18 C
2,682,273 6/1954 Roach....................134/170
3,177,126 4/1965 Charreau.................68/18 C
3,771,539 11/1973 De Santis................134/170
4,101,340 7/1978 Rand.....................134/109
4,770,197 9/1988 Prisco, Jr. et al. ......134/109
4,785,836 11/1988 Yamamoto.................134/200
5,193,561 3/1993 Robb et al. .............134/166C
5,318,056 6/1994 Kusz et al ................... 134/95.3
PRIMARY EXAMINER - Frankie L. Stinson
ATTORNEY, AGENT, OR FIRM - Robert M. Downey
ABSTRACT
An apparatus for washing paint spray guns and associated equipment with a liquid
solvent for the purpose of cleaning and removing paint therefrom after use in
painting operations. The apparatus includes a cleaning chamber having solvent
dispersing nozzles therein, the nozzles being structured and disposed for
spraying the liquid solvent onto exterior and interior surfaces of the spray
gun, paint canister and other equipment supported within the cleaning chamber
for cleaning thereof. The used solvent is collected in a holding chamber having
a float switch therein which activates a solenoid controlled valve upon the used
solvent reaching a predetermined level releasing the contaminated solvent into a
distillation chamber for boiling. Purified vapors pass through a condenser where
they are cooled to a liquid state, yielding pure solvent which is directed into
a clean solvent tank. A pump circulates the purified solvent from the clean
solvent holding tank to the dispersing nozzles in the cleaning chamber.
7 Claims, 4 Drawing Sheets
[DRAWING]
<PAGE>
U.S. PATENT FEB. 14, 1995 SHEET 1 OF 4 5,388,601
[PICTURE FIG.1]
<PAGE>
U.S. PATENT FEB. 14, 1995 SHEET 2 OF 4 5,388,601
[PICTURE, FIG.2]
<PAGE>
U.S. PATENT FEB. 14, 1995 SHEET 3 OF 4 5,388,601
[PICTURE, FIG.2A; FIG.7.A; FIG.7B; FIG. 7.C; FIG.8]
<PAGE>
U.S. PATENT FEB. 14, 1995 SHEET 4 OF 4 5,388,601
[PICTURE, FIG.3; FIG.4; FIG.5; FIG.6}
<PAGE>
5,388,601
SRAY GUN WASHING APPARATUS
BACKGROUND OF THE INVENTION
1. Field of the Invention
The present invention is directed to an apparatus for washing spray guns
with a liquid solvent, and more particularly to an apparatus for washing paint
spray guns and associated component parts with a liquid solvent and including
means for recycling the solvent to provide purified solvent for subsequent
cleaning operations.
2. Description of the Related Art
Paint spray gun assemblies have long been used in ,various painting
operations, particularly in the automobile and marine industries. Typically, a
paint spray gun assembly includes a hand-held spray gun and a can or cud which
attaches to the gun for holding paint to be supplied to the gun for spraying
therefrom. Generally, paint spray gun assemblies include two types of systems.
These include siphon spray guns for use with SMA11 scale jobs in which a small
amount of paint is required and pressure spray guns which are usually used for
large scale jobs requiring a significant amount of paint. The use of such
equipment is primarily to enable rapid painting of objects. After use of the
spray gun assembly during a particular job, the entire assembly, including the
gun, cup and associated component puts must be thoroughly cleaned of the paint
which accumulates both on the interior and exterior surfaces of the equipment.
Cleaning of the equipment is required not only to prevent mixing of colors,
which may result in an undesirable color blend, but also to prevent buildup,
blockage and jamming of the equipment. Obviously, in a commercial environment,
such as a paint workshop, the need to clean the equipment on a regular basis
entails a great deal of time and expense. Usually, a paint workshop, such as an
automotive paint shop, will use numerous spray gun assemblies throughout a daily
painting operation. In this instance, it will usually be required to clean a
number of spray gun assemblies on a daily basis, and possibly several times a
day if the assemblies are used with different paint colors.
In an attempt to minimize the time and expense associated with cleaning a
large number of spray gun assemblies on a daily basis, there has been developed
various spray gun washers which are designed to circulate a cleaning fluid
through a flow-line system for ejection of the fluid under pressure within a
closed cabinet. An example of such an apparatus is disclosed in the U.S. Patents
to Yamamoto, U.S. Pat. No. 4,795,836 and Robb et al., U.S. Pat. No. 4,793,369.
The spray washer apparatus disclosed in these patents generally comprise a
cabinet or housing divided into a work chamber and a fluid storage reservoir
containing paint solvent and water. The solvent and water is pumped from the
storage reservoir to spray nozzles located in the work chamber. The paint spray
gun and can are supported in the cleaning chamber such that the paint passage
interior of the gun is in direct fluid flow communication with the fluid
outlets. Thus, during cleaning, the solvent is dumped from the storage
reservoir out through the nozzles to clean the exterior of the spray gun and can
and also through the gun and within the inside of the can to clean the inner
surfaces thereof. The contaminated solution then returns to the storage
reservoir for subsequent use. After a period of time, the contaminated solution
is drained from a bottom of the
2
storage reservoir by opening a valve, and fresh cleaning solvent are replaced
within the reservoir. While these spray washers have been found to be effective
for use in washing spray guns and associated parts, they do not provide for
recycling and purifying of the cleaning solvent. Therefore, the contaminated
solvent must be disposed of on a regular basis while complying with E.P.A.
disposal guidelines. The disposal process can prove to be inefficient, costly
and therefore, most paint workshops using this washing equipment tend to reuse
the cleaning solution for an extended period of time, resulting in the use of
contaminated cleaning solvent/solution being used during cleaning operations.
There has been developed a cleaning apparatus for cleaning painted parts
which provides for the recycling of the cleaning solvent. Such an apparatus is
disclosed in the U.S. Patent to Ihringer, U.S. Pat. No. 4,407,316 directed to a
cleaning installation comprising a treatment chamber in which the painted parts
are cleaned and exposed to jets of a mixture of hot water and cleaning solvent.
The installation, as disclosed in Ihringer includes a plurality of individual
separating chambers for separating light paint solvents, cleaning solvent of
paint, water cleaning solvent and gas cleaning solvent. This type of cleaning
installation is somewhat complex, use a series of separating chambers, requires
a significant amount of space and is generally cost prohibitive for most paint
workshop environments.
Accordingly, there is a definite need in the spray gun art for a washing
apparatus specifically designed for washing both the exterior and interior
surfaces of paint spray guns, paint cans and associated component parts with a
solvent, such as paint thinner, wherein the apparatus provides means for
recycling the solvent to provide pure, continuous "on demand" fresh solvent.
Such an apparatus eliminates the disposal and replacement problems normally
associated with paint spray gun washers while providing a practical means of
complying with E.P.A. disposal guidelines.
Summary of the Invention
The present invention is directed to an apparatus for washing spray gun
apparatus with a cleaning solvent such as paint thinner.
More particularly, the present invention is directed to an apparatus for
washing paint spray gun equipment, including spray guns, paint cans and other
associated component parts. The spray gun washing apparatus of the present
invention includes a cabinet having an upper portion defining a cleaning chamber
having a plurality of spray nozzles therein and means to support at least one
paint spray gun, a paint can and other component parts, such that the solvent is
sprayed onto both exterior and interior surfaces of the spray gun and equipment
for removing paint therefrom. A lower portion of the cabinet includes a solvent
holding chamber disposed in fluid communication with the cleaning chamber such
that, after use for washing, the contaminated cleaning solvent is collected in
the holding chamber. Upon reaching a predetermined level in the holding chamber,
a float switch activates a solenoid controlled valve which releases the
contaminated solvent to a distillation chamber. The contaminated solvent is
heated to a predetermined temperature in the distillation chamber, producing
purified solvent vapors which pass through a condenser where they are cooled
to a liquid state, yielding
<PAGE>
3
pure solvent. The pure solvent is directed into a clean solvent holding tank for
subsequent circulation to spray nozzles disposed throughout the cleaning
chamber. Accordingly, the present invention provides for continuous recycling of
contaminated solvent so that pure, non-contaminated solvent is provided
continuously "on demand" throughout washing operations. In this manner, the cost
and inefficiency associated with disposal of contaminated paint thinner or
solvent, as well as the need to comply with E.P.A. disposal guidelines, is
eliminated.
