SystemOne Technologies Inc.

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934

SYSTEMONE TECHNOLOGIES INC.
(Exact name of Company as specified in its charter)

000-21325	65-0226813
(Commission File Number)	(I.R.S. Employer Identification No.)

8305 N.W. 27^th Street, Suite 107 Miami, Florida	33122
(Address of principal executive offices)	(Zip Code)

(Not Applicable)
(Former name or former address, if changed since last report)

On December 9, 2002, SystemOne Technologies Inc. (the “Company”) completed a restructuring of its subordinated debt. As a result of the restructuring, the maturity of the current portion of the Company’s indebtedness in an aggregate amount of approximately $26 Million was extended to December 31, 2005. In the restructuring, the Company issued its:

• (i) 8.25% Subordinated Convertible Notes due December 31, 2005 in an aggregate principal amount of $11,054,283.77 which provide that interest when due may be added at the Company’s option to the principal amount of such notes through December 31, 2002 and thereafter shall be paid in cash and (ii) 8.25% Subordinated Convertible Notes due December 31, 2005 in an aggregate principal amount of $11,054,283.77 which provide that interest when due may be added to the principal amount for the life of such notes, and (iii) Warrants for the purchase of an aggregate of 750,000 shares of Common Stock at an exercise price of $.01 per share expiring on December 31, 2005; in exchange for all of the Company’s currently outstanding 8.25% Subordinated Convertible Notes due February 23, 2003 in an aggregate principal amount (inclusive of capitalized interest) of $22,108,567.54; and

• 10% Promissory Notes due December 31, 2005 in an aggregate principal amount of $4,418,373 in exchange for all of the Company’s currently outstanding 16% Promissory Notes due November 30, 2002 in an equal principal amount (inclusive of capitalized interest).

• the Company issued to the holders of its currently outstanding shares of Series D Preferred Stock and Warrants to purchase an aggregate of 1,514,286 shares of the Company’s Common Stock, Warrants for the purchase of an aggregate of 250,000 shares of Common Stock at an exercise price of $.01 per share expiring on December 31, 2005 in exchange for the waiver of such holders’ antidilution rights which would otherwise have been triggered by the issuance of the warrants as a part of the exchange;

• the mandatory redemption date of the Company’s outstanding shares of Series B, C and D Preferred Stock was extended from May 17, 2004 to the earlier to occur of (i) the 90^th day after the date that all of the 8.25% Promissory Notes due December 31, 2005 shall have been repaid in full and (ii) March 31, 2006, but in no event prior to May 17, 2004.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

4.6 Waiver Agreement dated as of December 9, 2002, by and among the Company, Hanseatic Americas LDC, Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P.

4.7 Letter Agreement dated December 9, 2002, by and among the Company, Hanseatic Americas LDC, Environmental Opportunities Fund, L.P., Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P.

10.1 Fifth Amendment to Loan Agreement, dated as of December 9, 2002, by and among the Company, Hanseatic Americas LDC, Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P.

10.2 Third Amendment to Security Agreement, dated as of December 9, 2002, by and among the Company, Hanseatic Americas LDC, Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P.

10.3 Letter Agreement dated December 9, 2002, by and among the Company, Hanseatic Americas LDC, Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MANSUR INDUSTRIES INC.

