UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )(1)*
-------------------------------
MANSUR INDUSTRIES INC.
(Name of Issuer)
Common Stock, $.001 par value
(Title of Class of Securities)
564491 10 9
(CUSIP Number)
--------------------------------
Howard Kailes, Esq.
Krugman & Kailes LLP
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663
(201) 845-3434
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
-------------------------------
May 2, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of Sections 240.13d-1(e),
240.13d-1(f) or 240.13d-1(g), check the following box.
------
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See Section 240.13d.7(b) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
<PAGE>
<PAGE>
- -----------------------------
(1) Constitutes Amendment No. 1 to the Schedule 13G filed jointly
by Hanseatic Americas LDC, Hansabel Partners LLC, Hanseatic
Corporation and Wolfgang Traber.
<PAGE>
<PAGE>
CUSIP NO. 564491 10 8
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hanseatic Americas LDC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
-----
(b)
-----
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
-----
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bahamas
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
1,653,581 (see footnote 1)
8 SHARED VOTING POWER
-- (see footnote 2)
9 SOLE DISPOSITIVE POWER
1,653,581 (see footnote 1)
10 SHARED DISPOSITIVE POWER
-- (see footnote 2)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,653,581 (see footnote 1)
<PAGE>
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
x (see footnote 2)
------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.9% (see footnote 3)
14 TYPE OF REPORTING PERSON*
00
- -----------------
(1) Represents: (a) 1,289,945 shares (the "Series C Conversion
Shares") issuable upon conversion of Series C Convertible
Preferred Stock; (b) 181,818 shares (the "Series D Conversion
Shares") issuable upon conversion of Series D Convertible
Preferred Stock; and (c) 181,818 shares (together with the
Series C Conversion Shares and the Series D Conversion
Shares, the "Conversion Shares") issuable upon exercise of
warrants.
(2) Excludes an aggregate of approximately 3,373,737 shares (the
"Agreement Shares") that are subject to a shareholders
agreement, consisting of: (i) 2,044,537 shares beneficially
owned by Pierre Mansur (including 44,537 shares issuable upon
exercise of rights to purchase stock that are exercisable
within the next 60 days); and (ii) an aggregate of 1,329,200
shares beneficially owned by Environmental Opportunities Fund
II L.P., Environmental Opportunities Fund II (Institutional)
L.P. and affiliates (consisting of an aggregate of 965,564
shares issuable upon conversion of Series B Convertible
Preferred Stock, 181,818 shares issuable upon conversion of
Series D Convertible Preferred Stock and 181,818 shares
issuable upon exercise of warrants).
(3) Based upon an aggregate of 4,742,923 shares outstanding on
May 2, 2000, plus the Conversion Shares.
<PAGE>
<PAGE>
CUSIP NO. 564491 10 8
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hansabel Partners LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
-----
(b)
-----
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
-----
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
--
8 SHARED VOTING POWER
1,653,581 (see footnotes 1 and 2)
9 SOLE DISPOSITIVE POWER
--
10 SHARED DISPOSITIVE POWER
1,653,581 (see footnotes 1 and 2)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,653,581 (see footnotes 1 and 2)
<PAGE>
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
x (see footnote 2)
------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.9% (see footnote 3)
14 TYPE OF REPORTING PERSON*
OO
- -----------------
(1) Represents shares beneficially owned by Hanseatic Americas
LDC; Hansabel Partners LLC is the sole managing member of
Hanseatic Americas LDC.
(2) Excludes the Agreement Shares.
(3) Based upon an aggregate of 4,742,923 shares outstanding on
May 2, 2000, plus the Conversion Shares.
<PAGE>
<PAGE>
CUSIP NO. 564491 10 8
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hanseatic Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
-----
(b)
-----
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
-----
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
--
8 SHARED VOTING POWER
1,653,581 (see footnotes 1 and 2)
9 SOLE DISPOSITIVE POWER
--
10 SHARED DISPOSITIVE POWER
1,653,581 (see footnotes 1 and 2)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,653,581 (see footnotes 1 and 2)
<PAGE>
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
x (see footnote 2)
------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.9% (see footnote 3)
14 TYPE OF REPORTING PERSON*
CO
- -----------------
(1) Represents shares beneficially owned by Hansabel Partners
LLC; Hanseatic Corporation is the sole managing member of
Hansabel Partners LLC.
(2) Excludes the Agreement Shares.
(3) Based upon an aggregate of 4,742,923 shares outstanding on
May 2, 2000, plus the Conversion Shares.
<PAGE>
<PAGE>
CUSIP NO. 564491 10 8
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wolfgang Traber
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
-----
(b)
-----
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
-----
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
--
8 SHARED VOTING POWER
1,653,581 (see footnotes 1 and 2)
9 SOLE DISPOSITIVE POWER
--
10 SHARED DISPOSITIVE POWER
1,653,581 (see footnotes 1 and 2)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,653,581 (see footnotes 1 and 2)
<PAGE>
<PAGE>
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
x (see footnote 2)
------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.9 % (see footnote 3)
14 TYPE OF REPORTING PERSON*
IN
- -----------------
(1) Represents shares beneficially owned by Hanseatic
Corporation; Mr. Traber holds in excess of a majority of the
shares of capital stock of Hanseatic Corporation.
(2) Excludes the Agreement Shares.
(3) Based upon an aggregate of 4,742,923 shares outstanding on
May 2, 2000, plus the Conversion Shares.
<PAGE>
<PAGE>
Item 1. Security and Issuer
-------------------
The securities to which this statement relates are shares of
the common stock, $.001 par value (the "Common Stock"), of Mansur
Industries Inc., a Florida corporation (the "Corporation"). The
principal executive offices of the Corporation are located at 8305
N.W. 27th Street, Suite 107, Miami, Florida 33122.
Item 2. Identity and Background
-----------------------
This Statement is being filed jointly, pursuant to Rule 13d-
1(k)(1), by: (1) Hanseatic Americas LDC, a Bahamian limited
duration company ("Americas"); (2) Hansabel Partners LLC, a
Delaware limited liability company ("Hansabel"), the sole managing
member of Americas; (3) Hanseatic Corporation, a New York
corporation ("Hanseatic"), the sole managing member of Hansabel;
and (4) Wolfgang Traber ("Traber"), who holds in excess of a
majority of the shares of capital stock of Hanseatic. Americas,
whose principal business is investing, has its principal business
and office at Deltec House, Lyford Cay, Western District, New
Providence Island, Bahamas. Hansabel and Hanseatic, whose
principal businesses are investing, have their principal
businesses and offices at 450 Park Avenue, Suite 2302, New York,
New York 10022. The names, citizenship, business or residence
address and principal occupation of Traber and of each other
executive officer and director of Hanseatic is set forth in Annex
1 attached hereto, which information is incorporated herein by
reference. No person or entity responding hereunder shall be
responsible for the completeness or accuracy of any information
contained herein with respect to any other person or entity.
During the last five years, none of Americas, Hansabel,
Hanseatic, nor Traber, nor to the best of the knowledge of
Hanseatic, any executive officer or director of Hanseatic
identified in Annex 1, has been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) nor has
been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction, nor as a result of such proceeding
has been subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
The funds, in the amount of $1,000,000, used in purchasing
10,000 shares of Series D Convertible Preferred Stock, $1.00 par
value (the "Series D Preferred Stock"), of the Corporation,
<PAGE>
<PAGE>
together with warrants (the "Warrants") to acquire 181,818 shares
(the "Warrant Shares") of Common Stock, on May 2, 2000 (the
"Closing Date"), were obtained by Americas from a loan facility
provided by M.M. Warburg & CO. Luxembourg S.A.
Item 4. Purpose of Transaction
----------------------
On the Closing Date, in connection with the acquisition by
Americas of its Series D Preferred Stock and Warrants, Americas
entered into a shareholders agreement dated May 2, 2000 (the
"Shareholders Agreement") with the Corporation and certain other
shareholders, pursuant to which the Board of Directors of the
Corporation shall consist of five persons, two of whom shall be
nominated by written instruction delivered by the holders of two-
thirds or more of the outstanding shares of Series D Preferred
Stock (the "Required Preferred Shareholders"). In accordance with
such arrangements, Americas, which holds one-half of the
outstanding shares of Series D Preferred Stock, has designated
Paul A. Biddelman, and the other holders of Series D Preferred
Stock have designated Kenneth C. Leung, for election to the Board
of Directors.
The parties to the Shareholders Agreement have agreed to
vote, and to cause their affiliates to vote, the securities of the
Corporation respectively beneficially owned by them, within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934
(the "Exchange Act"), for, and the Corporation has agreed to take
all action to cause, the election of such designees and, as
successors thereto, respectively, those replacements nominated in
the same manner. In the event that such designees have not been
elected or appointed as directors prior to June 30, 2000, the
Required Preferred Shareholders have the right to require the
Corporation to expand its Board of Directors to consist of nine
persons, four of whom shall be nominated by the Required Preferred
Shareholders and who shall serve until the election of Messrs.
Biddelman and Leung. The Shareholders Agreement further requires:
(i) the appointment of executive, audit and finance and
compensation committees of the Board of Directors of the
Corporation, with the mandate thereof to be subject to approval by
the directors nominated by the Required Preferred Shareholders;
(ii) for such directors to serve on each such committee; and (iii)
for a majority of the members of each such committee to consist of
independent directors.
The foregoing provisions of the Shareholders Agreement remain
in effect until: (i) early conversion of the Series D Preferred
Stock, and of the Corporation's Series B Convertible Preferred
Stock, $1.00 par value (the "Series B Preferred Stock"), and
Series C Convertible Preferred Stock, $1.00 par value (the "Series
C Preferred Stock"), in accordance with the terms thereof,
affecting 50% or more of the shares owned by the holders of such
<PAGE>
<PAGE>
stock (the "Preferred Shareholders") on the Closing Date (an
"Early Conversion Event"); or (ii) the Preferred Shareholders
beneficially own less than 50% of the shares owned by them on the
Closing Date (an "Ownership Event") and such shares entitle the
holders to cast votes totalling less than 20% of all votes cast by
the Corporation's voting securities (a "Voting Event").
The Shareholders Agreement also provides for specified
additional actions during a period (the "Special Term") expiring
on the earliest of the Early Conversion Event, the Ownership Event
or the Voting Event. During the Special Term, in the event the
Corporation fails to achieve certain results during the third
quarter of 2000, the Required Preferred Shareholders may elect to
require the Corporation to obtain the immediate resignation of an
independent director from the Board of Directors, failing which
the Board of Directors shall be expanded by two, with all such
vacancies to be filled by nominees of the Required Preferred
Shareholders. During the Special Term, certain specified
determinations by the Board of Directors of the Corporation,
including authorization of any merger plan or similar transaction
or material acquisition, the issuance of certain securities or the
employment of senior management, require concurrence of the
directors designated by the Required Preferred Shareholders.
Dividends on the Series D Preferred Stock beneficially owned
by Americas accrue at the rate of 8.25% per annum based on the
liquidation preference thereof, and are payable semi-annually in
additional shares of Series D Preferred Stock, valued at their
liquidation preference, through the second anniversary of issuance
and thereafter in cash or additional shares at the election of the
Corporation. The shares of Series D Preferred Stock are
convertible into a number of shares of Common Stock calculated by
dividing the liquidation preference of the Series D Preferred
Stock by a conversion price of $5.50 per share, subject to
adjustment in accordance with the terms thereof, and in specified
circumstances are convertible into other securities of the
Corporation. The shares of Series D Preferred Stock are subject to
mandatory early conversion into Common Stock, in whole or in part,
in specified events, may be redeemed at the option of the
Corporation subsequent to specified dates at specified premiums on
their liquidation preference and must be redeemed at their
liquidation preference on May 17, 2004. The terms of the Series D
Preferred Stock also entitle the holder to require the Corporation
to purchase such shares in specified change-in-control events or
upon breach by the Corporation of its commitments to such holder.
The Series D Preferred Stock has parity with the Series B
Preferred Stock and Series C Preferred Stock in distributions upon
any liquidation or dissolution of the Corporation, with all senior
in rank to the Common Stock. On all matters voted upon by the
shareholders of the Corporation, except as required by law, all
such parity series and the Common Stock vote together as a single
class (with each share of convertible preferred stock casting a
number of votes equal to the number of shares of Common Stock into
which it is convertible).
<PAGE>
Dividends on the Series C Preferred Stock beneficially owned
by Americas accrue at a rate of 8.00% per annum based on the
liquidation preference thereof, and are payable semi-annually in
additional shares of Series C Preferred Stock, valued at their
liquidation preference, through the second anniversary of issuance
and thereafter in cash or additional shares at the election of the
Corporation. The shares of Series C Preferred Stock are
convertible into a number of shares of Common Stock calculated by
dividing the liquidation preference of the Series C Preferred
Stock by a conversion price of $5.50 per share (as adjusted on the
Closing Date), subject to further adjustment in accordance with
the terms thereof. The shares of Series C Preferred Stock are
subject to mandatory early conversion into shares of Common Stock,
in whole or in part, in specified events, may be redeemed at the
option of the Corporation subsequent to specified dates at
specified premiums on their liquidation preference and must be
redeemed at their liquidation preference on May 17, 2004. The
terms of the Series C Preferred Stock also entitle the holder to
require the Corporation to purchase such shares in specified
change-in-control events or upon breach by the Corporation of its
commitments to such holder.
Under the Warrants, Americas may, during the five years after
the Closing Date, acquire the Warrant Shares, at a price per share
of $5.50, subject to adjustment (together with the number of
Warrant Shares) in accordance with the terms thereof.
Subject to the foregoing, Americas has acquired all
securities of the Corporation which it presently owns as an
investment in the performance of the Corporation, seeking
appreciation thereof through the efforts of current management of
the Corporation. The undersigned intend to continue to review
Americas' investment in the Corporation and to discuss with
management the Corporation's strategies, goals and operations, and
the undersigned may in the future change Americas present course
of action with a view towards otherwise influencing the strategic
goals and operations of the Corporation, and the undersigned may
acquire additional securities of the Corporation. On the other
hand, the undersigned may determine to dispose of all or a portion
of the securities which they now own or may hereinafter acquire.
In reaching any conclusions as to the foregoing, the undersigned
will take into account various factors, including the
Corporation's business and prospects, general economic conditions
and money and stock market conditions.
Pursuant to Rule 13d-4 under the Exchange Act, any statements
by Traber herein shall not be construed as an admission that
Traber is, for purposes of Section 13(d) or 13(g) of the Exchange
Act, the beneficial owner of any securities of the Corporation;
Traber does not intend to exercise any power to vote, or to
dispose of or direct the disposition of any securities of the
Corporation that he may be deemed beneficially to own except as
determined by management of Hanseatic.
<PAGE>
<PAGE>
Except as aforesaid, none of Americas, Hanseatic, Hansabel
nor Traber have any plans or proposals which relate to or would
result in any other action specified in clauses (a) through (j) of
Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) As of May 12, 2000, Americas beneficially owned, for
purposes of Rule 13d-3 under the Exchange Act, 1,653,581 shares
(the "Americas Shares") of Common Stock, constituting, to the best
of the knowledge of Americas, 25.9% of the issued and outstanding
shares of Common Stock. Such shares represent: (i) 1,289,945
shares of Common Stock issuable upon conversion of shares of
Series C Preferred Stock; (ii) 181,818 shares of Common Stock
issuable upon conversion of shares of Series D Preferred Stock;
and (iii) 181,818 shares of Common Stock issuable upon exercise of
the Warrants. Such shares exclude approximately 3,373,737 shares
(the "Agreement Shares") subject to the Shareholders Agreement,
consisting of: (i) 2,044,537 shares beneficially owned by Pierre
Mansur (including 44,537 shares issuable upon exercise of rights
to purchase stock that are exercisable within the next 60 days);
and (ii) an aggregate of 1,329,200 shares beneficially owned by
Environmental Opportunities Fund II, L.P., Environmental
Opportunities Fund II (Institutional) L.P. and their affiliates
(consisting of an aggregate of 954,564 shares issuable upon
conversion of Series B Preferred Stock, 181,818 shares issuable
upon conversion of Series D Preferred Stock and 181,818 shares
issuable upon exercise of warrants).
Hansabel is the managing member of Americas and, accordingly,
may be deemed beneficially to own the Americas Shares,
constituting, to the best of the knowledge of Hansabel, 25.9% of
the issued and outstanding shares of Common Stock.
Hanseatic is the managing member of Hansabel and,
accordingly, may be deemed beneficially to own the Americas
Shares, constituting to the best of the knowledge of Hanseatic,
25.9% of the issued and outstanding shares of Common Stock.
Traber holder in excess of a majority of the shares of
capital stock of Hanseatic and, accordingly, may be deemed
beneficially to own the Americas Shares, constituting, to the best
of the knowledge of Traber, 25.9% of the issued and outstanding
shares of Common Stock.
(b) Excluding any effect of the relationships set forth
under the Shareholders Agreement, all shares of Common Stock
beneficially owned by Americas are held by Americas with sole
power to vote or to direct the vote thereof, and sole power to
dispose or to direct the disposition thereof.
<PAGE>
<PAGE>
Excluding any effect of the relationships set forth under the
Shareholders Agreement, all shares of Common Stock beneficially
owned by Hansabel are held with shared power to vote or to direct
the vote thereof, and with shared power to dispose or to direct
the disposition thereof, with Americas.
Excluding any effect of the relationships set forth under the
Shareholders Agreement, all shares of Common Stock beneficially
owned by Hanseatic are held with shared power to vote or to direct
the vote thereof, and with shared power to dispose or to direct
the disposition thereof, with Americas.
Excluding any effect of the relationships set forth under the
Shareholders Agreement, all shares of Common Stock beneficially
owned by Traber are held with shared power to vote or to direct
the vote thereof, and with shared power to dispose or to direct
the disposition thereof, with Americas.
(c) On the Closing Date, Americas acquired 10,000 shares of
Series D Preferred Stock, and the Warrants, for an aggregate
purchase price of $1,000,000, in a privately negotiated
transaction. On the Closing Date, the Corporation also issued to
Americas 1,947 shares of Series C Preferred Stock, constituting
accrued dividends on shares of Series C Preferred Stock held by
Americas.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer
-------------------------------------------------------
In connection with the issuance of the Series D Preferred
Stock and the Warrants, the Corporation extended certain
registration rights to Americas, which obligate the Corporation to
register with the Securities and Exchange Commission the shares of
Common Stock issuable upon conversion of the Series D Preferred
Stock and upon exercise of the Warrants, and to maintain the
effectiveness of such registration until two years after the
exercise of the last Warrant to be exercised.
In connection with the issuance of the Series C Preferred
Stock, the Corporation extended certain registration rights to
Americas, which obligated the Corporation to register with the
Securities and Exchange Commission the shares of Common Stock
issuable upon conversion of the Series C Preferred Stock, and to
maintain the effectiveness of such registration until August 2001.
See Item 4 herein for a description of voting arrangements
under the Shareholders Agreement, which information is
incorporated herein by reference.
<PAGE>
<PAGE>
Except as stated above, none of Americas, Hansabel, Hanseatic
nor Mr. Traber, nor, to the best of the knowledge of Americas, any
of the executive officers or directors listed on Annex 1, is a
party to any contract, arrangement, understanding or relationship
(legal or otherwise) with any person with respect to any
securities of the Corporation, including but not limited to, any
transfer or voting of any such securities, finder's fees, joint
ventures, loans or option arrangements, puts or calls, guarantees
or profits, divisions of profit or loss, or the giving or
withholding of proxies.
Item 7. Materials to be Filed as Exhibits
---------------------------------
Exhibit A - Agreement pursuant to Rule 13d-1(k)(1)(iii)
Exhibit B - Series D Convertible Preferred Stock and
Warrant Purchase Agreement dated May 2, 2000
entered into, inter alia, by the Corporation
and Americas
Exhibit C - Certificate of Designation of Series D
Convertible Preferred Stock
Exhibit D - Shareholders Agreement dated May 2, 2000
entered into, inter alia, by the Corporation
and Americas
Exhibit E - Warrant dated May 2, 2000 issued by the
Corporation to Americas
Exhibit F - Series C Convertible Preferred Stock Purchase
Agreement dated August 24, 1999 between the
Corporation and Americas
Exhibit G - Certificate of Designation of Series C
Convertible Preferred Stock
<PAGE>
<PAGE>
SIGNATURE
-----------
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this
statement is true, complete and correct.
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
Dated: May 12, 2000 By s/Wolfgang Traber
--------------------
HANSABEL PARTNERS LLC
By: Hanseatic Corporation
Dated: May 12, 2000 By s/Wolfgang Traber
---------------------
HANSEATIC CORPORATION
Dated: May 12, 2000 By s/Wolfgang Traber
---------------------
Dated: May 12, 2000 s/Wolfgang Traber
---------------------
Wolfgang Traber
<PAGE>
<PAGE>
<TABLE>
Annex 1
<CAPTION> Principal
Name and Occupation,
Business or Relationship Employer and
Residence to Hanseatic Address of
Address Citizenship Corporation Employer
<S> <C> <C> <C>
Wolfgang Traber Germany Chairman Chairman
Hanseatic Corporation Hanseatic Corporation
450 Park Avenue 450 Park Avenue
Suite 2302 Suite 2302
New York, NY 10022 New York, NY 10022
Gustav zu Germany Director Managing Director
Salm-Horstmar DHW Limited
DHW Limited 7-9 King Henry Terrace
7-9 King Henry Terrace Sovereign Court
Sovereign Court Sovereign Close
Sovereign Close London E19HE
London E19HE
Constantin R. Boden United States Director Principal
Boden Partners LLC Boden Partners LLC
450 Park Avenue 450 Park Avenue
Suite 2302 Suite 2302
New York, NY 10022 New York, NY 10022
Paul A. Biddelman United States President President
Hanseatic Corporation Hanseatic Corporation
450 Park Avenue 450 Park Avenue
Suite 2302 Suite 2302
New York, NY 10022 New York, NY 10022
Benjamin Schliemann Germany Vice President Vice President
Hanseatic Corporation Hanseatic Corporation
450 Park Avenue 450 Park Avenue
Suite 2302 Suite 2302
New York, NY 10022 New York, NY 10022
Mary Burkett United States Treasurer Treasurer
Hanseatic Corporation Hanseatic Corporation
450 Park Avenue 450 Park Avenue
Suite 2302 Suite 2302
New York, NY 10022 New York, NY 10022
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit A - Agreement pursuant to Rule 13d-1(k)(1)(iii)
Exhibit B - Series D Convertible Preferred Stock and
Warrant Purchase Agreement dated May 2, 2000
entered into, inter alia, by the Corporation
and Americas
Exhibit C - Certificate of Designation of Series D
Convertible Preferred Stock
Exhibit D - Shareholders Agreement dated May 2, 2000
entered into, inter alia, by the Corporation
and Americas
Exhibit E - Warrant dated May 2, 2000 issued by the
Corporation to Americas
Exhibit F - Series C Convertible Preferred Stock Purchase
Agreement dated August 24, 1999 between the
Corporation and Americas
Exhibit G - Certificate of Designation of Series C
Convertible Preferred Stock
</TABLE>
EXHIBIT A
Pursuant to Rule 13d-1(k)(1)(iii) promulgated by the
Securities and Exchange Commission, the undersigned agree that the
statement to which this Exhibit is attached is filed on their
behalf in the capacities set out hereinbelow.
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
Dated: May 12, 2000 By s/Wolfgang Traber
--------------------
HANSABEL PARTNERS LLC
By: Hanseatic Corporation
Dated: May 12, 2000 By s/Wolfgang Traber
---------------------
HANSEATIC CORPORATION
Dated: May 12, 2000 By s/Wolfgang Traber
---------------------
Dated: May 12, 2000 s/Wolfgang Traber
---------------------
Wolfgang Traber
Exhibit B
SERIES D CONVERTIBLE PREFERRED
STOCK AND WARRANT PURCHASE AGREEMENT
THIS SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
dated as of May 2, 2000 (this "Agreement"), between MANSUR
INDUSTRIES INC., a Florida corporation (the "Company"), and the
investors identified on Schedule I attached hereto (collectively,
the "Investors").
WHEREAS, the Company wishes to issue and sell to the
Investors an aggregate of 20,000 shares (the "Series D Preferred
Shares") of the authorized but unissued shares of Series D
Convertible Preferred Stock, $1.00 par value, of the Company (the
"Series D Preferred Stock") at a purchase price of $100 per
share; and
WHEREAS, together with the issuance and sale of the Series D
Preferred Stock, the Company wishes to issue and sell to the
Investors warrants (the "Warrants") to purchase an aggregate of
363,636 shares of the Company's Common Stock (as defined below),
at an exercise price of $5.50 per share, subject to adjustment;
and
WHEREAS, the Investors wish to purchase the Series D
Preferred Shares and Warrants upon the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises
and the covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Closing" and "Closing Date" shall have the meanings
ascribed to such terms in Section 1.3 herein.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Material Adverse Effect" means any adverse effect on the
business, operations, properties, prospects, or financial
condition of the entity with respect to which such term is used
and which is material to such entity and other entities
controlled by such entity taken as a whole, and any material
<PAGE>
adverse effect on the transactions contemplated under this
Agreement or any other agreement or document contemplated hereby
or thereby.
"Registrable Securities" shall mean (A) the shares (together
with the shares issued or issuable upon exercise of the Warrants,
the "Common Shares") of the Company's common stock, par value
$.001 per share (the "Common Stock"), issued or issuable upon
conversion of the Series D Preferred Shares, and upon conversion
of any additional shares of Series D Preferred Stock issued as a
dividend on the Series D Preferred Stock (which for all purposes
of this Agreement shall be deemed included in the Series D
Preferred Shares), (B) the Common Shares issued or issuable upon
exercise of the Warrants, and (C) any securities of the Company
or securities of any successor corporation issuable upon the
conversion or exercise of any warrant, right or other security
that is issued as a dividend or other distribution with respect
to, in exchange for, or in replacement of the Series D Preferred
Shares, which in any case (i) have not been resold pursuant to an
effective registration statement or pursuant to Rule 144 under
the Securities Act and (ii) may not be resold pursuant to Rule
144 under the Securities Act. For purposes of this Agreement,
securities will be considered ineligible for resale pursuant to
Rule 144 under the Securities Act unless the Company's transfer
agent has accepted an instruction from the Company specifying
that such securities are eligible for sale pursuant to Rule 144.
The term "holder of Registrable Securities" includes any person
who holds securities which are convertible into or exercisable
for Registrable Securities.
The terms "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration
or ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses to be
incurred by the Company in connection with the Investor's
registration rights under this Agreement, including, without
limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company and its
independent certified public accountants, blue sky fees and
expenses, reasonable fees and disbursements of counsel for the
Investors for a "due diligence" examination of the Company and
review of the Registration Statement and related documents, and
the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the
Company).
<PAGE>
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for the
Investors not included within "Registration Expenses."
"Registration Statement" shall have the meaning set forth in
Section 4.1(a) herein.
"Regulation D" shall mean Regulation D as promulgated
pursuant to the Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of
1933, as amended.
ARTICLE I
Purchase and Sale of Series D Preferred Shares and Warrants
Section 1.1 Authorization of the Series D Preferred
Shares and Warrants. The Company has authorized the sale and
issuance to the Investors of an aggregate of (i) 20,000 shares of
its Series D Convertible Preferred Stock having the rights,
restrictions, privileges and preferences set forth in the
Articles of Amendment to Company's Articles of Incorporation, as
amended, in the form attached hereto as Exhibit A (as amended,
the "Articles"), which have been filed with the Secretary of
State of the State of Florida and (ii) the Warrants in the form
of the Warrant Certificate (the "Warrant Certificate") attached
hereto as Exhibit B to purchase an aggregate of 363,636 Common
Shares.
Section 1.2 Issuance, Sale and Delivery of the Series D
Preferred Shares and Warrants. Subject to the terms and
conditions hereof and in reliance upon the representations,
warranties, covenants and agreements contained herein, the
Company hereby agrees to issue and sell to the Investors,
respectively, and the Investors, respectively, hereby agree to
purchase from the Company at the Closing (as hereinafter
defined), (i) an aggregate of 20,000 Series D Preferred Shares
and (ii) Warrants to purchase an aggregate of 363,636 shares of
Common Stock, in each case under clauses (i) and (ii) preceding
allocated among the Investors as set forth in Schedule I attached
hereto and for a Purchase Price (the "Purchase Price") calculated
as the product obtained by multiplying $100 by each Series D
Preferred Share acquired (95.5% of which shall be allocated to
the Series D Preferred Shares acquired and the remainder to the
Warrants acquired).
<PAGE>
Section 1.3 The Closing.
(a) The closing of the purchase and sale of the
Series D Preferred Shares and Warrants (the "Closing"), shall
take place at the offices of Greenberg Traurig, P.A., 1221
Brickell Avenue, Miami, Florida 33131 at 10:00 a.m., local time
on May 2, 2000 (the "Closing Date") or at such other time and
place and/or on such other date as shall be mutually agreed upon
by the Company and the Investors.
(b) On the Closing Date, the Company shall issue
and countersign, or cause to be issued and countersigned by its
transfer agent, for delivery upon the order of the Investors,
certificates representing the number of Series D Preferred Shares
and Warrants being purchased by the Investors, respectively,
registered in the names of each of the Investors or their
respective nominees, or deposit such Series D Preferred Shares
and Warrants into an account or accounts designated by the
Investors, respectively, and the Investors, respectively, shall
deliver to the Company the Purchase Price for such Series D
Preferred Shares and Warrants by wire transfer in immediately
available funds to an account designated in writing prior to
Closing by the Company. In addition, each party shall deliver
all documents, instruments and writings required to be delivered
by such party pursuant to this Agreement at or prior to the
Closing.
1.4 Replacement of Certificates. Without limiting any
provisions contained in the Warrant Certificate or the Articles,
upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of any certificate
representing Series D Preferred Shares or Warrants and, if
requested by the Company in the case of such loss, theft or
destruction, upon delivery of any indemnity bond or other
agreement or security reasonably satisfactory to the Company or,
in the case of such mutilation, upon surrender and cancellation
of such instrument without the delivery of any indemnity bond or
other agreement or security, the Company will issue and deliver,
in lieu of such lost, stolen, destroyed or mutilated instrument,
a new instrument of like tenor and amount.