Accordingly, with the foregoing in mind, it is a primary object of the
present invention to provide a spray gun washing apparatus for use in washing
spray gun equipment such as paint spray guns, paint cans and other component
parts, which includes means for recovering and recycling of the solvent or paint
thinner so as to provide the user with "on demand" pure solvent/paint thinner
continuously throughout washing operations.
It is another object of the present invention to provide a spray gun washing
apparatus as described above which eliminates the need for constant replacement
and disposal of contaminated solvent/paint thinner, while providing a practical
and economical means of complying with E.P.A. contaminate disposal guidelines.
It is a further object of the present invention to provide a spray gun
washing apparatus adapted to recycle solvent/paint thinner so as to provide
fresh, pure solvent/paint thinner on a continuous basis. It is still a further
object of the present invention to provide a spray gun washing apparatus, as
described above, which operates on common 120 volts and which further requires
no special water or air supply requirements.
It is yet another object of the present invention to provide a spray gun
washing apparatus, as described above, which is relatively compact and
inexpensive, making the apparatus available for use in virtually all commercial
environments where spray gun equipment is used.
It is still another object of the present invention to provide a spray gun
washing apparatus as described above, which complies with all government imposed
safety and health regulations.
These and other objects and advantages of the present invention will be more
readily apparent in the description which follows.
BRIEF DESCRIPTION OF THE DRAWINGS
For a fuller understanding of the nature of the present invention, reference
should be had to the following detailed description taken in connection with the
accompanying drawings in which:
FIG.1 is a front perspective view, in partial cutaway, illustrating the
spray gun washing apparatus of the present invention.
FIG.2 is a front elevation, in partial section, of the spray gun washing
apparatus of FIG. 1.
FIG.2(A) is an isolated front elevation, in partial section illustrating
removal of a distillation chamber from a mating lid means, to facilitate outward
movement of the distillation chamber from within a lower cabinet interior for
cleaning thereof.
FIG.3 is an isolated view, in partial section, of a cleaning chamber of the
present invention illustrating a paint spray gun and paint canister being washed
within the cleaning chamber by solvent (paint thinner) being
4
sprayed from various nozzles to clean exterior and interior surfaces of the
equipment.
FIG. 4 is a perspective view of the plumbing system defining a circulation
system for circulating clean solvent/paint thinner from a clean holding tank to
the various nozzles throughout the cleaning chamber.
FIG. 5 is an isolated view, in partial section, illustrating a spray gun
mount for supporting a spray gun and directing solvent/paint thinner internally
through a spray gun for cleaning thereof.
FIG. 6 is a sectional view of an alternative spray gun mount of the present
invention.
FIGS. 7(a), 7(b) and 7(c) are top plan views taken along line 7A-7A of FIG.
2A, of a distillation chamber illustrating, in sequence, movement of a
distillation chamber from within a lower cabinet interior of the apparatus for
cleaning thereof.
FIG. 8 is a plan view along line 8-8 of FIG. 2A of an inner bottom of the
distillation chamber showing a power supply connection to heating elements
therein.
Like reference numerals refer to like parts throughout the several views of
the drawings.
DETAILED DESCRIPTION OF THE
PREFERRED EMBODIMENT
Referring to the several views of the drawings, and initially FIGS. 1 and 2,
there is generally illustrated the spray gun washing apparatus 10 of the present
invention. The apparatus 10 includes a cabinet 12 including an upper portion 14
defining a cleaning chamber and a lower portion 16 including a base 17, side was
18, 18', rear wall 19 and a front wall 20. The front wall 20 is provided with at
least a single door 22 which is hingedly attached to the front wall such as at
23, to facilitate opening thereof to gain access to an interior of the cabinet
12.
The upper portion of the cabinet 12 deeming the cleaning chamber 14 includes
opposite side wall portions 24, 24' a rear wall portion 25 and a cover 26
hingedly attached to a top edge of the rear wall 25, as at 27, and movable
between an open position and a closed position in covering relation to an
interior of the cleaning chamber to prevent solvent from splashing and vapors
from escaping from within the cleaning chamber during washing operations. The
cover 26 may be formed so as to include a front 28 including a handle 29 to
better facilitate raising and lowering of the cover 26.
Within the cleaning chamber 14 there are a plurality of solvent disbursing
spray nozzles 30 (described in more detail hereinafter) for directing a sprayed
array of solvent onto exterior throughout interior of the spray gun equipment
placed therein. A rigid screen 32 may also be provided within the cleaning
chamber to prevent articles from falling down into a contaminated solvent
holding chamber. Below the screen 32 a floor 34 of the cleaning chamber slopes
downwardly and inwardly on all sides the centrally disposed contaminated solvent
holding chamber 40 in fluid communication therewith, such that contaminated
solvent/paint thinner which drips down, after being disbursed within the
cleaning chamber, is collected and contained within the contaminated solvent
holding tank 40. A valve 44 controlled by a sole-noid 46 contains the
contaminated solvent CS within the contaminated solvent holding chamber 40 until
the solvent level reaches a predetermined height at which point a float switch
48 activates solenoid 46 to open the valve 44, thus releasing the contaminated
solvent CS
<PAGE>
5
through a bottom port 49 of the solvent holding chamber 40 into a distillation
chamber 5O. The floor 34, surfaces of the holding chamber 40 and the
distillation chamber 50 are all thoroughly coated with a non-stick coating to
prevent paint and contaminants from drying and adhering thereto.
The distillation chamber 50 comprises a double walled distillation pot 52
including an outer wall 53 and an inner wall 54, having the non-stick coating on
an inner surface thereof, and insulating material 55 disposed between the outer
53 and inner wall 54. A rim 56 of the distillation pot 52 surrounds an open top
thereof and includes means for accommodating a seal 57 which may be fitted to
the rim 56 or, alternatively, to a mating upper rim 58 attached to and extending
downwardly from a stationery plate 59 defining, cooperatively with the upper rim
58, a lid for covering the open top of the distillation pot 52.
The distillation pot 52 is supported on a hinged arm assembly 60 having a first
arm member 62 and a second arm member 64 hingedly attached to one end of the
first arm member 62 at hinge point 65, as best seen in FIGS. 7(A)-7(C). An end
of the second arm member 64, opposite of the hinge point 65, includes means for
threaded receipt of support shaft 66 therethrough. The distillation pot 52 is
supported on a flanged plate 68 which engages a bottom 69 of the distillation
pot 52, such that rotation of wheel arms 70 serves to threadably advance the
shaft 66 in either an upward or downward direction, thereby raising or lowering
the plate 68 and the distillation pot 52. In this manner, the distillation pot
52 is either raised causing the rim 56 to mate in sealed engagement with the
upper rim 58 or, alternatively, by rotating the wheel arms 70 in an opposite
direction the distillation pot 52 is lowered, separating the rim 56 of the
distillation pot from the upper rim 58, as seen in FIG. 2(A). Once separated
from the upper rim 58, the distillation pot 52 can be conveniently removed from
within the cabinet interior as illustrated, sequentially, in FIGS. 7(A) through
7(C).
The first arm member 62 is hinged at a fixed hinged point 63 to the base 17
of the cabinet. With the front door 22 opened, the distillation pot 52 can be
easily pulled outwardly causing the hinge point 65 to move from a rear of the
cabinet interior outwardly towards the door opening resulting in the second arm
member becoming substantially aligned with the first arm member 62, with the
distillation pot 52 supported exteriorly of the cabinet interior. Once removed
from within the cabinet 12, access through the open top of the distillation pot
52 is easily permitted thus facilitating cleaning of accumulated contaminates
such as paint, which remains in the distillation pot during boiling and
vaporization of the solvent/paint thinner.