Date: December 11, 2002	By:	/s/ Paul I. Mansur

		Paul I. Mansur
		Chief Executive Officer

Page 4 of 4 Pages EX-4.1 3 g79773exv4w1.txt EXCHANGE AGREEMENT DATED DECEMBER 9, 2002 EXHIBIT 4.1 EXCHANGE AGREEMENT EXCHANGE AGREEMENT ("Agreement") dated as of December 9, 2002, by and among SystemOne Technologies Inc. (f/k/a Mansur Industries Inc.), a Florida corporation (the "Company"), each person or entity listed on Schedule I as a holder of the Company's currently outstanding 8.25% Subordinated Convertible Notes due February 23, 2003 (collectively, the "Junior Note Holders") and each person or entity listed on Schedule II as a holder of the Company's currently outstanding 16% Promissory Notes due November 30, 2002 (collectively, the "Secured Note Holders" and collectively with the Junior Note Holders, the "Holders"). W I T N E S S E T H: WHEREAS, the parties hereto believe that it is advisable and in their best interests and the best interest of the Company to recapitalize the Company by: (1) exchanging the Company's currently outstanding 8.25% Subordinated Convertible Notes due February 23, 2003 in the amounts set forth on Schedule I (the "Current Junior Notes") for (i) 8.25% Subordinated Convertible Notes due December 31, 2005 with interest which when due will be added to the principal amount of such notes through December 31, 2002 and thereafter shall be paid in cash in the form of Exhibit A attached hereto (the "New Junior Partial Cash Pay Notes"), (ii) 8.25% Subordinated Convertible Notes due December 31, 2005 with interest which when due will be added to the principal amount for the life of such notes in the form of Exhibit B attached hereto (the "New Junior PIK Pay Notes" and collectively with the New Junior Partial Cash Pay Notes, the "New Junior Notes"), and (iii) Warrants for the purchase of 750,000 shares of the Company's common stock, $.001 par value per share ("Common Stock") at an exercise price of $.01 per share expiring on December 31, 2005 in the form of Exhibit C attached hereto (the "New Warrants"); and (2) exchanging the Company's currently outstanding 16% Promissory Notes due November 30, 2002 in the amount set forth on Schedule II (the "Current Secured Notes" and collectively with the Current Junior Notes, the "Current Securities") for Promissory Notes due December 31, 2005 in the form of Exhibit D attached hereto (the "New Secured Notes" and collectively with the New Junior Notes, the "New Notes" and collectively with the New Warrants, the "New Securities"). NOW, THEREFORE, in consideration of the foregoing premises and the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I EXCHANGE OF SECURITIES Section 1.1 Exchange of Subordinated Convertible Notes. On or prior to the Closing Date (as defined below), each Junior Note Holder will deliver to the Company each of such holder's Current Junior Notes. On the Closing Date, the Company will cancel each of the Current Junior Notes and deliver to each Junior Note Holder (i) a New Junior Partial Cash Pay Note in a principal amount equal to 50 percent of the sum of the principal amount of such Junior Note Holder's Current Junior Note plus all accrued and unpaid interest thereon to and including the day prior to the Closing Date, (ii) a New Junior PIK Pay Note in a principal amount equal to 50 percent of the sum of the principal amount of such Junior Note Holder's Current Junior Note plus all accrued and unpaid interest thereon to an including the day prior to the Closing Date, and (iii) a New Warrant for the purchase of that number of shares of Common Stock equal to the product of (A) the quotient of (x) the outstanding principal amount of such Junior Note Holder's Current Junior Note including all accrued and unpaid interest to an including the day prior to the Closing Date, over (y) the aggregate outstanding principal amount of all outstanding Current Junior Notes including all accrued and unpaid interest to an including the day prior to the Closing Date, times (B) 750,000. The principal amount, including all accrued interest on each Junior Note Holder's Note as of September 30, 2002, and the number of New Warrants each Junior Note Holder will receive is as indicated next to such Junior Note Holder's name on Schedule I attached hereto. Section 1.2 Exchange of Secured Notes and Amendment of Loan Agreement. On or prior to the Closing Date the Company and each Secured Note Holder will execute and deliver that certain Fifth Amendment to Loan Agreement (the "Fifth Amendment") attached hereto as Exhibit E. On or prior to the Closing Date, each Secured Note Holder will deliver to the Company each of such holder's Current Secured Notes. On the Closing Date, the Company will cancel each of the Current Secured Notes and deliver to each Secured Note Holder a New Secured Note in a principal amount equal to the principal amount of such Secured Note Holder's Current Secured Note plus all accrued and unpaid interest thereon to and including the day prior to the Closing Date. The principal amount and accrued interest on each Secured Note Holder's Current Secured Note as of September 30, 2002 is indicated next to such Secured Note Holder's name on Schedule II. ARTICLE II CLOSING The closing shall take place at the offices of Greenberg Traurig, P.A., at 10:00 a.m., local time following the date on which the last of the conditions set forth in Article V hereof shall have been fulfilled or waived in accordance herewith. The date on which the Closing occurs is referred to as the "Closing Date". ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each of the Holders as of the date hereof and the Closing Date: (a) Organization and Qualification; Material Adverse Effect. The Company is a corporation duly incorporated and existing in good standing under the laws of the State of Florida and the Company has the requisite corporate power to own its properties and to 2 carry on its business as now being conducted. The Company does not have any direct or indirect subsidiaries. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary other than those in which the failure so to qualify would not have a Material Adverse Effect. "Material Adverse Effect" means any adverse effect on the business, operations, properties, prospects, or financial condition of the Company and which is material to the Company, and any material adverse effect on the transactions contemplated under this Agreement or any other agreement or document contemplated hereby or thereby. (b) Authorization; Enforcement. (i) The Company has the requisite corporate power and authority to enter into and perform this Agreement and to issue the New Securities in accordance with the terms hereof, and to issue the Underlying Shares (as hereinafter defined) in accordance with the terms of the New Junior Notes and the New Warrants, respectively, (ii) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby, including the issuance of the New Securities and the Underlying Shares, have been duly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company, and (iv) this Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws relating to, or affecting generally the enforcement of creditors' rights and remedies or by other equitable principles of general application. (c) Capitalization. Schedule III sets forth (i) the authorized capital stock of the Company, (ii) all currently issued and outstanding capital stock and derivative securities exercisable for or convertible into capital stock of the Company, and (iii) the issued and outstanding capital stock and derivative securities exercisable for or convertible into shares of capital stock of the Company after the transactions contemplated hereby determined as of September 30, 2002. All of the outstanding shares of capital stock as set forth on Schedule III have been validly issued and are fully paid and non-assessable. No shares of Common Stock or the Company's Series B Preferred Stock, $1.00 par value per share, Series C Preferred Stock, $1.00 par value per share, or Series D Preferred Stock, $1.00 par value per share (collectively "Preferred Stock") are entitled to preemptive rights. All dividends on the Preferred Stock have been recorded by the Company as paid in shares of the applicable series of Preferred Stock at each Dividend Payment Date (as defined in the Company's Articles of Incorporation) subsequent to issuance of such underlying shares and have thereafter accrued dividends at the prescribed rate. Except as set forth on Schedule III, there are no other scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights exchangeable or convertible into, any shares of capital stock of the Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company or options, warrants, scrip, rights to subscribe to, or commitments to purchase or acquire, any shares, or securities or rights convertible into shares, of capital stock of the Company. No event has occurred or will occur as a result of the execution and delivery of this Agreement and the consummation of the transactions 3 contemplated hereby, that, assuming the due execution and delivery of the Waiver (as defined in Section 5.1(i) below), requires any adjustment in the conversion price or ratio with respect to the Company's outstanding securities pursuant to any anti-dilution provisions thereunder, nor as a result thereof will the number of shares of capital stock issuable upon such conversion or exercise, as the case may be, be subject to adjustment. (d) Issuance of Common Stock upon conversion of New Junior Notes or exercise of New Warrants. The shares of Common Stock issuable upon the conversion of the New Junior Notes and the exercise of the New Warrants (the "Underlying Shares") are duly authorized and will be as of any Closing Date reserved for issuance and, upon such conversion or exercise, as applicable, in accordance with the terms of the New Junior Notes or New Warrants, such Underlying Shares will be validly issued, fully paid and non-assessable, free and clear of any and all liens, claims and encumbrances, and the holders of such Underlying Shares shall be entitled to all rights and preferences accorded to a holder of shares of Common Stock. The outstanding shares of Common Stock are currently included for quotation on the Over the Counter Bulletin Board (the "OTC Bulletin Board"). (e) No Conflicts. The execution, delivery and performance of this Agreement, the Fifth Amendment and each of the other documents contemplated hereby and thereby (collectively, the "Exchange Documents") by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not (i) result in a violation of the charter or by-laws of the Company or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company is a party, or result in a violation of any federal, state, local or foreign law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect); provided that, for purposes of such representation as to federal, state, local or foreign law, rule or regulation, no representation is made herein with respect to any of the same applicable solely to the Holders and not to the Company. Notwithstanding any other provision herein, the exchange of Current Securities as contemplated by this Agreement, will not give rise to any liability to any holder under Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or to any person or entity controlling, controlled by or under common control with such holder. The business of the Company is not being conducted in violation of any law, ordinance or regulation of any governmental entity, except for violations which either singly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required under federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or to make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or issue the New Securities in accordance with the terms hereof and issue the Underlying Shares upon conversion or exercise thereof (other than ordinary course filings under federal or state securities laws that have been or will be made), provided that, for purposes of the representation made in this sentence, the 4 Company is assuming and relying upon the accuracy of the relevant representations and agreements of the Holders herein. (f) SEC Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the Securities and Exchange Commission (the "Commission") pursuant to the reporting requirements of the Exchange Act, including material filed pursuant to Section 13(a) or 15(d), in addition to one or more registration statements and amendments thereto heretofore