-----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, FMrG1U8/Xh2Raia7mBqrp/DN8sKAi480A7lWwgqpVf5V7yz7UuiQNhbnjV1BmjP7 i8GehjIneT9HXawB6mutIQ== 0000950144-00-006591.txt : 20000516 0000950144-00-006591.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950144-00-006591 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000502 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000515 FILER: 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: 8-K SEC ACT: SEC FILE NUMBER: 000-21325 FILM NUMBER: 630808 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 8-K 1 MANSUR INDUSTRIES 5/2/00 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 2, 1999 MANSUR INDUSTRIES INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) FLORIDA - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 000-21325 65-0226813 - ------------------------ ------------------------------------ (Commission File Number) (I.R.S. Employer Identification No.) 8305 N.W. 27TH STREET, SUITE 107 MIAMI, FLORIDA 33122 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (305) 593-8015 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) (NOT APPLICABLE) - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Page 1 of 2 Pages Exhibit Index at Page 2 2 ITEM 5. OTHER EVENTS. On May 2, 2000, Mansur Industries Inc. (the "Registrant") consummated the sale of an aggregate of 20,000 shares of newly created Series D Convertible Preferred Stock. A copy of the press release issued by the Registrant on May 11, 2000 announcing the transaction is attached hereto as Exhibit 99.1 and incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits The following Exhibits are provided in accordance with the provisions of Item 601 of Regulation S-B and are filed herewith unless otherwise noted. EXHIBIT INDEX 4.1 Certificate of Designation of Series C Convertible Preferred Stock dated as of May 2, 2000. 4.2 Form of Series D Convertible Preferred Stock certificate. 4.3 Form of Warrant. 10.1 Shareholders Agreement, dated as of May 2, 2000, among the Company and the shareholders signatory thereto. 99.1 Press Release of Mansur Industries Inc. dated May 11, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MANSUR INDUSTRIES INC. Date: May 12, 2000 By: /s/ Paul I. Mansur ------------------------------- Paul I. Mansur Chief Executive Officer Page 2 of 2 Pages EX-4.1 2 CERTIFICATE OF DESIGNATED STOCK 5/2/00 1 Exhibit 4.1 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. 2 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 2 3 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 3 4 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 4 5 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 5 6 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. 6 7 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 7 8 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 8 9 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 9 10 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; 10 11 (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 11 12 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. 12 13 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, 13 14 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; 14 15 (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 15 16 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 16 17 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 17 18 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 18 19 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. 19 20 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 20 21 EXHIBIT A 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. 21 22 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: 22 EX-4.2 3 FORM OF SERIES D CONVERTIBLE PREFERRED STOCK 1 EXHIBIT 4.2 CERTIFICATE ORGANIZED UNDER THE LAWS OF SHARES NO. 1 THE STATE OF FLORIDA MANSUR INDUSTRIES, INC. 150,000 SHARES OF SERIES D CONVERTIBLE PREFERRED STOCK $1.00 PAR VALUE This Certifies that __________________________________________________________ is the registered holder of ________________________________________________________ shares SERIES D CONVERTIBLE PREFERRED STOCK OF THE ABOVE NAMED CORPORATION transferable only on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of this Certificate properly endorsed. IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be signed by its duly authorized officers and its Corporate Seal to be hereunto affixed this ___TH day of August A.D. 1999 -------------------------------------- -------------------------------------- Secretary President Pierre G. Mansur Pierre G. Mansur
2 FOR VALUE RECEIVED, ____ HEREBY SELL, ASSIGN AND TRANSFER UNTO ____________________________________________________ __________________________________________________ SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT ________________________________________________ ATTORNEY TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES. DATED ____________________________________ 19 ______ IN PRESENCE OF ______________________________ ______________________________ 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. EX-4.3 4 FORM OF WARRANT 1 Exhibit 4.3 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 ___, 2000 MANSUR INDUSTRIES INC. (INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA) WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK NO. WRT-_____ FOR VALUE RECEIVED, MANSUR INDUSTRIES INC., a Florida corporation (the "Company"), hereby certifies that _____________________ or assigns (the "Holder") is entitled, subject to the provisions of this Warrant, to purchase from the Company, up to ________________________ (___________) 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 ___, 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. 