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties of the
Company. The Company hereby makes the following representations
and warranties to the Investors, and each of them:
<PAGE>
(a) Organization and Qualification; Material
Adverse Effect. Each of the Company and its Subsidiary (as
defined below) is a corporation duly incorporated and existing in
good standing under the laws of its jurisdiction of incorporation
and each of the Company and the Subsidiary have the requisite
corporate power to own its properties and to carry on its
business as now being conducted. The Company owns 100% of the
outstanding capital stock of SystemOne Technologies Inc., a
Florida corporation (the "Subsidiary"). The Company does not
have any other direct or indirect subsidiaries. Each of the
Company and the Subsidiary is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary other
than those in which the failure so to qualify would not have a
Material Adverse Effect.
(b) Authorization; Enforcement. (i) The Company
has the requisite corporate power and authority to enter into and
perform this Agreement and to issue, sell and deliver the Series
D Preferred Shares and Warrants in accordance with the terms
hereof, and the Common Shares issuable upon conversion or
exercise, as the case may be, of the Series D Preferred Shares
and Warrants, (ii) the execution and delivery of this Agreement,
each of the Warrant Certificates and the Shareholders Agreement
with the Investors, among others (collectively, the "Principal
Agreements") by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including the
issuance, sale and delivery of the Series D Preferred Shares and
Warrants, and the Common Shares issuable upon conversion or
exercise, as the case may be, thereof, have been duly authorized
by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or
shareholders is required, (iii) this Agreement and the other
Principal Agreements have been duly executed and delivered by the
Company, and (iv) this Agreement and the other Principal
Agreements constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally
the enforcement of creditors' rights and remedies or by other
equitable principles of general application.
(c) Capitalization. The authorized capital stock
of the Company consists of (i) 25,000,000 shares of Common Stock,
and (ii) 1,500,000 shares of preferred stock ("Preferred Stock"),
of which (A) 150,000 shares have been designated Series B
Convertible Preferred Stock, (B) 150,000 shares have been
<PAGE>
designated Series C Convertible Preferred Stock and (C) 150,000
shares have been designated Series D Convertible Preferred Stock.
As of the date hereof and at Closing (and without reference to
the Series D Preferred Shares), 4,742,923 shares of Common Stock
are and will be issued and outstanding, 53,106 shares of Series B
Convertible Preferred Stock are and will be issued and
outstanding, 70,947 shares of Series C Convertible Preferred
Stock are and will be issued and outstanding and no shares of
Series D Convertible Preferred Stock or other preferred stock are
or will be issued and outstanding, respectively. All of the
outstanding shares of the Common Stock, Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock, and the
capital stock of the Subsidiary have been validly issued and are
fully paid and non-assessable. No shares of Common Stock or
Preferred Stock are entitled to preemptive rights. As of the
date hereof and at Closing, the following additional securities
are and will be issued and outstanding: (i) options to purchase
an aggregate of 684,908 shares of Common Stock, (ii) warrants to
purchase 488,636 shares of Common Stock, including the Warrants
issued pursuant to the terms of this Agreement and (iii)
subordinated debentures convertible into an aggregate of
1,017,589 shares of Common Stock. There are no other scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights exchangeable or
convertible into, any shares of capital stock of the Company or
the Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or the Subsidiary is or may
become bound to issue additional shares of capital stock of the
Company or the Subsidiary or options, warrants, scrip, rights to
subscribe to, or commitments to purchase or acquire, any shares,
or securities or rights convertible into shares, of capital stock
of the Company or the Subsidiary (except as contemplated by this
Agreement). No event has occurred prior to the date hereof
which, subsequent to the date hereof, will cause any adjustment
in any conversion or exercise price or ratio with respect to any
such securities pursuant to any anti-dilution provisions
thereunder, nor as a result of any such event, will the number of
shares of capital stock issuable upon such conversion or such
exercise, as the case may be, be subject to adjustment. No such
conversion or exercise price or ratio will be subject to
adjustment as a consequence of the consummation of the
transactions contemplated by the Agreement, nor, as a consequence
of such consummation, will the numbers of shares of capital stock
issuable upon such conversion or such exercise, as the case may
be, be subject to adjustment, except that as a consequence of
consummation of the Closing hereunder, the Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock will be
adjusted as hereinafter set forth. The Company has furnished or
<PAGE>
made available to the Investors true and correct copies of the
Articles and its bylaws (the "Bylaws"), as in effect on the date
hereof.
(d) Issuance of Series D Preferred Shares,
Warrants and Common Shares. The issuance of the Series D
Preferred Shares and Warrants have been duly authorized and, when
paid for or issued in accordance with the terms hereof, the (i)
Series D Preferred Shares shall be validly issued, fully paid and
non-assessable and entitled to the rights and preferences set
forth in the Articles and not subject to any preemptive rights or
adverse claims and (ii) the Warrants shall be validly issued,
fully paid and non-assessable and entitled to the rights set
forth in the Warrant Certificate. The Common Shares have been
duly authorized and reserved for issuance and, upon conversion or
exercise, as the case may be, in accordance with the terms of the
Articles or Warrants, as the case may be, will be validly issued,
fully paid and non-assessable, free and clear of any mortgage,
deed of trust, pledge, lien or other charge or encumbrance
created by the Company and not subject to any preemptive rights
or adverse claims, and the holders shall be entitled to all
rights and preferences accorded to a holder of Common Stock.
(e) No Conflicts. The execution, delivery and
performance of this Agreement and the other Principal Agreements
by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not
(i) result in a violation of the Articles or Bylaws or of the
articles of incorporation or bylaws of the Subsidiary or (ii)
conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture, patent, patent
license or instrument to which the Company or the Subsidiary is a
party, or result in a violation of any federal, state, local or
foreign law, rule, regulation, order, judgment or decree
(including Federal and state securities laws and regulations)
applicable to the Company or the Subsidiary or by which any
property or asset of the Company or the Subsidiary is bound or
affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect); provided that, for purposes of such representation as to
Federal, state, local or foreign law, rule or regulation, no
representation is made herein with respect to any of the same
applicable solely to the Investors and not to the Company or the
Subsidiary. Neither the business of the Company nor of the
Subsidiary is being conducted in violation of any law, ordinance
or regulation of any governmental entity, except for violations
<PAGE>
which either singly or in the aggregate do not and will not have
a Material Adverse Effect. The Company is not required under
Federal, state, local or foreign law, rule or regulation to
obtain any consent, authorization or order of, or to make any
filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its
obligations under this Agreement or to issue, sell and deliver
the Series D Preferred Shares and Warrants in accordance with the
terms hereof and issue the Common Shares upon conversion thereof,
except for the registration provisions provided for herein,
provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy
of the relevant representations and agreements of the Investors
herein.
(f) SEC Documents; Financial Statements. The
Common Stock of the Company is registered pursuant to Section
12(g) of the Exchange Act and the Company has timely filed all
reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act, including material
filed pursuant to Section 13(a) or 15(d), in addition to one or
more registration statements and amendments thereto heretofore
filed by the Company with the Commission (all of the foregoing
including filings incorporated by reference therein being
referred to herein as the "SEC Documents"). The Company has
delivered or made available to the Investors true and complete
copies of all SEC Documents (including, without limitation, proxy
information and solicitation materials and registration
statements) filed with the Commission since September 27, 1996
and all annual SEC Documents filed with the Commission since
September 27, 1996. Without limiting any other representation or
warranty herein, the Company has not provided the Investors with
any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company
but which has not been so disclosed. As of their respective
dates, the SEC Documents (as amended by any amendments filed
prior to the date of this Agreement or the Closing Date and
provided to the Investor) complied in all material respects with
the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with
<PAGE>
applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(g) Principal Exchange/Market. The principal
market on which the Common Stock is currently traded is Nasdaq.
(h) No Material Adverse Change. Since March 31,
2000, the date through which the most recent annual report of the
Company on Form 10-KSB has been prepared and filed with the
Commission, a copy of which is included in the SEC Documents, no
event which had or is likely to have a Material Adverse Effect
has occurred or exists with respect to the Company or the
Subsidiary.
(i) No Undisclosed Liabilities. Neither the
Company nor the Subsidiary has any liabilities or obligations not
disclosed in the SEC Documents, other than those liabilities
incurred in the ordinary course of its respective business since
December 31, 1999 or liabilities or obligations, individually or
in the aggregate, which do not or would not have a Material
Adverse Effect on the Company or the Subsidiary, taken as a
whole.
(j) No Undisclosed Events or Circumstances. No
event or circumstance has occurred or exists with respect to the
Company, the Subsidiary or their respective business, properties,
prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly
announced or disclosed.
(k) No General Solicitation. None of the
Company, the Subsidiary or, to the Company's knowledge, any of
their respective affiliates or any person acting on its or their
behalf has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection
with the offer or sale of the Series D Preferred Shares and
Warrants.
<PAGE>
(l) No Integrated Offering. None of the Company,
the Subsidiary, or, to the Company's knowledge, any of their
respective Affiliates (as defined pursuant to the Securities Act)
or any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
require registration of the Series D Preferred Shares and/or
Warrants under the Securities Act, and the offer and sale of the
Series D Preferred Shares and Warrants hereunder, and the
issuance of the Common Shares upon conversion or exercise, as the
case may be, thereof, is exempt from the registration
requirements of the Securities Act.
(m) Intellectual Property. Each of the Company
and the Subsidiary owns or has licenses to use certain patents,
copyrights and trademarks ("intellectual property") associated
with its respective business. Each of the Company and the
Subsidiary has all intellectual property rights which are needed
to conduct its respective business as it is now being conducted
or as proposed to be conducted as disclosed in the SEC Documents.
The Company has no reason to believe that the intellectual
property rights owned by the Company or the Subsidiary are
invalid or unenforceable or that the use of such intellectual
property by the Company or the Subsidiary infringes upon or
conflicts with any right of any third party, and neither the
Company nor the Subsidiary has received notice of any such
infringement or conflict. The Company has no knowledge of any
infringement of the Company's or the Subsidiary's intellectual
property by any third party.
(n) No Litigation. Except as set forth in the
SEC Documents delivered to the Investors prior to the date of
this Agreement ("Pre-Agreement SEC Documents") no litigation or
claim (including those for unpaid taxes) against the Company or
the Subsidiary is pending or, to the Company's knowledge,
threatened, and no other event has occurred, which if determined
adversely would be likely to have a Material Adverse Effect on
the Company or the Subsidiary, taken as a whole; and the Company
believes that the legal proceedings described in the Pre-
Agreement SEC Documents will not have a Material Adverse Effect
on the Company or the Subsidiary, taken as a whole. No
litigation or claim is pending or to the Company's knowledge,
threatened against the Company or the Subsidiary which, if
determined adversely would be likely to adversely affect the
transactions contemplated hereby.
(o) Brokers. The Company has taken no action
which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this
Agreement or the transactions contemplated hereby.
<PAGE>
(p) Taxes. The Company and the Subsidiary have
filed or caused to be filed all federal, state, municipal and
other tax returns, reports and declarations required to be filed
by them, respectively, so as to prevent any valid lien, charge or
encumbrance of any nature on their respective assets or
properties and have paid or shall pay all taxes which have been
or shall become due with respect to the periods covered by said
returns or pursuant to any assessment received by them in
connection therewith.
(q) Employee Benefit Plans. All pension, profit-
sharing, bonus, incentive, welfare and other employee benefit
plans in which the employees of the Company or the Subsidiary
participate comply in all material respects with all applicable
requirements of the Department of Labor and the Internal Revenue
Service promulgated under the Employee Retirement Income Security
Act of 1974, as amended, and all other applicable law. Without
limiting the foregoing, all required contributions under such
plans have been made, the respective fund or funds established
under such plans are funded in accordance with all applicable
laws, and no past service funding liability exists thereunder.
(r) Environmental Laws. Neither the consummation
of the transactions contemplated by this Agreement nor, to the
Company's knowledge, any real property utilized by the Company or
the Subsidiary, nor, to the Company's knowledge, any condition
thereon violates any Environmental Laws (as hereinafter defined),
other than any such violations which would not have a Material
Adverse Effect on the Company and the Subsidiary, taken as a
whole, and no provisions of any Environmental Laws or regulations
in any way affect the consummation of the transactions
contemplated by this Agreement. For purposes hereof,
"Environmental Laws" shall mean any and all federal, national,
state, or local laws, statutes, ordinances, rules, regulations,
orders or determinations of any federal, national, state, or
local governmental authority pertaining to health or the
environment.
(s) Qualified Small Business. The Company
covenants that so long as any shares of Series B Preferred Stock,
Series C Preferred Stock, or Series D Preferred Stock or shares
of Common Stock into which such preferred shares are converted,
are held by an Investor (or a transferee in whose hands such
shares or Common Stock are eligible to qualify as "Qualified
Small Business Stock" as defined in section 1202(c) of the
Internal Revenue Code of 1986, as amended (the "Code")), it will
use its commercially reasonable efforts (including complying with
any applicable filing or reporting requirements imposed by the
Code on issuers of "Qualified Small Business Stock") to cause
such shares to qualify as "Qualified Small Business Stock";
provided, however, that "commercially reasonable efforts" as used
<PAGE>
in this Section 2.1(s), without limitation, shall not be
construed to require the Company, in its sole discretion, to
acquire or operate its business in a manner that would adversely
affect its business, limit its future prospects or alter the
timing or manner of resource allocation related to its planned
operations or financing activities or otherwise to (i) engage in
any business,(ii) cease to engage in any business or (iii)
acquire or dispose of any asset or assets. Further, the Company
covenants and agrees, on the reasonable request of any Investor,
to conduct a commercially reasonable investigation into the
question of whether the shares of preferred stock (and the shares
of Common Stock issued or issuable upon conversion thereof) held
by the Investors, remain "Qualified Small Business Stock" within
the meaning of the Code, and to thereafter deliver to such
Investor a duly executed Certificate of Representations in the
form attached hereto as Exhibit C (the "QSBS Certificate").
(t) Disclosure. No representation or warranty
made under any provisions of this Agreement, and none of the
information furnished by the Company set forth herein or in any
document delivered to the Investors, or any authorized
representative of the Investors pursuant to this Agreement,
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or
therein not misleading.
Section 2.2 Representations and Warranties of the
Investors. The Investors, severally, hereby make the following
representations and warranties to the Company:
(a) Authorization; Enforcement. (i) Such
Investor has the requisite power and authority to enter into and
perform this Agreement and to purchase the Series D Preferred
Shares and Warrants being issued and sold hereunder, (ii) the
execution and delivery of this Agreement by such Investor and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary limited
duration company or limited partnership action, as required, and
(iii) this Agreement constitutes the valid and binding obligation
of such Investor enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally the
enforcement of creditors' rights and remedies or by other
equitable principles of general application.
(b) No Conflicts. The execution, delivery and
performance of this Agreement and the consummation by such
Investor of the transactions contemplated hereby and thereby do
not and will not (i) result in a violation of any of such
Investor's organizational documents, (ii) conflict with any
<PAGE>
agreement, indenture, or instrument to which such Investor is a
party, or (iii) result in a violation of any law, rule, or
regulation or any order, judgment or decree of any court or
governmental agency applicable to the Investor. Such Investor is
not required to obtain any consent or authorization of any
governmental agency in order for them to perform each of its
obligations under this Agreement.
(c) Investment Representation. Such Investor is
purchasing the Series D Preferred Shares and Warrants for its own
account and not with a view to distribution in violation of any
securities laws. Such Investor does not have any present
intention to sell the Series D Preferred Shares or Warrants and
such Investor does not have any present arrangement (whether or
not legally binding) to sell the Series D Preferred Shares or
Warrants to or through any person or entity; provided, however,
that by its representations herein, such Investor does not agree
to hold the Series D Preferred Shares and Warrants for any
minimum or other specific term and reserves the right to dispose
of the Series D Preferred Shares and/or the Warrants at any time
in accordance with Federal and state securities laws applicable
to such disposition.
(d) Accredited Investor. Such Investor is an
"accredited investor" as defined in Rule 501 promulgated under
the Securities Act. Such Investor has such knowledge and
experience in financial and business matters in general and
investments in particular, so that such Investor is able to
evaluate the merits and risks of an investment in the Series D
Preferred Shares and Warrants and to protect its own interests in
connection with such investment. In addition (but without
limiting the effect of the Company's representations and
warranties contained herein), such Investor has received such
information as it considers necessary or appropriate for deciding
whether to purchase the Series D Preferred Shares and Warrants
pursuant hereto.
(e) Rule 144. Such Investor understands that
there is no public trading market for the Series D Preferred
Shares or the Warrants, that none is expected to develop, and
that the Series D Preferred Shares and Warrants must be held
indefinitely until the Series D Preferred Shares, the Warrants,
the Common Shares or other securities issued or issuable upon
conversion thereof are registered under the Securities Act or an
exemption from registration is available. Such Investor has been
advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act.
<PAGE>
(f) Brokers. Such Investor has not taken any
action which would give rise to any claim by any person for
brokerage commissions, finder's fees or similar payments by the
Company relating to this Agreement or the transactions
contemplated hereby.
(g) Reliance by the Company. Such Investor
understands that the Series D Preferred Shares and Warrants are
being offered and sold in reliance on a transactional exemption
from the registration requirements of Federal and state
securities laws and that the Company is relying upon the truth
and accuracy of the representations, warranties, agreements,
acknowledgments and understandings such Investor set forth herein
in order to determine the applicability of such exemptions and
the suitability of the Investors to acquire the Series D
Preferred Shares and Warrants.
ARTICLE III
Covenants
Section 3.1 Registration and Listing. Until the later of
(i) such time as no Series D Preferred Shares and Warrants are
outstanding or (ii) the expiration of the Effectiveness Period
(as hereinafter defined in Section 4.3), the Company will cause
the Common Stock to continue to be registered under Section 12(g)
of the Exchange Act, will comply in all respects, with its
reporting and filing obligations under the Exchange Act, and will
not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to
terminate or suspend such reporting and filing obligations. The
Company shall take further action as any holder of Registrable
Securities may reasonably request, all to the extent required
from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144 under
the Securities Act, as such rule may be amended from time to
time, or (ii) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Registrable
Securities, the Company shall deliver to such holder a written
statement as to whether it has complied with such information and
requirements. Until the later of (i) such time as no Series D
Preferred Shares and Warrants are outstanding or (ii) the
expiration of the Effectiveness Period, the Company shall use its
best efforts to continue the listing or trading of the Common
Shares on Nasdaq, the Nasdaq National Market or a principal
exchange and comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of Nasdaq
and any exchange or market on which the Common Shares are then
traded.
<PAGE>
Section 3.2 Certificates on Conversion. Upon any
conversion or exercise, as the case may be (automatic or
optional), of Series D Preferred Shares and/or Warrants, the
Company shall issue and deliver to the appropriate Investor (or
the then holder) within three (3) days of the date of conversion
or exercise, as the case may be, a new certificate or
certificates for the Series D Preferred Shares or Warrants, as
the case may be, which has not yet been converted or exercised
but which are evidenced in part by the certificate(s) submitted
to the Company in connection with such conversion or exercise
(with the number of and denomination of such new certificate(s)
designated by such Investor or holder).
Section 3.3 Replacement Certificates. Without limiting
any provisions contained in the Warrant Certificate or the
Articles, the certificate(s) representing the Series D Preferred
Shares and Warrants held by the Investors (or then holders) may
be exchanged by the Investors (or such holders) at any time and
from time to time for certificates with different denominations
representing an equal aggregate number of Series D Preferred
Shares or Warrants, as the case may be, as reasonably requested
by the Investors (or such holders) upon surrendering the same.
No service charge will be made for such registration, transfer or
exchange.
Section 3.4 Securities Compliance. The Company shall
notify the Commission and Nasdaq, in accordance with their
requirements, of the transactions contemplated by this Agreement,
and shall take all other necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation,
for the legal and valid issuance of the Series D Preferred Shares
and Warrants hereunder and the Common Shares issuable upon
conversion thereof to the Investors or subsequent holders.
Section 3.5 Notices. The Company agrees to provide the
Investors (or any subsequent holders of Series D Preferred Shares
and Warrants) with copies of all notices and information,
including without limitation notices and proxy statements in
connection with any meetings, that are provided to the holders of
Common Stock, contemporaneously with the delivery of such notices
or information to such Common Stock holders.
Section 3.6 Reservation of Stock Issuable Upon
Conversion. The Company shall at all times reserve and keep
available out of its authorized but unissued Common Stock, solely
for the purpose of effecting the conversion of the Series D
Preferred Shares and conversion or exercise of the Warrants, such
number of shares of its Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding Series
D Preferred Shares and exercise of the Warrants, and if at any
time the number of authorized but unissued shares of Common Stock
<PAGE>
shall not be sufficient to effect the conversion of all the then
outstanding Series D Preferred Shares and exercise of the
Warrants, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose, including without
limitation engaging in best efforts to obtain the requisite
shareholder approval.
ARTICLE IV
Registration
Section 4.1 Registration Requirements. The Company shall
use its reasonable business efforts to effect the registration of
the Registrable Securities (including without limitation the
execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as would permit or
facilitate the resale or distribution of all the Registrable
Securities in the manner (including manner of sale) and in all
states reasonably requested by the holder thereof (each a
"Holder"). Such reasonable best efforts by the Company shall
include the following:
(a) the Company shall, as expeditiously as
reasonably possible after the Closing Date:
(i) Prepare and file a registration
statement with the Commission pursuant to Rule 415
under the Securities Act on such appropriate
registration form of the Commission as shall be
reasonably selected by the Company covering the
Registrable Securities ("Registration Statement")
within 45 days following the Closing Date. Thereafter
the Company shall use its reasonable business efforts
to cause such Registration Statement to be declared
effective by the Commission within 90 days following
the Closing Date. In the event that such Registration
Statement is not declared effective within 90 days
following the Closing Date, there shall be a 30 day
grace period. The Company shall use its reasonable
best efforts to cause the Registration Statement to
become effective during this 30 day grace period, if
applicable. In the event that such Registration
Statement has not been declared effective within 120
days from the Closing Date, then the Company shall,
until the Registration Statement is declared effective,
pay in cash to the Investors, and each of them, an
amount equal to 2% of the aggregate Liquidation Value
<PAGE>
of the Series D Preferred Shares (the "Liquidated
Damages") held by the Investors for each 30 day period,
or part thereof, beginning on the 121st day following
the Closing Date (the "Default Period") that the
Registration Statement has not been declared effective;
provided, however, that the Default Period shall
terminate and Liquidated Damages shall cease to accrue
on the date upon which all such Registrable Securities
may be immediately sold under Rule 144 in the
reasonable opinion of counsel to the Company (provided
that the Company's transfer agent has accepted an
instruction from the Company to such effect). If any
applicable Default Period is less than 30 days such
cash payment shall be on a pro rata basis. Such cash
payment shall be calculated by the Company on the
earlier of (i) the effective date of such Registration
Statement or (ii) the last day of each Default Period,
and a check in lawful money of the United States of
America shall be sent within three (3) business days of
such calculation to each of the Investors at the
addresses set forth on the signature page hereof.
Following the initial effective date of such
Registration Statement, Liquidated Damages shall also
be payable to each of the Investors by the Company for
periods (in excess of the time period in which the
Company is required to file a Current Report on Form 8-
K) during which the Registration Statement does not
remain effective; provided, however, that such
Liquidated Damages shall not be payable by the Company
in the event that all such Registrable Securities may
be immediately sold by the Investors pursuant to Rule
144. Notwithstanding the foregoing, if the Default
Period commences from the failure of the Company to
cause to become effective the Registration Statement
solely by reason of the failure of any Investor to
provide such information as (i) the Company may
reasonably request from such Investor to be included in
the Registration Statement or (ii) the Commission or
Nasdaq may request in connection with such Registration
Statement, the Company shall not be required to pay
such Liquidated Damages to such Investor during the
period of delay attributable to such Investor's
failure. The Company and the Investors hereby
acknowledge and agree that it may be difficult, if not
impossible, to determine with any reasonable accuracy
the actual damages arising from the failure to secure
effectiveness of the Registration Statement by the time
hereinbefore specified, or to maintain the Registration
Statement thereafter, and that the amount of the
Liquidated Damages is a reasonable estimate thereof,
<PAGE>
provided that payment thereof shall in no manner be
construed as impairing the right of the Investors, and
each of them, to require specific performance of this
Agreement.
(ii) Prepare and file with the Commission
such amendments and supplements to such Registration
Statement and the prospectus used in connection with
such Registration Statement as may be necessary to
comply with the provisions of the Act with respect to
the disposition of all securities covered by such
Registration Statement and notify each of the Investors
of the filing and effectiveness of such Registration
Statement and any amendments or supplements.
(iii) Furnish to each of the Investors
such number of copies of a current prospectus
conforming with the requirements of the Act, copies of
the Registration Statement, any amendment or supplement
thereto and any documents incorporated by reference
therein and such other documents as each of the
Investors may reasonably require in order to facilitate
the disposition of Registrable Securities owned by each
of the Investors.
(iv) Use its best efforts to register and
qualify the securities covered by such Registration
Statement under such other securities or "Blue Sky"
laws of such jurisdictions as shall be reasonably
requested by each of the Investors; provided that the
Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or
to file a general consent to service of process in any
such states or jurisdictions.
(v) Notify each of the Investors immediately
of the happening of any event as a result of which the
prospectus (including any supplement thereto or
thereof) included in such Registration Statement, as
then in effect, includes an untrue statement of
material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing, and use its best efforts
to promptly update and/or correct such prospectus.
(vi) Notify each of the Investors immediately
of the issuance by the Commission or any state
securities commission or agency of any stop order
suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
<PAGE>
purpose. The Company shall use its reasonable best
efforts to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting
thereof at the earliest possible time.
(vii) Permit a single firm of counsel,
designated by the Investors, to review the Registration
Statement and all amendments and supplements thereto
within a reasonable period of time prior to each
filing, and shall not file any document in a form to
which such counsel reasonably objects.
(viii) Use its reasonable business efforts
to list the Registrable Securities covered by such
Registration Statement with all securities exchange(s)
and/or markets on which the Common Stock is then
listed, and prepare and file any required filings with
the National Association of Securities Dealers, Inc. or
any exchange or market where the Common Shares are
traded.
(ix) Otherwise use its reasonable business
efforts to comply with all applicable rules and
regulations of the SEC and make available to its
security holders, as soon as reasonably practicable,
earnings statements covering a period of twelve months
beginning with three months after the effective date of
the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the
Securities Act.
(b) The Company shall make available for
inspection by the Investors and their representative(s), any
underwriter participating in any disposition pursuant to a
Registration Statement, and any attorney or accountant retained
by the Investors or underwriter, all financial and other records
customary for purposes of the Investors' due diligence
examination of the Company and all SEC Documents filed subsequent
to the Closing Date, pertinent corporate documents and properties
of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in
connection with such Registration Statement, provided that such
parties agree to keep such information confidential.
Section 4.2 Expenses of Registration. All Registration
Expenses incurred in connection with any registration,
qualification or compliance with registration pursuant to this
Section 4 shall be borne by the Company, and all Selling Expenses
of any Investor shall be borne by such Investor.
<PAGE>
Section 4.3 Registration Period. In the case of the
registration effected by the Company pursuant to this Section 4,
the Company will use its reasonable business efforts to keep such
registration effective (the "Effectiveness Period") until the
earliest to occur of (a) the later of two years from the Closing
Date or two years from the date of exercise of the last Warrant
to be exercised prior to the expiration thereof, provided that,
without limiting any provision of Section 4.1(a)(i), the Company
may suspend the effectiveness of the Registration Statement if
the Board of Directors determines, upon advice of counsel, that
in order to maintain effectiveness of the Registration Statement,
the Company would be required to disclose a significant corporate
development which disclosure would have a material effect on the
Company; provided, however, that the period of time which such
Registration Statement is required to be effective shall be
increased by the number of days that the Registration Statement's
effectiveness was suspended, if any, (b) the date on which the
Investors have completed the sale or distribution described in
the Registration Statement relating thereto, or (c) the date on
which such Registrable Securities may be sold under Rule 144(k)
in the reasonable opinion of counsel to the Company (provided
that the Company's transfer agent has accepted an instruction
from the Company to such effect).
Section 4.4 Indemnification.
(a) Company Indemnity. The Company will
indemnify each holder of Registrable Securities, each of its
officers, directors and partners, and each person controlling
such holder of Registrable Securities, within the meaning of
Section 15 of the Securities Act and the rules and regulations
thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls, within the
meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, any underwriter, against all claims,
losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related
registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the
Securities Act or any state securities law or in either case, any
rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in
connection with any such registration, qualification or
compliance, and will reimburse each holder of Registrable
<PAGE>
Securities, each of its officers, directors and partners, and
each person controlling such holder of Registrable Securities,
each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to a holder of
Registrable Securities to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information
relating to such holder or underwriter and furnished to the
Company by such holder or the underwriter (if any) therefor and
stated to be specifically for use therein. The indemnity
agreement contained in this Section 4.4(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent will not be unreasonably
withheld).
(b) Holder Indemnity. Each holder of Registrable
Securities will, severally and not jointly, if Registrable
Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, partners,
and each underwriter, if any, of the Company's securities covered
by such a registration statement, each person who controls the
Company or such underwriter within the meaning of Section 15 of
the Securities Act and the rules and regulations thereunder, each
other holder of Registrable Securities (if any), and each of
their directors, officers and partners, and each person
controlling such other holder(s) of Registrable Securities
against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statement therein not
misleading, in each case only insofar as such untrue statement or
alleged untrue statement or omission relates to such holder of
Registrable Securities, and will reimburse the Company and such
other holder(s) of Registrable Securities and their directors,
officers and partners, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection
with investigating and defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information
<PAGE>
furnished to the Company by such holder of Registrable Securities
and stated to be specifically for use therein, and provided that
the maximum amount for which such holder of Registrable
Securities shall be liable under this indemnity shall not exceed
the net proceeds received by such holder of Registrable
Securities from the sale of the Registrable Securities. The
indemnity agreement contained in this Section 4.4(b) shall not
apply to amounts paid in settlement of any such claims, losses,
damages or liabilities if such settlement is effected without the
consent of such holder of Registrable Securities (which consent
shall not be unreasonably withheld).
(c) Procedure. Each party entitled to
indemnification under this Article (the "Indemnified Party")
shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim in any litigation
resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its
obligations under this Article except to the extent that the
Indemnifying Party is materially and adversely affected by such
failure to provide notice. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself
or the claim in question as an Indemnifying Party may reasonably
request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation
resulting therefrom.
Section 4.5 Contribution. If the indemnification
provided for in Section 4 herein is unavailable to the
Indemnified Parties in respect of any losses, claims, damages or
liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities as between
<PAGE>
the Company on the one hand and any holder of Registrable
Securities on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of such holder of
Registrable Securities in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one
hand and of any holder of Registrable Securities on the other
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company or by such holder.