filed by the Company with the Commission (all of the foregoing including filings incorporated by reference therein being referred to herein as the "SEC Documents"). The Company has delivered or made available to the Holders true and complete copies of all SEC Documents (including, without limitation, proxy information and solicitation materials and registration statements) filed with the Commission since January 1, 2002. Without limiting any other representation or warranty herein, the Company has not provided to any Holder any information which as of the Closing, according to applicable law, rule or regulation, should be disclosed publicly by the Company but will not have been so disclosed. As of their respective dates, the SEC Documents (as amended by any amendments filed prior to the date of this Agreement or any Closing Date and provided to each Holder) complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents, at the time they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). (g) Market. The Common Stock is currently included for quotation on the OTC Bulletin Board. (h) No Material Adverse Change. Since August 14, 2002, the date through which the most recent quarterly report of the Company on Form 10-QSB was filed with the Commission, a copy of which is included in the SEC Documents, no event which had or is likely to have a Material Adverse Effect has occurred or exists with respect to the Company, except as otherwise disclosed or reflected in press releases or other SEC Documents prepared through or as of a date subsequent to August 14, 2002. (i) No Undisclosed Liabilities. The Company does not have any liabilities or obligations not disclosed in the SEC Documents, other than those liabilities incurred 5 in the ordinary course of its business since December 31, 2001 or liabilities or obligations, individually or in the aggregate, which do not or would not have a Material Adverse Effect on the Company, taken as a whole. (j) No Undisclosed Events or Circumstances. No event or circumstance has occurred or exists with respect to the Company or its business, properties, prospects, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. (k) No General Solicitation. Neither the Company nor, to the Company's knowledge, any of its affiliates or any person acting on its or their behalf has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act")) in connection with the transactions contemplated hereby. (l) No Integrated Offering. Neither the Company nor, to the Company's knowledge, any of its Affiliates (as defined pursuant to the Securities Act), or any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, or the Underlying Shares under circumstances that would require registration of the New Securities, and the issuance of the New Securities hereunder, and of the Underlying Shares upon conversion or exercise thereof, as applicable, is exempt from the registration requirements of the Securities Act. (m) Intellectual Property. The Company owns or has licenses to use certain patents, copyrights and trademarks ("intellectual property") associated with its business. The Company has all intellectual property rights which are needed to conduct its business as it is now being conducted or as proposed to be conducted as disclosed in the SEC Documents. The Company has no reason to believe that the intellectual property rights owned by the Company are invalid or unenforceable or that the use of such intellectual property by the Company infringes upon or conflicts with any right of any third party, and the Company has not received notice of any such infringement or conflict. The Company has no knowledge of any infringement of the Company's intellectual property by any third party. (n) No Litigation. Except as set forth in the SEC Documents delivered to the Holders prior to the date of this Agreement ("Pre-Agreement SEC Documents") no litigation or claim (including those for unpaid taxes) against the Company is pending or, to the Company's knowledge, threatened, and no other event has occurred, which if determined adversely to the Company would have a Material Adverse Effect on the Company, or would materially adversely effect the transactions contemplated hereby. The legal proceedings described in the Pre-Agreement SEC Documents will not have an effect on the transactions contemplated hereby, and will not have a Material Adverse Effect on the Company, taken as a whole. (o) Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, finder's fees or similar payments by any Holder relating to this Agreement or the transactions contemplated hereby. 6 (p) Schedules I and II. The amounts set forth on Schedules I and II hereto are true and correct as of September 30, 2002. Section 3.2 Representations and Warranties of the Holders. Each of the Holders, severally and not jointly, hereby makes the following representations and warranties to the Company as of the date hereof and on the Closing Date: (a) Authorization; Enforcement. (i) Such Holder has the requisite power and authority to enter into and perform this Agreement and to exchange such holder's Current Securities for the New Securities being offered hereunder, (ii) the execution and delivery of this Agreement by such Holder and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate or partnership action, as required, and (iii) this Agreement constitutes the valid and binding obligation of such Holder enforceable against such Holder in accordance its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws relating to, or affecting generally the enforcement of creditors' rights and remedies or by other equitable principles of general application. (b) No Conflicts. The execution, delivery and performance of this Agreement and any other Exchange Document to which it is a party, and the consummation by such Holder of the transactions contemplated hereby and thereby do not and will not (i) result in a violation of such Holder's organizational documents, if any, or (ii) conflict with any agreement, indenture, or instrument to which such Holder is a party, or (iii) result in a violation of any law, rule, or regulation or any order, judgment or decree of any court or governmental agency applicable to such Holder. Such Holder is not required to obtain any consent or authorization of any governmental agency in order for it to perform its obligations under this Agreement and any other Exchange Document to which it is a party. (c) Investment Representation. Such Holder is acquiring the New Securities for its own account and not with a view to distribution in violation of any securities laws. Such Holder has no present intention to sell the New Securities and such Holder has no present arrangement (whether or not legally binding) to sell the New Securities to or through any person or entity; provided, however, that by the representations herein, such Holder does not agree to hold the New Securities for any minimum or other specific term and reserves the right to dispose of the New Securities at any time in accordance with federal and state securities laws applicable to such disposition. (d) Accredited Investor. Such Holder is an "accredited investor" as defined in Rule 501 promulgated under the Securities Act and, in the case of each Holder of Junior Notes, has attested to such status by executing and delivering to the Company an Investor Questionnaire in the form attached hereto as Exhibit F ("Investor Questionnaire"). The Holder has such knowledge and experience in financial and business matters in general and investments in particular, so that such Holder is able to evaluate the merits and risks of an exchange of its Current Securities for New Securities and to protect its own interests in connection with such exchange. In addition (but without limiting the effect of the Company's representations and warranties contained herein), such Holder has had the opportunity to ask questions of and has 7 received such information as it considers necessary or appropriate for deciding whether to exchange its Current Securities for New Securities pursuant hereto. (e) Rule 144. Such Holder understands that the New Securities will not be registered under the Securities Act, that they are not expected to be registered, and that the New Junior Notes and New Warrants issued hereunder may be traded as set forth in the Amended and Restated Offering Memorandum, dated October 30, 2002, in connection with the transactions contemplated hereby. (f) Brokers. Such Holder has taken no action which would give rise to any claim by any person for brokerage commissions, finder's fees or similar payments by the Company relating to this Agreement or the transactions contemplated hereby. (g) Reliance by the Company. Such Holder understands that the New Securities are being offered and exchanged for the Current Securities in reliance on an exemption from the registration requirements of federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Holder set forth herein in order to determine the applicability of such exemptions and the suitability of such Holder to acquire New Securities. ARTICLE IV COVENANTS Section 4.1 Registration and Listing. Until such time as no New Securities or Underlying Shares are outstanding the Company will cause its Common Stock to continue to be registered under Section 12(g) of the Exchange Act, will comply in all respects, with its reporting and filing obligations under the Exchange Act, and will not take any action or file any document (whether or not permitted by the Exchange Act or the rules thereunder) to terminate or suspend such reporting and filing obligations. The Company shall take such further action as any holder of Underlying Shares may reasonably request, and to the extent required from time to time to enable such holder to sell such shares without registration under the Securities Act within the limitations of the exemptions provided by (i) Rule 144 promulgated under the Securities Act, as such rule may be amended from time to time, and (ii) any similar rule or regulation hereinafter adopted by the Commission. Upon the request of any such holder, the Company will deliver to such holder a written statement as to whether it has complied with any informational requirements. Until such time as no New Securities are outstanding the Company shall use commercially reasonable efforts to continue the listing or trading of the Common Stock on the OTC Bulletin Board, the Nasdaq or a principal exchange and comply in all respects with the Company's reporting, filing and other obligations arising from the OTC Bulletin Board or the by-laws or rules of Nasdaq or any exchange or market where the Common Stock is then traded. Section 4.2 Certificates on Conversion. Without limiting any provision contained in the New Warrants or the New Junior Notes, upon any conversion or exercise of the New Securities, as applicable, the Company shall issue and deliver to such Holder (or the then holder) within three (3) days after the Conversion Date (each as defined in the New Securities) a new certificate or certificates for the principal amount of New Securities which such Holder (or 8 holder) is not converting or exercising, as applicable, but which is evidenced in part by the certificate(s) submitted to the Company in connection with such conversion or exercise, as applicable (with the number of and denomination of such new certificate(s) designated by such Holder or holder). Section 4.3 Replacement Certificates. Without limiting any provision contained in the New Warrants, the New Junior Notes or the New Secured Notes, the certificate(s) representing the New Securities held by any Holder (or then holder) may be exchanged by such Holder (or such holder) at any time and from time to time for certificates with different denominations representing an equal aggregate principal amount of New Securities, as reasonably requested by such Holder (or such holder) upon surrendering the same. No service charge will be made for such registration, transfer or exchange. Section 4.4 Securities Compliance. The Company shall notify the Commission and the OTC Bulletin Board, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the New Securities hereunder and the Common Stock issuable upon conversion or exercise, as applicable, thereof. Section 4.5 Notices. The Company agrees to provide all holders of New Securities with copies of all notices and information, including without limitation notices and proxy statements in connection with any meetings, that are provided to the holders of shares of Common Stock, contemporaneously with the delivery of such notices or information to such holders of Common Stock. Section 4.6 Reservation of Stock Issuable Upon Conversion. Without limiting any provision contained in the New Warrants or the New Junior Notes, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the purpose of affecting the conversion or exercise, as applicable, of the New Securities, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion or exercise of all outstanding New Securities, as applicable, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion or exercise, as applicable, of all the then outstanding New Securities, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Common Stock to such number of shares as shall be sufficient for such purpose, including without limitation engaging in best efforts to obtain the requisite shareholder approval. Section 4.7 Pre-Closing Capitalization. Except as consented to by the Required Holders (as hereinafter defined) from and after the date of this Agreement and until the Closing: (a) No change shall be made or proposed to the Articles of Incorporation or bylaws of the Company, nor shall the Company merge into or with any other person, or sell or otherwise dispose of all or substantially all of its assets or properties. 