2 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 _____, 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 -2- 3 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. -3- 4 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 -4- 5 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 -5- 6 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 -6- 7 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- 8 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. -8- 9 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: -------------------------------- Name: Paul Mansur Title: Chief Executive Officer -9- 10 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 -------------------------------------------------- -10- 11 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 -11- EX-10.1 5 FORM OF SHAREHOLDERS AGREEMENT 1 Exhibit 10.1 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. 2 "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 2 3 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. 3 4 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 4 5 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 5 6 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. 6 7 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 ENVIRONMENTAL OPPORTUNITIES FUND II FUND II, L.P. (INSTITUTIONAL), L.P. By: Fund II Mgt. Co., LLC By: Fund II Mgt. Co., LLC Its General Partner Its General Partner Per: /s/ Bruce R. McMaken Per: /s/ Bruce R. McMaken ------------------------------- ------------------------------- Name: Bruce R. McMaken Name: Bruce R. McMaken Title: Manager Title: Manager SERIES C PREFERRED SHAREHOLDERS: HANSEATIC AMERICAS LDC By: Hansabel Partners LLC By: Hanseatic Corporation By: /s/ Paul Biddelman ------------------------------- Name: Paul Biddelman Title: President SERIES D PREFERRED SHAREHOLDERS: ENVIRONMENTAL OPPORTUNITIES ENVIRONMENTAL OPPORTUNITIES FUND II FUND II, L.P. (INSTITUTIONAL), L.P. By: Fund II Mgt. Co., LLC By: Fund II Mgt. Co., LLC Its General Partner Its General Partner Per: /s/ Bruce R. McMaken Per: /s/ Bruce R. McMaken ------------------------------- ------------------------------- Name: Bruce R. McMaken Name: Bruce R. McMaken Title: Manager Title: Manager HANSEATIC AMERICAS LDC By: Hansabel Partners LLC By: Hanseatic Corporation By: /s/ Paul Biddelman ------------------------------- Name: Paul Biddelman Title: President MANSUR INDUSTRIES INC.: By: /s/ Paul I. Mansur ------------------------------- Name: Paul I. Mansur Title: Chief Executive Officer /s/ PIERRE MANSUR - ----------------------------------- PIERRE MANSUR 7 8 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 ENVIRONMENTAL OPPORTUNITIES FUND II FUND II, L.P. (INSTITUTIONAL, L.P.) By: Fund II Mgt. Co., LLC By: Fund II Mgt. Co., LLC By: /s/ Bruce R. McMaken By: Bruce R. McMaken ------------------------------- ----------------------------- HANSEATIC AMERICAS LDC By: Hansabel Partners LLC By: Hanseatic Corporation By: /s/ Paul Biddelman ------------------------------- 8 EX-99.1 6 PRESS RELEASE 8/25/99 1 Exhibit 99.1 FOR IMMEDIATE RELEASE MAY 11, 2000 MANSUR INDUSTRIES REPORTS FIRST QUARTER 2000 RESULTS - OPERATIONS CONSOLIDATED NATIONWIDE - $2MM RAISED THROUGH PRIVATE PLACEMENT MIAMI, Florida, May 11, 2000-- Mansur Industries Inc. (NASDAQ: MANS) today reported its first quarter 2000 operating results. Revenues for the three months ended March 31, 2000 were $4,286,000 compared to revenues of $4,013,000 in the corresponding period of 1999, a 7% increase. The Company incurred an operating loss for the three months ended March 31, 2000 of $3,463,000 compared with an operating loss of $3,550,000 in the corresponding period of 1999. The Company's net loss for the three months ended March 31, 2000 was $4,243,000 or a loss of 89 cents per share, compared with a net loss of $3,997,000 or a loss of 87 cents per share, in the corresponding period of 1999. First quarter revenues were negatively impacted as a result of short term disruptions caused by the aggressive consolidation of the Company's distribution and service infrastructure nationwide eliminating redundant or nonproductive resources in the field and in the corporate offices, while restructuring the direct sales and service organization into 15 tightly controlled districts. Paul I. Mansur, Chief Executive Officer, stated that "we are pleased to report that the Company has undergone an ambitious streamlining of its entire organization including a reorganization of our direct sales force to enhance efficiency and productivity while". Mr. Mansur further stated that "although the Company's aggressive consolidation has negatively impacted first quarter sales and is expected to impact second quarter sales to a lesser extent, we believe that the changes will facilitate the Company's transition to profitability during the second half of 2000 and significantly enhance long term profitability." Mansur Industries also announced today the private sale of $2 million of 8.25% Convertible Preferred Stock redeemable in 2004. The Preferred Stock is convertible into common stock at a price equal to $5.50 per share. The Preferred Stock was purchased by current preferred shareholders of the Company, Hanseatic Americas LDC and Environmental Opportunities Funds II L.P., in equal amounts of $1 million each. The investors also received warrants to acquire an aggregate of 363,636 shares of common stock at an exercise price of $5.50 per share. Representatives of the investors will be added to the Company's Board of Directors. The Company plans to use the proceeds for general working capital purposes. Founded in 1990, Mansur Industries designs, manufacturers, sells and supports a full range of self contained, recycling industrial parts washing products for use in the automotive, aviation, marine and general industrial markets. The Company has been awarded ten patents for its products which incorporate innovative, proprietary resource recovery and waste minimization technologies. The Company is headquartered in Miami, Florida. THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS REGARDING FUTURE EVENTS AND THE FUTURE PERFORMANCE OF MANSUR INDUSTRIES THAT INVOLVES RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL EVENTS TO DIFFER MATERIALLY. WE REFER YOU TO THE DOCUMENTS THAT MANSUR INDUSTRIES FILES FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION WHICH CONTAIN IMPORTANT FACTORS THAT COULD CAUSE ITS RESULTS TO DIFFER FROM ITS CURRENT EXPECTATIONS. CONTACT: Mansur Industries Inc. Paul I. Mansur, Chief Executive Officer, (305) 593-8015 -----END PRIVACY-ENHANCED MESSAGE-----