In no event shall the obligation of any Indemnifying Party
to contribute under this Section 4.5 exceed the amount that such
Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section
4.4(a) or 4.4(b) hereof had been available under the
circumstances.
The Company and the Investors agree that it would not be
just and equitable if contribution pursuant to this Section 4.5
were determined by pro rata allocation (even if the holders or
the underwriters were treated as one entity for such purpose) or
by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraphs
shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
section, no holder of Registrable Securities or underwriter shall
be required to contribute any amount in excess of the amount by
which (i) in the case of any holder, the net proceeds received by
such holder from the sale of Registrable Securities or (ii) in
the case of an underwriter, the total price at which the
Registrable Securities purchased by it and distributed to the
public were offered to the public exceeds, in any such case, the
amount of any damages that such holder or underwriter has
otherwise been required to pay by reason of such untrue or
alleged untrue statement, omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
<PAGE>
ARTICLE V
Conditions
Section 5.1 Conditions Precedent to the Obligation of the
Company to Issue and Sell the Series D Preferred Shares and
Warrants. The obligation hereunder of the Company to issue and
sell the Series D Preferred Shares and Warrants to the Investors
is subject to the satisfaction, at or before any Closing Date, of
each of the conditions set forth below. These conditions are for
the Company's sole benefit and may be waived by the Company at
any time in its sole discretion.
(a) Accuracy of the Investors' Representations
and Warranties. The representations and warranties of the
Investors shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though made
at that time (except for representations and warranties that
speak as of a particular date) and the Investors shall deliver to
the Company a certificate executed by an executive officer of
each such Investor to such effect.
(b) Performance by the Investors. Each of the
Investors shall have performed all agreements and satisfied all
conditions required to be performed or satisfied by the Investors
at or prior to any Closing Date and each of the Investors shall
deliver to the Company a certificate executed by an executive
officer of each such Investor to such effect.
(c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this
Agreement.
Section 5.2 Conditions Precedent to the Obligation of the
Investors to Purchase the Series D Preferred Shares and Warrants.
The obligation hereunder of each of the Investors to acquire and
pay for the Series D Preferred Shares and Warrants is subject to
the satisfaction, at or before any Closing Date, of each of the
conditions set forth below. These conditions are for the
Investors' sole benefit and may be waived by the Investors at any
time in their sole discretion.
(a) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company
shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a
particular date) and the Company shall deliver to the Investors a
<PAGE>
certificate executed by the Company's president and the Company's
chief executive officer to such effect.
(b) Performance by the Company. The Company
shall have performed all agreements and satisfied all conditions
required to be performed or satisfied by the Company at or prior
to any Closing Date and the Company shall deliver to the
Investors a certificate executed by the Company's president and
the Company's chief executive officer to such effect.
(c) Nasdaq. From the date hereof to any Closing
Date, trading in the Company's Common Stock shall not have been
suspended by the Commission or Nasdaq, and trading in securities
generally as reported by Nasdaq, shall not have been suspended or
limited, and the Common Stock shall not have been delisted from
any exchange or market where they are currently listed.
(d) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority or competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this
Agreement.
(e) Opinion of Counsel. At the Closing, each of
the Investors shall have received an opinion of counsel to the
Company in substantially the form attached hereto as Exhibit D
and such other opinions, certificates and documents as each of
the Investors or its counsel shall reasonably require incident to
the Closing.
(f) Shareholders' Agreement. Each of the Company
and Pierre Mansur, the Company's Chairman and President, and all
Investors shall have executed that certain Shareholders'
Agreement of even date herewith, the form of which is attached
hereto as Exhibit E.
(g) Secretary's Certificate. The Company shall
have delivered to each of the Investors a certificate in form and
substance reasonably satisfactory to each of the Investors,
executed by the Secretary of the Company on behalf of the
Company, certifying as to the incumbency of signing officers,
Charter, Bylaws, good standing and authorizing resolutions of the
Company, including the appointment of the Investors' nominees to
the Company's Board of Directors.
(h) Consents. All consents, acknowledgements,
approvals, permits and orders with respect to the transactions
contemplated hereby shall have been obtained.
<PAGE>
(i) All dividends on the Series B Convertible
Preferred Stock and on the Series C Convertible Preferred Stock
accrued through and including December 31, 1999 shall have been
paid in full.
(j) Any and all adjustments to the Series B
Convertible Preferred Stock and to the Series C Convertible
Preferred Stock arising from events and circumstances through and
including Closing (including, without limitation, the
transactions contemplated in this Agreement) shall have been
effectuated and noticed to the holders of such securities.
(k) Other Certificates. Each of the Investors
shall have received such additional certificates, instruments and
other documents, in form and substance satisfactory to the each
of the Investors and counsel for the Investors as they shall have
reasonably requested in connection with the transactions
contemplated hereunder.
ARTICLE VI
Legend on Stock
Section 6.1. Certificates. Each certificate representing
the Series D Preferred Shares and, if appropriate, securities
issued upon conversion thereof, shall be stamped or otherwise
imprinted with a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR
AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
Any Common Stock issued pursuant to conversion of the Series
D Preferred Shares shall bear a legend in the same form as the
legend on the Series D Preferred Shares.
ARTICLE VII
Termination
Section 7.1 Termination by Mutual Consent. This
Agreement may be terminated at any time prior to the Closing Date
by the mutual written consent of the Company and the Investors.
<PAGE>
Section 7.2 Other Termination. This Agreement may be
terminated by action of the Board of Directors of the Company or
by the Investors at any time if the Closing shall not have been
consummated by May 31, 2000.
ARTICLE VIII
Miscellaneous
Section 8.1 Fees and Expenses. The Company shall pay the
fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by the Company
incident to the negotiation, preparation, execution, delivery and
performance of this Agreement, and shall promptly pay, or
reimburse the Investors for, all out-of-pocket fees and expenses
incurred by it, including, without limitation, the reasonable
fees and disbursements of its counsel, not to exceed an aggregate
of $20,000, in connection with such activities, and any other
documents or instruments required hereunder or thereunder,
whether or not the transactions contemplated hereunder are
consummated. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of the Series D
Preferred Shares and Warrants pursuant hereto.
Section 8.2 Default.
(a) It shall constitute an Event of Default if
the Company shall fail to perform its obligations hereunder or
shall fail to perform its obligations to any holder of the Series
D Preferred Shares, as provided for in the Company's Articles of
Incorporation including the provisions set forth in Schedule II
hereto, and Warrants. If an Event of Default shall occur, the
Investors shall be entitled, to immediately commence legal action
to recover damages in respect of such default and/or to seek
injunctive relief.
(b) The Company and the Investors acknowledge and
agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other
remedy to which either of them may be entitled by law or equity.
(c) Each of the Company and the Investors
(i) hereby irrevocably submit to the jurisdiction of the United
States District Court for the Southern District of Florida for
the purposes of any suit, action or proceeding arising out of or
relating to this Agreement and (ii) hereby waive, and agree not
<PAGE>
to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Investors consent to
process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agree that such service
shall constitute good and sufficient service of process and
notice thereof. Nothing in this paragraph shall affect or limit
any right to serve process in any other manner permitted by law.
Section 8.3 Consent of Holders of Series B and Series C
Convertible Preferred Stock. The undersigned holders of Series B
Convertible Preferred Stock and Series C Convertible Preferred
Stock, as applicable, without limiting any rights to adjustment
of the foregoing securities arising from the issuance of any
Series D Preferred Stock or Warrants, hereby consent to the
issuance of Series D Preferred Stock and the Warrants and all
related transactions as contemplated by this Agreement.
Section 8.4 Entire Agreement; Amendment. This Agreement
together with the agreements and documents executed in connection
herewith and therewith, contains the entire understanding of the
parties with respect to the matters covered hereby and thereby
and, except as specifically set forth herein or therein, neither
the Company nor the Investors make any representation, warranty,
covenant or undertaking with respect to such matters. No
provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought.
Section 8.5 Notices. Any notice or other communication
required or permitted to be given hereunder shall be in writing
and shall be effective upon actual receipt of such mailing. The
addresses for such communications shall be:
to the Company: Mansur Industries Inc.
8305 N.W. 27th Street
Suite 107
Miami, Florida 33122
Attn: Paul I. Mansur, Chief
Executive Officer
with copies to: Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Gary M. Epstein, Esq.
<PAGE>
to the Investors: At the addresses set forth on the
signature page of this Agreement,
with copies to the Investor's
counsel if specified in writing by
such Investor.
with a copy to: Krugman & Kailes LLP
Park 80 West - Plaza Two
Saddle Brook, New Jersey 07663
Attn: Howard Kailes, Esq.
Any party hereto may from time to time change its address for
notices by giving at least 10 days written notice of such changed
address to the other parties hereto.
Section 8.6 Indemnity. Each party shall indemnify each
other party against any loss, cost or damages (including
reasonable attorney's fees but excluding consequential damages)
incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this
Agreement.
Section 8.7 Waivers. No waiver by any party of any
default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party
to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Section 8.8 Headings. The headings herein are for
convenience only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions
hereof.
Section 8.9 Successors and Assigns. Except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted
assigns. The parties hereto may amend this Agreement without
notice to or the consent of any third party.
Section 8.10 No Third Party Beneficiaries. This Agreement
is intended for the benefit of the parties hereto and their
respective permitted successors and assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any
other person.
Section 8.11 Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the
internal laws of the State of Florida.
<PAGE>
Section 8.12 Survival. The representations and warranties
and the agreements and covenants of the Company and the Investors
contained herein shall survive the Closing.
Section 8.13 Execution. This Agreement may be executed in
two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign
the same counterpart. In the event any signature is delivered by
facsimile transmission, the party using such means of delivery
shall cause the manually executed signature page(s) to be
physically delivered to the other party within five days of the
execution hereof.
Section 8.14 Publicity. The Company agrees that it will
not disclose, and will not include in any public announcement,
the name of any of the Investors without their consent, unless
and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
THE COMPANY:
MANSUR INDUSTRIES, INC.
By: s/Paul I. Mansur
----------------------
Name: Paul I. Mansur
Title: Chief Executive Officer
THE INVESTORS:
ENVIRONMENTAL OPPORTUNITIES FUND
II, L.P.
By: Fund II Mgt. Co., LLC
Its General Partner
Per: s/Bruce R. McMaken
-------------------------
Name: Bruce R. McMaken
Title: Manager
ENVIRONMENTAL OPPORTUNITIES
FUND II (INSTITUTIONAL), L.P.
By: Fund II Mgt. Co., LLC
Its General Partner
Per: s/Bruce R. McMaken
-----------------------
Name: Bruce R. McMaken
Title: Manager
<PAGE>
Address:
c/o Sanders Morris Harris
3100 Chase Tower
600 Travis Street, Suite 3100
Houston, Texas 77002
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
By: s/Paul A. Biddelman
-----------------------
Name: Paul A. Biddelman
Title: President
Address:
450 Park Avenue, Suite 2302
New York, New York 10022
<PAGE>
SCHEDULE I
LIST OF INVESTORS
Investor
Number of
Series D
Preferred
Shares
Warrants
Purchase
Price
Hanseatic Americas LDC. . . . . .
10,000
181,818
$1,000,000
Environmental Opportunities
Fund II, L.P.. . . . . . . . . .
2,140
38,909
$ 214,000
Environmental Opportunities Fund
II (Institutional), L.P.. . . . .
7,860
142,909
$ 786,000
20,000
363,636
$2,000,000
(..continued)
Exhibit C
ARTICLES OF AMENDMENT
CERTIFICATE OF DESIGNATION
of
SERIES D CONVERTIBLE PREFERRED STOCK
of
MANSUR INDUSTRIES INC.
(Pursuant to Section 607.0602 of the
Florida Business Corporation Act)
____________________________________
Mansur Industries Inc., a corporation organized and existing
under the Business Corporation Act of the State of Florida
(hereinafter called the "Corporation"), hereby certifies that the
following resolution was adopted by the Board of Directors of the
Corporation as required by Section 607.0602 of the Business
Corporation Act at a meeting duly called and held on May 1, 2000:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation (hereinafter
called the "Board of Directors" or the "Board") in accordance with
the provisions of the Articles of Incorporation of the
Corporation, the Board of Directors hereby creates a series of
Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Series D Convertible Preferred Stock:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series D Convertible Preferred
Stock" (the "Series D Preferred Stock") and the number of shares
constituting the Series D Preferred Stock shall be 150,000, of
which 50,000 shares shall be reserved for use in connection with
the payment of dividends on the outstanding shares of Series D
Preferred Stock pursuant to Section 3 hereof. Such number of
shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number
of shares of Series D Preferred Stock to a number less than the
number of shares then outstanding, plus the number reserved as
aforesaid, and no increase shall increase the number of shares of
Series D Preferred Stock above the total number of authorized
shares.
<PAGE>
Section 2. Rank. The Series D Preferred Stock shall
rank as to distributions of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or
involuntary: (i) senior to all of the Corporation's common
stock, par value $.001 per share (the "Common Stock");
(ii) senior to any class or series of capital stock of the
Corporation hereafter created specifically ranking by its terms
junior to the Series D Preferred Stock (collectively, with the
Common Stock, "Junior Securities" or "Junior Stock"); (iii) on
parity with the Series B Convertible Preferred Stock, par value
$1.00 per share ("Series B Preferred Stock") of the Company; (iv)
on parity with the Series C Convertible Preferred Stock, par
value $1.00 per share ("Series C Preferred Stock") of the
Company; and (iv) on parity with any class or series of capital
stock of the Corporation hereafter created specifically ranking
by its terms on parity with the Series B Preferred Stock, Series
C Preferred Stock or Series D Preferred Stock ("Parity
Securities" or "Parity Stock"). While any shares of Series D
Preferred Stock are outstanding, no equity securities senior to
the Series D Preferred Stock, as to distribution of assets,
payment of dividends or otherwise ("Senior Securities") or Parity
Securities and no options, warrants or other rights
(collectively, "Options") to purchase or acquire Senior
Securities or Parity Securities, or any securities (collectively,
"Convertible Securities") by their terms convertible into or
exchangeable for Senior Securities or Parity Securities, or any
Options to purchase or acquire such Convertible Securities, shall
be authorized or issued and (except for shares issued as
dividends on outstanding shares of Series D Preferred Stock) no
additional shares of Series D Preferred Stock, or Options to
acquire Series D Preferred Stock, or Convertible Securities
convertible into or exchangeable for Series D Preferred Stock, or
any Option to acquire such Convertible Securities, shall be
issued, in each case, without the approval (by vote or written
consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Series D Preferred
Stock, voting as a single class. This prohibition shall not
include the authorization or issuance of any form of debt
securities or instruments to a bank or other institution.
Section 3. Dividends.
(a) The dividend rate payable with respect to the
outstanding shares of Series D Preferred Stock ("Dividend Rate")
shall be 8.25% of the Liquidation Value (as defined below) of
each share per annum. During the period commencing on the date of
initial issuance of the Series D Preferred Stock and continuing
through the second anniversary of the date thereof, all such
dividends shall be paid by the Corporation, in lieu of cash,
<PAGE>
through the issuance of additional shares of Series D Preferred
Stock valued at the Liquidation Value. Thereafter, all such
dividends may, at the option of the Corporation, be paid in lieu
of cash, through the issuance of additional shares of the Series
D Preferred Stock, cash legally available for payment thereof, or
any combination of Series D Preferred Stock and cash whether or
not such dividends have been declared. If dividends are paid by
the Corporation through the issuance of additional shares of
Series D Preferred Stock and such dividends would, but for the
provisions hereof, be payable with a fractional share, the
Corporation shall pay, in lieu of such fractional share, cash in
an amount equal to the value of such fractional share. Dividends
on the Series D Preferred Stock shall accrue from the date of
issuance or thereafter, from the most recent date on which
dividends were payable, and shall be payable semi-annually on
June 30 and December 31 of each year (each a "Dividend Payment
Date"), commencing on June 30, 2000; provided, however, that if
any such day is a non-business day, the Dividend Payment Date
will be the next business day. Each declared dividend shall be
payable to holders of record as they appear at the close of
business on the stock books of the Corporation on June 10 and
December 10 of each year (each of such dates a "Record Date").
Semi-annual dividend periods (each a "Dividend Period") shall
commence on and include the 1st day of July and January of each
year and shall end on and include the day next preceding the next
following Dividend Payment Date.
(b) No dividends shall be declared or paid or set
apart for payment on any Common Stock, Parity Stock or Junior
Stock during any semi-annual period unless full dividends on the
Series D Preferred Stock for all Dividend Periods ending prior to
or during such semi-annual period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment. When dividends
are not so paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series D Preferred Stock
and any other Parity Stock, dividends upon the Series D Preferred
Stock and dividends on such other Parity Stock payable during
such semi-annual period shall be declared pro rata so that the
amount of such dividends so payable per share on the Series D
Preferred Stock and such other Parity Stock shall in all cases
bear to each other the same ratio that full dividends on the
shares of Series D Preferred Stock and full dividends, if any, on
shares of such other Parity Stock, bear to each other. If full
dividends on the Series D Preferred Stock have not been declared
and paid or set apart for payment, no dividend or distribution,
other than in shares of Junior Stock, may be declared, set aside
or paid on any shares of Junior Stock. Holders of the Series D
Preferred Stock shall not be entitled to any dividends, whether
<PAGE>
payable in cash, property or stock, in excess of the dividends
provided for herein. No interest or sum of money in lieu of
interest shall be payable in respect of any declared dividend
payment or payments on the Series D Preferred Stock which may be
in arrears. As used herein, the phrase "set apart" in respect of
the payment of dividends shall require deposit of any funds in a
bank or trust company in a separate deposit account maintained
for the benefit of the holders of the Series D Preferred Stock,
or, in the case of payment of dividends through the issuance of
shares of the Corporation's Series D Preferred Stock, the deposit
of certificates representing such shares of Series D Preferred
Stock with such bank or trust company.
Section 4. Voting Rights. On all matters to come before
the shareholders of the Corporation, the holders of Series D
Preferred Stock will vote together with the holders of the Common
Stock, Series B Preferred Stock and Series C Preferred Stock as a
single class, with each share of Series D Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock entitled to
a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the
taking of such vote of shareholders as the date as of which the
Conversion Price (as hereinafter defined) is calculated except as
required by law.
To the extent that under Florida law or this
Certificate of Designation the vote of the holders of shares of
Series D Preferred Stock, voting separately as a class, is
required to authorize a given action of the Corporation, the
affirmative vote or consent of the holders of at least two-thirds
of the outstanding shares of the Series D Preferred Stock shall
constitute the approval of such action by the class. Holders of
shares of Series D Preferred Stock shall be entitled to notice of
all shareholder meetings or written consents with respect to which
they would be entitled to vote, which notice shall be provided
pursuant to the Corporation's bylaws and applicable law.
Section 5. Conversion. Subject to and upon compliance
with this Section 5, the holders of shares of Series D Preferred
Stock shall have conversion rights as follows:
(a) Optional Conversion. (i) Each holder of a
share of Series D Preferred Stock shall have the right, at any
time or from time to time prior to the Redemption Date (as
defined below), at the office of the Corporation or any transfer
agent for the Series D Preferred Stock, to convert such share of
Series D Preferred Stock into that number of fully paid and
nonassessable shares of Common Stock equal to $100 divided by the
Conversion Price of such share of Series D Preferred Stock as set
forth in Section 6 hereof. The number of shares of Common Stock
<PAGE>
into which the Series D Preferred Stock may be converted is
hereinafter referred to as the "Conversion Rate."
Notwithstanding the foregoing, the Corporation shall not be
obligated to accept shares of Series D Preferred Stock for
conversion if such conversion would require the Corporation to
issue a certificate or certificates evidencing less than an
aggregate of 50,000 shares of Common Stock on any Date of
Conversion (as defined below).
(ii) Without limiting any other rights herein
set forth, if at any time or from time to time prior to the
Redemption Date the Corporation issues any equity security
(within the meaning of Section 3(a)(11) of the Securities
Exchange Act of 1934, as amended) or any debt securities
convertible into equity securities, other than Excluded Shares,
each holder of a share of Series D Preferred Stock shall have the
right to convert such share of Series D Preferred Stock into, as
the case may be, (A) a number of such fully paid and
nonassessable equity securities determined by dividing $100 by
the purchase price of each such equity security in such
transaction or (B) $100 aggregate principal amount of such
convertible debt securities. This right of conversion shall
terminate on the later to occur of (A) the first anniversary of
the issuance of the shares of Series D Preferred Stock and (B)
the date on which the Corporation first consummates the sale of
shares of its equity securities or convertible debt securities
for gross cash proceeds to the Corporation of $2.0 million or
more, other than Excluded Shares. In the event any holder of a
share of Series D Preferred Stock exercises any right under this
subparagraph (ii), any securities so acquired shall be
accompanied by all registration and other contractual rights, as
acquired generally by purchasers of the Corporation's equity or
convertible debt securities in the transaction giving rise to
such rights.
(b) Early Conversion Event. If, after the first
anniversary of the date of issuance of the shares of Series D
Preferred Stock, the closing bid price of the Common Stock, as
reported on Nasdaq (or the closing sale price if the Common Stock
is then traded on any principal national exchange or Nasdaq
National Market) exceeds 175% of the Conversion Price for a
period of twenty (20) consecutive trading days, including the
twenty (20) trading days prior to such first anniversary (the
"Calculation Period"), an early conversion event ("Early
Conversion Event") shall have occurred. Upon the first Early
Conversion Event, if any, in each calendar quarter, the aggregate
Liquidation Value of the outstanding shares of Series D Preferred
Stock shall automatically and without any action by the holders
<PAGE>
of the Series D Preferred Stock or the Corporation be converted
into shares of Common Stock, on a pro rata basis, in an amount
determined in accordance with the following formula:
CPS = (V x 22 - Y) x CP
where CPS is the aggregate stated Liquidation Value of the Series
D Preferred Stock to be converted; V is the average daily
reported volume of trading in the Common Stock on all national
securities exchanges and/or reported through the automated
quotation system of a registered national securities association
during the Calculation Period and Y is the sum of (i) shares of
Common Stock which the Corporation then has the right to issue
upon an "Early Conversion Event" under the Corporation's
outstanding 8-1/4% Subordinated Convertible Notes due 2003 (the
"Convertible Notes") or under the Series B Preferred Stock and
the Series C Preferred Stock, plus (ii) shares of Common Stock
subject to then effective resale registration statements of the
Corporation other than Registration Statements on Form S-8 or S-4
and other than registration statements with respect to Common
Stock underlying the Convertible Notes, the Series B Preferred
Stock, the Series C Preferred Stock and Series D Preferred Stock
which remain unsold at such time, plus (iii) shares of Common
Stock issuable upon exercise of the Warrants; and CP is the
applicable Conversion Price. For purposes of calculating V,
trading volume in excess of 100,000 shares on any trading day
shall not be included, unless such amounts do not exceed 200% of
the trailing 30-day average reported volume of trading.
Notwithstanding the foregoing, none of the
outstanding shares of Series D Preferred Stock shall be converted
as a result of an Early Conversion Event pursuant to this
Section 5 unless the resale of the shares of Common Stock
issuable upon such conversion is subject to an effective
Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), or an exemption from registration
under the Securities Act is then available. Accrued dividends on
the shares of Series D Preferred Stock converted upon the
occurrence of an Early Conversion Event shall be paid on the next
Dividend Payment Date in accordance with Section 3 hereof.
(c) Mechanics of Conversion. Before a holder
shall be entitled to receive shares of Common Stock or other
securities of the Corporation upon conversion of shares of Series
D Preferred Stock, the holder of shares of Series D Preferred
Stock shall (i) fax or otherwise deliver a copy of the fully
executed notice of conversion in the form attached hereto as
Exhibit A ("Notice of Conversion") to the Corporation at its
principal office and to the office of its designated transfer
agent that such holder elects to convert the same, which notice
<PAGE>
shall specify the number of shares of Series D Preferred Stock to
be converted and shall contain the Conversion Price (together
with a copy of the first page of each certificate to be
converted) prior to 5:00 p.m., Eastern Standard time (the
"Conversion Notice Deadline") on the date of conversion specified
on the Notice of Conversion and (ii) surrender the original
certificate or certificates for the shares of Series D Preferred
Stock to be converted, duly endorsed, and deliver the original
Notice of Conversion by either overnight courier or two-day
courier, to the principal office of the Corporation or to the
office of its designated transfer agent; provided, however, that
the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock or other securities of the
Corporation issuable upon such conversion unless the certificates
evidencing such shares of Series D Preferred Stock are delivered
to the Corporation or its transfer agent as provided above. Upon
the conversion of shares of Series D Preferred Stock in
connection with an Early Conversion Event, the Corporation shall
send to the holders of shares of Series D Preferred Stock a
Notice of Early Conversion (in the form attached hereto as
Exhibit B) stating the aggregate Liquidation Value of shares of
Series D Preferred Stock to be converted and the number of shares
of Common Stock into which such Liquidation Value shall be
converted.
Upon receipt by the Corporation of evidence of the
loss, theft, destruction or mutilation of any certificate
representing shares of Series D Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Corporation, and upon surrender
and cancellation of any certificate representing shares of Series
D Preferred Stock, if mutilated, the Corporation shall execute
and deliver a new certificate of like tenor and date. No
fractional shares of Common Stock or other securities of the
Corporation shall be issued upon conversion of the Series D
Preferred Stock. In lieu of any fractional share to which the
holder of shares of Series D Preferred Stock would otherwise be
entitled, the Corporation shall pay cash to such holder in an
amount equal to such fraction multiplied by the Conversion Price
then in effect. In the case of a dispute as to the calculation
of the Conversion Price, the Corporation's calculation shall be
deemed conclusive absent manifest error.
The Corporation shall use all reasonable efforts
to issue and deliver within seven (7) business days after
delivery to the Corporation of the certificates representing the
shares of Series D Preferred Stock to be converted, or after such
agreement and indemnification, to such holder of shares of Series
D Preferred Stock at the address of the holder on the books of
<PAGE>
the Corporation, a certificate or certificates for the number of
shares of Common Stock or other securities of the Corporation to
which the holder shall be entitled as aforesaid. The date on
which conversion occurs (the "Date of Conversion") shall be
deemed to be the date set forth in such Notice of Conversion,
provided (i) that the advance copy of the Notice of Conversion is
delivered to and received by the Corporation before 5:00 p.m.,
Eastern time, on the Date of Conversion, and (ii) that the
original stock certificates representing the shares of Series D
Preferred Stock to be converted are received by the Corporation
or the transfer agent within two (2) business days thereafter.
In the case of an Early Conversion Event, the last date of the
Calculation Period shall be deemed to be the Date of Conversion.
The person or persons entitled to receive the shares of Series D
Preferred Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such shares
of Common Stock or other securities of the Corporation on the
Date of Conversion. In the case of an optional conversion, if
the original certificates representing the shares of Series D
Preferred Stock to be converted are not received by the
Corporation or the transfer agent within two (2) business days
after the Date of Conversion or if the facsimile of the Notice of
Conversion is not received by the Corporation or its transfer
agent prior to the Conversion Notice Deadline, the Notice of
Conversion, at the Corporation's option, may be declared null and
void.
Following any conversion of shares of Series D
Preferred Stock, such shares of Series D Preferred Stock shall no
longer be outstanding and all rights of a holder with respect to
the shares surrendered for conversion shall immediately terminate
except for the right to receive Common Stock or other securities
of the Corporation. All shares of Series D Preferred Stock
subject to an Early Conversion Event shall be deemed to be
cancelled upon such holder's receipt of shares of Common Stock or
other securities of the Corporation in connection with any such
conversion.
(d) Reservation of Shares. The Corporation shall
at all times reserve and keep available out of its authorized but
unissued shares of Common Stock or other securities of the
Corporation such number of shares of Common Stock or other
securities as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of Series D Preferred
Stock; and if at any time the number of authorized but unissued
shares of Common Stock or other securities shall not be
sufficient to effect the conversion of all then outstanding
shares of Series D Preferred Stock, the Corporation will take
such corporate action as may be necessary to increase its
<PAGE>
authorized but unissued shares of Common Stock or other
securities of the Corporation to such number of shares as shall
be sufficient for such purpose.
(e) Notice of Certain Events. The Corporation
shall deliver written notice to each holder of Series D Preferred
Stock at each issuance of equity securities or convertible debt
securities giving rise to a right under paragraph (a)(ii)
immediately preceding at least 30 days prior to the consummation
thereof, describing in reasonable detail the pertinent
transaction.
Section 6. Conversion Price. The "Conversion Price" per
share of the Series D Preferred Stock shall be $5.50, subject to
adjustment as set forth below, with all such adjustments, if any,
being cumulative from the date of initial issuance of shares of
Series D Preferred Stock such that all outstanding shares of
Series D Preferred Stock have the same Conversion Price
regardless of their date of issuance.
6.1 Adjustment of the Number of Shares of Common Stock
and the Conversion Price. The number of shares of Common Stock
issuable upon conversion and the Conversion Price shall be
subject to adjustment as follows:
(a) In case the Corporation shall at any time
after the date of the initial issuance of Series D Preferred
Stock and prior to the conversion of all outstanding shares
thereof (A) pay a dividend or make a distribution on its Common
Stock in shares of its capital stock (whether in shares of Common
Stock, of capital stock of any other class or Options to purchase
or acquire capital stock, Convertible Securities convertible or
exchangeable for capital stock, or Options with respect to such
Convertible Securities), (B) subdivide its outstanding shares of
Common Stock into a greater number of shares, (C) combine its
outstanding shares of Common Stock into a smaller number of
shares, or (D) reclassify, reorganize or effect any similar
transaction with respect to any of its shares of Common Stock, or
in substitution or exchange therefor (other than a change in par
value, or from par value to no par value, or from no par value to
par value), then the number and, if applicable, kind of shares of
Common Stock to be received by any holder of shares of Series D
Preferred Stock (a "Holder") shall be adjusted so that the Holder
will be entitled to receive on conversion the number and kind of
shares of capital stock or other securities which it would have
owned immediately following such action had its Series D
Preferred Stock been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become
effective immediately after the payment date in the case of a
dividend or distribution and shall become effective immediately
<PAGE>
after the effective date in the case of a subdivision,
combination, reclassification, reorganization or similar
transaction. If, as a result of an adjustment made pursuant to
this subsection (a), a Holder shall become entitled to receive
shares of two or more classes of capital stock of the Corporation
or other securities, the Board of Directors or a duly authorized
committee thereof shall in good faith determine (which
determination shall be conclusive and binding) the allocation of
the Conversion Price between or among shares of such classes of
capital stock or other securities. After such allocation, the
Conversion Price and number of shares of each class of capital
stock that is issuable upon conversion shall thereafter be
subject to adjustment in a manner and on terms determined by the
Board of Directors (which determination shall be conclusive and
binding) to be as nearly equivalent as practicable to those
applicable to Common Stock under this Section 6.