9 (b) The Company shall not: (i) issue, grant, sell or encumber any shares of its capital stock, (ii) issue, grant, sell or encumber any security, option, warrant, put, call, subscription or other right of any kind, fixed or contingent, that directly or indirectly calls for the acquisition, issuance, sale, pledge or other disposition of any shares of capital stock or other equity interests of the Company, (iii) enter into any agreement, commitment or understanding calling for any transaction referred to in clause (i) or (ii) of this Paragraph (b), or (iv) make any other changes in its equity capital structure except, in all such cases under this Paragraph (b), for this Agreement and the consummation of the transactions hereunder, or pursuant to obligations which are outstanding prior to the execution and delivery of this Agreement. (c) The Company shall not split, combine or reclassify any of its capital stock, or declare, set aside or pay any dividend or other distribution (whether in cash, stock, securities, indebtedness, rights or property or any combination thereof) in respect of any shares of its capital stock or other equity interests, or redeem or otherwise acquire any shares of the capital stock or other equity interests. Section 4.8 Opinion of Counsel Regarding Resale of Underlying Shares. If requested by any Holder upon a cashless exercise of a New Warrant, the Company will use its best efforts to obtain an opinion from its counsel that pursuant to Rule 144(k) of the Securities Act, the sale of the Underlying Shares by such Holder is exempt from the registration requirements of the Securities Act, provided, that such Holder is not and for the three months prior to the date of resale or transfer has not been an affiliate of the Company (as such term is defined in Rule 144). ARTICLE V CONDITIONS Section 5.1 Conditions Precedent to the Obligations of the Company. The obligations of the Company hereunder are subject to the satisfaction, at or before the Closing Date, of each of the conditions set forth below. These conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion. (a) Accuracy of the Holder's Representations and Warranties. The representations and warranties of each Holder shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a particular date). (b) Performance by the Holders. Each Holder shall have performed all agreements and satisfied all conditions required to be performed or satisfied by such Holder in all material respects at or prior to any Closing Date. (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement. 10 (d) Fifth Amendment to Loan Agreement. The Lenders (as defined in the Fifth Amendment) shall have executed and delivered the Fifth Amendment to the Company. (e) Minimum Exchange Offer Acceptance. Holders of no less than 100% of the outstanding Current Securities shall have executed this Agreement and the Company shall have received all of the Current Securities. (f) Consent of Hansa Finance Limited Liability Company. As required by the Revolving Credit Loan Agreement (the "Senior Secured Revolving Loan") between the Company and Hansa Finance Limited Liability Company, a Delaware limited liability company (the "Senior Lender"), the Company shall have obtained the consent of the Senior Lender in relation to the transactions contemplated hereby without material penalty or condition. (g) Investor Questionnaire. Each Holder of Current Junior Notes shall have executed and delivered to the Company an Investor Questionnaire. (h) Satisfaction regarding Tax Withholding. Hanseatic Americas LDC shall have either (i) represented to the satisfaction of the Company that it does not own, actually and constructively, ten percent or more of the total combined voting power of all classes of stock of the Company entitled to vote (or that no United States federal withholding tax is payable by the Company in respect of Hanseatic Americas LDC's exchange of its current Secured Note hereunder because an applicable income tax treaty eliminates the tax or because any interest income of Hanseatic Americas LDC is effectively connected with trade or business conducted by Hanseatic Americas LDC in the United States) or (ii) paid to the Company in cash the amount of such withholding tax payable in respect of interest on the Current Secured Note issued to Hanseatic Americas LDC of its Current Secured Note. (i) Waiver. The holders of (i) the Company's outstanding shares of Series D Preferred Stock, $1.00 par value per share, (ii) those certain Warrants issued May 2, 2000 exercisable for an aggregate of 571,428 shares of Common Stock, and (iii) those certain Warrants issued as of August 7, 2000 exercisable for an aggregate of 942,858 shares of Common Stock shall have executed and delivered a waiver (the "Waiver") to the Company, substantially in the form attached hereto as Exhibit G. (j) Extension of Mandatory Redemption Date for Preferred Stock. The holders of the Company's outstanding shares of Series B Preferred Stock, $1.00 par value per share, Series C Preferred Stock, $1.00 par value per share, and Series D Preferred Stock, $1.00 par value per share, shall have executed and delivered to the Company a letter agreement (the "Mandatory Redemption Date Extension") extending the mandatory redemption date of the preferred stock, substantially in the form attached hereto as Exhibit H. Section 5.2 Conditions Precedent to the Obligations of the Holders. The obligations of the Holders hereunder are subject to the satisfaction, at or before the Closing Date, of each of the conditions set forth below. These conditions are for the Holders' sole benefit and may be waived by the Required Holders at any time in their sole discretion. 11 (a) Accuracy of the Company's Representations and Warranties. The representations and warranties of the Company set forth in Article III shall be true and correct in all material respects as of the date when made and as of any Closing Date as though made at that time (except for representations and warranties that speak as of a particular date). (b) Performance by the Company. The Company shall have performed in all material respects all agreements and satisfied all conditions required to be performed or satisfied by the Company at or prior to any Closing Date and the Company shall have delivered to the Holders a certificate executed by the Company's President and the Company's Chief Executive Officer to such effect. (c) Public Market. From the date hereof to the Closing Date, trading in the Company's Common Stock shall not have been suspended by the Commission, and trading in securities generally as reported by the OTC Bulletin Board, shall not have been suspended or limited, and the Common Stock shall not have been delisted from the OTC Bulletin Board. (d) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority or competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement or any other Exchange Document. (e) Secretary's Certificate. The Company shall have delivered to the Holders a certificate, executed by the Secretary of the Company on behalf of the Company, certifying as to satisfaction of closing conditions, incumbency of signing officers, charter, by-laws, good standing and authorizing resolutions of the Company. (f) Opinion of Counsel. At Closing, the Holders shall have received an opinion of counsel substantially in the form attached hereto as Exhibit I. (g) Fifth Amendment to Loan Agreement. The Company and the Lenders shall have executed and delivered the Fifth Amendment. (h) Consents. All consents, acknowledgements, approvals, permits and orders with respect to the transactions contemplated hereby shall have been obtained, including, without limitation, the consent of the Senior Lender under its subordination arrangements with the Holders of Current Secured Notes. (i) Other Certificates. The Holders shall have received such additional certificates, instruments and other documents in form and substance reasonably satisfactory to them as they shall have reasonably requested in connection with the transactions hereunder. (j) Waiver. The holders of (i) the Company's outstanding shares of Series D Preferred Stock, $1.00 par value per share, (ii) those certain Warrants issued May 2, 2000 exercisable for an aggregate of 571,428 shares of Common Stock, and (iii) those certain 12 Warrants issued as of August 7, 2000 exercisable for an aggregate of 942,858 shares of Common Stock shall have executed and delivered the Waiver to the Company. (k) Extension of Mandatory Redemption Date for Preferred Stock. The holders of the Company's outstanding shares of Series B Preferred Stock, $1.00 par value per share, Series C Preferred Stock, $1.00 par value per share, and Series D Preferred Stock, $1.00 par value per share, shall have executed and delivered the Mandatory Redemption Date Extension to the Company. ARTICLE VI LEGEND AND STOCK Each of the New Securities (other than the New Secured Notes) and the Underlying Shares, if issued, shall be stamped or otherwise imprinted with a legend substantially in the following form: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES OR (II) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL OF THE ISSUER, OR OTHER COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT. ARTICLE VII TERMINATION OF PRIOR AGREEMENT Upon the Closing of the transactions contemplated hereby, the Subordinated Convertible Note Purchase Agreement, dated February 23, 1998, between the Company and the Investors party thereto, as amended prior to the Closing Date, shall terminate insofar as any Holder has rights thereunder and be of no force and effect. ARTICLE VIII TERMINATION 13 Section 8.1 Termination by Written Consent. This Agreement may be terminated at any time prior to the Closing Date by written consent of the Company and each of the following (collectively, the "Required Holders"): (i) the holders of Current Junior Notes representing in excess of a majority of the outstanding principal amount thereof; plus (ii) the holders of Current Secured Notes representing in excess of a majority of the outstanding principal amount thereof. Section 8.2 Other Termination. This Agreement shall terminate upon written notice at the Company's option, or upon written notice at the option of the Required Holders, if the Closing Date shall not have occurred prior to December 31, 2002. ARTICLE IX MISCELLANEOUS Section 9.1 Stamp Taxes; Agent Fees. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of the New Securities pursuant hereto and the shares of Common Stock issued upon conversion or exercise, as applicable, thereof. Section 9.2 Specific Enforcement; Consent to Jurisdiction. (a) The Company and the Holders acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. (b) The Company and each of the Holders (i) hereby irrevocably submits to the non-exclusive jurisdiction of the United States District Court, the New York State courts and other courts of the United States sitting in New York County, New York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. The Company and each of the Holders consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this paragraph shall affect or limit any right to serve process in any other manner permitted by law. Section 9.3 Entire Agreement; Amendment. This Agreement and the Exchange Documents together with the agreements and documents executed in connection herewith and therewith, contains the entire understanding of the parties with respect to the matters covered hereby and thereby and, except as specifically set forth herein or therein, neither the Company nor any Holder makes any representation, warranty, covenant or undertaking with respect to such matters. This Agreement may be amended by the Company and the Required Holders. The 14 Company may in writing waive any provision hereof accruing to its benefit and the Required Holders may waive any provision hereof accruing to the benefit of the Holders. Section 9.4 Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be effective upon actual receipt of such mailing. The addresses for such communications shall be: to the Company: SystemOne Technologies Inc. 8305 N.W. 27th Street Suite 107 Miami, Florida 33122 Attn: Paul I. Mansur, Chief Executive Officer with copies to: Greenberg Traurig, P.A. 1221 Brickell Avenue Miami, Florida 33131 Attn: Ira N. Rosner, Esq. to the Holders: To each Holder at the address(es) set forth on Schedule I or II of this Agreement. Any party hereto may from time to time change its address for notices by giving at least 10 days' written notice of such changed address to the other parties hereto. Section 9.5 Indemnity. Each party shall indemnify each other party against any loss, cost or damages (including reasonable attorney's fees but excluding consequential damages) incurred as a result of such parties' breach of any representation, warranty, covenant or agreement in this Agreement. Section 9.6 Waivers. No waiver by any party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. Section 9.7 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. Section 9.8 Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holders (which consent may be withheld for any reason in their sole discretion), except that the Company may assign this Agreement in connection with a merger, consolidation, business combination or the sale of all or substantially all of its assets provided that the Company is not released from any of its obligations hereunder, such successor in interest or assignee assumes all obligations of the Company hereunder, and appropriate adjustment of the provisions contained in this Agreement is made to place the Holders in substantially the same position as they would have been but for 15 such assignment. Any Holder may assign this Agreement (in whole or in part) or any rights or obligations hereunder without the consent of the Company in connection with any sale or transfer of all or any portion of the New Securities (or Underlying Shares) held by such Holder. Section 9.9 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. Section 9.10 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without regard to such state's principles of conflict of laws. Section 9.11 Survival. The representations and warranties and the agreements and covenants of the Company and each Holder contained herein shall survive the Closing. Section 9.12 Execution. This Agreement may be executed in counterparts, each of which shall be considered one and the same agreement, it being understood that all parties need not sign the same counterpart. Section 9.13 Publicity. The Company agrees that it will not disclose, and will not include in any public announcement, the name of any Holder without its consent, unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement. Section 9.14 Severability. The parties acknowledge and agree that all representations, warranties, covenants and agreements of the Holders hereunder are several and not joint, that no Holder shall have any responsibility or liability for the representations, warrants, agreements, acts or omissions of any other Holder, and that any rights granted to "Holders" hereunder shall be enforceable by each Holder hereunder. Section 9.15 Like Treatment of Holders. Neither the Company nor any of its affiliates shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee, payment for the redemption or exchange of New Junior Notes, or otherwise, to any Junior Note Holders, for or as an inducement to, or in connection with the solicitation of, any consent, waiver or amendment of any terms or provisions of the New Junior Notes or this Agreement, unless such consideration is required to be paid to all Junior Note Holders bound by such consent, waiver or amendment whether or not such holders so consent, waive or agree to amend and whether or not such holders tender their New Junior Notes for redemption or exchange. The Company shall not, directly or indirectly, redeem any New Junior Notes unless such offer of redemption is made pro rata to all holders of New Junior Notes on identical terms. Section 9.16 Consent. Each Holder of Current Junior Notes hereby consents to and approves the transactions contemplated by this Agreement to the extent such consent or approval is required under the terms of the Current Junior Notes and the documents related thereto; each Holder of Current Secured Notes hereby consents to and approves the transactions contemplated by this Agreement to the extent such consent or approval is required under the terms of the 16 Current Secured Notes, the Company's Articles of Incorporation, the documents related thereto or otherwise. [The remainder of this page has been intentionally left blank.] 17 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. The Company: SYSTEMONE TECHNOLOGIES INC. By: /s/ Paul I. Mansur --------------------------------- Name: Paul I. Mansur Title: Chief Executive Officer 18 JUNIOR NOTE HOLDERS HOLDERS: GULFBEND & CO. c/o Emerging Growth Advisers, Inc. World Trade Center Baltimore 401 E. Pratt Street, Suite 211 Baltimore, MD 21202-3041 Attn: Catherine Grable By: /s/William A. Muggrei -------------------------------- Name: William A. Muggrei Title: President and Chief Executive Officer CREDIT SUISSE FIRST BOSTON CORPORATION 11 Madison Avenue, 3rd Floor New York, NY 10010 Attn: Jeffrey Andreski By: /s/ Jeffrey B. Andreski -------------------------------- Name: Jeffrey B. Andreski Title: Managing Director SB MGT. CORP. (F/K/A NEW RIVER CAPITAL PARTNERS) 1600 S.E. 17th Street, Suite 306 Ft. Lauderdale, FL 33316 Attn: Thomas C. Byrne By: /s/ Thomas C. Byrne -------------------------------- Name: Thomas C. Byrne Title: President 19 TRITON CAPITAL INVESTMENTS, LTD. c/o Pacific Assets Management 1 Sansome Street 39th Floor San Francisco, CA 94104 Attn: Amy Zhang By: /s/ Roger Richter -------------------------------- Name: Roger Richter Title: Senior Partner PITT & COMPANY c/o Emerging Growth Advisers, Inc. World Trade Center Baltimore 401 E. Pratt Street, Suite 211 Baltimore, MD 21202-3041 Attn: Catherine Grable By: /s/ Peter S. Welles -------------------------------- Name: Peter S. Welles Title: President, Emerging Growth Advisors, Inc. /s/ Gillett Welles, Jr. - ----------------------------------- GILLETT WELLES, JR. c/o Emerging Growth Advisers, Inc. World Trade Center Baltimore 401 E. Pratt Street, Suite 211 Baltimore, MD 21202-3041 Attn: Catherine Grable /s/ Anne Henry Welles - ----------------------------------- ANNE HENRY WELLES c/o Emerging Growth Advisers, Inc. World Trade Center Baltimore 401 E. Pratt Street, Suite 211 Baltimore, MD 21202-3041 Attn: Catherine Grable 20 /s/ Gillett Welles III - ----------------------------------- GILLETT WELLES III P.O. Box 448 Horseheads, NY 14845 /s/ Ann V. Welles - ----------------------------------- ANN V. WELLES 14 Badger Road Framingham, MA 01702 /s/ Michael H. Welles - ----------------------------------- MICHAEL H. WELLES 920 Salem End Road Framingham, MA 01702 /s/ Thomasine M. Thompson and Robert L. Thompson - ------------------------------------------------ ROBERT L. & THOMASINE M. THOMPSON c/o Emerging Growth Advisers, Inc. World Trade Center Baltimore 401 E. Pratt Street, Suite 211 Baltimore, MD 21202-3041 Attn: Catherine Grable DEUTSCHE BANK SECURITIES Custodian FBO Peter S. Welles' IRA 1 South Street Baltimore, MD 21202 Attn: Lisa Howard By: /s/ Peter S. Welles -------------------------------- Name: Peter S. Welles 21 DEUTSCHE BANK SECURITIES Custodian FBO Clayton L. Moravec's IRA 1 South Street Baltimore, MD 21202 Attn: Lisa Howard By: /s/ Clayton L. Moravec -------------------------------- Name: Clayton L. Moravec Title: Trustee /s/ R. Pito Salas - ----------------------------------- R. PITO SALAS 12 Intervale Road Arlington, MA 02174 /s/ Christine K. Salas - ----------------------------------- CHRISTINE K. SALAS 12 Intervale Road Arlington, MA 02174 /s/ Sarah P. Beir - ----------------------------------- SARAH P. BEIR 37 Wedgemere Avenue Winchester, MA 01890 Dan Purjes c/o Rockwood Group, LLC 60 East 42nd Street, Suite 2544 New York, NY 10165 By: /s/ Dan Purjes -------------------------------- Name: Dan Purjes 22 J. M. HULL ASSOCIATES, L.P. c/o Hull Management 750 Lexington Avenue, 26th Floor New York, NY 10022 Attn: J. Mitchell Hull By: /s/ J. Mitchell Hull -------------------------------- Name: J. Mitchell Hull Title: Gen Partner BOST & CO. c/o JP Morgan Chase Bank, formerly known as Morgan Guarantee Trust Company of New York, as Investment Manager and Agent for the Alfred P. Sloan Foundation (Multi-Market Account) 522 Fifth Avenue, 9th Floor New York, NY 10036 Attn: Joan L. Huggins By: /s/ Lawrence J. Fuchs --------------------------------- Name: Lawrence J. Fuchs Title: Vice President WHITING & CO. c/o JP Morgan Chase Bank, formerly known as Morgan Guarantee Trust Company of New York, as Trustee of the Commingled Pension Trust Fund (Multi-Market Special Investment Fund II) of JP Morgan Chase Bank 522 Fifth Avenue, 9th Floor New York, NY 10036 Attn: Joan L. Huggins By: /s/ Lawrence J. Fuchs --------------------------------- Name: Lawrence J. Fuchs Title: Vice President 23 WHITING & CO. c/o JP Morgan Chase Bank, formerly known as Morgan Guarantee Trust Company of New York, as Trustee of the Multi-Market Special Investment Trust Fund of JP Morgan Chase Bank 522 Fifth Avenue, 9th Floor New York, NY 10036 Attn: Joan L. Huggins By: /s/ Lawrence J. Fuchs --------------------------------- Name: Lawrence J. Fuchs Title: Vice President Oppenheimer Convertible Securities Fund c/o Citibank, N.A. 333 West 34th Street - 3rd Floor New York, NY 10001 Attn: Adeline Chung By: /s/ Edward Everett --------------------------------- Name: Edward Everett Title: Vice President 24 SECURED NOTE HOLDERS HOLDERS: ENVIRONMENTAL OPPORTUNITIES FUND II, L.P. ENVIRONMENTAL OPPORTUNITIES FUND II (INSTITUTIONAL), L.P. By: Fund II Mgt. Co., LLC General Partner By: /s/ Bruce McMaken -------------------------------- Name: Bruce McMaken Title: Manager HANSEATIC AMERICAS LDC By: Hanseatic Corporation By: /s/ Paul A. Biddelman -------------------------------- Name: Paul A. Biddelman Title: President 25 EXHIBITS AND SCHEDULES - -------------------------------------------------------------------------------- Schedule I List of Junior Note Holders - -------------------------------------------------------------------------------- Schedule II List of Secured Note Holders - -------------------------------------------------------------------------------- Schedule III Capitalization Table - -------------------------------------------------------------------------------- Exhibit A Form of New Junior Partial Cash Pay Note - -------------------------------------------------------------------------------- Exhibit B Form of New Junior PIK Pay Note - -------------------------------------------------------------------------------- Exhibit C Form of New Warrant - -------------------------------------------------------------------------------- Exhibit D Form of New Secured Note - -------------------------------------------------------------------------------- Exhibit E Fifth Amendment - -------------------------------------------------------------------------------- Exhibit F Form of Investor Questionnaire - -------------------------------------------------------------------------------- Exhibit G Waiver - -------------------------------------------------------------------------------- Exhibit H Mandatory Redemption Date Extension - -------------------------------------------------------------------------------- Exhibit I Opinion of Company Counsel - --------------------------------------------------------------------------------