A plurality of heating elements 74 are provided within the bottom of the
distillation pot 52 below the inner wall 54 in heat transferring relation
therewith, as seen in FIG. 2A. The heating elements 74 are activated during
washing operations in order to boil the solvent/paint thinner to produce
purified solvent vapors.
Referring again to FIGS. 1 and 2, a condenser tube 80 includes a first end
82 attached through the plate 59 defining the lid of the distillation chamber 50
and an opposite end 84 disposed in fluid communication with a clean solvent tank
90. A mid-section 86 of the condenser tube 80 is coiled and passes through a
cooling zone and defines a condenser. The cooling zone is cooled by air flow
created by blower 88. Air is drawn through the
6
blower through the cooling zone and discharged by the blower through the rear
wall 19 of the cabinet 12. Thus, as purified solvent vapors rise up through the
condenser tube 80 and into the coiled mid-section 86 in the cooling zone, the
vapors are condensed to produce purified, non-contaminated solvent/paint thinner
which drips down into the clean solvent tank 90 from the end 84 of the condenser
tube 80. The intake 101 of a pump 100 connects through the bottom 94 of the
clean solvent holding tank 90 for circulating the clean solvent from the holding
tank 90 out through a discharge 102 of the pump 100 and up through conduit 104
to the spray nozzles 30 within the cleaning chamber 14. As seen in FIG. 4, the
conduit 104 leading from the discharge of the pump 100 branches off into a
flow-line system of various lines leading to the dispersing spray nozzles 30
disposed at various locations throughout the cleaning chamber 14. One line 106
leads towards a central area of the cleaning chamber 14 and to a
multidirectional spray head 110 and a spray gun mount 120. The multidirectional
spray head 110 is specifically adapted for receipt within the interior of a
paint can or jar PC, as seen in FIG. 3, such that solvent is sprayed throughout
the interior of the paint can PC to clean the interior surfaces thereof. The
spray gun mount 120 is specifically adapted to facilitate fluid connection of an
internal passage of a spray gun SG with the solvent supply line leading from
conduit 104. As seen in FIGS. 3 and 5, a first embodiment of the gun mount 120
comprises an upwardly directed rigid conduit 122 extending upwardly through the
screen 32 and terminating at an open end. A plug 126 is fitted therein and
includes a central axial bore for passage of a hose 134 of the spray gun
therethrough so that a distal end 136 of the hose 134 is disposed within the
upwardly directed conduit 122. Accordingly, upon circulation of solvent/paint
thinner from the pump 100 through the conduit 104 and 106 and upwardly through
the conduit 122. The solvent is directed through the end of the hose 134 and
throughout the internal passage of the spray gun, exiting through the spray head
of the gun, as seen in FIG. 3. An alternative embodiment of the gun mount 120'
is seen in FIG. 6, wherein the upwardly directed conduit 122' terminates below
the screen 32. An adapter 140 is threadably engaged within the open top end of
the upwardly directed conduit 122' and includes an enlarged flanged portion 142
having thread adapted for engagement with an inner threaded surface of a collar
144 of the spray gun. The adapter includes an axial bore extending therethrough
for passage of the hose 134 of the spray gun such that the distal end 136 of the
hose is disposed within the upwardly supply pipe. Seals 146, 148 are provided at
opposite ends of the axial bore for sealed engagement about the hose 134. In
this manner, as solvent/paint thinner is circulated to the upwardly directed
conduit 122', the solvent is directed through the distal end of the hose 134 and
throughout the internal passage of the spray gun, exiting in the same manner as
illustrated in FIG. 3. The supply conduit 104 further leads to branch conduits
108 extending about the cleaning chamber and leading to a plurality of the spray
nozzles 30 specifically structured and disposed for spraying solvent on external
surfaces of the spray gun equipment being washed. A refill port 150 is provided
on the cabinet exterior to facilitate refilling or adding clean solvent/paint
thinner to the clean solvent holding tank 90. The front wall or
<PAGE>
7
side walls of the cabinet 14 may further be proved with a site level gauge 154
to enable visual determinaton of the level of purified solvent/paint thinner PS
contained within the clean solvent holding tank 90.
Now that the invention has been described,
What is claimed is:
1. An apparatus for cleaning spray gun assemble comprising:
a cabinet including a lower portion having a base, side walls, a back wall
and a front in surrounding relation to a cabinet interior and an upper
portion including a cleaning chamber having side wall portions, a front
wall portion, a rear wall portion and a cover hingedly attached to said
rear wall portion, said cover being movable between an open position
facilitating access to said cleaning chamber and a closed position in
covering relation to an interior of said cleaning chamber,
solvent dispersing means including a plurality of spray nozzles positioned
and arranged within said cleaning chamber and being structured and
disposed for spraying the solvent onto exterior and interior surfaces of
the spray gun assemblies placed within said cleaning chamber for cleaning
thereof,
a solvent holding chamber disposed in fluid communication with said
cleaning chamber and structured and disposed for containing contaminated
solvent after use during cleaning in said cleaning chamber,
a distillation chamber disposed in fluid communication with said holding
chamber and including an insulated surrounding side wall structure, an
insulated base and an open top,
means defining a lid for covering said open top of said distillation
chamber in sealed airtight relation therewith,
valve means between said holding chamber and said distillation chamber and
being operable between a closed position to contain the solvent in said
holding chamber and an open position to release the solvent into said
distillation chamber,
fluid level monitor means for detecting and monitoring a level of the
solvent in said holding chamber,
switch means communicating with said fluid level monitor means and
structured and disposed for operating said valve means to said open
position upon a level of the solvent in the holding chamber reaching a
predetermined level as detected by the fluid level monitor means,
a clean solvent tank for containing purified, non-contaminated solvent
therein for subsequent circulation to said dispersing means,
a plurality of heating elements disposed in heat transferring relation
with distillation chamber for heating the solvent to a predetermined
temperature so as to produce solvent vapors,
a condenser including a condensing tube having a first end connected in
fluid communication with said distillation chamber for recovering the
solvent vapors, a mid-portion disposed in a cooling zone within said
cabinet and a second opposite end disposed in fluid communication with
said clean solvent tank for directing purified, condensed liquid solvent
into said clean solvent tank,
blower disposed within said cooling zone for creating an air current
therethrough to cool said midportion of said condensing tube,
a pump for circulating the purified liquid solvent, at a predetermined
pressure, from said clean solvent
8
tank to said solvent dispersing means resulting in the solvent being
dispersed from said spray nozzles into said cleaning chamber.
2. An apparatus for cleaning articles with a solvent comprising:
a cleaning chamber structured and disposed to accommodate the articles to
be cleaned therein,
solvent dispersing means within said cleaning chamber and structured and
disposed to spray the solvent onto exterior and interior surfaces of the
articles for cleaning thereof,
solvent collection means for collecting the solvent after spraying the
articles,
a solvent holding chamber disposed in fluid communication with said
collection means, said holding chamber being structured and disposed for
containing contaminated solvent after use cleaning,
a distillation chamber in fluid communication with said holding chamber
and including an insulated surrounding side wall structure, and an
insulated base and an open top,
means defining a lid for covering said open top of said distillation
chamber in sealed, air tight relation therewith,
valve means- between said holding chamber and said distillation chamber and
operable between a closed position to contain the solvent in said holding
chamber, and an open position to release the solvent into said
distillation cheer,
a clean solvent tank for containing purified, non-contaminated solvent
therein,
heating means for heating the solvent in said distillation chamber to a
predetermined temperature so as to produce solvent vapors,
condenser means for condensing the solvent vapors produced in said
distillation chamber to yield purified, non-contaminated solvent, said
condenser means being interconnected in fluid communication with said
clean solvent tank for directing the purified, non-contaminated solvent
therein,
circulation means for circulating the purified noncontaminated solvent
from said clean solvent tank to said solvent dispersing means, a cabinet
including a lower portion having a base and surrounding walls in
surrounding relation to a cabinet interior, said cabinet further including
an upper portion deemed by said cleaning chamber, and
means to facilitate movement of said distillation chamber from within the
cabinet interior to facilitate access to an interior or said distillation
chamber.