(b) (i) From the date of the initial issuance of
shares of Series D Preferred Stock until the later of (A) the
first anniversary of the date of such issuance and (B) the date
on which the Corporation first consummates a sale of equity
securities or debt securities convertible into equity securities
for gross cash proceeds to the Company of $2.0 million or more
(such period through such later date, the "Reset Period"), other
than Excluded Shares (as hereinafter defined), if the Corporation
shall issue or enter into any agreement to issue any shares of
Common Stock other than Excluded Shares for consideration per
share (the "Issuance Price") less than the Conversion Price (as
herein defined) per share in effect immediately prior to such
issuance, the Conversion Price in effect immediately prior to
such issuance shall be reduced (but shall not be increased) to
the Issuance Price.
(ii) If, at any time subsequent to the Reset
Period and prior to the first anniversary of the expiration of
the Reset Period, the Corporation shall issue or enter into any
agreement to issue any shares of Common Stock other than Excluded
Shares for consideration per share less than the Conversion Price
per share in effect immediately prior to such issuance, the
Conversion Price in effect immediately prior to such issuance
shall be reduced (but shall not be increased) to the price
(calculated to the nearest cent) determined: by dividing (A) an
amount equal to the sum of (1) the number of shares of Common
Stock outstanding on a fully diluted basis immediately prior to
such issuance multiplied by the Conversion Price per share in
effect immediately prior to such issuance and (2) the
consideration, if any, received by the Corporation upon such
issuance by (B) the number of shares of Common Stock outstanding
on a fully diluted basis immediately after such issuance.
<PAGE>
(iii) If, at any time from the date of
the initial issuance of shares of Series D Preferred Stock, prior
to the first anniversary of the expiration of the Reset Period,
the Corporation shall issue or enter into any agreement to issue
any shares of Common Stock other than Excluded Shares for
consideration per share greater than the Conversion Price but
lower than the market price per share in effect immediately prior
to such issuance, the Conversion Price in effect immediately
prior to such issuance shall be reduced (but shall not be
increased) to the price (calculated to the nearest cent)
determined by multiplying the Conversion Price in effect
immediately prior to such issuance by the factor determined by
dividing (A) an amount equal to the sum of (1) the number of
shares of Common Stock outstanding on a fully diluted basis
immediately prior to such issuance multiplied by the market price
per share in effect immediately prior to such issuance and (2)
the consideration, if any, received by the Corporation upon such
issuance by (B) the number of shares of Common Stock outstanding
on a fully diluted basis immediately after such issuance
multiplied by the market price per share in effect immediately
prior to such issuance; provided, however, no adjustment shall be
made to the Conversion Price if (i) such issuance is in
connection with a firm commitment underwritten public offering or
(ii) the consideration per share is equal to or greater than 85%
of the market price per share in effect immediately prior to such
issuance. For purposes hereof, the "market price" as of any
measurement date shall be the average of the closing prices of
the Common Stock for each of the 10 consecutive trading days
immediately preceding such measurement date.
(c) Certain Adjustment Factors. For the purposes
of any adjustment of the Conversion Price pursuant to paragraph
(b) above, the following provisions shall be applicable:
(x) Cash. In the case of the issuance of
shares of Common Stock for cash, the amount of the
consideration received by the Corporation shall be
deemed to be the amount of the cash proceeds received
by the Corporation for such shares of Common Stock
before deducting therefrom any discounts, commissions,
taxes or other expenses allowed, paid or incurred by
the Corporation for any underwriting or otherwise in
connection with the issuance and sale thereof; and
(y) Consideration Other Than Cash. In the
case of the issuance of shares of Common Stock (other
than upon the conversion of shares of capital stock or
other securities of the Corporation) for consideration
in whole or in part other than cash, including
<PAGE>
securities acquired in exchange therefor (other than
securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the
fair value thereof (as determined by the Board of
Directors of the Corporation based on an opinion of an
outside financial advisor of recognized regional or
national standing, which may, but need not, be the
independent public accountants who serve as the regular
auditors of the Corporation (the "Financial Advisor"),
whose determination shall be conclusive and binding),
irrespective of any accounting treatment; and
(z) Options and Convertible Securities. In
the case of the issuance of (i) Options to purchase or
acquire shares of Common Stock (whether or not
exercisable immediately following such issuance), (ii)
Convertible Securities by their terms convertible into
or exchangeable for shares of Common Stock (whether or
not so convertible or exchangeable immediately
following such issuance), or (iii) Options to purchase
such Convertible Securities (whether or not exercisable
immediately following such issuance):
(1) the aggregate maximum number of
shares of Common Stock deliverable upon exercise
of such Options to purchase or acquire shares of
Common Stock shall be deemed to have been issued
at the time such Options are first issued and for
a consideration equal to the consideration
(determined in the manner provided in clauses (x)
and (y) above), if any, received by the
Corporation upon the issuance of such Options plus
the purchase price provided in such Options for
the shares of Common Stock covered thereby (if the
purchase price per share of Common Stock is
expressed as a range, the purchase price per share
for purposes of this subparagraph (z)(1) shall be
the average of such range of prices);
(2) the aggregate maximum number of
shares of Common Stock deliverable upon conversion
of or in exchange for any such Convertible
Securities, or upon the exercise of Options to
purchase or acquire such Convertible Securities
and the subsequent conversion or exchange thereto
shall be deemed to have been issued at the time
such convertible or exchangeable securities or
such options, warrants or other rights are first
issued and for a consideration equal to the
<PAGE>
consideration, if any, received by the Corporation
for any such Convertible Securities or Options
(excluding any cash received on account of accrued
interest or accumulated dividends), plus the
additional consideration, if any, to be received
by the Corporation upon the conversion or exchange
of such Convertible Securities and the exercise of
any Options (the consideration in each case to be
determined in the manner provided in clauses (x)
and (y) above);
(3) on any change in the number of
shares of Common Stock deliverable upon exercise
of any such Options which have become exercisable
or conversion of or exchange of such Convertible
Securities which have become convertible or
exchangeable, or any change in the consideration
to be received by the Corporation upon such
exercise, conversion or exchange, the Conversion
Price as then in effect shall forthwith be
readjusted to such Conversion Price as would have
been obtained had such adjustment been made upon
the original issuance of such Options; provided,
however, no adjustment shall be made with respect
to such Options exercised prior to such change, or
Convertible Securities converted or exchanged
prior to such change;
(4) on the expiration or cancellation
of any such Options or the termination of the
right to convert or exchange such Convertible
Securities, if the Conversion Price shall have
been adjusted upon such securities being issued or
becoming exercisable, convertible or exchangeable,
such Conversion Price shall forthwith be
readjusted to such Conversion Price as would have
been obtained had an adjustment been made on the
basis of the issuance of only the number of shares
of Common Stock actually issued upon the exercise
of such options, warrants or other rights, or upon
the conversion or exchange of such securities; and
(5) if the Conversion Price shall have
been adjusted when such Options were first issued
or such Convertible Securities were first issued,
no further adjustment of the Conversion Price
shall be made for the actual issuance of shares of
Common Stock upon the exercise, conversion or
exchange thereof.
<PAGE>
(d) Excluded Shares. "Excluded Shares" shall
mean (i) any shares of Common Stock issued in a transaction
described in Section 6.1(a) of this Agreement; (ii) issuances of
shares of Common Stock from time to time pursuant to employment
agreements, stock option or bonus plans authorized by the Board
of Directors of the Corporation as of the date hereof, (iii)
issuances of Common Stock, or Options to acquire shares of Common
Stock, or Convertible Securities convertible into or exchangeable
for Common Stock pursuant to the terms of any acquisition by the
Corporation of all or substantially all of the operating assets,
or more than fifty percent (50%) of the voting capital stock or
other controlling interest of any business entity in a
transaction negotiated on an arms-length basis and expressly
approved in advance by the Board of Directors of the Corporation;
(iv) issuances of shares of Common Stock from time to time upon
the exercise, exchange or conversion of warrants, options,
convertible securities, the Convertible Notes or other securities
outstanding as of the date hereof and pursuant to the written
terms of such securities as they exist as of the date hereof and
(v) issuances of shares of Common Stock from time to time
pursuant to the anti-dilution provisions of other securities.
For purposes hereof, "voting capital stock" shall be deemed to be
capital stock of any class or classes, however designated having
ordinary voting power for the election of members of the board of
directors or other governing body and "controlling" shall mean
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a party,
whether through the ownership of voting capital stock, by
contract or otherwise.
(e) For further clarity, any change to the
conversion price or other terms of the 8-1/4% Subordinated
Convertible Notes Due 2003 shall not count toward determining the
Reset Period, but shall, notwithstanding any other provision
herein, be taken into account in determining whether any
adjustment to the Conversion Price is due under this Section 6.1.
(f) No adjustment in the Conversion Price shall
be required unless such adjustment would require an increase or
decrease of at least 1.2% in such price; provided, however, that
any adjustments which by reason of this subsection (e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 6 shall be made to the nearest tenth of a cent or to
the nearest one-hundredth of a share, as the case may be.
<PAGE>
(g) The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the
disposition of any such shares shall be considered an issuance of
Common Stock for the purposes of this Section 6.
6.2 Rights to Purchase Other Securities. If any of
the following shall occur:
Without limiting any provisions of Section 9:
(a) any Corporate Change (as hereinafter defined)
to which the Corporation is a party, other than a Corporate
Change in which the Corporation is the continuing or surviving
Corporation and which does not result in any reclassification of,
or change (other than as a result of a subdivision or
combination) in, outstanding shares of the Common Stock, or
(b) any sale or transfer to another corporation
or entity of all or substantially all of the assets of the
Corporation;
then, and in either such case, the Holder of each share of Series
D Preferred Stock then outstanding shall have the right to
purchase the kind and amount of shares of stock and/or other
securities and property receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of
Common Stock issuable upon conversion of such stock immediately
prior to such consolidation, merger, sale, or transfer. The
provisions of this Section 6.2 shall similarly apply to
successive consolidations, mergers, sales or transfers.
6.3 Notice of Adjustment. Whenever the number of
shares of Common Stock issuable upon the conversion of each share
of Series D Preferred Stock or the Conversion Price of such
shares of Series D Preferred Stock, or the Conversion Price, is
adjusted or reduced, as herein provided, the Corporation shall
mail by first class, postage prepaid, to each Holder (a) notice
of any reduction on or before the day the reduction takes effect,
which shall state the reduced Conversion Price and the period
during which it will be in effect and/or (b) a certificate
setting forth the number of shares of Common Stock issuable upon
the conversion of each share of Series D Preferred Stock and the
Conversion Price on such shares of Series D Preferred Stock after
adjustment setting forth a brief statement of the facts requiring
such adjustment and setting forth the computation by which such
adjustment was made. The Corporation shall further deliver
notice to each Holder, in the manner aforesaid, of the expiration
of the Reset Period.
<PAGE>
6.4 No Adjustment for Dividend. No adjustment in
respect of any cash dividends shall be made while the Series D
Preferred Stock is outstanding or upon the conversion of the
Series D Preferred Stock.
6.5 Certain Events. If any event occurs as to which
in the reasonable judgment of the Board of Directors of the
Corporation , in good faith, the other provisions of this Section
6 are not strictly applicable but the lack of any adjustment
would not in the opinion of the Board of Directors of the
Corporation fairly reflect the purchase rights of the Holders of
the Series D Preferred Stock in accordance with the basic intent
and principles of the provisions of this Agreement then the Board
of Directors of the Corporation shall appoint a Financial Advisor
which shall give its opinion upon the adjustment, if any, on a
basis consistent with the basic intent and principles established
and the other provisions of this Section 6, necessary to
preserve, without dilution, the exercise rights of the Holders.
Upon receipt of such opinion, the Corporation shall forthwith
make the adjustments described therein which adjustments shall be
conclusive and binding. Without limiting the generality of the
foregoing provisions of this Section 6.5, in the event any holder
of Series D Preferred Stock becomes entitled under Section
5(a)(ii) hereof to convert any share thereof into any securities
of the Corporation other than Common Stock: (i) the number and
kind of such securities shall be subject thereafter to
modification pursuant to comparable principles to those
applicable under this Section 6 to the Common Stock; (ii) the
purchase price in such conversion shall be subject to
modification pursuant to comparable principles to those
applicable under this Section 6 to the Conversion Price; and
(iii) any and all notices under this Section 6 applicable to
modifications in the Conversion Price or the securities issuable
upon conversion of the Series D Preferred Stock shall apply
mutatis mutandis to modifications in the rights under Section
5(a)(ii) hereof, in each case under clauses (i), (ii) and (iii)
immediately preceding, so as to preserve without dilution, the
rights of the Holders.
Section 7. Status of Converted or Reacquired Shares.
Any shares of Series D Preferred Stock converted into shares of
Common Stock pursuant to Section 5 hereof or purchased or
otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the conversion or
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Series D
Preferred Stock and may be reissued as part of a new series of
preferred stock subject to the conditions and restrictions on
issuance set forth herein, in the Articles of Incorporation, or
<PAGE>
in any other Certificate of Designation creating a series of
preferred stock or any similar stock or as otherwise required by
law.
Section 8. Liquidation, Dissolution or Change of
Control.
(a) In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or
involuntary, the holders of shares of Series D Preferred Stock
shall be entitled to receive out of the assets of the Corporation
available for distribution to shareholders under applicable law,
prior and in preference to any distribution to holders of the
Common Stock or any Junior Securities but in parity with any
distribution to holders of Parity Securities, an amount of $100
per share (the "Liquidation Value"), plus a sum equal to all
dividends accrued on such shares (whether or not declared) and
unpaid through and including the then current Dividend Period.
If upon the occurrence of such event, the assets and funds to be
distributed among the holders of shares of Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and
Parity Securities shall be insufficient to permit the payment to
such holders of the full preferential amounts due to the holders
of shares of Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Parity Securities, respectively,
then the entire assets and funds of the Corporation legally
available for distribution shall be distributed among the holders
of shares of Series B Preferred Stock, Series C Preferred Stock
and Parity Securities, pro rata, based on the respective
liquidation amounts to which each such series of stock is
entitled by the Corporation's Articles of Incorporation and any
certificate of designation of preferences.
(b) Upon the completion of the distribution
required by subsection 8(a) above, if assets remain in the
Corporation, they shall be distributed to holders of Parity
Securities (unless holders of Parity Securities have received
distributions pursuant to subsection 8(a)) and Junior Securities
in accordance with the Corporation's Articles of Incorporation,
including any duly adopted certificate(s) of designation of
preferences.
(c) (i) Upon a Change of Control (as defined
below) of the Corporation, each holder of the Series D Preferred
Stock will have the option to require the Corporation to
repurchase such holder's shares of Series D Preferred Stock at a
price per share equal to the Liquidation Value plus any accrued
and unpaid dividends. A "Change of Control" shall have occurred:
(A) when any person or group is or becomes the beneficial owner
of 50% or more of the then outstanding voting capital stock of
<PAGE>
the Corporation, (B) when, during any period of two consecutive
years after the closing of the sale of the Series D Preferred
Stock, individuals who at the beginning of such period
constituted the Corporation's Board of Directors, or whose
nomination for election by the Corporation's shareholders was
approved by a vote of a majority of the directors of the
Corporation then still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority of the directors then in office or (C) upon
any sale, transfer or other conveyance of all or substantially
all of the assets of the Corporation.
(ii) Upon the occurrence of a Change of
Control, the Corporation will offer to repurchase (the "Change of
Control Purchase Offer") all outstanding shares of Series D
Preferred Stock, and each holder of outstanding shares of Series
D Preferred Stock will have the right to require that the
Corporation repurchase such holder's shares of Series D Preferred
Stock, at the price set forth in clause (i) of this subsection
8(c). Within 30 days following any Change of Control, the
Corporation shall mail a notice, by first class mail, to each
holder of record of Series D Preferred Stock (a "Change of
Control Notice"), at his address of record, stating:
(A) that a Change of Control has
occurred and that such holder has the right to
require the Corporation to purchase such holder's
shares of Series D Preferred Stock at the price
set forth above;
(B) the circumstances and relevant
facts regarding such Change of Control;
(C) the date on which the Corporation
will repurchase any shares of Series D Preferred
Stock which the holders require the Corporation to
repurchase in accordance with this subsection
8(c), which date shall be no earlier than 30 days
nor later than 60 days from the date such Change
of Control Notice is mailed (the "Change of
Control Purchase Date");
(D) that, unless the Corporation
defaults in making such payment, any shares of
Series D Preferred Stock accepted for payment
pursuant to the Change of Control Purchase Offer
shall cease to accrue dividends after the Change
of Control Purchase Date;
<PAGE>
(E) that holders of Series D Preferred
Stock electing to have their shares repurchased
pursuant to any Change of Control Purchase Offer
shall be required to surrender the original
certificates for the shares of Series D Preferred
Stock at the address specified in the notice, at
least three business days before the Change of
Control Purchase Date; and
(F) that the holders of Series D
Preferred Stock shall be entitled to withdraw
their election if the Corporation receives, not
later than the last business day prior to the
Change of Control Purchase Date, a telegram,
telex, facsimile transmission or letter setting
forth the name of the holder, the number of shares
of Series D Preferred Stock the holder delivered
for repurchase and a statement that such holder is
withdrawing his election to have such shares
repurchased.
(iii) Each holder of shares of Series D
Preferred Stock electing to have such shares purchased by the
Corporation pursuant to this subsection 8(c) shall deliver to the
Corporation at its principal office, at least three business days
prior to the Change of Control Purchase Date, the original
certificate or certificate(s) for the shares to be purchased duly
endorsed, together with written notice to the Corporation
specifying the number of shares of Series D Preferred Stock to be
purchased. Holders of Series D Preferred Stock will be entitled
to withdraw their election if the Corporation receives, not later
than one business day prior to the Change of Control Purchase
Date, a telegram, facsimile transmission or letter, at its
principal office, setting forth the name of the holder, the
number of shares of Series D Preferred Stock which were delivered
by the holder for purchase by the Corporation and a statement
that such holder is withdrawing his election to have such shares
purchased.
(iv) Promptly following the Change of Control
Purchase Date, the Corporation will mail or deliver to each
holder of shares of Series D Preferred Stock who properly
tendered such shares to the Corporation for purchase pursuant to
this subsection 8(c) and did not withdraw such election, at his,
her or its address of record, an amount equal to the purchase
price for the shares of Series D Preferred Stock so delivered for
purchase as set forth in this subsection 8(c). Unless the
Corporation shall have defaulted in the payment of the purchase
price for shares of Series D Preferred Stock tendered for
<PAGE>
purchase by the Corporation, all rights of the holders of such
shares (except the right to receive the purchase price therefor)
shall cease with respect to such shares on the Change of Control
Purchase Date and such shares shall not, after the Change of
Control Purchase Date, be deemed to be outstanding and shall not
have the status of Series D Preferred Stock.
(v) The Corporation will comply, to the
extent applicable, with the requirements of Section 14(e) of the
Securities Exchange Act of 1934, as amended, and any other
applicable securities laws or regulations in connection with the
repurchase of Series D Preferred Stock pursuant to this
subsection 8(c). To the extent that the provisions of any
securities laws or regulations conflict with the provisions of
this subsection 8(c), the Corporation will comply with the
applicable securities laws and regulations and will not be deemed
to have breached its obligations under this Section by virtue
thereof.
Section 9. Consolidation, Merger, etc. Except as set
forth in Section 8(c) hereof, and without limiting any provision
of Section 6.2 hereof, in the event of a merger, reorganization,
recapitalization or similar event of or with respect to the
Corporation (a "Corporate Change") (other than a Corporate Change
in which all or substantially all of the consideration received
by the holders of the Corporation's equity securities upon such
Corporate Change consists of cash or assets other than securities
issued by the acquiring entity or any Affiliate thereof), the
Series D Preferred Stock shall be assumed by the acquiring entity
and thereafter the Series D Preferred Stock shall be convertible
into such class and type of securities as the holder of shares of
Series D Preferred Stock would have received had such holder
converted the Series D Preferred Stock immediately prior to such
Corporate Change.
Section 10. Redemption.
(a) Optional Redemption. Subject to earlier
conversion, commencing on May 17, 2002 and continuing through the
Mandatory Redemption Date (as defined below), the Corporation
shall have the right, exercisable at any time and from time to
time, to redeem shares of Series D Preferred Stock at the
following prices plus the payment of all accrued and unpaid
dividends:
<PAGE>
Year Redeemed
Price
2002
104% of Liquidation
Value
2003
102% of Liquidation
Value
If less than all of the outstanding shares of
Series D Preferred Stock are called for redemption pursuant to
this Section 10(a), shares of Series D Preferred Stock shall be
redeemed on a pro rata basis among the holders thereof. Each
holder of Series D Preferred Stock will be given notice of such
redemption pursuant to Section 10(c) and will have the right to
convert the Series D Preferred Stock into shares of Common Stock
prior to the redemption date specified in such notice.
(b) Mandatory Redemption.
(i) The Corporation will be required to
redeem the outstanding shares of Series D Preferred Stock on May
17, 2004 (the "Mandatory Redemption Date"), at a redemption price
per share equal to the Liquidation Value plus accrued and unpaid
dividends.
(ii) If at any time, (A) the Corporation
shall breach the terms and conditions contained in this
certificate of designation, (B) the Corporation shall breach any
representation, warranty, or covenant contained in that certain
Series D Convertible Stock and Warrant Purchase Agreement, dated
May __, 2000, between the Corporation and the initial Holders or
any subsequent Series D Stock Purchase Agreement with like terms,
or (C) the Corporation shall fail to make a dividend payment on a
Dividend Payment Date (each a "Breach"), prompt notice of such
Breach shall be given to each Holder by the Corporation at such
time as the Corporation becomes aware of such Breach and (without
limiting any rights of Holder) prompt notice of such Breach shall
be given to the Corporation by each Holder at such time such
Holder becomes aware of such Breach, and any Holder shall give
written notice to the Corporation of its desire to have the
Corporation redeem its shares of Series D Preferred Stock, such
shares shall be redeemed by the Corporation at a redemption price
per share equal to the greater of the amounts that would at that
time be payable under Section 10(a) hereof had the Corporation
exercised its right to redeem the shares of Series B Preferred
Stock thereunder or the Liquidation Value plus accrued and unpaid
dividends; provided, however, no Holder shall have the right to
request a redemption of its shares of Series D Preferred Stock
<PAGE>
pursuant to this Section 10(b)(ii) unless and until the
Corporation shall have failed to cure any such Breach within a
period of ten (10) days after having received written notice
thereof from the Holder.
(c) Mechanics of Redemption. Notice of
redemption of the Series D Preferred Stock, specifying the
redemption date and place of redemption, shall be given by first
class mail to each holder of record of the shares to be redeemed,
at his address of record, not less than 30 nor more than 60
calendar days prior to the date upon which the Corporation shall
redeem the Series D Preferred Stock (the "Redemption Date").
Each such notice shall also specify the redemption price
applicable to the shares to be redeemed. If less than all the
shares owned by such holder are then to be redeemed, the notice
shall also specify the number of shares thereof which are to be
redeemed and the fact that a new certificate or certificates
representing any unredeemed shares shall be issued without cost
to such holder.
(i) Notice of redemption of shares of the
Series D Preferred Stock having been given as provided in
Section 10(c), then unless the Corporation shall have defaulted
in the payment of the redemption price and all accrued and unpaid
dividends (whether or not declared), all rights of the holders
thereof (except the right to receive the redemption price and all
accrued and unpaid dividends, whether or not declared) shall
cease with respect to such shares on the Redemption Date and such
shares shall not, after the Redemption Date, be deemed to be
outstanding and shall not have the status of Series D Preferred
Stock. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder
thereof.
(ii) Shares of the Series D Preferred Stock
are not subject or entitled to the benefit of a sinking fund.
(iii) Notwithstanding the foregoing, if
notice of redemption shall have been given pursuant to this
Section 10 and any holder of the Series D Preferred Stock shall,
prior to the close of business on the date three business days
next preceding the Redemption Date, give written notice to the
Corporation pursuant to Section 5 hereof of the conversion of any
or all of the shares held by the holder (accompanied by a
certificate or certificates for such shares, duly endorsed or
assigned to the Corporation), then the redemption shall not
become effective as to such shares and the conversion shall
become effective as provided in Section 5.
<PAGE>
(iv) If on the Mandatory Redemption Date
funds legally available to the Corporation for redemption of all
outstanding shares of Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock are insufficient to
redeem all such shares of Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, such available
funds shall be used by the Corporation to redeem shares of
Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock from all holders ratably in proportion to the
full number of shares they would otherwise be entitled to have
redeemed. In the event that less than all outstanding shares of
Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock are redeemed on the Mandatory Redemption Date,
the Corporation will continue to redeem shares of Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock from time to time as soon as practicable after funds become
legally available therefor (ratably if the funds legally
available remain insufficient to redeem all shares required to be
redeemed) until all shares of Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock required to be
redeemed shall have been redeemed. Until actually redeemed, each
share of Series D Preferred Stock will continue to enjoy all
rights and benefits hereof, including the right to convert into
shares of Common Stock.
(d) Conversion Price Adjustment for Failure to
Redeem. If the Corporation fails to redeem all outstanding
shares of Series D Preferred Stock on the Mandatory Redemption
Date, then, without any action by the holders of shares of Series
D Preferred Stock, the then current Conversion Price respecting
any shares of Series D Preferred Stock not redeemed by the
Corporation shall be reduced (but shall not be increased) to the
greater of: (i) fifty percent (50%) of the then current
Conversion Price, and (ii) the closing price of the Common Stock
as reported by Nasdaq (or such principal national exchange on
which the Common Stock is then listed) on the Mandatory
Redemption Date.
Section 11. Amendment. The Articles of Incorporation of
the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series D Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series D Preferred Stock,
voting together as a single class.
<PAGE>
Section 12. Notices. Written notice of each meeting of
the shareholders of the Corporation shall be given by first-class
mail not less than ten (10) days prior to such meeting to each
holder of record of the Series D Preferred Stock to the address
of such record holder shown on the Corporation's records.
IN WITNESS WHEREOF, this Certificate of Designation has been
executed on behalf of the Corporation by its Chief Executive
Officer this 1st day of May, 2000.
MANSUR INDUSTRIES INC.
By: s/Paul I. Mansur
-----------------------
Paul I. Mansur
Chief Executive Officer
<PAGE>
NOTICE OF CONVERSION
(To be executed by the Registered Holder
in order to Convert the Series D Preferred Stock)
The undersigned hereby irrevocably elects to convert ______
shares of Series D Preferred Stock, represented by stock
certificate No(s). ________________ (the "Series D Preferred
Stock Certificates") into shares of common stock, par value $.001
per share ("Common Stock"), or other securities, of Mansur
Industries Inc., (the "Corporation") according to the conditions
of the Certificate of Designation of Series D Preferred Stock, as
of the date written below. If shares are to be issued in the
name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. No fee will
be charged to the holder for any conversion, except for transfer
taxes, if any.
The undersigned represents and warrants that all offers and
sales by the undersigned of the shares of Common Stock or other
securities issuable to the undersigned upon conversion of the
Series D Preferred Stock shall be made pursuant to registration
of such shares of Common Stock under the Securities Act of 1933,
as amended, or pursuant to an exemption from registration under
such Act.
Conversion Calculations:
Date of Conversion
Applicable Conversion Price
Signature
Name
Address:
*No shares of Common Stock or other securities will be issued
until the original Series D Preferred Stock Certificate(s) to be
converted and the Notice of Conversion are received by the
<PAGE>
Corporation or its designated Transfer Agent. The original Stock
Certificate(s) representing the Series D Preferred Stock to be
converted and the Notice of Conversion must be received by the
Corporation or its designated Transfer Agent by the second
business day following the Date of Conversion, or the Notice of
Conversion, at the Corporation's option, may be declared null and
void.
<PAGE>
EXHIBIT B
NOTICE OF EARLY CONVERSION EVENT
Mansur Industries Inc. (the "Corporation ") hereby notifies
____________________, the holder of ___________ shares (the
"Shares") of the Corporation 's Series D Preferred Stock (the
"Series D Preferred Stock"), that an Early Conversion Event
occurred on __________, and as such, you are hereby directed to
surrender the Shares as $______ of the aggregate Liquidation
Value of such Shares has been automatically converted into shares
of the Corporation 's common stock, par value $.001 per share
(the "Conversion Shares"), in accordance with the terms of the
Certificate of Designation respecting the Series D Preferred
Stock.
Unless otherwise instructed, the Corporation shall issue
the Conversion Shares and a new certificate representing the
Shares not converted in the name of the holder of the Shares and
deliver same as soon as practicable and in accordance with the
provisions of the Certificate of Designation to the address set
forth in the Corporation's register respecting the Series D
Preferred Stock.
Date: ________________________
MANSUR INDUSTRIES INC.
By: ________________________
Name:
Title:
21
47
EXHIBIT A
Exhibit D
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (herein the "Agreement") is made
and entered into this 2nd day of May, 2000, by and among the
following parties (referred to herein collectively as the
"parties" or individually as a "Party"):
(i) Environmental Opportunities Fund, L.P., Environmental
Opportunities Fund II, L.P., Environmental Opportunities Fund II
(Institutional), L.P. and Environmental Opportunities Fund
(Cayman), L.P., as holders of all of the issued and outstanding
shares of the Series B Convertible Preferred Stock of the
Corporation (collectively, the "Series B Preferred
Shareholders");
(ii) Hanseatic Americas, LDC, as the holder of all of the
issued and outstanding shares of Series C Convertible Preferred
Stock of the Corporation (the "Series C Preferred Shareholder");
(iii) Hanseatic Americas, LDC, Environmental
Opportunities Fund II, L.P. and Environmental Opportunities Fund
II (Institutional), L.P., as the holders of the all of the issued
and outstanding shares of Series D Convertible Preferred Stock of
the Corporation (collectively, the "Series D Preferred
Shareholders," and together with the Series B Preferred
Shareholders and the Series C Preferred Shareholders, the
"Preferred Shareholders" and individually as a "Preferred
Shareholder");
(iv) Pierre Mansur, an individual residing at 7501 SW 114th
Street, Pinecrest, Florida 33156 ("Mansur" and together with the
Preferred Shareholders, the "Shareholders"); and
(v) Mansur Industries Inc., a Florida corporation (the
"Corporation").