26 SCHEDULE I
PRINCIPAL AMOUNT AND ACCRUED INTEREST OF CURRENT JUNIOR NOTES NUMBER OF NEW NAME OF JUNIOR NOTE HOLDER (AS OF SEPTEMBER 30, 2002) WARRANTS - --------------------------------------------------------------------------------------------------------------- Gulfbend & Co. 2,967,581 102,250 - --------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston Corporation 870,684 30,000 - --------------------------------------------------------------------------------------------------------------- New River Capital Partners 1,088,355 37,500 - --------------------------------------------------------------------------------------------------------------- Triton Capital Investments, LTD. 580,456 20,000 - --------------------------------------------------------------------------------------------------------------- Pitt & Company 253,950 8,750 - --------------------------------------------------------------------------------------------------------------- Gillett Welles, Jr. 72,557 2,500 - --------------------------------------------------------------------------------------------------------------- Anne Henry Welles 65,301 2,250 - --------------------------------------------------------------------------------------------------------------- Gillett Welles III 21,767 750 - --------------------------------------------------------------------------------------------------------------- Ann V. Welles 10,883.50 375 - --------------------------------------------------------------------------------------------------------------- Michael H. Welles 10,883.50 375 - --------------------------------------------------------------------------------------------------------------- Robert L. & Thomasine M. Thompson 14,511 500 - --------------------------------------------------------------------------------------------------------------- Deutsche Bank Securities custodian Peter S. Welles IRA 58,046 2,000 - --------------------------------------------------------------------------------------------------------------- Deutsche Bank Securities custodian Clayton L. Moravec, IRA 58,046 2,000 - --------------------------------------------------------------------------------------------------------------- R. Pito Salas 29,023 1,000 - --------------------------------------------------------------------------------------------------------------- Christine K. Salas 21,767 750 - --------------------------------------------------------------------------------------------------------------- Sarah P. Beir 43,534 1,500 - --------------------------------------------------------------------------------------------------------------- WBM III, LLC 72,557 2,500 - --------------------------------------------------------------------------------------------------------------- J.M. Hull Associates, L.P. 1,015,798 35,000 - --------------------------------------------------------------------------------------------------------------- Bost & Co. 1,306,026 45,000 - --------------------------------------------------------------------------------------------------------------- Whiting & Co. 7,400,815 255,000 - --------------------------------------------------------------------------------------------------------------- Hare & Co. 5,804,561 200,000 - ---------------------------------------------------------------------------------------------------------------
27 SCHEDULE II
PRINCIPAL AMOUNT AND ACCRUED INTEREST OF CURRENT SECURED NOTES NAME OF SECURED NOTE HOLDER (AS OF SEPTEMBER 30, 2002) - ------------------------------------------------------------------------------------ Environmental Opportunities Fund II, L.P. $ 462,047 - ------------------------------------------------------------------------------------ Environmental Opportunities Fund II (Institutional), L.P. $1,697,052 - ------------------------------------------------------------------------------------ Hanseatic Americas LDC $2,159,099 - ------------------------------------------------------------------------------------
28 SCHEDULE III CAPITALIZATION PRIOR TO THE EXCHANGE
ISSUED & OUTSTANDING INCLUDING ACCRUED INTEREST AND DIVIDENDS SECURITY AUTHORIZED (AS OF SEPTEMBER 30, 2002) - ------------------------------------------------------------------------------------------------ Common Stock 25,000,000 shares 4,742,923 shares - ------------------------------------------------------------------------------------------------ Preferred Stock 1,500,000 shares 178,710 shares - ------------------------------------------------------------------------------------------------ Series B Preferred 150,000 shares 66,356 shares - ------------------------------------------------------------------------------------------------ Series C Preferred 150,000 shares 88,043 shares - ------------------------------------------------------------------------------------------------ Series D Preferred 150,000 shares 24,311 shares - ------------------------------------------------------------------------------------------------ Options 603,966 - ------------------------------------------------------------------------------------------------ Warrants 2,679,901 - ------------------------------------------------------------------------------------------------ Current Junior Notes $21,767,102 - ------------------------------------------------------------------------------------------------ Current Secured Notes $ 4,318,198 - ------------------------------------------------------------------------------------------------
CAPITALIZATION FOLLOWING THE EXCHANGE
SECURITY AUTHORIZED ISSUED & OUTSTANDING - ------------------------------------------------------------------------------------------------ Common Stock 25,000,000 shares 4,742,923 shares - ------------------------------------------------------------------------------------------------ Preferred Stock 1,500,000 shares 178,710 shares - ------------------------------------------------------------------------------------------------ Series B Preferred 150,000 shares 66,356 shares - ------------------------------------------------------------------------------------------------ Series C Preferred 150,000 shares 88,043 shares - ------------------------------------------------------------------------------------------------ Series D Preferred 150,000 shares 24,311 shares - ------------------------------------------------------------------------------------------------ Options 603,966 - ------------------------------------------------------------------------------------------------ Warrants 3,679,901 - ------------------------------------------------------------------------------------------------ Current Junior Notes $21,767,102 - ------------------------------------------------------------------------------------------------ Current Secured Notes $ 4,318,198 - ------------------------------------------------------------------------------------------------
29 EX-4.2 4 g79773exv4w2.txt FORM OF 8.25% SUBORDINATED CONVERTIBLE NOTE (PCP) EXHIBIT 4.2 FORM OF NEW JUNIOR PARTIAL CASH PAY NOTE THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (II) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE ISSUER, OR OTHER COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR OTHER SIMILAR SECURITIES LAW. SYSTEMONE TECHNOLOGIES INC. 8.25% SUBORDINATED CONVERTIBLE NOTE DUE DECEMBER 31, 2005 $[[DOllARAMT]] DECEMBER 9, 2002 NEW YORK, NEW YORK FOR VALUE RECEIVED, SystemOne Technologies Inc. (f/k/a Mansur Industries Inc.), a Florida corporation (the "Company"), promises to pay to [[Holder]] (the "Holder") or registered assigns, the principal amount of [[WordDollars]] Dollars ($[[DollarAmt]]), and to pay interest (computed on the basis of a 360 day year of twelve 30 day months) on the unpaid principal amount hereof at the rate of eight and one-fourth percent (8.25%) per annum on such dates as set forth in Section 3 hereof. Principal hereunder shall be due and payable in cash on the Maturity Date (as defined in Section 4 hereof), subject to the terms and conditions of Sections 5 and 6 hereof. This Note is one of several 8.25% Subordinated Convertible Notes Due December 31, 2005 (collectively, the "Notes") issued by the Company to several holders (collectively, the "Holders") pursuant to that certain Exchange Agreement dated December 9, 2002 (the "Agreement"), by and among the Company, the Holders and the Secured Note Holders (as defined therein). Unless otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to them in the Agreement. This Note is subject to the following terms and conditions: 1. UNSECURED OBLIGATIONS; SUBORDINATION. This Note and the amounts payable hereunder, including principal, premium, if any, and accrued interest shall be unsecured obligations of the Company, and shall be subordinate and junior to all indebtedness of the Company presently existing or hereinafter incurred by the Company from time to time in accordance with Section 2(h) hereof. 2. COVENANTS. The Company covenants and agrees that, so long as this Note is outstanding and unpaid: (a) PAYMENT OF NOTE. The Company will punctually pay or cause to be paid the principal, premium, if any, and interest on this Note at the dates and places and in the manner specified herein. Any sums required to be withheld from any payment of principal, premium, if any, or interest on this Note by operation of law or pursuant to any order, judgment, execution, treaty, rule or regulation may be withheld by the Company and paid over in accordance therewith. In the event any restriction is placed upon payment of principal, premium, if any, or interest by virtue of a currency or monetary control law, rule or regulation of the United States Federal Government, as set forth in a written notice delivered to the Holder within thirty (30) days after the imposition of such a restriction, such payments shall be deposited to the account of the payee in a bank, trust company or other financial institution, as directed by the payee. Such payment or deposit will be deemed payment to the Holder. Nothing in this Note or in any other agreement between the Holder and the Company shall require the Company to pay, or the Holder to accept, interest in an amount which would subject the Holder to any penalty or forfeiture under applicable law. In the event that the payment of any charges, fees or other sums due under this Note or provided for in any other agreement between the Company and the Holder are or could be held to be in the nature of interest and would subject the Holder to any penalty or forfeiture under applicable law, then ipso facto the obligations of the Company to make such payment to the Holder shall be reduced to the highest rate authorized under applicable law and, in the event that the Holder shall have ever received, collected, accepted or applied as interest any amount in excess of the maximum rate of interest permitted to be charged by applicable law, such amount which would be excess interest under applicable law shall be applied first to the reduction of principal then outstanding, and, second, if such principal amount is paid in full, any remaining excess shall forthwith be returned to the Company. (b) MAINTENANCE OF CORPORATE EXISTENCE; MERGER AND CONSOLIDATION. The Company will at all times cause to be done all things necessary or appropriate to preserve and keep in full force and effect its corporate existence and the corporate existence of any significant subsidiary (as defined in Rule 405 of the Rules and Regulations under the Securities Act ("Significant Subsidiary")) and it shall not consolidate with or merge into any other corporation or transfer all or substantially all of its assets to any person unless (i) the corporation formed by such consolidation or into which the Company is merged or to which all or substantially all of the assets of the Company are transferred is a corporation that expressly assumes all of the obligations of the Company under this Note and (ii) after giving effect to such transaction, no Event of Default, as defined in Section 8(a) below, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing. (c) MAINTENANCE OF PROPERTIES. The Company will reasonably maintain in good repair, working order and condition, reasonable wear and tear excepted, its properties and other assets, and those of any Significant Subsidiary, and from time to time make all necessary or desirable repairs, renewals and replacements thereto. 