3. An apparatus as recited in claim 2 wherein said solvent dispersing means
includes a plurality of spray nozzles, said spray nozzles including at least one
multidirectional spray head adapted for receipt within a paint can of a spray
gun assembly for cleaning interior surface thereof
4. An apparatus as recited in claim 3 wherein said spray nozzles further
include at least one spray gun mount having means thereon for fluid connection
with an interior passage of a paint spray gun such that the solvent circulated
by the circulation means is directed through the passage of the paint spray gun
for cleaning thereof.
5. An apparatus as recited in claim 2 further comprising fluid level monitor
means for detecting and monitoring a level of contaminated solvent in said
holding chamber.
<PAGE>
9
6. An apparatus as recited in claim 5 further comprising switch means
interconnected to said fluid level monitor means and said valve means for
operating said valve means to said open position upon the contaminated solvent
reaching a predetermined level in said holding chamber as detected by said
fluid level monitor means.
7.An apparatus for cleaning articles with a solvent comprising:
a cleaning chamber structured and disposed to accommodate the articles to
be cleaned therein,
solvent dispersing means within said cleaning chamber and structured and
disposed to spray the solvent onto exterior and interior surfaces of the
articles for cleaning thereof,
solvent collection means for collecting the solvent after spraying the
articles,
a solvent holding chamber disposed in fluid communication with said
collection means, said holding chamber being structured and disposed for
containing contaminated solvent after use for cleaning,
a distillation chamber in fluid communication with said holding chamber
and including an insulated surrounding side wall structure, and insulated
base and an open top,
means defining a lid for covering said open top of said distillation
chamber in sealed, air tight relation therewith,
10
valve means between said holding chamber and said distillation chamber and
operable between a closed position to contain the solvent in said holding
chamber, and an open position to release the solvent into said
distillation chamber,
a clean solvent tank for containing purified, non-contaminated solvents
therein,
heating means for heating the solvent in said distillation chamber to a
predetermined temperature so as to produce solvent vapors,
a condenser including a condensing tube having a first end connected in
fluid communication with said distillation chamber for recovering the
solvent vapors, a mid-portion disposed in a cooling zone within a cabinet
and a second opposite end disposed in fluid communication with said clean
solvent tank for directing purified, condensed liquid solvent into said
clean solvent tank,
a blower disposed within said cooling zone for creating an air currant
therethrough to cool said mid-portion of said condensing tube, and
circulation means for circulating the purified, noncontaminated solvent
from said clean solvent tank to said solvent dispersing means resulting in
the solvent being dispersed within said cleaning chamber.
EXHIBIT 10.17
United States Patent
IMMERSION WASHER
<PAGE>
United States Patent Patent Number: 5,518,013
Mansur Date of Patent: May 21, 1996
IMMERSION WASHER APPARATUS
Inventor: Pierre G. Mansur, Miami, Fla.
Assignee: Mansur Industries Inc., Miami, Fla.
Appl. No.: 364,800
Filed: Dec. 27, 1994
Int. Cl.6...........08B 3/04; BOBB 13/00
US. Cl. ...........134136 R, 134/104. 1.
134/1 08; 134/1 1 1; 134/135; 134/147. 1341164
Fleld of Search ..........134/56 R, 104.1,
134/107, 109, 109, 111, 135,141, 147,
164,165
References Cited
U.S. PATENT DOCUMENTS
2,724,392 11/955 Cooper..................... 134/165 X
5,186,193 2/1993 Gullberg etal ............. 134/135 X
5,277,208 1/1994 Mansur..................... 134/111 X
PRIMARY Examiner-Philip R. Coe
ATTORNEY, AGENT, OR FIRM-Robert M. Downey
ABSTRACT
An apparatus for soaking and cleaning articles in a cleaning solution includes
a primary cleaning chamber for containing a predetermined volume of the cleaning
solution therein and a filter assembly including a filtration sheet pulled from
a supply across a drainage trough for removing contaminants from the cleaning
solution. A sensor activates movement and replacement of saturated sections of
the filtration sheet upon detecting a rise of fluid level in the drainage
trough. A fan forced electronic beater supplies heat to an oxidation chamber for
thermal oxidation of refuse placed therein, the resulting flue gasses being
directed through a heat transfer duct, wherein heat is transferred to the
solution contained in the cleaning chamber, the flue gasses exiting through a
flue stack. An article support assembly includes a platform for supporting the
articles to be cleaned thereon, the platform being movable between a raised
position and a lowered position within the cleaning chamber to facilitate
immersion of the articles in the cleaning solution. The platform and articles
thereon can be agitated to cause movement relative to the cleaning solution and
thereby promoting more thorough cleaning.
12 Claims, 3 Drawing Sheets
[DIAGRAM]
<PAGE>
U.S. PATENT MAY 21, 1996 SHEET 1 OF 3 5,518,013
[FIGURE 1 DIAGRAM]
<PAGE>
U.S. PATENT MAY 21, 1996 SHEET 2 of 3 5,518,013
[FIGURE 2 DIAGRAM]
<PAGE>
U.S. PATENT MAY 21, 1996 SHEET 3 of 3 5,518,013
[FIGURE 3 & 4 DIAGRAM]
<PAGE>
5,518,013
1
IMMERSION WASHER APPARATUS
BACKGROUND OF THE INVENTION
1. Field of the Invention
This invention relates to an apparatus for soaking and cleaning articles
with a cleaning solution, and more particularly, to an immersion washer
apparatus having means for removing and disposing of contaminants and refuse
during a recycling and solution recovery process.
2. Description of the Related Art During maintenance, repair and rebuilding
operations in virtually all industrial and commercial environments, it is
necessary to wash a wide variety of parts and articles in order to remove
grease, oil, dirt and other contaminants. To remove contaminants, various
solvents and aqueous cleaning solutions are used in a variety of cleaning
machines and assemblies. Some parts and articles are cleaned in spray washer
machines of the type set forth in my previous U.S. Pat. No. 5.277,208. Still
other parts, particularly smaller parts, are washed using a solvent in a sink
type apparatus, of the type set forth in my previous U.S. Pat No. 5,349.974.
There are however many parts, articles and devices which need to be immersed and
soaked in a cleaning solution, particularly those having blind holes and
crevices which are difficult to clean. Examples of these types of articles
include radiators, engine blocks and transmissions. Presently, these types of
articles, comprising blind holes and crevices, are in a tank containing cleaning
solution for a period of time. The articles are then removed from the tank and
brushed rinsed to remove loose contaminants such as grease, oil, rust and dirt.
In a short period of time, after soaking several articles, it can be appreciated
that the cleaning solution becomes saturated with contaminants. Eventually, the
entire charge of cleaning solution in the tank needs to be disposed of and
replaced with clean solution. In a busy facility, this may need to be done one
or more times a week. When changing the cleaning solution, the contaminated
solution must be taken way and disposed of in a manner complying with EPA
contaminant disposal guidelines. This procedure is inefficient, costly and time
consuming, leaving a busy manufacturing or repair facility with no other
alternative than to perform parts cleaning operations using dirty, contaminated
cleaning solution for extended periods of time.