W I T N E S S E T H:
WHEREAS, the Preferred Shareholders are presently the
holders of record of all of the issued and outstanding shares of
the Series B, Series C and Series D Convertible Preferred Stock
of the Corporation; and
WHEREAS, in connection with the Corporation's sale and
delivery of the Series D Preferred Stock, the Corporation and
Mansur have agreed to enter into this Agreement; and
WHEREAS, the Shareholders desire to make certain provisions
as to the governance of the Corporation;
<PAGE>
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt of which is
hereby acknowledged, the Shareholders and the Corporation have
agreed, and they do agree, as follows:
Article 1.
Definitions
Section 1.1. Defined Terms. For purposes of this
Agreement, the terms hereinafter set forth shall have the
following definitions unless otherwise specifically stated.
"Affiliate" shall mean any person or entity controlling,
controlled by or under common control with the subject
referenced.
"Articles" shall mean the Corporation's Amended and Restated
Articles of Association, as from time to time amended, including
all Certificates of Designation of Preferred Stock, respectively.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Indebtedness" of any Person means all obligations,
contingent or otherwise, which in accordance with GAAP should be
classified upon a Person's balance sheet as liabilities and shall
include, in any event and without limitation, (i) indebtedness
for borrowed money, (ii) indebtedness incurred or assumed in
connection with the acquisition of assets, (iii) liabilities
secured by any Lien on property owned or acquired by such Person,
whether or not the liability secured thereby shall have been
assumed by such Person, (iv) capitalized lease obligations and
(v) all guarantees by such Person of Indebtedness of another
Person.
"Person" (whether or not such term is capitalized) means any
individual, partnership, corporation, joint venture, trust,
business trust, governmental entity, union, association,
instrumentality, commission or other entity.
"Shareholder's Stock" shall mean Stock referred to as being
owned by a Shareholder at any point in time.
"Stock" shall mean the shares of the Corporation's capital
stock, of whatever class, that may be issued and outstanding from
time to time.
<PAGE>
"Subsidiaries" means the Persons in which the Corporation
shall at any time, directly or indirectly, beneficially own an
equity interest equal to or more than 50%, or which the
Corporation shall, at any time, directly or indirectly control.
Article 2.
Governance of the Corporation
Section 2.1. Officers and Directors of the Corporation.
(a) The Corporation and the Shareholders agree that the
Board of Directors of the Corporation shall consist of five (5)
natural persons. It is agreed that immediately following the
execution of this Agreement and thereafter during the Term (as
hereinafter defined) of this Agreement, the Shareholders shall
vote, and shall cause their respective Affiliates to vote, their
shares of Stock, and those shares beneficially owned by them,
respectively (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934), and the Corporation shall take
all such other action, to elect or appoint two (2) directors
nominated by written instruction delivered by Series D Preferred
Shareholders holding two-thirds or more of the outstanding shares
of Series D Preferred Stock of the Corporation (the "Required
Preferred Shareholders") as members of the Corporation's Board of
Directors (the "Preferred Shareholder Directors"), and to elect
or appoint as successors thereto, respectively, solely those
replacements nominated as aforesaid.
(b) Without limiting any other provision contained in
paragraph (a) immediately preceding, in the event that the
Preferred Shareholder Directors have not been elected or
appointed prior to June 30, 2000, the Required Preferred
Shareholders shall have the right, exercisable by written notice
to the Corporation, forthwith to require the Corporation to
expand its Board of Directors to consist of nine natural persons,
four of whom shall be nominated by the Required Preferred
Shareholders (who shall be the Preferred Shareholder Directors
hereunder) and who shall serve until compliance in full with
paragraph (a) immediately preceding.
(c) The Board of Directors, may appoint such committees as
they deem appropriate, with the authority to act on all matters
delegated to such committee in accordance with the Bylaws or the
Florida Business Corporation Act. The Shareholders and the
Corporation agree that immediately following the execution of
this Agreement and thereafter during the Term, such committees
shall be created and shall include (i) an executive committee,
(ii) an audit and finance committee and (iii) a compensation
<PAGE>
committee. The duties and functions of such committees shall be
set forth in the Bylaws or in the action of the Board of
Directors creating such committees; provided that the mandate of
each such committee shall be subject to approval by each of the
Preferred Shareholder Directors. Each of the Preferred
Shareholder Directors shall have the right to serve on each of
the committees; provided, however, that a majority of the
directors serving on such committees shall be independent
directors.
Section 2.2. Change in Control Event. Notwithstanding
anything in Section 2.1 to the contrary, in the event the
Corporation fails to achieve certain target results of operations
during the third quarter of 2000 (a "Change in Control Event"),
which targets are set forth on Schedule 2.2 hereto, the Required
Preferred Shareholders may notify Mansur of their intent to
effect a change in control of the Corporation. If the Required
Preferred Shareholders notify Mansur of their intention to effect
a change in control, the Corporation and its Board of Directors
and the Shareholders will obtain the immediate resignation of a
standing independent director from the Board of Directors,
failing which the Board of Directors shall forthwith be expanded
by two. The vacancy or vacancies in the Board of Directors
resulting from the resignation of such standing independent
director (other than the Preferred Shareholder Directors) or such
expansion shall be filled by a nominee of the Required Preferred
Shareholders. During the Term of this Agreement, the
Shareholders agree to vote, and shall cause their respective
Affiliates to vote, their shares of Stock, and those shares
beneficially owned by them, respectively, to elect and reelect
the director nominees of the Required Preferred Shareholders and
any replacements therefor.
Section 2.3. Actions of Board of Directors and
Shareholders.
(a) Except as otherwise expressly provided herein, by law
or in the Articles or Bylaws as in effect on the date hereof, all
actions of the Board of Directors or shareholders of the
Corporation shall be taken upon or pursuant to a majority vote of
the Board of Directors or of the votes held by beneficial owners
of shares of Stock entitled to vote, respectively, who are
present in person or by proxy at the corresponding meeting
(provided a quorum exists).
(b) During the Term, the Corporation, the Board of
Directors (including any committee or subcommittee thereof) and
the Shareholders shall not take any of the actions, enter into
<PAGE>
any commitment to take any of the actions, or otherwise agree to
take any of the actions, specified below unless such action has
been first approved by all of the Preferred Shareholder
Directors:
(i) the entering into or approval by the Corporation
of any joint venture, partnership or merger plan or similar
transaction;
(ii) the making by the Corporation, within any twelve
month period beginning on the date hereof, of any material
acquisitions or sales of any material assets (other than
sales of inventory or superseded or obsolete equipment in
the ordinary course of business) or significant businesses;
(iii) the issuance of capital stock or convertible
securities of the Corporation, in a single transaction or in
a series of related transactions within any twelve month
period (other than issuances of capital stock pursuant to
(a) the exercise of options granted or to be granted under
the corporation's 1996 Executive Incentive Compensation
Plan, (b) the conversion of the Corporation's outstanding
8.25% Convertible Subordinated Notes due 2003 (the "Notes")
pursuant to the terms of the Notes as they exist as of the
date hereof, and (c) upon the exercise of warrants and other
convertible securities outstanding as of the date hereof or
issuable pursuant to the Articles as in effect on the date
hereof);
(v) the incurrence, in a single transaction or in a
series of related transactions within any twelve month
period beginning on the date hereof, of any Indebtedness by
the Corporation in an amount exceeding $250,000 in the
aggregate (other than Indebtedness which constitutes
financing for commitments of the Corporation or any
Subsidiary thereof existing as of the date hereof, the
refinancing or successive refinancing of Indebtedness of the
Corporation or any Subsidiary (other than the Notes)
existing as of the date hereof, and Indebtedness which
constitutes vendor financing or otherwise incurred by the
Corporation in the ordinary course of business);
(vi) the employment of a chief executive officer, chief
operating officer or chief financial officer of the
Corporation or of senior management personnel having
substantially similar responsibilities; and
<PAGE>
(c) The Preferred Shareholders agree that the exercise of
rights granted to it under Section 2.3(b) above shall be made in
good faith and subject to fiduciary obligations owed to the
corporation and its shareholders.
Section 2.4. Dealings in Good Faith; Best Efforts. Each
Shareholder agrees to act in good faith with respect to the other
parties hereto in exercising its rights and discharging its
obligation under this Agreement. Each party further agrees to
use its best efforts to ensure that the purposes of this
Agreement are realized during the Term.
Article 3.
The Giving of Notices Required by This Agreement
Section 3.1. Addresses. The addresses of the Corporation
and the Shareholders, which shall be considered to be their last
known addresses unless subsequently changed in accordance with
the provisions of this Agreement, are as follows:
To the Corporation:
Mansur Industries Inc.
8305 N.W. 27th Street
Suite 107
Miami, Florida 33122
Attn: Paul I. Mansur
with copies to:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Gary M. Epstein, Esq.
To the Series B
Shareholders:
c/o Sanders Morris Harris
3100 Chase Tower
600 Travis Street
Suite 3100
Houston, Texas 77002
Attn: Bruce R. McMaken
<PAGE>
To the Series C
Shareholders:
Hanseatic Americas LDC
450 Park Avenue
Suite 2302
New York, New York 10022
Attn: Paul Biddelman
with copies to:
Krugman & Kailes LLP
Park 80 West - Plaza Two
Saddlebrook, New Jersey
07663
Attn: Howard Kailes, Esq.
To the Series D
Shareholders:
At their respective
addresses as listed
above.
Any Party may change its address for the purposes of this
Agreement by giving notice of such change of address to the other
Parties in the manner herein provided for giving notice.
Section 3.2. Form of Notice. Any notice or communication
hereunder must be in writing, and may be personally delivered or
given by reputable overnight courier, or by telecopier. Any
notice so given shall be effective upon receipt if personally
delivered or telecopied, or one day after delivery to nationally
recognized courier for next-day delivery. Any party may change
the address to which notices are to be sent by giving written
notice of such change of address to the other parties in the
manner herein provided for giving notice.
Section 3.3. Failure to Notify of Changed Address. It
shall be the responsibility of each of the Parties to this
Agreement to notify all other Parties of their respective
addresses and any changes thereof, and any objections to the
performance of any act required hereunder based upon a failure to
receive a notice mailed in conformity with the provisions of this
Agreement shall be meritless.
Article 4.
Termination or Modification of the Agreement
Section 4.1. Termination. This Agreement shall terminate,
in whole or in part, in accordance with the following provisions
(the period of duration of the applicable provisions of this
Agreement to be referred to herein as the "Term").
<PAGE>
(a) Bankruptcy. The Agreement and all provisions hereof
shall terminate upon the dissolution of the Corporation or upon
the filing of a voluntary or involuntary petition by or against
the Corporation under Chapter 7 or Chapter 11 of the Bankruptcy
Code upon the appointment of a receiver for the Corporation.
(b) Sale of Stock.
(i) Sections 2.2 and 2.3 of this Agreement shall
terminate on the date on which (x) the Preferred
Shareholders in the aggregate beneficially own less than 50%
of the shares of Stock owned by them as of the date hereof
or (y) the Preferred Shareholders in the aggregate
beneficially own shares of Stock entitling them to cast
votes totaling less than 20% of all votes cast by shares of
Stock entitled to vote or (z) there have occurred one or
more Early Conversion Events under Section 5(b) of the
Certificates of Designation of the Corporation's Series B
Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock with respect to shares totaling in the
aggregate at least 50% of the shares of Stock owned by the
Preferred Shareholders as of the date hereof.
(ii) This Agreement and all provisions hereof shall
terminate on the date on which (x) the Preferred
Shareholders in the aggregate beneficially own less than 50%
of the shares of Stock owned by them as of the date hereof
and the Preferred Shareholders in the aggregate beneficially
own shares of Stock entitling them to cast votes totaling
less than 20% of all votes cast by shares of Stock entitled
to vote or (y) there have occurred one or more Early
Conversion Events under Section 5(b) of the Certificates of
Designation of the Corporation's Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock with
respect to shares totaling in the aggregate at least 50% of
the shares of Stock owned by the Preferred Shareholders as
of the date hereof.
(c) Specific Shareholder. This Agreement shall terminate
as to any specific Shareholder upon the date such Shareholder
ceases to own any shares of Stock
Section 4.2. Modification. This Agreement may be
modified, in whole or in part, by amendment upon the agreement of
a majority of the directors of the Corporation and eighty percent
(80%) in voting interest of the signatory Shareholders to this
Agreement; provided, however, that no such amendment may create
any additional obligation for any Shareholder without his written
concurrence.
<PAGE>
Article 5.
Miscellaneous
Section 5.1. Successors. This Agreement shall be binding
upon the Parties hereto, their heirs, administrators, successors,
executors and assigns, and the Parties hereto do covenant and
agree that they themselves and their respective heirs, executors,
successors, administrators and assigns will execute any and all
instruments, releases, assignments and consents that may be
reasonably required of them to more fully execute the provisions
of this Agreement. Notwithstanding the foregoing: (i) Mansur
shall not assign or transfer any interest in the Corporation
(other than sales pursuant to Rule 144 promulgated by the
Securities and Exchange Commission including paragraph (k)
thereunder, and other than in a public offering pursuant to an
effective registration statement) unless the transferee shall
agree in writing acceptable to the Required Preferred
Shareholders to be bound by the provisions hereof as if Mansur,
(ii) the Preferred Shareholders, and any of them, may assign or
transfer any interest in the Corporation, including any rights,
benefits and privileges under this Agreement, it being
acknowledged that no duties or obligations hereunder shall
thereby be assumed by any person not controlling, controlled or
under common control with such Preferred Shareholder, and (iii)
the Corporation may not assign or transfer any rights or
obligations hereunder.
Section 5.2. Counterparts. This Agreement may be executed
in several counterparts, each of which shall serve as an original
for all purposes, but all copies of which shall constitute but
one and the same Agreement.
Section 5.3. Headings. All headings set forth in this
Agreement are intended for convenience only and shall not control
or affect the meaning, construction or effect of this Agreement
or of any of the provisions thereof.
Section 5.4. Governing Law. This Agreement shall be
governed by and shall be construed and enforced in accordance
with the laws of the State of Florida.
Section 5.5. Waiver. The waiver by any Party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any Party.
Section 5.6. Entire Agreement. This Agreement constitutes
the entire Agreement of the Parties hereto with respect to the
transactions contemplated hereby, and it is hereby agreed that
any prior oral or written agreements concerning the sale or
disposition of Stock shall be null and void.
<PAGE>
Section 5.7. Severability. If any provision of this
Agreement shall be held to be illegal or unenforceable, such
illegality or unenforceability shall extend to that provision
solely, and the remainder of this Agreement shall be enforced as
if such illegal or unenforceable provision were not incorporated
herein.
Section 5.8. Specific Performance. The rights conferred
by this Agreement are hereby declared by the Parties hereto to be
unique rights, the loss of any of which is not susceptible to
monetary quantification. Consequently, the Parties hereto agree
that an action for specific performance of the obligations
created by this Agreement is a proper remedy for the breach of
its provisions. If the Parties to this Agreement are forced to
institute legal proceedings to enforce their rights in accordance
with the provisions of this Agreement, they shall be entitled to
recover their reasonable attorneys' fees and court costs incurred
in enforcing such rights.
Section 5.9. Business Days. Whenever the terms of this
Agreement call for the performance of a specific act on a
specified date, which date falls on a Saturday, Sunday or legal
holiday, the date for the performance of such act shall be
postponed to the next succeeding regular business day following
such Saturday, Sunday or legal holiday.
IN WITNESS WHEREOF, the Parties to this Agreement have
hereunto set their names on this, the 2nd day of May, 2000.
SERIES B PREFERRED SHAREHOLDERS:
ENVIRONMENTAL OPPORTUNITIES
FUND II, L.P.
By: Fund II Mgt. Co., LLC
Its General Partner
Per: s/Bruce R. McMaken
-------------------------
Name: Bruce R. McMaken
Title: Manager
ENVIRONMENTAL OPPORTUNITIES
FUND II (INSTITUTIONAL),
L.P.
By: Fund II Mgt. Co., LLC
Its General Partner
Per: s/Bruce R. McMaken
-------------------------
Name: Bruce R. McMaken
Title: Manager
<PAGE>
SERIES C PREFERRED SHAREHOLDERS:
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
By: s/Paul A. Biddelman
--------------------------
Name: Paul A. Biddelman
Title: President
SERIES D PREFERRED SHAREHOLDERS:
ENVIRONMENTAL OPPORTUNITIES
FUND II, L.P.
By:Fund II Mgt. Co., LLC
Its General Partner
Per: s/Bruce R. McMaken
------------------------
Name: Bruce R. McMaken
Title: Manager
ENVIRONMENTAL OPPORTUNITIES
FUND II (INSTITUTIONAL),
L.P.
By:Fund II Mgt. Co., LLC
Its General Partner
Per: s/Bruce R. McMaken
-------------------------
Name: Bruce R. McMaken
Title: Manager
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
By: s/Paul A. Biddelman
------------------------
Name: Paul A. Biddelman
Title: President
MANSUR INDUSTRIES INC.:
By: s/Paul I. Mansur
-----------------------
Name: Paul I. Mansur
Title: Chief Executive
Officer
S/Pierre Mansur
- --------------------------
PIERRE MANSUR
<PAGE>
ADDENDUM
The undersigned Required Preferred Shareholders hereby agree
with each other and instruct the Corporation in accordance with
Section 2.1(a) of the foregoing agreement that, until further
instruction by the Required Preferred Shareholders, the Preferred
Shareholder Directors shall be Paul A. Biddelman and Kenneth C.
Leung.
IN WITNESS WHEREOF, the Required Preferred Shareholders have
hereunto set their names on this 2nd day of May, 2000.
ENVIRONMENTAL OPPORTUNITIES
FUND II, L.P.
By: Fund II Mgt. Co., LLC
By: s/Bruce R. McMaken
---------------------------
ENVIRONMENTAL OPPORTUNITIES
FUND II (INSTITUTIONAL, L.P.)
By: Fund II Mgt. Co., LLC
By: s/Bruce R. McMaken
--------------------------
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
By: s/Paul A. Biddelman
----------------------
19
Exhibit E
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD,
OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF,
UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THE SECURITIES
ACT OR AN OPINION OF COUNSEL IS OBTAINED STATING THAT SUCH
DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION.
May 2, 2000
MANSUR INDUSTRIES INC.
(Incorporated under the laws of the State of Florida)
Warrant for the Purchase of Shares of Common Stock
No. WRT-1
FOR VALUE RECEIVED, MANSUR INDUSTRIES INC., a Florida
corporation (the "Company"), hereby certifies that Hanseatic
Americas LDC or assigns (the "Holder") is entitled, subject to
the provisions of this Warrant, to purchase from the Company, up
to one hundred eighty-one thousand eight hundred and eighteen
(181,818) fully paid and non-assessable shares of Common Stock at
a price of $5.50 per share (the "Exercise Price").
The term "Common Stock" means the Common Stock, par value
$.001 per share, of the Company as constituted on May 2, 2000
(the "Base Date"). The number of shares of Common Stock to be
received upon the exercise of this Warrant may be adjusted from
time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time
to time, are hereinafter referred to as "Warrant Stock." The term
"Other Securities" means any other equity or debt securities that
may be issued by the Company in addition thereto or in
substitution for the Warrant Stock in accordance with the terms
hereof. The term "Company" means and includes the corporation
named above as well as (i) any immediate or more remote successor
corporation resulting from the merger or consolidation of such
corporation (or any immediate or more remote successor
corporation of such corporation) with another corporation, or
(ii) any corporation to which such corporation (or any immediate
or more remote successor corporation of such corporation) has
transferred its property or assets as an entirety or
substantially as an entirety.
<PAGE>
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation
of this Warrant, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date. Any
such new Warrant executed and delivered shall constitute an
additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or
mutilated shall be at any time enforceable by anyone.
The Holder agrees with the Company that this Warrant is
issued, and all the rights hereunder shall be held subject to,
all of the conditions, limitations and provisions set forth
herein.
1. Exercise of Warrant.
1.1 Cash Exercise. This Warrant may be exercised, in
whole or in part, at any time, or from time to time during the
period commencing on the date hereof and expiring 5:00 p.m.
Eastern Time on May 2, 2005 (the "Expiration Date"), by
presentation and surrender of this Warrant to the Company at its
principal office, or at the office of its stock transfer agent,
if any, with the Warrant Exercise Form attached hereto duly
executed and accompanied by payment (either in cash or by
certified or official bank check, payable to the order of the
Company) of the Exercise Price for the number of shares specified
in such form and instruments of transfer, if appropriate, duly
executed by the Holder or his or her duly authorized attorney. If
this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Warrant, together with the
Exercise Price, at its office, or by the stock transfer agent of
the Company at its office, in proper form for exercise, the
Holder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or
that certificates representing such shares of Common Stock shall
not then be actually delivered to the Holder. The Company shall
pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of
Common Stock on exercise of this Warrant.
<PAGE>
1.2 Cashless Exercise. This Warrant may be exchanged,
in whole or in part (a "Warrant Exchange"), at any time, or from
time to time, during the period commencing on the date hereof and
ending on the Expiration Date, into the number of shares of
Common Stock determined in accordance with this Section 1.2, by
presentation and surrender of this Warrant to the Company at its
principal office, or at the office of its stock transfer agent,
if any, accompanied by a notice (a "Notice of Exchange") stating
that this Warrant is being exchanged and the number of shares of
Common Stock to be exchanged. In connection with any Warrant
Exchange, this Warrant shall represent the right to subscribe for
and acquire the number of shares of Common Stock (rounded to the
nearest whole number) equal to (i) the number of shares specified
by the Holder in its Notice of Exchange (the "Total Number") less
the number of shares equal to the quotient obtained by dividing
(A) the product of the Total Number and the then applicable
Exercise Price by (B) the then fair market value (determined in
accordance with Section 3 below) per share of Common Stock. If
this Warrant should be exchanged in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
Upon receipt by the Company of this Warrant, together with a duly
executed Notice of Exchange, at its office, or by the stock
transfer agent of the Company at its office, the Holder shall be
deemed to be the holder of record of the shares of Common Stock
issuable upon such exchange, notwithstanding that the stock
transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. The Company shall pay
any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common
Stock on exchange of this Warrant.
2. Reservation of Shares. The Company will at all times
reserve for issuance and delivery upon exercise of this Warrant
all shares of Common Stock or other shares of capital stock of
the Company (and Other Securities) from time to time receivable
upon exercise of this Warrant. All such shares (and Other
Securities) shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and non-assessable
and free of all preemptive rights.
3. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise
of this Warrant, but the Company shall pay the Holder an amount
equal to the fair market value of such fractional share of Common
Stock in lieu of each fraction of a share otherwise called for
upon any exercise of this Warrant. For purposes of this Warrant,
<PAGE>
the fair market value of a share of Common Stock shall be
determined as follows:
(a) If the Common Stock is listed on a National
Securities Exchange or admitted to unlisted trading privileges on
such exchange or listed for trading on the NASDAQ system, the
current market value shall be the last reported sale price of the
Common Stock on such exchange or system on the last business day
prior to the date of exercise of this Warrant or if no such sale
is made on such day, the average of the closing bid and asked
prices for such day on such exchange or system; or
(b) If the Common Stock is not so listed or admitted
to unlisted trading privileges, the current market value shall be
the mean of the last reported bid and asked prices reported by
the National Quotation Bureau, Inc. on the last business day
prior to the date of the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and asked prices are not
so reported, the current market value shall be an amount, not
less than book value thereof as at the end of the most recent
fiscal year of the Company ending prior to the date of the
exercise of the Warrant, determined by the Board of Directors of
the Company in good faith.
4. Exchange, Transfer, Assignment or Loss of Warrant.
This Warrant is exchangeable, without expense, at the option of
the Holder, upon presentation and surrender hereof to the Company
or at the office of its stock transfer agent, if any, for other
Warrants of different denominations, entitling the Holder or
Holders thereof to purchase in the aggregate the same number of
shares of Common Stock purchasable hereunder. Upon surrender of
this Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto
duly executed and funds sufficient to pay any transfer tax,
subject to the provisions of Section 7 hereof, the Company shall,
without charge, execute and deliver a new Warrant in the name of
the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. This Warrant may be divided
or combined with other Warrants that carry the same rights upon
presentation hereof at the office of the Company or at the office
of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new
Warrants are to be issued and signed by the Holder hereof.
<PAGE>
5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the
Company, either at law or in equity, and the rights of the Holder
are limited to those expressed in this Warrant.
6. Anti-Dilution Provisions.
6.1 Adjustment for Recapitalization. If the Company
shall at any time subdivide its outstanding shares of Common
Stock (or Other Securities at the time receivable upon the
exercise of the Warrant) by recapitalization, reclassification or
split-up thereof, or if the Company shall declare a stock
dividend or distribute shares of Common Stock to its
shareholders, the number of shares of Common Stock subject to
this Warrant immediately prior to such subdivision shall be
proportionately increased and the Exercise Price shall be
proportionately decreased, and if the Company shall at any time
combine the outstanding shares of Common Stock by
recapitalization, reclassification or combination thereof, the
number of shares of Common Stock or Other Securities subject to
this Warrant immediately prior to such combination shall be
proportionately decreased and the Exercise Price shall be
proportionately increased. Any such adjustments pursuant to this
Section 6.1 shall be effective at the close of business on the
effective date of such subdivision or combination or if any
adjustment is the result of a stock dividend or distribution then
the effective date for such adjustment based thereon shall be the
record date therefor.
6.2 Adjustment for Reorganization, Consolidation,
Merger, Etc. In case of any reorganization of the Company (or
any other entity, the securities of which are at the time
receivable on the exercise of this Warrant) after the Base Date
or in case after such date the Company (or any such other entity)
shall consolidate with or merge into another entity or convey all
or substantially all of its assets to another entity, then, and
in each such case, the Holder of this Warrant upon the exercise
thereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive, in lieu of the
securities and property receivable upon the exercise of this
Warrant prior to such consummation, the securities or property to
which such Holder would have been entitled upon such consummation
if such Holder had exercised this Warrant immediately prior
thereto; in each such case, the terms of this Warrant shall be
applicable to the securities or property receivable upon the
exercise of this Warrant after such consummation.
<PAGE>
6.3 No Dilution.
(a) From the date of issuance of this Warrant
until the later of (1) the first anniversary of the date of such
issuance and (2) the date on which the Company first consummates
a sale of shares of its equity securities (within the meaning of
Section 3(a)(11) of the Securities Exchange Act of 1934, as
amended) or debt securities convertible into equity securities
for gross cash proceeds to the Company of more than $2.0 million
(such period through such later date, the "Reset Period") other
than Excluded Shares (as hereinafter defined), if the Company
shall issue or enter into any agreement to issue any shares of
Common Stock other than Excluded Shares for consideration per
share (the "Issuance Price") less than the Exercise Price per
share in effect immediately prior to such issuance, the Exercise
Price in effect immediately prior to such issuance shall be
reduced (but shall not be increased) to the Issuance Price. For
purposes hereof, the term "Excluded Shares" shall mean (1) any
shares of Common Stock issued in a transaction described in
Sections 6.1 and 6.2 of this Warrant; (2) issuances of shares of
Common Stock from time to time pursuant to employment agreements,
stock option or bonus plans authorized by the Board of Directors
of the Corporation as of the date hereof, (3) issuances of Common
Stock, or options to acquire shares of Common Stock, or
securities convertible into or exchangeable for Common Stock
pursuant to the terms of any acquisition by the Company of all or
substantially all of the operating assets, or more than fifty
percent (50%) of the voting capital stock or other controlling
interest of any business entity in a transaction negotiated on an
arms-length basis and expressly approved in advance by the Board
of Directors of the Company; (4) issuances of shares of Common
Stock from time to time upon the exercise, exchange or conversion
of warrants, options, convertible securities, the Company's
outstanding 8-1/4% Subordinated Convertible Notes Due 2003 or other
securities outstanding as of the date hereof and pursuant to the
written terms of such securities as they exist as of the date
hereof, and (5) issuances of shares of Common Stock from time to
time pursuant to the anti-dilution provisions of other securities
of the Company, including shares of the Company's outstanding
Series B, Series C and Series D Convertible Preferred Stock. For
purposes hereof, "voting capital stock" shall be deemed to be
capital stock of any class or classes, however designated having
ordinary voting power for the election of members of the board of
directors or other governing body and "controlling" shall mean
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a party,
whether through the ownership of voting capital stock, by
contract or otherwise.
<PAGE>
(b) If, at any time subsequent to the Reset
Period and prior to the first anniversary of the expiration of
the Reset Period, the Company consummates a sale of shares of its
Common Stock other than Excluded Shares for consideration per
share of Common Stock less than the Exercise Price per share in
effect immediately prior to such issuance, the Conversion Price
in effect immediately prior to such issuance shall be reduced
(but shall not be increased) to the price (calculated to the
nearest cent) determined: by dividing (1) an amount equal to the
sum of (A) the number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to such issuance multiplied
by the Exercise Price per share in effect immediately prior to
such issuance and (B) the consideration, if any, received by the
Corporation upon such issuance by (2) the number of shares of
Common Stock outstanding on a fully diluted basis immediately
after such issuance.
(c) If, at any time from the date of issuance of
this Warrant prior to the first anniversary of the expiration of
the Reset Period, the Company shall issue or enter into any
agreement to issue any shares of Common Stock other than Excluded
Shares for consideration per share greater than the Exercise
Price but lower than the market price per share in effect
immediately prior to such issuance, the Exercise Price in effect
immediately prior to such issuance shall be reduced (but shall
not be increased) to the price (calculated to the nearest cent)
determined by multiplying the Exercise Price in effect
immediately prior to such issuance by the factor determined by
dividing (1) an amount equal to the sum of (A) the number of
shares of Common Stock outstanding on a fully diluted basis
immediately prior to such issuance multiplied by the market price
per share in effect immediately prior to such issuance and (B)
the consideration, if any, received by the Company upon such
issuance by (2) the number of shares of Common Stock outstanding
on a fully diluted basis immediately after such issuance
multiplied by the market price per share in effect immediately
prior to such issuance; provided, however, no adjustment shall be
made to the Exercise Price if (1) such issuance is in connection
with a firm commitment underwritten public offering or (2) the
consideration per share is equal to or greater than 85% of the
market price per share in effect immediately prior to such
issuance. For purposes hereof, the "market price" as of any
measurement date shall be the average of the closing prices of
the Common Stock for each of the 10 consecutive trading days
immediately preceding such measurement date.