2 (d) PAYMENT OF TAXES. The Company will, and will cause any Significant Subsidiary to, pay or discharge or cause to be paid, set aside for payment or discharge, before the same shall become delinquent, all taxes, assessments and governmental charges levied or imposed upon the Company or any Significant Subsidiary, as the case may be, or upon their respective income, profits or property; provided, that neither the Company nor any Significant Subsidiary shall be required to pay or discharge, or cause to be paid or discharged, any such tax, assessment, charge or claim whose amount or validity is being contested in good faith by appropriate proceedings. (e) COMPLIANCE WITH STATUTES. The Company will, and will cause any Significant Subsidiary to, comply in all material respects with all applicable statutes and regulations of the United States of America and of any state or municipality, and of any agency thereof, in respect of the conduct of business and the ownership of property by the Company or any Significant Subsidiary; provided, that nothing contained in this Section 1(e) shall require the Company or a Significant Subsidiary to comply with any such statute or regulations so long as its legality or applicability shall be contested in good faith. (f) RESTRICTIONS ON DIVIDENDS, REDEMPTIONS, ETC. The Company will not, and will cause its subsidiaries (other than wholly-owned subsidiaries) not to, (i) declare or pay any dividend or make any other distribution of the Company, except dividends or distributions payable in equity securities of the Company, or (ii) purchase, redeem or otherwise acquire or retire for value any equity securities of the Company, except (A) equity securities acquired upon conversion or exchange thereof into other equity securities of the Company and (B) any equity security issued to employees, directors of others performing services in accordance with agreements providing for such repurchase at original cost upon termination of employment, membership on the Board of Directors or other affiliation with the Company. (g) TRANSACTIONS WITH AFFILIATES. Neither the Company nor any Significant Subsidiary will itself, and will not permit any of their respective officers or directors, or holder of 5% or more of the Company's common stock ("Common Stock"), to engage in any transaction of any kind or nature with any affiliate of the Company or any Significant Subsidiary, other than transactions with any wholly-owned subsidiary of the Company or any Significant Subsidiary or pursuant to the terms of any agreement existing as of the date hereof between the Company or any Significant Subsidiary and any affiliate of the Company or any Significant Subsidiary, unless such transaction, or in the case of a course of related or similar transactions or continuing transactions, such course of transactions or continuing transactions is or are approved by independent directors of the Company or is or are upon terms which are fair to the Company or any Significant Subsidiary and which are reasonably similar to, or more beneficial to the Company or any Significant Subsidiary than the terms deemed likely to be obtained in similar transactions with unrelated persons under the same circumstances. (h) LIMITATION OF INCURRENCE OF INDEBTEDNESS. The Company will not, and will not permit any of its subsidiaries to, at any time, incur, create, assume or guarantee, or otherwise become or be liable in any manner with respect to any indebtedness (other than indebtedness incurred to refinance any indebtedness outstanding on the date hereof or otherwise permitted hereunder) (the "Incurrence") unless, after giving pro forma effect of the Incurrence thereof, the ratio of Total Debt (as defined below) to Consolidated EBITDA (as defined below) 3 for any period of twelve months then most recently ended shall be less than 6.0:1.0; provided, however, the Company may incur up to $10,000,000 of Total Debt (excluding the New Junior Notes) at any time. "Total Debt" shall mean the principal amount of all indebtedness of the Company and its subsidiaries, determined on a consolidated basis in accordance with generally accepted accounting principals, (a) in respect of money borrowed or evidenced by a promissory note, debenture or like written obligation to pay money (including the New Junior Notes); (b) in respect of any capital lease obligation; (c) obligations incurred or assumed as part of the deferred purchase price of any assets acquired by the Company or its subsidiaries; (d) all obligations or liabilities of others secured by a lien on any asset owned by the Company or any of its subsidiaries, irrespective of whether such obligation or liability is assumed, to the extent of the lesser of such obligation or liability or the fair market value of such asset; and (e) any guarantees by the Company or its subsidiaries of any indebtedness of another person or entities, provided, however, that in determining the indebtedness of the Company or any subsidiary, all liabilities of which the Company or any subsidiary is jointly and severally liable with one or more other persons or entities (including, without limitation, all liabilities of any partnership or joint venture of which the Company is a general partner or co-venturer) shall be included at the full amount thereof without regard to any right the Company or subsidiary may have against any such other person or entity for contribution or indemnity. The term "Consolidated EBITDA" shall mean for any period for which the amount thereof is to be determined, the Consolidated Net Income (as defined below) for such period plus the aggregate amounts deducted in determining such Consolidated Net Income in respect of (i) Interest Expense (as defined below) for such period, (ii) income and other taxes measured by income or profits for such period, and (iii) Depreciation and Amortization Expense (as defined below) for such period. The term "Consolidated Net Income" shall mean, for any period, the consolidated net income (or loss) of the Company and its subsidiaries for such period determined in accordance with generally accepted accounting principles applied on a consistent basis, after eliminating all offsetting debits and credits between the Company and its subsidiaries, operating expenses, provisions for all taxes and reserves (including reserves for deferred income taxes) and other items to be eliminated in accordance with generally accepted accounting principles, but, in any event, excluding: (i) any net gains or net losses (less all fees and expenses related thereto) on the sale or other disposition of investments or fixed or capital assets, and any taxes on such excluded gains and any tax deductions or credits on account of any such excluded losses; (ii) all items properly classified as extraordinary in accordance with generally accepted accounting principles; (iii) net earnings and losses of any subsidiary accrued prior to the date it became a subsidiary; (iv) net earnings and losses of any person or entity (other than a subsidiary), substantially all the assets of which have been acquired by the Company or any 4 subsidiary in any manner, realized by such other person or entity prior to the date of such acquisition, except to the extent that any such earnings have been received by the Company or such subsidiary in the form of cash dividends or other similar cash distributions; (v) net earnings and losses of any person or entity (other than a subsidiary) which shall have been merged into or consolidated with the Company or any subsidiary prior to the date of such merger or consolidation; (vi) any portion of the net earnings of any subsidiary which for any reason is unavailable for payment of dividends to the Company or any subsidiary; (vii) earnings or losses resulting from any reappraisal, revaluation, write-up or write-down of assets during such period; (viii) any income resulting from any excess of the equity in any person or entity at the date of acquisition thereof over the amount invested in such person or entity; (ix) any net gain arising from the acquisition of any capital stock or other securities of the Company or any subsidiary; (x) any deferred credit or amortization thereof from the acquisition of any properties or assets of any person or entity; and (xi) any net gain from the collection of the proceeds of life insurance policies. The term "Depreciation and Amortization Expense" shall mean, for any period, without duplication, the total expense of the Company and its subsidiaries during such period for depreciation, amortization of intangible assets and other non-cash charges, all calculated in accordance with generally accepted accounting principles. The term "Interest Expense" shall mean, for any period, without duplication, the aggregate of all interest paid or accrued, including, without limitation, amortization of debt issuance costs, of the Company and its subsidiaries as determined on a consolidated basis in accordance with generally accepted accounting principles. 3. INTEREST. Interest shall be paid in cash semi-annually on the unpaid principal amount hereof at the rate of eight and one-quarter percent (8.25%) per annum on each June 30 and December 31, commencing on December 31, 2002 (each an "Interest Payment Date"), and concluding on the Maturity Date; provided, however, that the accrued interest that would otherwise be due on December 31, 2002 may, at the Company's election, be paid by adding such accrued interest to the principal amount of this Note then outstanding and thereafter be principal of this Note for all purposes. 4. MATURITY 5 If this Note is not converted into Common Stock in accordance with Section 5 hereof or redeemed in accordance with Section 6 hereof, the principal amount of this Note as determined in accordance with Section 2 hereof, together with accrued but unpaid interest, shall be due and payable in cash on December 31, 2005 (the "Maturity Date"). 5. CONVERSION All, but not less than all, of the principal amount of this Note as determined in accordance with Section 3 of this Note and accrued interest thereon may be converted into shares of Common Stock (the "Note Shares") at the option of the Holder at any time on or prior to the Maturity Date, subject to the terms and conditions set forth in this Section 5 or, if earlier, prior to the date fixed for redemption pursuant to Section 6 hereof. Upon conversion into Note Shares pursuant to this paragraph, the principal amount of this Note and accrued interest thereon, as determined in accordance with Section 3, shall be discharged. From and after the date hereof, if 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 (as defined below) for a period of twenty (20) consecutive trading days, including the twenty (20) trading days prior to the date hereof (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 principal amount of the Notes (as determined in accordance with Section 3 hereof) shall automatically and without any action by the Holder or the Company be converted into the Company's Common Stock, on a pro rata basis, in an amount determined in accordance with the following formula: CN = V X 22 X CP where CN is the principal amount of the Notes to be converted; V is the average daily reported volume of trading in the Company's 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 CP is the Conversion Price (as hereinafter defined). Notwithstanding the foregoing, none of the outstanding principal of the Notes shall be converted as a result of an Early Conversion Event pursuant to this Section 5 unless the resale of the Note Shares is eligible for resale pursuant to Rule 144(k) under the Securities Act of 1933, as amended (the "Act") or pursuant to an effective registration statement under the Act. Accrued interest on the principal amount converted upon the occurrence of an Early Conversion Event shall be paid on the next Interest Payment Date in accordance with Section 3 hereof. (a) CONVERSION PRICE. The "Conversion Price" shall equal seventeen dollars ($17.00) (subject to adjustment under certain circumstances). The number of Note Shares into which this Note may be converted shall be determined by dividing the aggregate amount of outstanding principal on this Note and accrued interest thereon, as determined in accordance with Section 3, to be converted on the Conversion Date (as defined below) by the then applicable Conversion Price. 