Accordingly, there is a definite need in all industries requiring parts
cleaning during maintenance, manufacturing, repair and rebuilding operations,
for an immersion washer apparatus having means for recycling the cleaning
solution by regularly removing the contaminants from the solution and disposing
of contaminants and refuse on site during normal operation of the apparatus in a
manner complying with EPA disposal guidelines.
SUMMARY OF THE INVENTION
The present invention is directed to an immersion washer apparatus for
washing articles such as radiators, engine blocks, transmissions and virtually
any articles, particularly those having blind holes and crevices.
More particularly, the present invention includes a primary cleaning
chamber for containing a predetermined charge of aqueous cleaning solution
therein. During normal operations, a pump draws the cleaning solution from a
bottom sweep in the cleaning chamber and delivers the solution to a drainage
trough having a filtration
2
sheet pulled there across. The cleaning solution is deposited on the filtration
sheet and, upon passing there through, contaminants are removed from the
solution. A sensor activates movement and replacement of saturated sections of
the filtration sheet upon detecting a raise of fluid level in the drainage
trough due to an inability of the solution to easily pass through the saturated
filtration sheet.
An electronic or gas heater supplies heat to an oxidation chamber for
thermal oxidation of refuse placed therein, including the used saturated
filtration sheet sections. The hot flue gases resulting from the thermal
oxidation process are directed through a heat transfer duct which at least
partially surrounds the primary cleaning chamber. Heat is transferred to the
solution in the cleaning chamber as the hot flue gasses pass through the heat
transfer duct and exit through a flue stack.
An article support assembly includes a platform for supporting the articles
to be cleaned thereon, the platform being movable between a raised position and
a lowered position within the cleaning chamber to facilitate immersion of the
articles in the cleaning solution. The platform and articles thereon can be
agitated to cause movements of the articles relative to the solution and thereby
promoting more thorough cleaning of the articles.
Many aqueous cleaning solutions employ the use of coagulants or flocculants
to gather and clump contaminants such as oils and grease into clusters which are
then more easily separable from the cleaning solution. Some coagulants and
flocculants act near the surface of the aqueous solution for lighter
contaminants, while others act near the bottom to clump together heavier
contaminants. Because coagulant and flocculent agents are generally somewhat
delicate by nature, they cannot be passed through pumps, such as centrifugal
pumps, because the violent turbulence will cause breakup of the charges in the
agents. To address this concern, the present invention employs the use or a
vacuum chamber which is specifically designed to draw both surface coagulants
and flocculants as well as bottom coagulants and flocculants from the primary
cleaning chamber without disturbing the charges in the various agents. From the
vacuum chamber, the coagulant and/or flocculant agents are lead through a
transfer conduit and deposited onto the filtration sheet in the drainage trough.
During normal operations, the cleaning solution is drawn through a sweep
arm which rotates about a 360 degree movement on the extreme bottom of the
cleaning chamber. In order to move contaminants which have settled on the bottom
into the sweep zone of the sweep arm for pickup, the present invention further
employs the use of a bottom wash system which includes a three-way valve for
redirecting the discharge from the pump. Rather than the discharge being
directed to the drainage trough for filtering, the three-way valve facilitates
directing of the discharge of solution from the pump to bottom flush jets which
wash the bottom and push bottom contaminants into the sweep zone of the bottom
sweep, and thus, together with the sweep arm, achieving complete cleansing and
removal of contaminants from the bottom of the cleaning chamber.
Accordingly, with the foregoing in mind it is a primary object of the
present invention to provide an immersion washer apparatus for use in cleaning
various articles during maintenance, repair and rebuilding operations, and
particularly articles having blind holes and crevices, wherein the apparatus
includes means for recovering and recycling of aqueous cleaning solution used
therein, removing contaminants therefrom and providing on-site disposal means
for disposing of the contaminants and refuse.
<PAGE>
5,518,013
3
It is another object of the present invention to provide an immersion
washer apparatus, as described above, which provides a practical and economical
means of complying with Environment Protection Agency contaminate disposal
guidelines.
It is a further object of the present invention to provide an immersion
washer apparatus providing for regularly and constantly removing contaminants
from the cleaning solution during operation thereof, and further providing
self-contained means for disposal of contaminants and refuse in a manner which
complies which EPA disposal guidelines.
It is still a further object of the present invention to provide an
immersion washer apparatus which eliminates the need to regularly dispose of
large volumes of contaminated cleaning solution.
It is yet another object of the present invention to provide an immersion
washer which is relatively inexpensive and requires minimal maintenance.
It is still a further object of the present invention to provide an
immersion washer apparatus which complies with all government imposed safety
requirements.
It is still a further object of the present invention to provide an
immersion washer apparatus which employs several means of removing and disposing
of contaminants during normal operation thereof.
These and other objects and advantages of the present invention will be
more readily apparent in the description which follows.
BRIEF DESCRIPTION OF THE DRAWINGS
For a fuller understanding of the nature of the present invention,
reference should be had to the following detailed description taken in
connection with the accompanying drawings in which:
FIG. 1 is a front, top perspective view of the immersion washer apparatus
of the invention;
FIG. 2 is a front elevation, in partial section, of the immersion washer
apparatus;
FIG. 3 is an isolated view, shown in perspective of an article support
assembly of the present invention;
FIG. 4 is a partially exploded and isolated view, shown in perspective, of
a pump and bottom wash system of the present invention; and
FIG. 5 is an isolated view, shown in perspective, of an oxidation chamber
and cleaning solution purification assembly of the washer apparatus of the
invention. Like reference numerals refer to like parts throughout the several
views of the drawings.
DETAILED DESCRIPTION OF THE
PREFERRED EMBODIMENT
Referring to the several views of the drawings and initially FIGS. 1 and
2, there is generally illustrated the immersion washer apparatus 10 of the
present invention. The apparatus 10 includes a primary cleaning chamber 12
surrounded by front, rear and opposite side walls and a bottom floor 13. The
primary cleaning chamber 12 may further include a lid 14 for covering an open
top thereof. The cleaning chamber 12 is specifically sized and configured to
contain a predetermined quantity of cleaning solution, preferably an aqueous
cleaning solution, for immersing articles to be cleaned therein.
4
A filter means 20 is provided for removing contaminants from the cleaning
solution and includes a filtration sheet 22 which is pulled from a supply source
24, such as a roll. The filtration sheet extends from the supply source 24
across a drainage trough 23, wherein cleaning solution deposited on the
filtration sheet is caused to be transferred through the filtration sheet 22 and
removing contaminants in the process. A fluid level sensor 26 in the drainage
trough 23 senses when the cleaning solution in the trough 23 reaches a
predetermined level due to saturation of the filtration sheet 22 with
contaminants, and thus impeding passage of the cleaning solution through the
filtration sheet. Upon sensing the cleaning solution reaching a predetermined
level, the fluid level sensor 26 activates a roller motor 28 causing rollers 29
to be rotated and thus pulling the filtration sheet 22 from the supply 24 so
that the saturated portion of the filtration sheet is removed from the trough 23
and a clean section of filtration sheet is positioned in the trough 23.
Referring to FIGS. 1, 2 and 4, there is illustrated pump means 30 for
transferring the cleaning solution from the primary cleaning chamber to the
drainage trough 23 for discharge on the filtration sheet 22. Once having passed
through the filtration sheet 22, the cleaning solution returns to the primary
cleaning chamber 12. In accordance with a preferred embodiment, the pump means
30 includes pump motor 31 and centrifugal pump 32. An intake line 34 extends
from a lower channel 35, below the cleaning chamber bottom floor 13, in fluid
flow communication therewith. An opposite end of the input line 34 leads to the
intake of centrifugal pump 32. An output line 36 extends from an output of
centrifugal pump 32 to a three-way valve 38. The three-way valve 38 is
specifically structured to control direction of fluid flow from the output line
36 to either a filter delivery line 40 leading to the drainage trough 23 or,
alternatively, to a bottom wash return line 42 leading to a bottom wash jet
assembly 44 on the bottom floor 13 or the primary wash chamber 12. The bottom
wash jet assembly 44 includes opposite jet wash channels 46, 46' positioned and
disposed on opposite sides of the wash chamber floor 13 as been seen in FIG. 2.