<PAGE>
(d) The Company will not, by amendment of its
Articles of Incorporation or through reorganization,
consolidation, merger, dissolution, issue or sale of securities,
sale of assets or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the
rights of the Holder of this Warrant against dilution or other
impairment.
(e) For further clarity, any change to the
conversion price or other terms of the 8-1/4% Subordinated
Convertible Notes Due 2003 shall not count toward determining the
Reset Period, but shall be taken into account in determining
whether any adjustment to the Exercise Price is due under this
Section 6.3.
(f) The Exercise Price shall be subject to
adjustment from time to time as previously provided in this
section 6.3. Upon each adjustment of the Exercise Price, the
holder of the Warrant evidenced hereby shall thereafter be
entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of shares of Common Stock (calculated to
the nearest whole share pursuant to Section 3) obtained by
multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of shares purchasable pursuant
hereto immediately prior to such adjustment and dividing the
product by the Exercise Price resulting from such adjustment.
6.4 Certificate as to Adjustments. In each case of an
adjustment in the number of shares of Warrant Stock or Other
Securities receivable on the exercise of this Warrant, or the
Exercise Price, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Warrant and
prepare a certificate executed by an executive officer of the
Company setting forth such adjustment and showing in detail the
facts upon which such adjustment is based. The Company will
forthwith mail a copy of each such certificate to the Holder.
6.5 Notices of Record Date, Etc. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or Other Securities at the time receivable upon
the exercise of the Warrant) for the purpose of entitling them to
receive any dividend (other than a cash dividend at the same rate
as the rate of the last cash dividend theretofore paid) or other
distribution, or any right to subscribe for, purchase or
<PAGE>
otherwise acquire any shares of stock of any class or any other
securities, or to receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
entity, or any conveyance of all or substantially all of the
assets of the Company to another entity; or
(c) of any voluntary or involuntary dissolution,
liquidation, partial liquidation or winding up of the Company, or
(d) any event resulting in the expiration of the Reset
Period,
then, and in each such case, the Company shall mail or cause to
be mailed to each Holder of the Warrant at the time outstanding a
notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of
such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding up is to take
place, and the time, if any, to be fixed, as to which the holders
of record of Common Stock (or such other securities at the time
receivable upon the exercise of the Warrant) shall be entitled to
exchange their shares of Common Stock (or such other securities)
for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding up. Such notice
shall be mailed at least 20 days prior to the date therein
specified.
7. Transfer to Comply with the Securities Act.
Notwithstanding any other provision contained herein, this
Warrant and any Warrant Stock or Other Securities may not be
sold, transferred, pledged, hypothecated or otherwise disposed of
except as follows: (a) to a person who, in the opinion of
counsel to the Company, is a person to whom this Warrant or the
Warrant Stock or Other Securities may legally be transferred
without registration and without the delivery of a current
prospectus under the Securities Act with respect thereto; or (b)
to any person upon delivery of a prospectus then meeting the
requirements of the Securities Act relating to such securities
and the offering thereof for such sale or disposition, and
thereafter to all successive assignees.
<PAGE>
8. Legend. Unless the shares of Warrant Stock or Other
Securities have been registered under the Securities Act, upon
exercise of any of the Warrants and the issuance of any of the
shares of Warrant Stock or Other Securities, all certificates
representing such securities shall bear on the face thereof
substantially the following legend:
The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended, and
may not be sold, offered for sale, assigned,
transferred or otherwise disposed of, unless
registered pursuant to the provisions of that
Act or unless an opinion of counsel is
obtained stating that such disposition is in
compliance with an available exemption from
such registration.
9. Notices. All notices required hereunder shall be in
writing and shall be deemed given when telegraphed, delivered
personally or within two days after mailing when mailed by
certified or registered mail, return receipt requested, to the
Company at its principal office, or to the Holder at the address
set forth on the record books of the Company, or at such other
address of which the Company or the Holder has been advised by
notice hereunder.
10. Applicable Law. The Warrant is issued under and shall
for all purposes be governed by and construed in accordance with
the laws of the State of Florida, without giving effect to the
choice of law rules thereof.
IN WITNESS HEREOF, the Company has caused this Warrant to be
signed on its behalf, in its corporate name, by its duly
authorized officer, all as of the day and year first above
written.
MANSUR INDUSTRIES INC.
By: s/Paul Mansur
--------------------------
Name: Paul Mansur
Title: Chief Executive Officer
<PAGE>
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ____________ shares of Common
Stock of Mansur Industries Inc., a Florida corporation, and
hereby makes payment of $____________ in payment therefor.
Signature
Signature, if jointly held
Date
INSTRUCTIONS FOR ISSUANCE OF STOCK
(if other than to the registered holder of the within Warrant)
Name
(Please typewrite or print in block letters)
Address
Social Security or
Taxpayer Identification Number
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED,
hereby sells, assigns and transfers unto
Name
(Please typewrite or print in block letters)
the right to purchase Common Stock of Mansur Industries Inc., a
Florida corporation, represented by this Warrant to the extent of
shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint
___________________________________________ Attorney, to transfer
the same on the books of the Company with full power of
substitution in the premises.
DATED: ____________, 200_.
Signature
Signature, if jointly held
- - 16 -
Exhibit F
SERIES C CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
THIS SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
dated as of August 24, 1999 (this "Agreement"), between MANSUR
INDUSTRIES INC., a Florida corporation (the "Company"), and
HANSEATIC AMERICAS LDC, a Bahamian limited duration company (the
"Investor").
WHEREAS, the Company wishes to issue and sell to the
Investor an aggregate of 69,000 shares (the "Series C Preferred
Shares") of the authorized but unissued shares of Series C
Convertible Preferred Stock, $1.00 par value, of the Company (the
"Series C Preferred Stock") at a purchase price of $100 per
share; and
WHEREAS, the Investor wishes to purchase the Series C
Preferred Shares upon the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises
and the covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Closing" and "Closing Date" shall have the meanings
ascribed to such terms in Section 1.3 herein.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Material Adverse Effect" means any adverse effect on the
business, operations, properties, prospects, or financial
condition of the entity with respect to which such term is used
and which is material to such entity and other entities
controlled by such entity taken as a whole, and any material
adverse effect on the transactions contemplated under this
Agreement or any other agreement or document contemplated hereby
or thereby.
<PAGE>
"Registrable Securities" shall mean (A) the shares (the
"Common Shares") of the Company's common stock, par value $.001
per share (the "Common Stock"), issued or issuable upon
conversion of the Series C Preferred Shares, and upon conversion
of any shares of Series C Preferred Stock issued as a dividend
thereon (which for all purposes of this Agreement shall be deemed
included in the Series C Preferred Shares), and (B) any
securities of the Company or securities of any successor
corporation issuable upon the conversion or exercise of any
warrant, right or other security that is issued as a dividend or
other distribution with respect to, in exchange for, or in
replacement of the Series C Preferred Shares, which in either
case (i) have not been resold pursuant to an effective
registration statement or pursuant to Rule 144 under the
Securities Act and (ii) may not be resold pursuant to Rule 144
under the Securities Act. For purposes of this Agreement,
securities will be considered ineligible for resale pursuant to
Rule 144 under the Securities Act unless the Company's transfer
agent has accepted an instruction from the Company specifying
that such securities are eligible for sale pursuant to Rule 144.
The term "holder of Registrable Securities" includes any person
who holds securities which are convertible into or exercisable
for Registrable Securities.
The terms "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration
or ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses to be
incurred by the Company in connection with the Investor's
registration rights under this Agreement, including, without
limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company and its
independent certified public accountants, blue sky fees and
expenses, reasonable fees and disbursements of counsel for the
Investor for a "due diligence" examination of the Company and
review of the Registration Statement and related documents, and
the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the
Company).
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for the
Investor not included within "Registration Expenses."
<PAGE>
"Registration Statement" shall have the meaning set forth in
Section 4.1(a) herein.
"Regulation D" shall mean Regulation D as promulgated
pursuant to the Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of
1933, as amended.
ARTICLE I
Purchase and Sale of Series C Preferred Shares
Section 1.1 Authorization of the Series C Preferred
Shares. The Company has authorized the sale and issuance to the
Investor of an aggregate of 69,000 shares of its Series C
Convertible Preferred Stock having the rights, restrictions,
privileges and preferences set forth in the Company's Articles of
Incorporation, as amended, in the form attached hereto as Exhibit
A (as amended, the "Articles"), which has been filed with the
Secretary of State of the State of Florida.
Section 1.2 Issuance, Sale and Delivery of the Series C
Preferred Shares. Subject to the terms and conditions hereof and
in reliance upon the representations, warranties, covenants and
agreements contained herein, the Company hereby agrees to issue
and sell to the Investor, and the Investor hereby agrees to
purchase from the Company at the Closing (as hereinafter
defined), an aggregate of 69,000 Series C Preferred Shares at a
purchase price of $100 per Series C Preferred Share (the
"Purchase Price").
Section 1.3 The Closing.
(a) The closing of the purchase and sale of the
Series C Preferred Shares (the "Closing"), shall take place at
the offices of Greenberg Traurig, P.A., 1221 Brickell Avenue,
Miami, Florida 33131 at 10:00 a.m., local time on August 24, 1999
(the "Closing Date") or at such other time and place and/or on
such other date as shall be mutually agreed upon by the Company
and the Investor.
(b) On the Closing Date, the Company shall issue
and countersign, or cause to be issued and countersigned by its
transfer agent, for delivery upon the order of the Investor,
certificates representing the number of Series C Preferred Shares
being purchased by the Investor, registered in the name of the
Investor or its nominee, or deposit such Series C Preferred
<PAGE>
Shares into an account or accounts designated by the Investor,
and the Investor shall deliver to the Company the Purchase Price
for such Series C Preferred Shares by wire transfer in
immediately available funds to an account designated in writing
prior to Closing by the Company. In addition, each party shall
deliver all documents, instruments and writings required to be
delivered by such party pursuant to this Agreement at or prior to
the Closing.
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties of the
Company. The Company hereby makes the following representations
and warranties to the Investor:
(a) Organization and Qualification; Material
Adverse Effect. Each of the Company and its Subsidiary (as
defined below) is a corporation duly incorporated and existing in
good standing under the laws of its jurisdiction of incorporation
and the Company and the Subsidiary each have the requisite
corporate power to own its properties and to carry on its
business as now being conducted. The Company owns 100% of the
outstanding capital stock of SystemOne Technologies Inc., a
Florida corporation (the "Subsidiary"). The Company does not
have any other direct or indirect subsidiaries. Each of the
Company and the Subsidiary is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary other
than those in which the failure so to qualify would not have a
Material Adverse Effect.
(b) Authorization; Enforcement. (i) The Company
has the requisite corporate power and authority to enter into and
perform this Agreement and to issue the Series C Preferred Shares
in accordance with the terms hereof, and the Common Shares upon
conversion of the Series C Preferred Shares, (ii) the execution
and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and
thereby, including the issuance of the Series C Preferred Shares,
and the Common Shares upon conversion thereof, have been duly
authorized by all necessary corporate action, and no further
consent or authorization of the Company or its Board of Directors
or stockholders is required, (iii) this Agreement has been duly
executed and delivered by the Company, and (iv) this Agreement
<PAGE>
constitutes the valid and binding obligation 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, liquidation
or similar laws relating to, or affecting generally the
enforcement of creditors' rights and remedies or by other
equitable principles of general application.
(c) Capitalization. The authorized capital stock
of the Company consists of (i) 25,000,000 shares of Common Stock,
and (ii) 1,500,000 shares of preferred stock ("Preferred Stock"),
of which 150,000 shares have been designated Series B Convertible
Preferred Stock and 150,000 shares have been designated Series C
Convertible Preferred Stock. As of the date hereof and at
Closing (and without reference to the Series C Preferred Shares),
4,601,309 shares of Common Stock are and will be issued and
outstanding, 51,003 shares of Series B Convertible Preferred
Stock are and will be issued and outstanding, and no shares of
Series C Convertible Preferred Stock or other preferred stock are
or will be issued and outstanding, respectively. All of the
outstanding shares of the Common Stock and Series B Convertible
Preferred Stock, and the capital stock of the Subsidiary have
been validly issued and are fully paid and non-assessable. No
shares of Common Stock or Preferred Stock are entitled to
preemptive rights. As of the date hereof and at Closing, the
following additional securities are and will be issued and
outstanding: (i) options to purchase an aggregate of 395,997
shares of Common Stock, (ii) warrants to purchase 129,750 shares
of Common Stock, and (iii) subordinated debentures convertible
into an aggregate of 1,119,487 shares of Common Stock. There are
no other scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
exchangeable or convertible into, any shares of capital stock of
the Company or the Subsidiary, or contracts, commitments,
understandings or arrangements by which the Company or the
Subsidiary is or may become bound to issue additional shares of
capital stock of the Company or the Subsidiary or options,
warrants, scrip, rights to subscribe to, or commitments to
purchase or acquire, any shares, or securities or rights
convertible into shares, of capital stock of the Company or the
Subsidiary (except as contemplated by this Agreement). No event
has occurred prior to the date hereof which, subsequent to the
date hereof, will cause any adjustment in any conversion or
exercise price or ratio with respect to any such securities
pursuant to any anti-dilution provisions thereunder, nor as a
result of any such event, will the number of shares of capital
stock issuable upon such conversion or such exercise, as the case
<PAGE>
may be, be subject to adjustment. No such conversion or exercise
price or ratio will be subject to adjustment as a consequence of
the consummation of the transactions contemplated by the
Agreement, nor, as a consequence of such consummation, will the
numbers of shares of capital stock issuable upon such conversion
or such exercise, as the case may be, be subject to adjustment.
The Company has furnished or made available to the Investor true
and correct copies of the Articles and its bylaws (the "Bylaws"),
as in effect on the date hereof.
(d) Issuance of Series C Preferred Shares and
Common Shares. The issuance of the Series C Preferred Shares has
been duly authorized and, when paid for or issued in accordance
with the terms hereof, the Series C Preferred Shares shall be
validly issued, fully paid and non-assessable and entitled to the
rights and preferences set forth in the Articles and not subject
to any preemptive rights or adverse claims. The Common Shares
will be duly authorized and reserved for issuance and, upon
conversion in accordance with the Articles, will be validly
issued, fully paid and non-assessable, free and clear of any
mortgage, deed of trust, pledge, lien or other charge or
encumbrance created by the Company and not subject to any
preemptive rights or adverse claims, and the holders shall be
entitled to all rights and preferences accorded to a holder of
Common Stock.
(e) No Conflicts. The execution, delivery and
performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby and
thereby do not and will not (i) result in a violation of the
Articles or Bylaws or of the articles of incorporation or bylaws
of the Subsidiary or (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to
which the Company or the Subsidiary is a party, or result in a
violation of any federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including Federal and
state securities laws and regulations) applicable to the Company
or the Subsidiary or by which any property or asset of the
Company or the Subsidiary is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect); provided that, for
purposes of such representation as to Federal, state, local or
foreign law, rule or regulation, no representation is made herein
<PAGE>
with respect to any of the same applicable solely to the Investor
and not to the Company or the Subsidiary. Neither the business
of the Company nor of the Subsidiary is being conducted in
violation of any law, ordinance or regulation of any governmental
entity, except for violations which either singly or in the
aggregate do not and will not have a Material Adverse Effect.
The Company is not required under Federal, state, local or
foreign law, rule or regulation to obtain any consent,
authorization or order of, or to make any filing or registration
with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Series C Preferred Shares in
accordance with the terms hereof and issue the Common Shares upon
conversion thereof, except for the registration provisions
provided for herein, provided that, for purposes of the
representation made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and
agreements of the Investor herein.
(f) SEC Documents; Financial Statements. The
Common Stock of the Company is registered pursuant to Section
12(g) of the Exchange Act and the Company has timely filed all
reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act, including material
filed pursuant to Section 13(a) or 15(d), in addition to one or
more registration statements and amendments thereto heretofore
filed by the Company with the Commission (all of the foregoing
including filings incorporated by reference therein being
referred to herein as the "SEC Documents"). The Company has
delivered or made available to the Investor true and complete
copies of all SEC Documents (including, without limitation, proxy
information and solicitation materials and registration
statements) filed with the Commission since September 27, 1996
and all annual SEC Documents filed with the Commission since
September 27, 1996. Without limiting any other representation or
warranty herein, the Company has not provided the Investor with
any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company
but which has not been so disclosed. As of their respective
dates, the SEC Documents (as amended by any amendments filed
prior to the date of this Agreement or the Closing Date and
provided to the Investor) complied in all material respects with
the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC
<PAGE>
Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(g) Principal Exchange/Market. The principal
market on which the Common Shares are currently traded is Nasdaq.
(h) No Material Adverse Change. Since June 30,
1999, the date through which the most recent quarterly report of
the Company on Form 10-QSB has been prepared and filed with the
Commission, a copy of which is included in the SEC Documents, no
event which had or is likely to have a Material Adverse Effect
has occurred or exists with respect to the Company or the
Subsidiary.
(i) No Undisclosed Liabilities. Neither the
Company nor the Subsidiary has any liabilities or obligations not
disclosed in the SEC Documents, other than those liabilities
incurred in the ordinary course of its respective business since
December 31, 1998 or liabilities or obligations, individually or
in the aggregate, which do not or would not have a Material
Adverse Effect on the Company or the Subsidiary, taken as a
whole.
(j) No Undisclosed Events or Circumstances. No
event or circumstance has occurred or exists with respect to the
Company, the Subsidiary or their respective business, properties,
prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly
announced or disclosed.
<PAGE>
(k) No General Solicitation. None of the
Company, the Subsidiary or, to the Company's knowledge, any of
their respective affiliates or any person acting on its or their
behalf has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection
with the offer or sale of the Series C Preferred Shares.
(l) No Integrated Offering. None of the Company,
the Subsidiary, or, to the Company's knowledge, any of their
respective Affiliates (as defined pursuant to the Securities Act)
or any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
require registration of the Series C Preferred Shares under the
Securities Act, and the offer and sale of the Series C Preferred
Shares hereunder, and the issuance of the Common Shares upon
conversion thereof, is exempt from the registration requirements
of the Securities Act.
(m) Intellectual Property. Each of the Company
and the Subsidiary owns or has licenses to use certain patents,
copyrights and trademarks ("intellectual property") associated
with its respective business. Each of the Company and the
Subsidiary has all intellectual property rights which are needed
to conduct its respective business as it is now being conducted
or as proposed to be conducted as disclosed in the SEC Documents.
The Company has no reason to believe that the intellectual
property rights owned by the Company or the Subsidiary are
invalid or unenforceable or that the use of such intellectual
property by the Company or the Subsidiary infringes upon or
conflicts with any right of any third party, and neither the
Company nor the Subsidiary has received notice of any such
infringement or conflict. The Company has no knowledge of any
infringement of the Company's or the Subsidiary's intellectual
property by any third party.
(n) No Litigation. Except as set forth in the
SEC Documents delivered to the Investor prior to the date of this
Agreement ("Pre-Agreement SEC Documents") no litigation or claim
(including those for unpaid taxes) against the Company or the
Subsidiary is pending or, to the Company's knowledge, threatened,
and no other event has occurred, which if determined adversely
would be likely to have a Material Adverse Effect on the Company
or the Subsidiary, taken as a whole; and the Company believes
that the legal proceedings described in the Pre-Agreement SEC
Documents will not have a Material Adverse Effect on the Company
or the Subsidiary, taken as a whole. No litigation or claim is
<PAGE>
pending or to the Company's knowledge, threatened against the
Company or the Subsidiary which, if determined adversely would be
likely to adversely affect the transactions contemplated hereby.
(o) Brokers. The Company has taken no action
which would give rise to any claim by any person, other than
Ryan, Beck & Co. (the fees and expenses of which shall be borne
by the Company) for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions
contemplated hereby.
(p) Taxes. The Company and the Subsidiary have
filed or caused to be filed all federal, state, municipal and
other tax returns, reports and declarations required to be filed
by them, respectively, so as to prevent any valid lien, charge or
encumbrance of any nature on their respective assets or
properties and have paid or shall pay all taxes which have been
or shall become due with respect to the periods covered by said
returns or pursuant to any assessment received by them in
connection therewith.
(q) Employee Benefit Plans. All pension, profit-
sharing, bonus, incentive, welfare and other employee benefit
plans in which the employees of the Company or the Subsidiary
participate comply in all material respects with all applicable
requirements of the Department of Labor and the Internal Revenue
Service promulgated under the Employee Retirement Income Security
Act of 1974, as amended, and all other applicable law. Without
limiting the foregoing, all required contributions under such
plans have been made, the respective fund or funds established
under such plans are funded in accordance with all applicable
laws, and no past service funding liability exists thereunder.
(r) Environmental Laws. Neither the consummation
of the transactions contemplated by this Agreement nor, to the
Company's knowledge, any real property utilized by the Company or
the Subsidiary, nor, to the Company's knowledge, any condition
thereon violates any Environmental Laws (as hereinafter defined),
other than any such violations which would not have a Material
Adverse Effect on the Company and the Subsidiary, taken as a
whole, and no provisions of any Environmental Laws or regulations
in any way affect the consummation of the transactions
contemplated by this Agreement. For purposes hereof,
"Environmental Laws" shall mean any and all federal, national,
state, or local laws, statutes, ordinances, rules, regulations,
orders or determinations of any federal, national, state, or
local governmental authority pertaining to health or the
environment.
<PAGE>
(s) Disclosure. No representation or warranty
made under any provisions of this Agreement, and none of the
information furnished by the Company set forth herein or in any
document delivered to the Investor, or any authorized
representative of the Investor, pursuant to this Agreement,
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or
therein not misleading.
Section 2.2 Representations and Warranties of the
Investor. The Investor hereby makes the following
representations and warranties to the Company:
(a) Authorization; Enforcement. (i) The Investor
has the requisite power and authority to enter into and perform
this Agreement and to purchase the Series C Preferred Shares
being sold hereunder, (ii) the execution and delivery of this
Agreement by the Investor and the consummation by it of the
transactions contemplated hereby and thereby have been duly
authorized by all necessary limited duration company action, as
required, and (iii) this Agreement constitutes the valid and
binding obligation of the Investor enforceable against the
Investor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of
creditors' rights and remedies or by other equitable principles
of general application.
(b) No Conflicts. The execution, delivery and
performance of this Agreement and the consummation by the
Investor of the transactions contemplated hereby and thereby do
not and will not (i) result in a violation of any of the
Investor's organizational documents, (ii) conflict with any
agreement, indenture, or instrument to which the Investor is a
party, or (iii) result in a violation of any law, rule, or
regulation or any order, judgment or decree of any court or
governmental agency applicable to the Investor. The Investor is
not required to obtain any consent or authorization of any
governmental agency in order for them to perform their
obligations under this Agreement.
(c) Investment Representation. The Investor is
purchasing the Series C Preferred Shares for its own account and
not with a view to distribution in violation of any securities
laws. The Investor has no present intention to sell the Series C
Preferred Shares and the Investor does not have any present
<PAGE>
arrangement (whether or not legally binding) to sell the Series C
Preferred Shares to or through any person or entity; provided,
however, that by their representations herein, the Investor does
not agree to hold the Series C Preferred Shares for any minimum
or other specific term and reserve the right to dispose of the
Series C Preferred Shares at any time in accordance with Federal
and state securities laws applicable to such disposition.
(d) Accredited Investor. The Investor is an
"accredited investor" as defined in Rule 501 promulgated under
the Securities Act. The Investor has such knowledge and
experience in financial and business matters in general and
investments in particular, so that the Investor is able to
evaluate the merits and risks of an investment in the Series C
Preferred Shares and to protect its own interests in connection
with such investment. In addition (but without limiting the
effect of the Company's representations and warranties contained
herein), the Investor has received such information as it
considers necessary or appropriate for deciding whether to
purchase the Series C Preferred Shares pursuant hereto.
(e) Rule 144. The Investor understands that
there is no public trading market for the Series C Preferred
Shares, that none is expected to develop, and that the Series C
Preferred Shares must be held indefinitely until the Series C
Preferred Shares or securities into which such Series C Preferred
Shares are converted are registered under the Securities Act or
an exemption from registration is available. The Investor has
been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act.
(f) Brokers. The Investor has not taken any
action which would give rise to any claim by any person for
brokerage commissions, finder's fees or similar payments by the
Company relating to this Agreement or the transactions
contemplated hereby.
(g) Reliance by the Company. The Investor
understands that the Series C Preferred Shares are being offered
and sold in reliance on a transactional exemption from the
registration requirements of Federal and state securities laws
and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and
understandings of the Investor set forth herein in order to
determine the applicability of such exemptions and the
suitability of the Investor to acquire the Series C Preferred
Shares.
<PAGE>
ARTICLE III
Covenants
Section 3.1 Registration and Listing. Until the later of
(i) such time as no Series C Preferred Shares are outstanding or
(ii) the expiration of the Effectiveness Period (as hereinafter
defined in Section 4.3), the Company will cause the Common Stock
to continue to be registered under Section 12(g) of the Exchange
Act, will comply in all respects, with its reporting and filing
obligations under the Exchange Act, and will not take any action
or file any document (whether or not permitted by the Exchange
Act or the rules thereunder) to terminate or suspend such
reporting and filing obligations. The Company shall take further
action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable
such holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule
may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the Commission. Upon the request
of any holder of Registrable Securities, the Company shall
deliver to such holder a written statement as to whether it has
complied with such information and requirements. Until the later
of (i) such time as no Series C Preferred Shares are outstanding
or (ii) the expiration of the Effectiveness Period, the Company
shall use its best efforts to continue the listing or trading of
the Common Shares on Nasdaq, the Nasdaq National Market or a
principal exchange and comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules
of Nasdaq and any exchange or market on which the Common Shares
are then traded.
Section 3.2 Certificates on Conversion. Upon any
conversion (automatic or optional) of Series C Preferred Shares,
the Company shall issue and deliver to the Investor (or the then
holder) within three (3) days of the conversion date a new
certificate or certificates for the Series C Preferred Shares
which has not yet been converted but which are evidenced in part
by the certificate(s) submitted to the Company in connection with
such conversion (with the number of and denomination of such new
certificate(s) designated by such Investor or holder).
Section 3.3 Replacement Certificates. The certificate(s)
representing the Series C Preferred Shares held by the Investor
(or then holders) may be exchanged by the Investor (or such
holders) at any time and from time to time for certificates with
<PAGE>
different denominations representing an equal aggregate number of
Series C Preferred Shares, as reasonably requested by the
Investor (or such holders) upon surrendering the same. No
service charge will be made for such registration, transfer or
exchange.
Section 3.4 Securities Compliance. The Company shall
notify the Commission and Nasdaq, in accordance with their
requirements, of the transactions contemplated by this Agreement,
and shall take all other necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation,
for the legal and valid issuance of the Series C Preferred Shares
hereunder and the Common Stock issuable upon conversion thereof
to the Investor or subsequent holders.
Section 3.5 Notices. The Company agrees to provide the
Investor (or any subsequent holders of Series C Preferred Shares)
with copies of all notices and information, including without
limitation notices and proxy statements in connection with any
meetings, that are provided to the holders of shares of Common
Shares, contemporaneously with the delivery of such notices or
information to such Common Share holders.
Section 3.6 Reservation of Stock Issuable Upon
Conversion. The Company shall at all times reserve and keep
available out of its authorized but unissued Common Stock, solely
for the purpose of effecting the conversion of the Series C
Preferred Shares, such number of shares of its Common Stock as
shall from time to time be sufficient to effect the conversion of
all outstanding Series C Preferred Shares, and if at any time the
number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all the then
outstanding Series C Preferred Shares, the Company will take such
corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purpose, including without limitation engaging in best
efforts to obtain the requisite shareholder approval.
Section 3.7. Board Observation Rights. So long as the
Investor holds any Series C Preferred Shares, the Investor shall
have the right to collectively designate an observer to receive
notice of and attend meetings of the Company's Board of
Directors. Such observer shall have no right to vote on or with
respect to any matter considered by the Board of Directors. Such
observer shall agree to maintain as confidential any non-public
information it obtains as a result of the provisions of this
<PAGE>
Section 3.7. The Company agrees to reimburse the observer for
the reasonable travel and other expenses incurred by such
observer in connection with his or her attendance at meetings of
the Company's Board of Directors.
ARTICLE IV
Registration
Section 4.1 Registration Requirements. The Company shall
use its reasonable business efforts to effect the registration of
the Registrable Securities (including without limitation the
execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as would permit or
facilitate the resale or distribution of all the Registrable
Securities in the manner (including manner of sale) and in all
states reasonably requested by the Holder. Such reasonable best
efforts by the Company shall include the following:
(a) the Company shall, as expeditiously as
reasonably possible after the Closing Date:
(i) Prepare and file a registration
statement with the Commission pursuant to Rule 415
under the Securities Act on such appropriate
registration form of the Commission as shall be
reasonably selected by the Company covering the
Registrable Securities ("Registration Statement")
within 45 days following the Closing Date. Thereafter
the Company shall use its reasonable business efforts
to cause such Registration Statement to be declared
effective by the Commission within 90 days following
the Closing Date. In the event that such Registration
Statement is not declared effective within 90 days
following the Closing Date, there shall be a 30 day
grace period. The Company shall use its reasonable
best efforts to cause the Registration Statement to
become effective during this 30 day grace period, if
applicable. In the event that such Registration
Statement has not been declared effective within 120
days from the Closing Date, then the Company shall,
until the Registration Statement is declared effective,
pay in cash to the Investor an amount equal to 2% of
the aggregate Liquidation Value of the Series C
Preferred Shares (the "Liquidated Damages") held by the
<PAGE>
Investor for each 30 day period, or part thereof,
beginning on the 121st day following the Closing Date
(the "Default Period") that the Registration Statement
has not been declared effective; provided, however,
that the Default Period shall terminate and Liquidated
Damages shall cease to accrue on the date upon which
all such Registrable Securities may be immediately sold
under Rule 144 in the reasonable opinion of counsel to
the Company (provided that the Company's transfer agent
has accepted an instruction from the Company to such
effect). If any applicable Default Period is less than
30 days such cash payment shall be on a pro rata basis.
Such cash payment shall be calculated by the Company on
the earlier of (i) the effective date of such
Registration Statement or (ii) the last day of each
Default Period, and a check in lawful money of the
United States of America shall be sent within three (3)
business days of such calculation to the Investor at
the addresses set forth on the signature page hereof.
