-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AbTM360ppVFuY9QtfDvwe4bQIl1twHlQtlFT/C5Z6Ze5Rg8ZAtjYQCF8QoQNL1oY O1koAU3BWPAe3gCfVcjN5Q== 0000922435-00-000017.txt : 20000515 0000922435-00-000017.hdr.sgml : 20000515 ACCESSION NUMBER: 0000922435-00-000017 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20000512 GROUP MEMBERS: HANSABEL PARTNERS LLC GROUP MEMBERS: HANSEATIC AMERICAS LDC GROUP MEMBERS: HANSEATIC CORP GROUP MEMBERS: WOLFGANG TRABER SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MANSUR INDUSTRIES INC CENTRAL INDEX KEY: 0000934851 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 650226813 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-49763 FILM NUMBER: 627876 BUSINESS ADDRESS: STREET 1: 8305 NW 27TH STREET STREET 2: SUITE 107 CITY: MIAMI STATE: FL ZIP: 33122 BUSINESS PHONE: 3055938015 MAIL ADDRESS: STREET 1: 8305 NW 27TH STREET STREET 2: SUITE 107 CITY: MIAMI STATE: FL ZIP: 33122 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HANSEATIC CORP CENTRAL INDEX KEY: 0000944801 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133273221 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 450 PARK AVENUE STREET 2: SUITE 2302 CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128323038 MAIL ADDRESS: STREET 1: 450 PARK AVENUE STREET 2: SUITE 2302 CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 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). - ----------------------------- (1) Constitutes Amendment No. 1 to the Schedule 13G filed jointly by Hanseatic Americas LDC, Hansabel Partners LLC, Hanseatic Corporation and Wolfgang Traber. 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) 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. 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) 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. 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) 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. 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) 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. 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, 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 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). 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. 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. 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. 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 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 Annex 1
Principal Name and Occupation, Business or Relationship Employer and Residence to Hanseatic Address of Address Citizenship Corporation Employer 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 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
EX-99 2 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 EX-99 3 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 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). "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). 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: (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 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 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 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 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. (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. (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 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 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. (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. 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 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 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, 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 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. 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 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 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 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. 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 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. (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. 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 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. 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. 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 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 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) EX-99 4 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. 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, 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 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 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 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 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 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 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 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. (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 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 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. (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. (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. 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 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 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; (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 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: 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 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. (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. 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 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 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. 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 EX-99 5 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; 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. "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 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 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 (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 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"). (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. 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. 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 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 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 EX-99 6 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. 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. 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, 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. 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. 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. (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. (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 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. 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 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 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 - EX-99 7 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. "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." "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 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 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 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 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 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. (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 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. (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 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. 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 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 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 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 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 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. 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 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 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 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 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 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. (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. 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. (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. 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. 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) EX-99 8 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 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 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 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 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. 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 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 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 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. (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 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 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. (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: (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 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. (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; (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 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. 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 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 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. 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 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 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. 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 -----END PRIVACY-ENHANCED MESSAGE-----