Referring now to FIG. 4, the opposite jet wash channels 46, 46' arc
interconnected in fluid communication with one another and the return line 42 by
a channel 48. The opposite jet wash channels 46, 46'include openings 47 along an
inboard lower edge 49, forming an opening between the lower inboard edge 49 and
the bottom floor 13 for discharge of the cleaning solution across the bottom
floor 13 of the wash chamber 12. Accordingly, operation of the one-way valve 38
by movement of level 39 serves to selectively direct flow of the cleaning
solution from the pump 32 to either the filter means 20 or to the bottom jet
assembly 44. This serves to wash the bottom floor 13 of accumulated sediment,
forcing the bottom sediment (contaminants) into a central sweep zone defined by
a circumferential area through which a bottom sweep arm 50 rotates. The bottom
sweep arm 50 is disposed in fluid flow communication with the lower channel 35
and, preferably includes opposite arm portions 51, 51. Each of the arm portions
51, 51' includes fluid intake means (such as apertures) on a lower portion
thereof of intake of the cleaning solution and bottom sediment there through for
subsequent transfer through the bottom channel 35, and to intake line 34, when
the pump means 30 is activated, as illustrated by the arrows in FIG. 2. With
reference to FIGS. 2 and 3, there is generally illustrated article support means
60 for supporting articles to be cleaned in the primary cleaning chamber 12. The
article support means 60 includes a platform 62 having a back plate
<PAGE>
5,518,013
5
63 and support base 64 preferably comprised of a metal grate. The support
base 64 is specifically positioned disposed to support the articles to be
cleaned thereon, the platform 62 being sized and configured to be lowered down
into an interior of the primary cleaning chamber 12, so that the articles can by
completely immersed in the cleaning solution. To facilitate raising and lowering
of the platform 62, a lead screw 66 extends vertically from a motor 67 above the
cleaning chamber 12 and terminating at or near the bottom floor 13. A ball screw
or like coupling 65 is movably engaged on the lead screw 66, such that upon
selective rotation of the lead screw 66, clockwise or counterclockwise, by motor
67, the ball screw coupling 65 is be moved up and down along the length of the
lead screw 66. The ball screw coupling 65 is attached to a back of the 63 of the
platform 62 so that upon rotation of lead screw 66 platform 62 is caused to be
selectively raised or lowered within the cleaning chamber 12. Guide rollers 68
the back plate 63 ride within a guide channel 69 to stabilize vertical movement
of the platform 62 during raising and lowering.
The platform 62, and articles supported thereon, can be agitated by various
means in order to cause movement of the cleaning solution relative to surfaces
and crevices of the articles, thereby promoting washing by loosening and/or
removing contaminants therefrom. In a preferred embodiment, the platform 62 is
agitated by quick start and stopping of the motor 67, causing the platform to be
raised and then lowered a short distance near a lower portion of the cleaning
chamber 12.
Heating means 80 are provided for supplying heat to a thermal oxidation
chamber 84 at temperatures preferably in excess of 1,500 degrees Fahrenheit. In
a preferred embodiment, the heating means 80 includes a fan forced electronic
heater 82 interconnected to an open port 83 leading to the thermal oxidation
chamber 84, whereupon heat is forced fed therein, as indicated by the arrows in
FIG.5. Other heat generating means, such as a gas heater, could be used. The
thermal oxidation chamber 84 is specifically sized and configured to receive
refuse, including contaminated filtration sheets from the filter means 20
therein. A tray for holding the filtration sheets and other refuse can be used
in order to promote thermal oxidation by heat convection, whereupon the refuse
disintegrates slowly at high temperatures emitting close to zero harmful
emissions. A cleaning solution burn-off assembly 86 includes a valve 87
controlled by solenoid 88. A fluid transfer line 89 extends from the cleaning
chamber 12 to the valve 87, which is normally closed when the burner 82 is not
operating. Upon operation of the burner 82 for a predetermined period of time, a
heat sensor 90 attached to the burner 82 senses that the heater 82 is operating
and triggers the solenoid 88 which opens the valve 87. When the valve 87 is
open, cleaning solution containing contaminants, is released through the
delivery line 91 leading to the interior of the thermal oxidation chamber 84. An
orifice 92 can be provided in the delivery line 91 to achieve a controlled
release of cleaning solution into the thermal oxidation chamber 84. As the
cleaning solution is deposited in the thermal oxidation chamber 84, the high
temperatures cause the liquid to immediately vaporize, whereupon metal deposits
and other contaminant solids are deposited in a tray 93 in the thermal oxidation
chamber 84. Thus, an additional means of removing contaminants from the cleaning
solution and disposing of the contaminants in a environmentally sound manner is
provided. Between the filter means 20 and the cleaning solution burnoff assembly
86, a substantial amount of contaminants are regularly removed and disposed of
during normal operation. Water, cleaning detergents and various coagulant agents
would be added as needed to maintain predetermined control standards and fluid
level in the cleaning chamber 12.
Referring to FIG.2, there is shown a heat transfer duct 96 which
interconnects with the thermal oxidation chamber 84 to receive hot flue gases
generated therein during thermal oxidation or from just the continuous operation
of heater 82. The heat transfer duct 96 passes through the cleaning chamber 12
interior, along a side and the back thereof, and interconnecting with a flue gas
exhaust stack 98 through which flue gases are exhausted to atmosphere. Heat from
the hot flue gases passing through the duct 96 is transferred to the cleaning
solution surrounding the portion of the duct 96 within the cleaning chamber 12.
In order to remove coagulants and flocculants from the cleaning solution in
the cleaning chamber 12, while preventing breakup of the charges in the
coagulant/flocculant agents, a vacuum chamber 100 is provided to draw both
surface coagulants/flocculants as well a bottom coagulants/ flocculants from the
cleaning chamber 12 in a non-turbulent manner. To achieve negative pressure in
the vacuum chamber 100, a vacuum pump 102 is used, interconnecting to the
chamber 100 and structured to draw air therefor. A bottom suction conduit 104
includes an upper end located within the interior of the vacuum chamber 100 and
an opposite lower end disposed in fluid communication within the channel 35
below the cleaning chamber 12. A second upper level suction conduit 106 includes
an upper end within the interior of the vacuum chamber and a lower end within
the upper interior portion of the cleaning chamber 12. A filter 107 may be
provided on the lower end of the conduit 106 to prevent intake of large
particles. A delivery conduit 108 has first end disposed at a lower portion of
the vacuum chamber 100 interior and an opposite end leading to the drainage
trough 23. The upper ends of each of the respective conduits 104, 106, 108
(within the vacuum chamber 100) are normally closed by individual valve members
110 disposed in blocking engagement on the open top ends of the conduit 104,
106, and 108. The valve members 110 are each independently interconnected with
respective linkages 112 leading to corresponding actuators 114 on a top of the
vacuum chamber 100. The actuators 114 are each structured to move the respective
linkage 112, on demand, to raise and lower the respective valve member 110 into
and out of flocking engagement on the open end of the conduits 104, 106, and
108. In this manner, with a negative pressure in the vacuum chamber 100 creating
a suction, release of the valve members 110 on the bottom and upper level
suction conduits 104, 106 will serve to selectively draw cleaning solution and
coagulants/flocculants from either the bottom or surface of the cleaning
solution in the cleaning chamber 12. Upon returning to atmospheric pressure in
the vacuum chamber 100, the collected cleaning solution and
coagulants/flocculants therein can be released through the delivery conduit 108
by raising the respective valve member 110 on the open end thereof. The
collected cleaning solution and coagulants are thereafter lead through the
delivery conduit 108 and deposited on the filtration sheet 22.