Following the initial effective date of such
Registration Statement, Liquidated Damages shall also
be payable to the Investor by the Company for periods
(in excess of the time period in which the Company is
required to file a Current Report on Form 8-K) during
which the Registration Statement does not remain
effective; provided, however, that such Liquidated
Damages shall not be payable by the Company in the
event that all such Registrable Securities may be
immediately sold by the Investor pursuant to Rule 144.
Notwithstanding the foregoing, if the Default Period
commences from the failure of the Company to cause to
become effective the Registration Statement solely by
reason of the failure of the Investor to provide such
information as (i) the Company may reasonably request
from the Investor to be included in the Registration
Statement or (ii) the Commission or Nasdaq may request
in connection with such Registration Statement, the
Company shall not be required to pay such Liquidated
Damages to the Investor during the period of delay
attributable to Investor's failure. The Company and
the Investor hereby acknowledge and agree that it may
be difficult, if not impossible, to determine with any
reasonable accuracy the actual damages arising from the
failure to secure effectiveness of the Registration
Statement by the time hereinbefore specified, or to
maintain the Registration Statement thereafter, and
that the amount of the Liquidated Damages is a
<PAGE>
reasonable estimate thereof, provided that payment
thereof shall in no manner be construed as impairing
the Investor's right to require specific performance of
this Agreement.
(ii) Prepare and file with the Commission
such amendments and supplements to such Registration
Statement and the prospectus used in connection with
such Registration Statement as may be necessary to
comply with the provisions of the Act with respect to
the disposition of all securities covered by such
Registration Statement and notify the Investor of the
filing and effectiveness of such Registration Statement
and any amendments or supplements.
(iii) Furnish to the Investor such number
of copies of a current prospectus conforming with the
requirements of the Act, copies of the Registration
Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such
other documents as the Investor may reasonably require
in order to facilitate the disposition of Registrable
Securities owned by the Investor.
(iv) Use its best efforts to register and
qualify the securities covered by such Registration
Statement under such other securities or "Blue Sky"
laws of such jurisdictions as shall be reasonably
requested by the Investor; provided that the Company
shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file
a general consent to service of process in any such
states or jurisdictions.
(v) Notify the Investor immediately of the
happening of any event as a result of which the
prospectus (including any supplement thereto or
thereof) included in such Registration Statement, as
then in effect, includes an untrue statement of
material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing, and use its best efforts
to promptly update and/or correct such prospectus.
(vi) Notify the Investor immediately of the
issuance by the Commission or any state securities
<PAGE>
commission or agency of any stop order suspending the
effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The
Company shall use its reasonable best efforts to
prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the
earliest possible time.
(vii) Permit a single firm of counsel,
designated by the Investor, to review the Registration
Statement and all amendments and supplements thereto
within a reasonable period of time prior to each
filing, and shall not file any document in a form to
which such counsel reasonably objects.
(viii) Use its reasonable business efforts
to list the Registrable Securities covered by such
Registration Statement with all securities exchange(s)
and/or markets on which the Common Stock is then
listed, and prepare and file any required filings with
the National Association of Securities Dealers, Inc. or
any exchange or market where the Common Shares are
traded.
(ix) Otherwise use its reasonable business
efforts to comply with all applicable rules and
regulations of the SEC and make available to its
security holders, as soon as reasonably practicable,
earnings statements covering a period of twelve months
beginning with three months after the effective date of
the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the
Securities Act.
(b) The Company shall make available for
inspection by the Investor and its representative(s), any
underwriter participating in any disposition pursuant to a
Registration Statement, and any attorney or accountant retained
by the Investor or underwriter, all financial and other records
customary for purposes of the Investor's due diligence
examination of the Company and all SEC Documents filed subsequent
to the Closing Date, pertinent corporate documents and properties
of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in
connection with such Registration Statement, provided that such
parties agree to keep such information confidential.
<PAGE>
Section 4.2 Expenses of Registration. All Registration
Expenses incurred in connection with any registration,
qualification or compliance with registration pursuant to this
Section 4 shall be borne by the Company, and all Selling Expenses
of the Investor shall be borne by the Investor.
Section 4.3 Registration Period. In the case of the
registration effected by the Company pursuant to this Section 4,
the Company will use its reasonable business efforts to keep such
registration effective (the "Effectiveness Period") until the
earlier to occur of (a) two years from the Closing Date, provided
that, without limiting any provision of Section 4.1(a)(i), the
Company may suspend the effectiveness of the Registration
Statement if the Board of Directors determines, upon advice of
counsel, that in order to maintain effectiveness of the
Registration Statement, the Company would be required to disclose
a significant corporate development which disclosure would have a
material effect on the Company; provided, however, that the
period of time which such Registration Statement is required to
be effective shall be increased by the number of days that the
Registration Statement's effectiveness was suspended, if any,
during the two year period from the Closing Date, (b) the date on
which the Investor have completed the sale or distribution
described in the Registration Statement relating thereto, or (c)
the date on which such Registrable Securities may be sold under
Rule 144(k) in the reasonable opinion of counsel to the Company
(provided that the Company's transfer agent has accepted an
instruction from the Company to such effect).
Section 4.4 Indemnification.
(a) Company Indemnity. The Company will
indemnify each holder of Registrable Securities, each of its
officers, directors and partners, and each person controlling
such holder of Registrable Securities, within the meaning of
Section 15 of the Securities Act and the rules and regulations
thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls, within the
meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, any underwriter, against all claims,
losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related
registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any
<PAGE>
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the
Securities Act or any state securities law or in either case, any
rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in
connection with any such registration, qualification or
compliance, and will reimburse each holder of Registrable
Securities, each of its officers, directors and partners, and
each person controlling such holder of Registrable Securities,
each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to a holder of
Registrable Securities to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information
relating to such holder or underwriter and furnished to the
Company by such holder or the underwriter (if any) therefor and
stated to be specifically for use therein. The indemnity
agreement contained in this Section 4.4(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent will not be unreasonably
withheld).
(b) Holder Indemnity. Each holder of Registrable
Securities will, severally and not jointly, if Registrable
Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, partners,
and each underwriter, if any, of the Company's securities covered
by such a registration statement, each person who controls the
Company or such underwriter within the meaning of Section 15 of
the Securities Act and the rules and regulations thereunder, each
other holder of Registrable Securities (if any), and each of
their directors, officers and partners, and each person
controlling such other holder(s) of Registrable Securities
against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statement therein not
misleading, in each case only insofar as such untrue statement or
<PAGE>
alleged untrue statement or omission relates to such holder of
Registrable Securities, and will reimburse the Company and such
other holder(s) of Registrable Securities and their directors,
officers and partners, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection
with investigating and defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information
furnished to the Company by such holder of Registrable Securities
and stated to be specifically for use therein, and provided that
the maximum amount for which such holder of Registrable
Securities shall be liable under this indemnity shall not exceed
the net proceeds received by such holder of Registrable
Securities from the sale of the Registrable Securities. The
indemnity agreement contained in this Section 4.4(b) shall not
apply to amounts paid in settlement of any such claims, losses,
damages or liabilities if such settlement is effected without the
consent of such holder of Registrable Securities (which consent
shall not be unreasonably withheld).
(c) Procedure. Each party entitled to
indemnification under this Article (the "Indemnified Party")
shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim in any litigation
resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its
obligations under this Article except to the extent that the
Indemnifying Party is materially and adversely affected by such
failure to provide notice. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each
<PAGE>
Indemnified Party shall furnish such information regarding itself
or the claim in question as an Indemnifying Party may reasonably
request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation
resulting therefrom.
Section 4.5 Contribution. If the indemnification
provided for in Section 4 herein is unavailable to the
Indemnified Parties in respect of any losses, claims, damages or
liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities as between
the Company on the one hand and any holder of Registrable
Securities on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of such holder of
Registrable Securities in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one
hand and of any holder of Registrable Securities on the other
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company or by such holder.
In no event shall the obligation of any Indemnifying Party
to contribute under this Section 4.5 exceed the amount that such
Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section
4.4(a) or 4.4(b) hereof had been available under the
circumstances.
The Company and the Investor agree that it would not be just
and equitable if contribution pursuant to this Section 4.5 were
determined by pro rata allocation (even if the holders or the
underwriters were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party
as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraphs shall be
deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
<PAGE>
section, no holder of Registrable Securities or underwriter shall
be required to contribute any amount in excess of the amount by
which (i) in the case of any holder, the net proceeds received by
such holder from the sale of Registrable Securities or (ii) in
the case of an underwriter, the total price at which the
Registrable Securities purchased by it and distributed to the
public were offered to the public exceeds, in any such case, the
amount of any damages that such holder or underwriter has
otherwise been required to pay by reason of such untrue or
alleged untrue statement, omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
ARTICLE V
Conditions
Section 5.1 Conditions Precedent to the Obligation of the
Company to Issue and Sell the Series C Preferred Shares. The
obligation hereunder of the Company to issue and sell the Series
C Preferred Shares to the Investor is subject to the
satisfaction, at or before any Closing Date, of each of the
conditions set forth below. These conditions are for the
Company's sole benefit and may be waived by the Company at any
time in its sole discretion.
(a) Accuracy of the Investor Representations and
Warranties. The representations and warranties of the Investor
shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a
particular date) and the Investor shall deliver to the Company a
certificate executed by an executive officer of such Investor to
such effect.
(b) Performance by the Investor. The Investor
shall have performed all agreements and satisfied all conditions
required to be performed or satisfied by the Investor at or prior
to any Closing Date and the Investor shall deliver to the Company
a certificate executed by an executive officer of such Investor
to such effect.
(c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
<PAGE>
governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this
Agreement.
Section 5.2 Conditions Precedent to the Obligation of the
Investor to Purchase the Series C Preferred Shares. The
obligation hereunder of the Investor to acquire and pay for the
Series C Preferred Shares is subject to the satisfaction, at or
before any Closing Date, of each of the conditions set forth
below. These conditions are for the Investor's sole benefit and
may be waived by the Investor at any time in its sole discretion.
(a) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company
shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a
particular date) and the Company shall deliver to the Investor a
certificate executed by an executive officer of the Company to
such effect.
(b) Performance by the Company. The Company
shall have performed all agreements and satisfied all conditions
required to be performed or satisfied by the Company at or prior
to any Closing Date and the Company shall deliver to the Investor
a certificate executed by an executive officer of the Company to
that effect.
(c) Nasdaq. From the date hereof to any Closing
Date, trading in the Company's Common Stock shall not have been
suspended by the Commission or Nasdaq, and trading in securities
generally as reported by Nasdaq, shall not have been suspended or
limited, and the Common Stock shall not have been delisted from
any exchange or market where they are currently listed.
(d) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority or competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this
Agreement.
(e) Opinion of Counsel. At the Closing, the
Investor shall have received an opinion of counsel to the Company
in substantially the form attached hereto as Exhibit B and such
other opinions, certificates and documents as the Investor or its
counsel shall reasonably require incident to the Closing.
<PAGE>
(f) Secretary's Certificate. The Company shall
have delivered to the Investor a certificate in form and
substance reasonably satisfactory to the Investor, executed by
the Secretary of the Company on behalf of the Company, certifying
as to the incumbency of signing officers, Charter, Bylaws, good
standing and authorizing resolutions of the Company.
(g) Consents. All consents, acknowledgements,
approvals, permits and orders with respect to the transactions
contemplated hereby shall have been obtained.
(h) Other Certificates. The Investor shall have
received such additional certificates, instruments and other
documents, in form and substance satisfactory to the Investor and
counsel for the Investor as it shall have reasonably requested in
connection with the transactions contemplated hereunder.
ARTICLE VI
Legend on Stock
Section 6.1. Certificates. Each certificate representing
the Series C Preferred Shares and, if appropriate, securities
issued upon conversion thereof, shall be stamped or otherwise
imprinted with a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR
AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
Any Common Stock issued pursuant to conversion of the Series
C Preferred Shares shall bear a legend in the same form as the
legend on the Series C Preferred Shares.
ARTICLE VII
Termination
Section 7.1 Termination by Mutual Consent. This
Agreement may be terminated at any time prior to the Closing Date
by the mutual written consent of the Company and the Investor.
<PAGE>
Section 7.2 Other Termination. This Agreement may be
terminated by action of the Board of Directors of the Company or
by the Investor at any time if the Closing shall not have been
consummated by August 31, 1999.
ARTICLE VIII
Miscellaneous
Section 8.1 Fees and Expenses. The Company shall pay the
fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by the Company
incident to the negotiation, preparation, execution, delivery and
performance of this Agreement, and shall promptly pay, or
reimburse the Investor for, all out-of-pocket fees and expenses
incurred by it, including, without limitation, the reasonable
fees and disbursements of its counsel, not to exceed an aggregate
of $20,000, in connection with such activities, and any other
documents or instruments required hereunder or thereunder,
whether or not the transactions contemplated hereunder are
consummated. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of the Series C
Preferred Shares pursuant hereto.
Section 8.2 Default.
(a) It shall constitute an Event of Default if
the Company shall fail to perform its obligations hereunder or
shall fail to perform its obligations to any holder of the Series
C Preferred Shares as provided for in the Company's Articles of
Incorporation including the provisions set forth in Schedule I
hereto. If an Event of Default shall occur, the Investor shall
be entitled, to immediately commence legal action to recover
damages in respect of such default and/or to seek injunctive
relief.
(b) The Company and the Investor acknowledge and
agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other
remedy to which either of them may be entitled by law or equity.
<PAGE>
(c) Each of the Company and the Investor
(i) hereby irrevocably submit to the jurisdiction of the United
States District Court for the Southern District of Florida for
the purposes of any suit, action or proceeding arising out of or
relating to this Agreement and (ii) hereby waive, and agree not
to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Investor consent to
process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agree that such service
shall constitute good and sufficient service of process and
notice thereof. Nothing in this paragraph shall affect or limit
any right to serve process in any other manner permitted by law.
Section 8.3 Entire Agreement; Amendment. This Agreement
together with the agreements and documents executed in connection
herewith and therewith, contains the entire understanding of the
parties with respect to the matters covered hereby and thereby
and, except as specifically set forth herein or therein, neither
the Company nor the Investor make any representation, warranty,
covenant or undertaking with respect to such matters. No
provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought.
Section 8.4 Notices. Any notice or other communication
required or permitted to be given hereunder shall be in writing
and shall be effective upon actual receipt of such mailing. The
addresses for such communications shall be:
to the Company: Mansur Industries Inc.
8305 N.W. 27th Street
Suite 107
Miami, Florida 33122
Attn: Paul I. Mansur, Chief
Executive Officer
with copies to: Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Gary M. Epstein, Esq.
<PAGE>
to the Investor: Hanseatic Americas LDC
450 Park Avenue, Suite 2302
New York, New York 10022
Attn: Paul A. Biddelman,
President
with a copy to: Krugman & Kailes LLP
Park 80 West - Plaza Two
Saddle Brook, New Jersey 07663
Attn: Howard Kailes, Esq.
Any party hereto may from time to time change its address for
notices by giving at least 10 days written notice of such changed
address to the other parties hereto.
Section 8.5 Indemnity. Each party shall indemnify each
other party against any loss, cost or damages (including
reasonable attorney's fees but excluding consequential damages)
incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this
Agreement.
Section 8.6 Waivers. No waiver by any party of any
default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party
to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Section 8.7 Headings. The headings herein are for
convenience only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions
hereof.
Section 8.8 Successors and Assigns. Except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted
assigns. The parties hereto may amend this Agreement without
notice to or the consent of any third party.
Section 8.9 No Third Party Beneficiaries. This Agreement
is intended for the benefit of the parties hereto and their
respective permitted successors and assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any
other person.
<PAGE>
Section 8.10 Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the
internal laws of the State of Florida.
Section 8.11 Survival. The representations and warranties
and the agreements and covenants of the Company and the Investor
contained herein shall survive the Closing.
Section 8.12 Execution. This Agreement may be executed in
two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign
the same counterpart. In the event any signature is delivered by
facsimile transmission, the party using such means of delivery
shall cause the manually executed signature page(s) to be
physically delivered to the other party within five days of the
execution hereof.
Section 8.13 Publicity. The Company agrees that it will
not disclose, and will not include in any public announcement,
the name of any of the Investor without their consent, unless and
until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
THE COMPANY:
MANSUR INDUSTRIES, INC.
By: s/Paul I. Mansur
--------------------------
Name: Paul I. Mansur
Title: Chief Executive
Officer
THE INVESTOR:
HANSEATIC AMERICAS LDC
By: Hansabel Partners LLC
By: Hanseatic Corporation
By: s/Paul A. Biddelman
--------------------------
Name: Paul A. Biddelman
Title: President
(..continued)
Exhibit G
ARTICLES OF AMENDMENT
CERTIFICATE OF DESIGNATION
of
SERIES C CONVERTIBLE PREFERRED STOCK
of
MANSUR INDUSTRIES INC.
(Pursuant to Section 607.0602 of the
Florida Business Corporation Act)
____________________________________
Mansur Industries Inc., a corporation organized and existing
under the Business Corporation Act of the State of Florida
(hereinafter called the "Corporation"), hereby certifies that the
following resolution was adopted by the Board of Directors of the
Corporation as required by Section 607.0602 of the Business
Corporation Act at a meeting duly called and held on August 23,
1999:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation (hereinafter
called the "Board of Directors" or the "Board") in accordance with
the provisions of the Articles of Incorporation of the
Corporation, the Board of Directors hereby creates a series of
Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Series C Convertible Preferred Stock:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series C Convertible Preferred
Stock" (the "Series C Preferred Stock") and the number of shares
constituting the Series C Preferred Stock shall be 150,000, of
which 50,000 shares shall be reserved for use in connection with
the payment of dividends on the outstanding shares of Series C
Preferred Stock pursuant to Section 3 hereof. Such number of
shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number
of shares of Series C Preferred Stock to a number less than the
number of shares then outstanding, plus the number reserved as
<PAGE>
aforesaid, and no increase shall increase the number of shares of
Series C Preferred Stock above the total number of authorized
shares.
Section 2. Rank. The Series C Preferred Stock shall
rank as to distributions of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or
involuntary: (i) senior to all of the Corporation's common
stock, par value $.001 per share (the "Common Stock");
(ii) senior to any class or series of capital stock of the
Corporation hereafter created specifically ranking by its terms
junior to the Series C Preferred Stock (collectively, with the
Common Stock, "Junior Securities" or "Junior Stock"); (iii) on
parity with the Series B Preferred Stock, par value $1.00 per
share ("Series B Preferred Stock") of the Company: and (iv) on
parity with any class or series of capital stock of the
Corporation hereafter created specifically ranking by its terms
on parity with the Series B Preferred Stock or Series C Preferred
Stock ("Parity Securities" or "Parity Stock"). While any shares
of Series C Preferred Stock are outstanding, no equity securities
senior to the Series C Preferred Stock, as to distribution of
assets, payment of dividends or otherwise ("Senior Securities")
or Parity Securities and no options, warrants or other rights
(collectively, "Options") to purchase or acquire Senior
Securities or Parity Securities, or any securities (collectively,
"Convertible Securities") by their terms convertible into or
exchangeable for Senior Securities or Parity Securities, or any
Options to purchase or acquire such Convertible Securities, shall
be authorized or issued and (except for shares issued as
dividends on outstanding shares of Series C Preferred Stock) no
additional shares of Series C Preferred Stock, or Options to
acquire Series C Preferred Stock, or Convertible Securities
convertible into or exchangeable for Series C Preferred Stock, or
any Option to acquire such Convertible Securities, shall be
issued, in each case, without the approval (by vote or written
consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Series C Preferred
Stock, voting as a single class. This prohibition shall not
include the authorization or issuance of any form of debt
securities or instruments to a bank or other institution.
Section 3. Dividends.
(a) The dividend rate payable with respect to the
outstanding shares of Series C Preferred Stock ("Dividend Rate")
shall be 8.00% of the Liquidation Value (as defined below) of
each share per annum. During the period commencing on the date of
initial issuance of the Series C Preferred Stock and continuing
through the second anniversary of the date thereof, all such
<PAGE>
dividends shall be paid by the Corporation, in lieu of cash,
through the issuance of additional shares of Series C Preferred
Stock valued at the Liquidation Value. Thereafter, all such
dividends may, at the option of the Corporation, be paid in lieu
of cash, through the issuance of additional shares of the Series
C Preferred Stock, cash legally available for payment thereof, or
any combination of Series C Preferred Stock and cash whether or
not such dividends have been declared. If dividends are paid by
the Corporation through the issuance of additional shares of
Series C Preferred Stock and such dividends would, but for the
provisions hereof, be payable with a fractional share, the
Corporation shall pay, in lieu of such fractional share, cash in
an amount equal to the value of such fractional share. Dividends
on the Series C Preferred Stock shall accrue from the date of
issuance or thereafter, from the most recent date on which
dividends were payable, and shall be payable semi-annually on
June 30 and December 31 of each year (each a "Dividend Payment
Date"), commencing on December 31, 1999; provided, however, that
if any such day is a non-business day, the Dividend Payment Date
will be the next business day. Each declared dividend shall be
payable to holders of record as they appear at the close of
business on the stock books of the Corporation on June 10 and
December 10 of each year (each of such dates a "Record Date").
Semi-annual dividend periods (each a "Dividend Period") shall
commence on and include the 1st day of July and January of each
year and shall end on and include the day next preceding the next
following Dividend Payment Date.
(b) No dividends shall be declared or paid or set
apart for payment on any Common Stock, Parity Stock or Junior
Stock during any semi-annual period unless full dividends on the
Series C Preferred Stock for all Dividend Periods ending prior to
or during such semi-annual period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment. When dividends
are not so paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series C Preferred Stock
and any other Parity Stock, dividends upon the Series C Preferred
Stock and dividends on such other Parity Stock payable during
such semi-annual period shall be declared pro rata so that the
amount of such dividends so payable per share on the Series C
Preferred Stock and such other Parity Stock shall in all cases
bear to each other the same ratio that full dividends on the
shares of Series C Preferred Stock and full dividends, if any, on
shares of such other Parity Stock, bear to each other. If full
dividends on the Series C Preferred Stock have not been declared
and paid or set apart for payment, no dividend or distribution,
other than in shares of Junior Stock, may be declared, set aside
or paid on any shares of Junior Stock. Holders of the Series C
<PAGE>
Preferred Stock shall not be entitled to any dividends, whether
payable in cash, property or stock, in excess of the dividends
provided for herein. No interest or sum of money in lieu of
interest shall be payable in respect of any declared dividend
payment or payments on the Series C Preferred Stock which may be
in arrears. As used herein, the phrase "set apart" in respect of
the payment of dividends shall require deposit of any funds in a
bank or trust company in a separate deposit account maintained
for the benefit of the holders of the Series C Preferred Stock,
or, in the case of payment of dividends through the issuance of
shares of the Corporation's Series C Preferred Stock, the deposit
of certificates representing such shares of Series C Preferred
Stock with such bank or trust company.
Section 4. Voting Rights. On all matters to come before
the shareholders of the Corporation, the holders of Series C
Preferred Stock will vote together with the holders of the Common
Stock and Series B Preferred Stock as a single class, with each
share of Series C Preferred Stock and Series B Preferred Stock
entitled to a number of votes equal to the number of shares of
Common Stock into which it is then convertible using the record
date for the taking of such vote of shareholders as the date as of
which the Conversion Price (as hereinafter defined) is calculated
except as required by law.
To the extent that under Florida law or this
Certificate of Designation the vote of the holders of shares of
Series C Preferred Stock, voting separately as a class, is
required to authorize a given action of the Corporation, the
affirmative vote or consent of the holders of at least a majority
of the outstanding shares of the Series C Preferred Stock shall
constitute the approval of such action by the class. Holders of
shares of Series C Preferred Stock shall be entitled to notice of
all shareholder meetings or written consents with respect to which
they would be entitled to vote, which notice shall be provided
pursuant to the Corporation's bylaws and applicable law.
Section 5. Conversion. Subject to and upon compliance
with this Section 5, the holders of shares of Series C Preferred
Stock shall have conversion rights as follows:
(a) Optional Conversion. Each holder of a share
of Series C Preferred Stock shall have the right, at any time or
from time to time prior to the Redemption Date (as defined
below), at the office of the Corporation or any transfer agent
for the Series C Preferred Stock, to convert such share of Series
C Preferred Stock into that number of fully paid and
nonassessable shares of Common Stock equal to $100 divided by the
Conversion Price of such share of Series C Preferred Stock as set
forth in Section 6 hereof. The number of shares of Common Stock
<PAGE>
into which the Series C Preferred Stock may be converted is
hereinafter referred to as the "Conversion Rate."
Notwithstanding the foregoing, the Corporation shall not be
obligated to accept shares of Series C Preferred Stock for
conversion if such conversion would require the Corporation to
issue a certificate or certificates evidencing less than an
aggregate of 50,000 shares of Common Stock on any Date of
Conversion (as defined below).
(b) Early Conversion Event. If, after the first
anniversary of the date of issuance of the shares of Series C
Preferred Stock, the closing bid price of the Common Stock, as
reported on Nasdaq (or the closing sale price if the Common Stock
is then traded on any principal national exchange or Nasdaq
National Market) exceeds 175% of the Conversion Price for a
period of twenty (20) consecutive trading days, including the
twenty (20) trading days prior to such first anniversary (the
"Calculation Period"), an early conversion event ("Early
Conversion Event") shall have occurred. Upon the first Early
Conversion Event, if any, in each calendar quarter, the aggregate
Liquidation Value of the outstanding shares of Series C Preferred
Stock shall automatically and without any action by the holders
of the Series C Preferred Stock or the Corporation be converted
into shares of Common Stock, on a pro rata basis, in an amount
determined in accordance with the following formula:
CPS = [(V-Y)] x 22 x CP
where CPS is the aggregate stated Liquidation Value of the
Series C Preferred Stock to be converted; V is the average daily
reported volume of trading in the Common Stock on all national
securities exchanges and/or reported through the automated
quotation system of a registered national securities association
during the Calculation Period and Y is the sum of (i) shares of
Common Stock which the Corporation then has the right to issue
upon an "Early Conversion Event" under the Corporation's
outstanding 8-1/4% Subordinated Convertible Notes due 2003 (the
"Convertible Notes"), plus (ii) shares of Common Stock subject to
then effective resale registration statements of the Corporation
other than Registration Statements on Form S-8 or S-4 and other
than registration statements with respect to Common Stock
underlying the Convertible Notes, the Series B Preferred Stock
and the Series C Preferred Stock which remain unsold at such
time; and CP is the applicable Conversion Price. For purposes of
calculating V, trading volume in excess of 100,000 shares on any
trading day shall not be included, unless such amounts do not
exceed 200% of the trailing 30-day average reported volume of
trading.
<PAGE>
Notwithstanding the foregoing, none of the
outstanding shares of Series C Preferred Stock shall be
converted as a result of an Early Conversion Event pursuant to
this Section 5 unless the resale of the shares of Common Stock
issuable upon such conversion is subject to an effective
Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), or an exemption from registration
under the Securities Act is then available. Accrued dividends on
the shares of Series C Preferred Stock converted upon the
occurrence of an Early Conversion Event shall be paid on the next
Dividend Payment Date in accordance with Section 3 hereof.
(c) Mechanics of Conversion. Before a holder
shall be entitled to receive shares of Common Stock upon
conversion of shares of Series C Preferred Stock, the holder of
shares of Series C Preferred Stock shall (i) fax or otherwise
deliver a copy of the fully executed notice of conversion in the
form attached hereto as Exhibit A ("Notice of Conversion") to the
Corporation at its principal office and to the office of its
designated transfer agent that such holder elects to convert the
same, which notice shall specify the number of shares of Series C
Preferred Stock to be converted and shall contain the Conversion
Price (together with a copy of the first page of each certificate
to be converted) prior to 5:00 p.m., Eastern Standard time (the
"Conversion Notice Deadline") on the date of conversion specified
on the Notice of Conversion and (ii) surrender the original
certificate or certificates for the shares of Series C Preferred
Stock to be converted, duly endorsed, and deliver the original
Notice of Conversion by either overnight courier or two-day
courier, to the principal office of the Corporation or to the
office of its designated transfer agent; provided, however, that
the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such
conversion unless the certificates evidencing such shares of
Series C Preferred Stock are delivered to the Corporation or its
transfer agent as provided above. Upon the conversion of shares
of Series C Preferred Stock in connection with an Early
Conversion Event, the Corporation shall send to the holders of
shares of Series C Preferred Stock a Notice of Early Conversion
(in the form attached hereto as Exhibit B) stating the aggregate
Liquidation Value of shares of Series C Preferred Stock to be
converted and the number of shares of Common Stock into which
such Liquidation Value shall be converted.
Upon receipt by the Corporation of evidence of the
loss, theft, destruction or mutilation of any certificate
representing shares of Series C Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Corporation, and upon surrender
<PAGE>
and cancellation of any certificate representing shares of Series
C Preferred Stock, if mutilated, the Corporation shall execute
and deliver a new certificate of like tenor and date. No
fractional shares of Common Stock shall be issued upon conversion
of the Series C Preferred Stock. In lieu of any fractional share
to which the holder of shares of Series C Preferred Stock would
otherwise be entitled, the Corporation shall pay cash to such
holder in an amount equal to such fraction multiplied by the
Conversion Price then in effect. In the case of a dispute as to
the calculation of the Conversion Price, the Corporation's
calculation shall be deemed conclusive absent manifest error.
The Corporation shall use all reasonable efforts
to issue and deliver within seven (7) business days after
delivery to the Corporation of the certificates representing the
shares of Series C Preferred Stock to be converted, or after such
agreement and indemnification, to such holder of shares of Series
C Preferred Stock at the address of the holder on the books of
the Corporation, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as
aforesaid. The date on which conversion occurs (the "Date of
Conversion") shall be deemed to be the date set forth in such
Notice of Conversion, provided (i) that the advance copy of the
Notice of Conversion is delivered to and received by the
Corporation before 5:00 p.m., Eastern time, on the Date of
Conversion, and (ii) that the original stock certificates
representing the shares of Series C Preferred Stock to be
converted are received by the Corporation or the transfer agent
within two (2) business days thereafter. In the case of an Early
Conversion Event, the last date of the Calculation Period shall
be deemed to be the Date of Conversion. The person or persons
entitled to receive the shares of Series C Preferred Stock
issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on
the Date of Conversion. In the case of an optional conversion,
if the original certificates representing the shares of Series C
Preferred Stock to be converted are not received by the
Corporation or the transfer agent within two (2) business days
after the Date of Conversion or if the facsimile of the Notice of
Conversion is not received by the Corporation or its transfer
agent prior to the Conversion Notice Deadline, the Notice of
Conversion, at the Corporation's option, may be declared null and
void.
Following any conversion of shares of Series C
Preferred Stock, such shares of Series C Preferred Stock shall no
longer be outstanding and all rights of a holder with respect to
the shares surrendered for conversion shall immediately terminate
except for the right to receive Common Stock. All shares of
<PAGE>
Series C Preferred Stock subject to an Early Conversion Event
shall be deemed to be cancelled upon such holder's receipt of
shares of Common Stock in connection with any such conversion.
(d) Reservation of Shares. The Corporation shall
at all times reserve and keep available out of its authorized but
unissued shares of Common Stock such number of shares of Common
Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of Series C Preferred
Stock; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of Series C Preferred
Stock, the Corporation will take such corporate action as may be
necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purpose.
Section 6. Conversion Price. The "Conversion Price" per
share of the Series C Preferred Stock shall be $11.50, subject to
adjustment as set forth below, with all such adjustments, if any,
being cumulative from the date of initial issuance of shares of
Series C Preferred Stock such that all outstanding shares of
Series C Preferred Stock have the same Conversion Price
regardless of their date of issuance.
6.1 Adjustment of the Number of Shares of Common Stock
and the Conversion Price. The number of shares of Common Stock
issuable upon conversion and the Conversion Price shall be
subject to adjustment as follows:
(a) In case the Corporation shall at any time
after the date of the initial issuance of Series C Preferred
Stock and prior to the conversion of all outstanding shares
thereof (A) pay a dividend or make a distribution on its Common
Stock in shares of its capital stock (whether in shares of Common
Stock, of capital stock of any other class or Options to purchase
or acquire capital stock, Convertible Securities convertible or
exchangeable for capital stock, or Options with respect to such
Convertible Securities), (B) subdivide its outstanding shares of
Common Stock into a greater number of shares, (C) combine its
outstanding shares of Common Stock into a smaller number of
shares, or (D) reclassify, reorganize or effect any similar
transaction with respect to any of its shares of Common Stock, or
in substitution or exchange therefor (other than a change in par
value, or from par value to no par value, or from no par value to
par value), then the number and, if applicable, kind of shares of
Common Stock to be received by any holder of shares of Series C
Preferred Stock (a "Holder") shall be adjusted so that the Holder
will be entitled to receive on conversion the number and kind of
shares of capital stock or other securities which it would have
<PAGE>
owned immediately following such action had its Series C
Preferred Stock been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become
effective immediately after the payment date in the case of a
dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision,
combination, reclassification, reorganization or similar
transaction. If, as a result of an adjustment made pursuant to
this subsection (a), a Holder shall become entitled to receive
shares of two or more classes of capital stock of the Corporation
or other securities, the Board of Directors or a duly authorized
committee thereof shall in good faith determine (which
determination shall be conclusive and binding) the allocation of
the Conversion Price between or among shares of such classes of
capital stock or other securities. After such allocation, the
Conversion Price and number of shares of each class of capital
stock that is issuable upon conversion shall thereafter be
subject to adjustment in a manner and on terms determined by the
Board of Directors (which determination shall be conclusive and
binding) to be as nearly equivalent as practicable to those
applicable to Common Stock under this Section 6.
(b) (i) From the date of the initial issuance of
the shares of Series C Preferred Stock to and including the first
anniversary of the date thereof, if the Corporation shall issue
or enter into any agreement to issue any shares of Common Stock
other than Excluded Shares (as hereinafter defined) for
consideration per share (the "Issuance Price") less than the
Conversion Price (as herein defined) per share in effect
immediately prior to such issuance, the Conversion Price in
effect immediately prior to such issuance shall be reduced (but
shall not be increased) to the Issuance Price.
(ii) After the first anniversary and prior to
the second anniversary of the initial issuance of the shares of
Series C Preferred Stock, if the Corporation shall issue or enter
into any agreement to issue any shares of Common Stock other than
Excluded Shares for consideration per share less than the
Conversion Price per share in effect immediately prior to such
issuance, the Conversion Price in effect immediately prior to
such issuance shall be reduced (but shall not be increased) to
the price (calculated to the nearest cent) determined: by
dividing (A) an amount equal to the sum of (1) the number of
shares of Common Stock outstanding on a fully diluted basis
immediately prior to such issuance multiplied by the Conversion
Price per share in effect immediately prior to such issuance and
(2) the consideration, if any, received by the Corporation upon
such issuance by (B) the number of shares of Common Stock
outstanding on a fully diluted basis immediately after such
issuance.
<PAGE>
(iii) If at any time prior to the second
anniversary of the initial issuance of the shares of Series C
Preferred Stock, the Corporation shall issue or enter into any
agreement to issue any shares of Common Stock other than Excluded
Shares for consideration per share greater than the Conversion
Price but lower than the market price per share in effect
immediately prior to such issuance, the Conversion Price in
effect immediately prior to such issuance shall be reduced (but
shall not be increased) to the price (calculated to the nearest
cent) determined by multiplying the Conversion Price in effect
immediately prior to such issuance by the factor determined by
dividing (A) an amount equal to the sum of (1) the number of
shares of Common Stock outstanding on a fully diluted basis
immediately prior to such issuance multiplied by the market price
per share in effect immediately prior to such issuance and (2)
the consideration, if any, received by the Corporation upon such
issuance by (B) the number of shares of Common Stock outstanding
on a fully diluted basis immediately after such issuance
multiplied by the market price per share in effect immediately
prior to such issuance; provided, however, no adjustment shall be
made to the Conversion Price if (i) such issuance is in
connection with a firm commitment underwritten public offering or
(ii) the consideration per share is equal to or greater than 85%
of the market price per share in effect immediately prior to such
issuance. For purposes hereof, the "market price" as of any
measurement date shall be the average of the closing prices of
the Common Stock for each of the 10 consecutive trading days
immediately preceding such measurement date.
(c) Certain Adjustment Factors. For the purposes
of any adjustment of the Conversion Price pursuant to paragraph
(b) above, the following provisions shall be applicable:
(x) Cash. In the case of the issuance of
shares of Common Stock for cash, the amount of the
consideration received by the Corporation shall be
deemed to be the amount of the cash proceeds received
by the Corporation for such shares of Common Stock
before deducting therefrom any discounts, commissions,
taxes or other expenses allowed, paid or incurred by
the Corporation for any underwriting or otherwise in
connection with the issuance and sale thereof; and
(y) Consideration Other Than Cash. In the
case of the issuance of shares of Common Stock (other
than upon the conversion of shares of capital stock or
other securities of the Corporation) for consideration
in whole or in part other than cash, including
securities acquired in exchange therefor (other than
<PAGE>
securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the
fair value thereof (as determined by the Board of
Directors of the Corporation based on an opinion of an
outside financial advisor of recognized regional or
national standing, which may, but need not, be the
independent public accountants who serve as the regular
auditors of the Corporation (the "Financial Advisor"),
whose determination shall be conclusive and binding),
irrespective of any accounting treatment; and
(z) Options and Convertible Securities. In
the case of the issuance of (i) Options to purchase or
acquire shares of Common Stock (whether or not
exercisable immediately following such issuance), (ii)
Convertible Securities by their terms convertible into
or exchangeable for shares of Common Stock (whether or
not so convertible or exchangeable immediately
following such issuance), or (iii) Options to purchase
such Convertible Securities (whether or not exercisable
immediately following such issuance):
(1) the aggregate maximum number of
shares of Common Stock deliverable upon exercise
of such Options to purchase or acquire shares of
Common Stock shall be deemed to have been issued
at the time such Options are first issued and for
a consideration equal to the consideration
(determined in the manner provided in clauses (x)
and (y) above), if any, received by the
Corporation upon the issuance of such Options plus
the purchase price provided in such Options for
the shares of Common Stock covered thereby (if the
purchase price per share of Common Stock is
expressed as a range, the purchase price per share
for purposes of this subparagraph (z)(1) shall be
the average of such range of prices);
(2) the aggregate maximum number of
shares of Common Stock deliverable upon conversion
of or in exchange for any such Convertible
Securities, or upon the exercise of Options to
purchase or acquire such Convertible Securities
and the subsequent conversion or exchange thereto
shall be deemed to have been issued at the time
such convertible or exchangeable securities or
such options, warrants or other rights are first
issued and for a consideration equal to the
consideration, if any, received by the Corporation
<PAGE>
for any such Convertible Securities or Options
(excluding any cash received on account of accrued
interest or accumulated dividends), plus the
additional consideration, if any, to be received
by the Corporation upon the conversion or exchange
of such Convertible Securities and the exercise of
any Options (the consideration in each case to be
determined in the manner provided in clauses (x)
and (y) above);
(3) on any change in the number of
shares of Common Stock deliverable upon exercise
of any such Options which have become exercisable
or conversion of or exchange of such Convertible
Securities which have become convertible or
exchangeable, or any change in the consideration
to be received by the Corporation upon such
exercise, conversion or exchange, the Conversion
Price as then in effect shall forthwith be
readjusted to such Conversion Price as would have
been obtained had such adjustment been made upon
the original issuance of such Options; provided,
however, no adjustment shall be made with respect
to such Options exercised prior to such change, or
Convertible Securities converted or exchanged
prior to such change;
(4) on the expiration or cancellation
of any such Options or the termination of the
right to convert or exchange such Convertible
Securities, if the Conversion Price shall have
been adjusted upon such securities being issued or
becoming exercisable, convertible or exchangeable,
such Conversion Price shall forthwith be
readjusted to such Conversion Price as would have
been obtained had an adjustment been made on the
basis of the issuance of only the number of shares
of Common Stock actually issued upon the exercise
of such options, warrants or other rights, or upon
the conversion or exchange of such securities; and
(5) if the Conversion Price shall have
been adjusted when such Options were first issued
or such Convertible Securities were first issued,
no further adjustment of the Conversion Price
shall be made for the actual issuance of shares of
Common Stock upon the exercise, conversion or
exchange thereof.
<PAGE>
(d) Excluded Shares. "Excluded Shares" shall
mean (i) any shares of Common Stock issued in a transaction
described in Section 6.1(a) of this Agreement; and (ii) issuances
of shares of Common Stock from time to time pursuant to
employment agreements, stock option or bonus plans authorized by
the Board of Directors of the Corporation as of the date hereof,
(iii) issuances of Common Stock, or Options to acquire shares of
Common Stock, or Convertible Securities convertible into or
exchangeable for Common Stock pursuant to the terms of any
acquisition by the Corporation of all or substantially all of the
operating assets, or more than fifty percent (50%) of the voting
capital stock or other controlling interest of any business
entity in a transaction negotiated on an arms-length basis and
expressly approved in advance by the Board of Directors of the
Corporation; (iv) issuances of shares of Common Stock from time
to time upon the exercise, exchange or conversion of warrants,
options, convertible securities, the Convertible Notes or other
securities outstanding as of the date hereof, and (v) issuances
of shares of Common Stock from time to time pursuant to the anti-
dilution provisions of other securities. For purposes hereof,
"voting capital stock" shall be deemed to be capital stock of any
class or classes, however designated having ordinary voting power
for the election of members of the board of directors or other
governing body and "controlling" shall mean the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a party, whether
through the ownership of voting capital stock, by contract or
otherwise.
(e) No adjustment in the Conversion Price shall
be required unless such adjustment would require an increase or
decrease of at least 1.2% in such price; provided, however, that
any adjustments which by reason of this subsection (e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 6 shall be made to the nearest tenth of a cent or to
the nearest one-hundredth of a share, as the case may be.
(f) The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the
disposition of any such shares shall be considered an issuance of
Common Stock for the purposes of this Section 6.
6.2 Rights to Purchase Other Securities. If any of
the following shall occur:
Without limiting any provisions of Section 9:
<PAGE>
(a) any Corporate Change (as hereinafter defined)
to which the Corporation is a party, other than a Corporate
Change in which the Corporation is the continuing or surviving
Corporation and which does not result in any reclassification of,
or change (other than as a result of a subdivision or
combination) in, outstanding shares of the Common Stock, or
(b) any sale or transfer to another corporation
or entity of all or substantially all of the assets of the
Corporation;
then, and in either such case, the Holder of each share of Series
C Preferred Stock then outstanding shall have the right to
purchase the kind and amount of shares of stock and/or other
securities and property receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of
Common Stock issuable upon conversion of such stock immediately
prior to such consolidation, merger, sale, or transfer. The
provisions of this Section 6.2 shall similarly apply to
successive consolidations, mergers, sales or transfers.
6.3 Notice of Adjustment. Whenever the number of
shares of Common Stock issuable upon the conversion of each share
of Series C Preferred Stock or the Conversion Price of such
shares of Series C Preferred Stock is adjusted or reduced, as
herein provided, the Corporation shall mail by first class,
postage prepaid, to each Holder (a) notice of any reduction on or
before the day the reduction takes effect, which shall state the
reduced Conversion Price and the period during which it will be
in effect and/or (b) a certificate setting forth the number of
shares of Common Stock issuable upon the conversion of each share
of Series C Preferred Stock and the Conversion Price on such
shares of Series C Preferred Stock after adjustment setting forth
a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made.
6.4 No Adjustment for Dividend. No adjustment in
respect of any cash dividends shall be made while the Series C
Preferred Stock is outstanding or upon the conversion of the
Series C Preferred Stock.
6.5 Certain Events. If any event occurs as to which
in the reasonable judgment of the Board of Directors of the
Corporation, in good faith, the other provisions of this Section
6 are not strictly applicable but the lack of any adjustment
would not in the opinion of the Board of Directors of the
Corporation fairly reflect the purchase rights of the Holders of
the Series C Preferred Stock in accordance with the basic intent
and principles of the provisions of this Agreement then the Board
of Directors of the Corporation shall appoint a Financial Advisor
<PAGE>
which shall give its opinion upon the adjustment, if any, on a
basis consistent with the basic intent and principles established
and the other provisions of this Section 6, necessary to
preserve, without dilution, the exercise rights of the Holders.
Upon receipt of such opinion, the Corporation shall forthwith
make the adjustments described therein which adjustments shall be
conclusive and binding.
Section 7. Status of Converted or Reacquired Shares.
Any shares of Series C Preferred Stock converted into shares of
Common Stock pursuant to Section 5 hereof or purchased or
otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the conversion or
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Series C
Preferred Stock and may be reissued as part of a new series of
preferred stock subject to the conditions and restrictions on
issuance set forth herein, in the Articles of Incorporation, or
in any other Certificate of Designation creating a series of
preferred stock or any similar stock or as otherwise required by
law.
Section 8. Liquidation, Dissolution or Change of Control.
(a) In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or
involuntary, the holders of shares of Series C Preferred Stock
shall be entitled to receive out of the assets of the Corporation
available for distribution to shareholders under applicable law,
prior and in preference to any distribution to holders of the
Common Stock or any Junior Securities but in parity with any
distribution to holders of Parity Securities, an amount of $100
per share (the "Liquidation Value"), plus a sum equal to all
dividends accrued on such shares (whether or not declared) and
unpaid through and including the then current Dividend Period.
If upon the occurrence of such event, the assets and funds to be
distributed among the holders of shares of Series B Preferred
Stock, Series C Preferred Stock and Parity Securities shall be
insufficient to permit the payment to such holders of the full
preferential amounts due to the holders of shares of Series B
Preferred Stock, Series C Preferred Stock and Parity Securities,
respectively, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed among the
holders of shares of Series B Preferred Stock, Series C Preferred
Stock and Parity Securities, pro rata, based on the respective
liquidation amounts to which each such series of stock is
entitled by the Corporation's Articles of Incorporation and any
certificate of designation of preferences.
<PAGE>
(b) Upon the completion of the distribution
required by subsection 8(a) above, if assets remain in the
Corporation, they shall be distributed to holders of Parity
Securities (unless holders of Parity Securities have received
distributions pursuant to subsection 8(a)) and Junior Securities
in accordance with the Corporation's Articles of Incorporation,
including any duly adopted certificate(s) of designation of
preferences.
(c) (i) Upon a Change of Control (as defined
below) of the Corporation, each holder of the Series C Preferred
Stock will have the option to require the Corporation to
repurchase such holder's shares of Series C Preferred Stock at a
price per share equal to the Liquidation Value plus any accrued
and unpaid dividends. A "Change of Control" shall have occurred:
(A) when any person or group is or becomes the beneficial owner
of 50% or more of the then outstanding voting capital stock of
the Corporation, (B) when, during any period of two consecutive
years after the closing of the sale of the Series C Preferred
Stock, individuals who at the beginning of such period
constituted the Corporation's Board of Directors, or whose
nomination for election by the Corporation's shareholders was
approved by a vote of a majority of the directors of the
Corporation then still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority of the directors then in office or (C) upon
any sale, transfer or other conveyance of all or substantially
all of the assets of the Corporation.
(ii) Upon the occurrence of a Change of
Control, the Corporation will offer to repurchase (the "Change of
Control Purchase Offer") all outstanding shares of Series C
Preferred Stock, and each holder of outstanding shares of Series
C Preferred Stock will have the right to require that the
Corporation repurchase such holder's shares of Series C Preferred
Stock, at the price set forth in clause (i) of this subsection
8(c). Within 30 days following any Change of Control, the
Corporation shall mail a notice, by first class mail, to each
holder of record of Series C Preferred Stock (a "Change of
Control Notice"), at his address of record, stating:
(A) that a Change of Control has
occurred and that such holder has the right to
require the Corporation to purchase such holder's
shares of Series C Preferred Stock at the price
set forth above;
(B) the circumstances and relevant
facts regarding such Change of Control;
<PAGE>
(C) the date on which the Corporation
will repurchase any shares of Series C Preferred
Stock which the holders require the Corporation to
repurchase in accordance with this subsection
8(c), which date shall be no earlier than 30 days
nor later than 60 days from the date such Change
of Control Notice is mailed (the "Change of
Control Purchase Date");
(D) that, unless the Corporation
defaults in making such payment, any shares of
Series C Preferred Stock accepted for payment
pursuant to the Change of Control Purchase Offer
shall cease to accrue dividends after the Change
of Control Purchase Date;
(E) that holders of Series C Preferred
Stock electing to have their shares repurchased
pursuant to any Change of Control Purchase Offer
shall be required to surrender the original
certificates for the shares of Series C Preferred
Stock at the address specified in the notice, at
least three business days before the Change of
Control Purchase Date; and
(F) that the holders of Series C
Preferred Stock shall be entitled to withdraw
their election if the Corporation receives, not
later than the last business day prior to the
Change of Control Purchase Date, a telegram,
telex, facsimile transmission or letter setting
forth the name of the holder, the number of shares
of Series C Preferred Stock the holder delivered
for repurchase and a statement that such holder is
withdrawing his election to have such shares
repurchased.
(iii) Each holder of shares of Series C
Preferred Stock electing to have such shares purchased by the
Corporation pursuant to this subsection 8(c) shall deliver to the
Corporation at its principal office, at least three business days
prior to the Change of Control Purchase Date, the original
certificate or certificate(s) for the shares to be purchased duly
endorsed, together with written notice to the Corporation
specifying the number of shares of Series C Preferred Stock to be
purchased. Holders of Series C Preferred Stock will be entitled
to withdraw their election if the Corporation receives, not later
than one business day prior to the Change of Control Purchase
Date, a telegram, facsimile transmission or letter, at its
principal office, setting forth the name of the holder, the
<PAGE>
number of shares of Series C Preferred Stock which were delivered
by the holder for purchase by the Corporation and a statement
that such holder is withdrawing his election to have such shares
purchased.
(iv) Promptly following the Change of Control
Purchase Date, the Corporation will mail or deliver to each
holder of shares of Series C Preferred Stock who properly
tendered such shares to the Corporation for purchase pursuant to
this subsection 8(c) and did not withdraw such election, at his,
her or its address of record, an amount equal to the purchase
price for the shares of Series C Preferred Stock so delivered for
purchase as set forth in this subsection 8(c). Unless the
Corporation shall have defaulted in the payment of the purchase
price for shares of Series C Preferred Stock tendered for
purchase by the Corporation, all rights of the holders of such
shares (except the right to receive the purchase price therefor)
shall cease with respect to such shares on the Change of Control
Purchase Date and such shares shall not, after the Change of
Control Purchase Date, be deemed to be outstanding and shall not
have the status of Series C Preferred Stock.
(v) The Corporation will comply, to the
extent applicable, with the requirements of Section 14(e) of the
Securities Exchange Act of 1934, as amended, and any other
applicable securities laws or regulations in connection with the
repurchase of Series C Preferred Stock pursuant to this
subsection 8(c). To the extent that the provisions of any
securities laws or regulations conflict with the provisions of
this subsection 8(c), the Corporation will comply with the
applicable securities laws and regulations and will not be deemed
to have breached its obligations under this Section by virtue
thereof.
Section 9. Consolidation, Merger, etc. Except as set
forth in Section 8(c) hereof, and without limiting any provision
of Section 6.2 hereof, in the event of a merger, reorganization,
recapitalization or similar event of or with respect to the
Corporation (a "Corporate Change") (other than a Corporate Change
in which all or substantially all of the consideration received
by the holders of the Corporation's equity securities upon such
Corporate Change consists of cash or assets other than securities
issued by the acquiring entity or any Affiliate thereof), the
Series C Preferred Stock shall be assumed by the acquiring entity
and thereafter the Series C Preferred Stock shall be convertible
into such class and type of securities as the holder of shares of
Series C Preferred Stock would have received had such holder
converted the Series C Preferred Stock immediately prior to such
Corporate Change.
<PAGE>
Section 10. Redemption.
(a) Optional Redemption. Subject to earlier
conversion, commencing on May 17, 2002 and continuing through the
Mandatory Redemption Date (as defined below), the Corporation
shall have the right, exercisable at any time and from time to
time, to redeem shares of Series C Preferred Stock at the
following prices plus the payment of all accrued and unpaid
dividends:
Year Redeemed
Price
2002
104% of Liquidation
Value
2003
102% of Liquidation
Value
If less than all of the outstanding shares of
Series C Preferred Stock are called for redemption pursuant to
this Section 10(a), shares of Series C Preferred Stock shall be
redeemed on a pro rata basis among the holders thereof. Each
holder of Series C Preferred Stock will be given notice of such
redemption pursuant to Section 10(c) and will have the right to
convert the Series C Preferred Stock into shares of Common Stock
prior to the redemption date specified in such notice.
(b) Mandatory Redemption.
(i) The Corporation will be required to
redeem the outstanding shares of Series C Preferred Stock on May
17, 2004 (the "Mandatory Redemption Date"), at a redemption price
per share equal to the Liquidation Value plus accrued and unpaid
dividends.
(ii) If at any time, (A) the Corporation
shall breach the terms and conditions contained in this
certificate of designation, (B) the Corporation shall breach any
representation, warranty, or covenant contained in that certain
Series C Convertible Stock Purchase Agreement, dated August __,
1999, between the Corporation and the initial Holders or any
subsequent Series C Stock Purchase Agreement with like terms, or
(C) the Corporation shall fail to make a dividend payment on a
Dividend Payment Date (each a "Breach"), prompt notice of such
Breach shall be given to each Holder by the Corporation at such
time as the Corporation becomes aware of such Breach and (without
limiting any rights of Holder) prompt notice of such Breach shall
be given to the Corporation by each Holder at such time such
Holder becomes aware of such Breach, and any Holder shall give
written notice to the Corporation of its desire to have the
<PAGE>
Corporation redeem its shares of Series C Preferred Stock, such
shares shall be redeemed by the Corporation at a redemption price
per share equal to the greater of the amounts that would at that
time be payable under Section 10(a) hereof had the Corporation
exercised its right to redeem the shares of Series B Preferred
Stock thereunder or the Liquidation Value plus accrued and unpaid
dividends; provided, however, no Holder shall have the right to
request a redemption of its shares of Series C Preferred Stock
pursuant to this Section 10(b)(ii) unless and until the
Corporation shall have failed to cure any such Breach within a
period of ten (10) days after having received written notice
thereof from the Holder.
(c) Mechanics of Redemption. Notice of
redemption of the Series C Preferred Stock, specifying the
redemption date and place of redemption, shall be given by first
class mail to each holder of record of the shares to be redeemed,
at his address of record, not less than 30 nor more than 60
calendar days prior to the date upon which the Corporation shall
redeem the Series C Preferred Stock (the "Redemption Date").
Each such notice shall also specify the redemption price
applicable to the shares to be redeemed. If less than all the
shares owned by such holder are then to be redeemed, the notice
shall also specify the number of shares thereof which are to be
redeemed and the fact that a new certificate or certificates
representing any unredeemed shares shall be issued without cost
to such holder.
(i) Notice of redemption of shares of the
Series C Preferred Stock having been given as provided in
Section 10(c), then unless the Corporation shall have defaulted
in the payment of the redemption price and all accrued and unpaid
dividends (whether or not declared), all rights of the holders
thereof (except the right to receive the redemption price and all
accrued and unpaid dividends, whether or not declared) shall
cease with respect to such shares on the Redemption Date and such
shares shall not, after the Redemption Date, be deemed to be
outstanding and shall not have the status of Series C Preferred
Stock. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder
thereof.
(ii) Shares of the Series C Preferred Stock
are not subject or entitled to the benefit of a sinking fund.
(iii) Notwithstanding the foregoing, if
notice of redemption shall have been given pursuant to this
Section 10 and any holder of the Series C Preferred Stock shall,
prior to the close of business on the date three business days
<PAGE>
next preceding the Redemption Date, give written notice to the
Corporation pursuant to Section 5 hereof of the conversion of any
or all of the shares held by the holder (accompanied by a
certificate or certificates for such shares, duly endorsed or
assigned to the Corporation), then the redemption shall not
become effective as to such shares and the conversion shall
become effective as provided in Section 5.
(iv) If on the Mandatory Redemption Date
funds legally available to the Corporation for redemption of all
outstanding shares of Series B Preferred Stock and Series C
Preferred Stock are insufficient to redeem all such shares of
Series B Preferred Stock and Series C Preferred Stock, such
available funds shall be used by the Corporation to redeem
shares of Series B Preferred Stock and Series C Preferred Stock
from all holders ratably in proportion to the full number of
shares they would otherwise be entitled to have redeemed. In the
event that less than all outstanding shares of Series B Preferred
Stock and Series C Preferred Stock are redeemed on the Mandatory
Redemption Date, the Corporation will continue to redeem shares
of Series B Preferred Stock and Series C Preferred Stock from
time to time as soon as practicable after funds become legally
available therefor (ratably if the funds legally available remain
insufficient to redeem all shares required to be redeemed) until
all shares of Series B Preferred Stock and Series C Preferred
Stock required to be redeemed shall have been redeemed. Until
actually redeemed, each share of Series C Preferred Stock will
continue to enjoy all rights and benefits hereof, including the
right to convert into shares of Common Stock.
(d) Conversion Price Adjustment for Failure to
Redeem. If the Corporation fails to redeem all outstanding
shares of Series C Preferred Stock on the Mandatory Redemption
Date, then, without any action by the holders of shares of Series
C Preferred Stock, the then current Conversion Price respecting
any shares of Series C Preferred Stock not redeemed by the
Corporation shall be reduced (but shall not be increased) to the
greater of: (i) fifty percent (50%) of the then current
Conversion Price, and (ii) the closing price of the Common Stock
as reported by Nasdaq (or such principal national exchange on
which the Common Stock is then listed) on the Mandatory
Redemption Date.
Section 11. Amendment. The Articles of Incorporation of
the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series C Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least
a majority of the outstanding shares of Series C Preferred Stock,
voting together as a single class.
<PAGE>
Section 12. Notices. Written notice of each meeting of
the shareholders of the Corporation shall be given by first-class
mail not less than ten (10) days prior to such meeting to each
holder of record of the Series C Preferred Stock to the address
of such record holder shown on the Corporation's records.
IN WITNESS WHEREOF, this Certificate of Designation has been
executed on behalf of the Corporation by its Chief Executive
Officer this 23rd day of August, 1999.
MANSUR INDUSTRIES INC.
By: s/Paul I. Mansur
----------------------------
Paul I. Mansur
Chief Executive Officer
<PAGE>
NOTICE OF CONVERSION
(To be executed by the Registered Holder
in order to Convert the Series C Preferred Stock)
The undersigned hereby irrevocably elects to convert ______
shares of Series C Preferred Stock, represented by stock
certificate No(s). ________________ (the "Series C Preferred
Stock Certificates") into shares of common stock, par value $.001
per share ("Common Stock"), of Mansur Industries Inc., (the
"Corporation") according to the conditions of the Certificate of
Designation of Series C Preferred Stock, as of the date written
below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. No fee will be charged to the
holder for any conversion, except for transfer taxes, if any.
The undersigned represents and warrants that all offers and
sales by the undersigned of the shares of Common Stock issuable
to the undersigned upon conversion of the Series C Preferred
Stock shall be made pursuant to registration of such shares of
Common Stock under the Securities Act of 1933, as amended, or
pursuant to an exemption from registration under such Act.
Conversion Calculations:
Date of Conversion
Applicable Conversion Price
Signature
Name
Address:
*No shares of Common Stock will be issued until the original
Series C Preferred Stock Certificate(s) to be converted and the
Notice of Conversion are received by the Corporation or its
designated Transfer Agent. The original Stock Certificate(s)
representing the Series C Preferred Stock to be converted and the
<PAGE>
Notice of Conversion must be received by the Corporation or its
designated Transfer Agent by the second business day following
the Date of Conversion, or the Notice of Conversion, at the
Corporation's option, may be declared null and void.
<PAGE>
EXHIBIT B
NOTICE OF EARLY CONVERSION EVENT
Mansur Industries Inc. (the "Corporation ") hereby notifies
____________________, the holder of ___________ shares (the
"Shares") of the Corporation 's Series C Preferred Stock (the
"Series C Preferred Stock"), that an Early Conversion Event
occurred on __________, and as such, you are hereby directed to
surrender the Shares as $______ of the aggregate Liquidation
Value of such Shares has been automatically converted into shares
of the Corporation 's common stock, par value $.001 per share
(the "Conversion Shares"), in accordance with the terms of the
Certificate of Designation respecting the Series C Preferred
Stock.
Unless otherwise instructed, the Corporation shall issue
the Conversion Shares and a new certificate representing the
Shares not converted in the name of the holder of the Shares and
deliver same as soon as practicable and in accordance with the
provisions of the Certificate of Designation to the address set
forth in the Corporation's register respecting the Series C
Preferred Stock.
Date: ________________________
MANSUR INDUSTRIES INC.
By: ________________________
Name:
Title:
21
35
EXHIBIT A