Control means 120 provided on a control console 122 for facilitating
selective control of the movement of the platform between the raised and lowered
positions, as well as agitation of the platform. Further, the control means 120
facilitates control of the vacuum chamber 100, including selective control of
each of the actuators 114 and the vacuum pump 102. Finally, the control means
120 enables actuation of the pump means 30 and heater 82 during normal start-up
operation.
<PAGE>
While the invention has been shown and described in what is considered to
be a practical and preferred embodiment, it is recognized that departures may be
made within the spirit and scope of the following claims which, therefore,
should not be limited except within the Doctrine of Equivalents.
Now that the invention has been described,
What is claimed is:
1. An apparatus for soaking and cleaning articles in a cleaning solution
comprising:
a primary cleaning chamber sized and configured to contain a predetermined
charge of the cleaning solution for immersing the articles therein,
filter means for removing contaminants from the cleaning solution and
including a filtration sheet pulled from a roll on a roller assembly
across a drainage trough,
fluid level sensor means in said drainage trough for actuating movement of
said filtration sheet to provide a clean section of said filtration sheet
in said trough upon the cleaning solution reaching a predetermined level
in said trough due to saturation of said filtration sheet with
contaminants,
roller means triggered by said fluid level sensor for pulling said
filtration sheet from said roll to provide said clean section of said
filtration sheet,
heating means for heating said cleaning solution and including a fan forced
electronic burner structured and disposed to generate hot flue gasses,
said heating means further including a heat transfer duct in fluid air-
flow communication with said fan forced electronic burner and an exhaust
flue stack and structured for passage of the hot flue gasses
therethrough, said heat transferred duct being exposed to said cleaning
solution in said primary cleaning chamber for transferring heat from the
hot flue gasses passing therethrough to said cleaning solution,
a thermal oxidation chamber communicating with said fan forced electronic
burner and said heat transferred duct and being structured and disposed
to receive refuse and contaminants therein for disposal by thermal
oxidation,
pump means for transferring the cleaning solution from the primary cleaning
chamber to said drainage trough for passage through said filtration sheet
and including a sweep arm on a bottom of said primary cleaning chamber
and a pump in fluid flow communication with said sweep arm, said pump
being structured and disposed to draw the cleaning solution and
contaminants settled on the cleaning chamber bottom through said sweep
arm for delivery to said filter means,
article support means including a platform for supporting the articles to
be cleaned thereon, and means for lowering and raising said platform and
the articles supported thereon into and out of the primary cleaning
chamber for selectively immersing and removing the articles from within
the cleaning solution,
vacuum means for drawing the cleaning solution from said primary cleaning
chamber and including a vacuum chamber having means for creating a vacuum
therein and further including a bottom suction conduit for selectively
drawing the cleaning solution from the bottom of the cleaning chamber
into the vacuum chamber and an upper level suction conduit for
selectively drawing the cleaning solution from an upper portion of the
primary cleaning chamber into the vacuum chamber, the cleaning solution
being drawn through the conduits by a suction force created by the vacuum
in said vacuum chamber, and a delivery conduit for selectively delivering
the cleaning solution to said filter means.
agitation means for agitating said platform and the articles supported
thereon when immersed in the cleaning solution, creating movement of the
cleaning solution relative to surfaces of the articles, resulting in
loosening and removal of at least some contaminants therefrom and thereby
promoting cleaning of the articles, and
control means for selectively controlling movement of said platform and
said agitation means and further for controlling said vacuum creating
means, said pump means and the selective drawing and transfer of the
cleaning solution through said bottom suction conduit, said upper level
suction conduit or said delivery conduit.
2. An apparatus as set forth in claim 1 further including a bottom wash
system for moving contaminants on the bottom of said cleaning chamber into a
sweep zone, defined by a circumferential area through which aid sweep arm
rotates, so that the contaminants are drawn through said sweep arm for delivery
to said filter means, said bottom wash system including jet means near the
bottom of said cleaning chamber and structured to direct a flow of the cleaning
solution therefrom towards said sweep zone.
3. An apparatus as set forth in claim 2 wherein said bottom wash system
further includes a 3-way valve structured and disposed to selectively direct a
discharge of the cleaning solution therefrom to either said filter means or said
jet means.
4. An apparatus as set forth in claim 1 further including a cleaning
solution burn-off system for removing contaminants from said cleaning solution
and including a fluid transfer line extending from said cleaning chamber to a
valve and further including a delivery line extending from said valve and
further including a delivery line extending from said valve to said thermal
oxidation chamber, whereupon opening of said valve results in delivery of the
cleaning solution, at a predetermined flow rate, to said thermal oxidation
chamber for vaporization and separating of contaminants therefrom.
5. An apparatus for soaking cleaning articles in a cleaning solution
comprising:
a primary cleaning chamber sized and configured to contain a predetermined
charge of the cleaning solution for immersing the articles therein.
filter means for removing contaminants from the cleaning solution and
including a filtration sheet pulled from a supply source across a
drainage trough.
fluid level sensor means in said drainage trough for actuating movement of
said filtration sheet to provide a clean section of said filtration sheet
in said trough upon the cleaning solution reaching a predetermined level
in said trough due to saturation of said filtration sheet with
contaminants,
heating means for heating said cleaning solution and including a burner
structured and disposed to generate hot flue gases, said heating means
further including a heat transfer duct in fluid air-flow communication
with said burner and an exhaust flue stack and structured for passage of
the hot flue gasses therethrough, said heat transfer duct being exposed
to said cleaning solution in said primary cleaning chamber for heating
the cleaning solution by transfer of heat thereto from the hot flue
gasses passing through said heat transfer duct,
<PAGE>
a thermal oxidation chamber disposed in fluid communication with said
burner and said heat transfer duct and being structured and disposed to
receive refuse and contaminants therein for disposal by thermal
oxidation,
pump means for transferring the cleaning solution from said primary
cleaning chamber to said drainage trough for passage through said
filtration sheet and including a sweep arm on a bottom of said primary
cleaning chamber and a pump in fluid communication with said sweep arm
said pump being structured and disposed to draw the cleaning solution and
contaminants settled on the cleaning chamber bottom through said sweep
arm for delivery to said filter means and passage through said filtration
sheet,
a bottom wash system for moving contaminants on the bottom of said cleaning
chamber into a sweep zone, defined by a circumferential area through
which said sweep arm rotates, so that contaminates are drawn through said
sweep arm for delivery to said filter means, said bottom wash system
including jet means positioned and disposed near the bottom of the
cleaning chamber and structured to direct a flow of the cleaning solution
towards said sweep zone,
a three-way valve structured and disposed to selectively direct a discharge
of the cleaning solution therefrom to either said filter means or said
jet means,
a cleaning solution burn-off means for removing contaminants from said
cleaning solution and including a fluid transfer line extending from said
cleaning chamber to a valve to said thermal oxidation chamber, whereupon
opening of said valve results in delivery of the cleaning solution, at a
predetermined flow rate, to said thermal oxidation chamber for
vaporization and separation of contaminants therefrom,
article support means including a platform for supporting the articles to
be cleaned thereon, and means for lowering and raising said platform and
the articles supported thereon into and out of the primary cleaning
chamber for selectively immersing and removing the articles from within
the cleaning solution,
agitation means for agitating said platform and the articles supported
thereon when immersed in the cleaning solution, creating movement of the
cleaning solution relative to surfaces of the articles, resulting in at
least partial loosening and removal of contaminants therefrom and thereby
promoting cleaning of the articles, and control means for selectively
controlling movement of said platform and said agitation means, and
further for controlling actuation of said pump means.
6. An apparatus for soaking and cleaning articles in a cleaning solution
comprising:
a primary cleaning chamber sized and configured to contain a predetermined
charge of the cleaning solution for immersing the articles therein,
filter means for removing contaminants from said cleaning solution,
heating means for heating the cleaning solution for a predetermined
temperature,
pump means for circulating the cleaning solution from said primary cleaning
chamber to said filter means for passage of said cleaning solution
therethrough,
sweep means on a bottom of said primary cleaning chamber in fluid
communication with said pump means, said sweep means including a sweep
arm structured and disposed to move through a circumferential area
defining a sweep zone and to draw the cleaning solution and contaminants
within said sweep zone therethrough for delivery to said filter means,
jet means positioned and disposed near the bottom of said primary cleaning
chamber and being structured and disposed to direct a flow of the
cleaning solution therefrom towards said sweep zone, causing contaminants
on the bottom of said primary cleaning chamber to be moved into said
sweep zone for suction through said sweep arm,
article support means including a platform for supporting the articles to
be cleaned thereon,
means for lowering and raising said platform and the articles into and out
of the primary cleaning chamber for selectively immersing and removing the
articles from within the cleaning solution, and
control means for activating said pump means and said article support means
to selectively control raising and lowering of said platform within said primary
cleaning chamber.
7. An apparatus as set forth in claim 6 further including agitation means
for agitating said platform and the articles supported thereon when immersed in
the cleaning solution, creating movement of the cleaning solution relative to
surfaces of the articles, resulting in at least partial loosening and removal of
contaminants therefrom and thereby promoting cleaning of the articles.
8. An apparatus as set forth in claim 6 further including a thermal
oxidation chamber being structured and disposed to receive refuse and
contaminants therein for disposal by thermal oxidation.
9. An apparatus as set forth in claim 8 further including cleaning solution
burn-off means for removing contaminants from said cleaning solution and
including a fluid transfer line extending from said cleaning chamber to a valve
and further including a delivery line extending from said valve to said thermal
oxidation chamber, whereupon opening of said valve results in delivery of the
cleaning solution, at a predetermined flow rate, to said thermal oxidation
chamber for vaporization and separating of contaminants therefrom.
10. An apparatus as set forth in claim 9 wherein said filter means includes
a filtration sheet pulled from a supply source across a drainage trough.
11. An apparatus as set forth in claim 10 further including fluid level
sensor means in said drainage trough for actuating movement of said filtration
sheet to provide a clean section of said filtration sheet in said trough upon
the cleaning solution reaching a predetermined level in said trough due to
saturation of said filtration sheet with contaminants.
12. An apparatus as set forth in claim 10 wherein said heating means
includes a burner structured and disposed to generate hot flue gasses, said
heating means further including a heat transfer duct in fluid air-flow
communication with said burner and an exhaust flue stack, said heat transfer
duct being structured for passage of hot flue gasses therethrough and being
exposed to said cleaning solution in said primary cleaning chamber in heat
transferring relation therewith for heating the cleaning solution by transfer of
heat thereto from the hot flue gasses passing through said heat transfer duct.
<PAGE>
ISSUE NOTIFICATION [SEAL] UNITED STATES DEPARTMENT OF COMMERCE
Patent and Trademark Office
ASSISTANT SECRETARY AND COMMISSIONER
OF PATENTS AND TRADEMARKS
WASHINGTON, D.C. 20231
APPLICATION NUMBER PATENT NUMBER ISSUE DATE ATTORNEY DOCKET NO.
08/364,800 5518013 05/21/96 MANSPA394
8013 7707
ROBERT M DOWNEY
701 BRICKELL AVENUE
SUITE 1480
MIAMI FL 33131
APPLICANT(S) PIERRE G. MANSUR, MIAMI FLORIDA
EXHIBIT 10.18
United States Patent Application for
Apparatus for Disposal of Refuse By Thermal Oxidation
<PAGE>
UNITED STATES DEPARTMENT OF COMMERCE
Patent and Trademark Office
Address: Box ISSUE FEE
COMMISSIONER OF PATENTS AND TRADEMARKS
Washington, D.C. 20231
34MI/0626
ROBERT M. DOWNEY NOTICE OF ALLOWANCE
701 BRICKELL AVENUE SUITE 1480 AND ISSUE FEE DUE
MIAMI FL 33131
Note attached communication from the Examiner
This notice is issued in view of applicant's communication filed ______________
<TABLE>
<CAPTION>
SERIES CODE/SERIAL NO: FILING DATE TOTAL CLAIMS EXAMINER AND GROUP ART UNIT DATE MAILED
<S> <C> <C> <C> <C>
18,364,785 12/27/94 011 TINKER, S 3404 06/26/96
</TABLE>
First Named MANSUR, PIERRE G.
Applicant
TITLE OF APPARATUS FOR DISPOSING OF REFUSE BY THERMAL OXIDATION
INVENTION (AS AMENDED)
<TABLE>
<CAPTION>
ATTY'S DOCKET NO. CLASS-SUBCLASS BATCH NO. APPLN. TYPE SMALL ENTITY FEE DUE DATE DUE
<S> <C> <C> <C> <C> <C> <C>
MANSPA494 110-185.000 B57 UTILITY YES $625.00 09/26/96
</TABLE>
THE APPLICATION IDENTIFIES ABOVE HAS BEEN EXAMINED AND IS ALLOWED FOR ISSUANCE
AS A PATENT. PROSECUTION ON THE MERITS IS CLOSED.
THE ISSUE FEE MUST BE PAID WITHIN THREE MONTHS FROM THE MAILING DATE OF THIS
NOTICE OR THIS APPLICATION SHALL BE REGARDED AS ABANDONED. THIS STATUTORY PERIOD
CANNOT BE EXTENDED.
HOW TO RESPOND TO THIS NOTICE:
Review the SMALL ENTITY Status shown above.
If the SMALL ENTITY is shown as YES, verify your current SMALL ENTITY status:
A. If the status is changed, pay twice the amount of the FEE DUE shown above
and notify the patent and Trademark Office of the change in status, or
B. If the Status is the same, pay the FEE DUE shown above.
If the SMALL ENTITY is shown as NO:
A. Pay FEE DUE shown above, or
B. File verified statement of Small Entity Status before, or with, pay of 1/2
the FEE DUE shown above.
I. Part B of this notice should be completed and returned to the Patent and
Trademark Office (PTO) with your ISSUE FEE. Even if the ISSUE FEE has
already been paid by charge to deposit account, Part B should be completed
and returned. If you are charging the ISSUE FEE to your deposit account,
Part C of this notice should also be completed and returned.
II. All communications regarding this application must give series code (or
filing date), serial number and batch number. Please direct all
communication prior to all issuance to Box ISSUE FEE unless advised to
contrary.
IMPORTANT REMINDER: Patents issuing on applications filed on or after Dec. 12,
1980 may require payment of maintenance fees. It is patentee's responsibility to
ensure timely payment of maintenance fees when due.
EXHIBIT 23.2
The Board of Directors
Mansur Industries, Inc.:
We consent to the use of our report dated January 19, 1996 of Mansur Industries
Inc. included herein in this registration statement on Form S-1 of Mansur
Industries Inc. and to the reference to our firm under the heading "Experts"
in the prospectus.
/s/ KPMG Peat Marwick LLP
---------------------
Miami, Florida
July 23, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the audited
consolidated balance sheets as of December 31, 1995 and the audited consolidated
statements of income for the year ended December 31, 1995, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 916,383
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 193,838
<CURRENT-ASSETS> 1,128,511
<PP&E> 384,891
<DEPRECIATION> 60,460
<TOTAL-ASSETS> 1,452,942
<CURRENT-LIABILITIES> 515,324
<BONDS> 154,165
2,573,863
0
<COMMON> 2,673
<OTHER-SE> (1,793,083)
<TOTAL-LIABILITY-AND-EQUITY> 1,452,942
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,301,267
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,528
<INCOME-PRETAX> (1,319,145)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,319,145)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,319,145)
<EPS-PRIMARY> (.66)
<EPS-DILUTED> (.66)
</TABLE>