6 (b) METHOD OF CONVERSION. Before the Holder shall be entitled to receive Note Shares upon the conversion of this Note, the Holder shall surrender this Note and deliver a Notice of Conversion (in the form attached hereto as Exhibit A) in the event of conversion at the option of the Holder to the office of the Company or its designated agent. The Notice of Conversion shall state therein the amount(s) in which the certificate(s) for Note Shares are to be issued. Upon the conversion of this Note, in whole or in part, in connection with an Early Conversion Event the Company shall send to the Holder of this Note a Notice of Early Conversion (in the form attached hereto as Exhibit B) stating the amount of principal of the Note to be converted and the number of shares of Common Stock into which such principal shall be converted. The time of conversion (the "Conversion Date") shall be the close of business on the first business day following the date on which the Company receives the Notice of Conversion in the event of conversion at the option of the Holder or the last date of a Calculation Period in the event of conversion upon an Early Conversion Event, as the case may be. Interest on the principal amount of Notes converted ceases to accrue on and after the Conversion Date of such principal amount. (c) ISSUANCE OF NOTE SHARES. The Company shall, as soon as practicable after surrender of this Note and receipt of the Notice of Conversion and receipt of this Note, but in no event more than three (3) business days thereafter, issue and deliver to the Holder, a certificate(s) for the number of Note Shares to which the Holder shall be entitled as aforesaid. (d) NO FRACTIONAL SHARES. No fractional Note Shares shall be issuable upon conversion of this Note. If the conversion of this Note and any other Note(s) held by the Holder, in the aggregate would result in the issuance of a fractional share of Common Stock, such fractional share shall be rounded up to the nearest whole share and issued to the Holder. (e) ADJUSTMENT OF CONVERSION PRICE; MERGER. (i) If the Company at any time or from time to time while this Note is issued and outstanding shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment of a dividend in Common Stock or in any right to acquire Common Stock), or if the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the Conversion Price in effect immediately before such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. If the Company shall declare or pay, without consideration, any dividend on the Common Stock payable in any right to acquire Common Stock for no consideration, then the Company shall be deemed to have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of shares issuable upon exercise of such rights to acquire Common Stock. (ii) If the Common Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares 7 provided for in Section 5(e)(i)), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted so that the Note Shares shall be convertible into, in lieu of the number of shares of Common Stock which the Holder would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of Note Shares that would have been subject to receipt by the Holder upon payment of Note Shares on this Note immediately before that change. (iii) In case of any consolidation or merger of the Company with any other corporation, limited liability company or any other entity (each such transaction, a "Merger"), the entity formed by the Merger shall succeed to the covenants, stipulations, promises and the agreements contained in this Note. In the event of a Merger, the Company shall make appropriate provisions so that the Holder shall have the right thereafter to convert this Note into the kind and amount of securities receivable upon such Merger by a Holder of the number of securities into which this Note could have been converted immediately prior to a Merger. The above provisions shall similarly apply to successive Mergers. (iv) Upon the occurrence of each adjustment or readjustment of any Conversion Price pursuant to this Section 5(e), the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder a notice setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. (f) RESERVATION OF STOCK. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Notes into Note Shares, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Notes; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all of the Notes then, the Company will take such corporate action as in the opinion of its counsel may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including without limitation, engaging in best efforts to obtain the requisite shareholder approval. (g) ISSUE TAXES. The Company shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of Note Shares; provided, that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by the Holder in connection with any such conversion. 6. REDEMPTION (a) The principal amount of this Note plus any accrued but unpaid interest may be redeemed by the Company in cash at a redemption price of one hundred and two percent (102%) of the principal amount plus any accrued but unpaid interest. 8 (b) Notice of intention to redeem this Note pursuant to Section 6(b) will be given to the Holders by mailing notice thereof to such Holders' address as listed in the Note Register. Such notice will be deemed to have been given on the date of mailing as evidenced by an affidavit from the Chief Executive Officer or the Chief Financial Officer of the Company. Notice will be given not more than sixty (60) days nor less than thirty (30) days prior to the redemption date. 7. REGISTRATION: REGISTRATION OF TRANSFER AND EXCHANGE OF THIS NOTE (a) The Company shall keep or cause to be kept a note register (the "Note Register") for the Notes in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of the Notes and the registration of transfers of the Notes. (b) Subject to the restrictions on transfer set forth herein, this Note may be exchanged, at the option of each Holder, for other Notes in any authorized denominations, of a like aggregate principal amount, upon surrender of this Note to be exchanged at the offices of the Company or its designated agent (either, the "Registrar"). (c) All Notes issued upon any registration of transfer or exchange of this Note shall be valid obligations of the Company, evidencing the same debt, and entitling the Holder to the same benefits under this Note. (d) Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Registrar, duly executed by the Holder thereof or such Holder's attorney duly authorized in writing. (e) No charge shall be made to a Holder for any registration of transfer or exchange of Notes. (f) Prior to due presentment for registration of transfer of any Note, the Company may treat the person in whose name any Note is registered (as of the day of determination) as the Holder for the purpose of receiving payments of principal of and interest on such Note and for all other purposes, and neither the Company nor any agent of the Company shall be affected by notice to the contrary. 8. DEFAULT (a) DEFAULT. For purposes of this Section 8, the term "Significant Subsidiary" shall have the same meaning as defined in Rule 405 of the Rules and Regulations under the Securities Act, except that the applicable percentage expressed in each of the conditions under such Rule 405 shall be 25% instead of 10%. The occurrence of any one or more of the following events shall constitute an event of default (each an "Event of Default") hereunder: (i) if the Company fails to make payment of any sum payable with respect to the Note, which failure is not cured within ten (10) business days of the stated due date of such payment, or if the Company violates any of the agreements, 9 promises, covenants, terms and conditions of any of, the Notes and such violation remains uncured for ten (10) business days after the earlier of (i) the date of the applicable Notice of Event of Default (as defined below) or (ii) the date that a Responsible Officer (as defined below) acquires knowledge of any such violation. (ii) if any warranty, representation or statement of fact made herein by the Company is false or misleading in any material respect when made; (iii) if the Company or any Significant Subsidiary fails to maintain its corporate existence and such failure remains uncured for ten (10) business days after earlier of (i) the date of the applicable Notice of Event of Default (as defined below) or (ii) the date that a Responsible Officer (as defined below) acquires knowledge of any such failure; (iv) if the Company or any Significant Subsidiary becomes insolvent (however defined or evidenced) or makes an assignment for the benefit of creditors; (v) if there shall be filed by or against the Company or any Significant Subsidiary any petition for any relief under the bankruptcy laws of the United States now or hereafter in effect or any proceeding shall be commenced with respect to the Company or any Significant Subsidiary under any insolvency, readjustment of debt, reorganization, dissolution, liquidation or similar law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity), provided that in the case of any involuntary filing or the commencement of any involuntary proceeding against the Company or any Significant Subsidiary such proceeding or petition shall have continued undismissed and unvacated for at least 60 days; (vi) if any proceeding, procedure or remedy supplementary to or in enforcement of a final non-appealable judgment (other than any judgment that would not have a Material Adverse Effect on the Company or any Significant Subsidiary, taken as a whole) shall be commenced against, or with respect to any material property of, the Company or any Significant Subsidiary; or (vii) if any petition or application to any court or tribunal, at law or in equity, shall be filed by or against the Company or any Significant Subsidiary for the appointment of any receiver or trustee for the Company or any Significant Subsidiary or any material part of the property of the Company or any Significant Subsidiary, provided that in the case of any involuntary filing against the Company or any Significant Subsidiary, such proceeding or appointment shall have continued undismissed and unvacated for at least 60 days. (b) NOTICE OF EVENT OF DEFAULT. Upon the Chairman, the Chief Executive Officer, the Chief Financial Officer (or principal accounting officer), or any President (each a "Responsible Officer") of the Company acquiring knowledge of the existence of an Event of Default, the Company shall send to the Holder a written notice ("Notice of Event of Default") 10 specifying the nature and period of existence of any Event of Default and what action the Company is taking or proposes to take with respect thereto. (c) REMEDIES UPON DEFAULT. If any Event of Default shall occur for any reason, then and in any such event, in addition to all rights and remedies of the Holder under applicable law or otherwise, all such rights and remedies being cumulative, not exclusive and enforceable alternatively, successively and concurrently, the Holder may, at its option, declare any or all amounts owing under this Note, to be due and payable, whereupon the then unpaid balance hereof, together with all accrued and unpaid interest thereon, shall forthwith become due and payable, together with interest accruing thereafter at the then applicable interest rate stated above until the indebtedness evidenced by this Note is paid in full, plus the costs and expenses of collection hereof, including, but not limited to, attorney's fees and legal expenses. (d) THE COMPANY'S WAIVERS. The Company (i) waives diligence, demand, presentment, protest and notice of any kind, (ii) agrees that it will not be necessary for the Holder to first institute suit in order to enforce payment of this Note and (iii) consents to any one or more extensions or postponements of time of payment, release, surrender or forbearance or other indulgence, without notice or consent. The pleading of any statute of limitations as a defense to any demand against the Company is hereby expressly waived by the Company. (e) CERTAIN OBLIGORS. The Holder may proceed against the Company and any guarantors or endorsees hereof in such order and manner as the Holder may choose. 9. OTHER PROVISIONS RELATING TO RIGHTS OF THE HOLDER OF THIS NOTE (a) RIGHTS OF THE HOLDER OF THIS NOTE. This Note shall not entitle the Holder to any of the rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of shareholders or any other proceedings of the Company. This Section 9(a) shall not affect the rights of the Holder in its capacity as a shareholder of the Company upon conversion of this Note and issuance to the Holder of Note Shares pursuant to Section 5 hereof. (b) LOST, STOLEN, MUTILATED OR DESTROYED NOTE. If this Note shall be mutilated, lost, stolen, or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen, or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen, or destroyed but only upon receipt of evidence (which may consist of a signed affidavit of the Holder), of such loss, theft, or destruction of such Note, and of the ownership thereof, and indemnity, if requested, all reasonably satisfactory to the Company. 10. SECURITIES LAW COMPLIANCE (a) RESTRICTIONS ON TRANSFER. The Holder and the Company understand that each of (i) the Holder's right to convert this Note and (ii) the ability of the Company to issue the Note Shares are subject to full compliance with the provisions of all applicable securities laws and the availability thereunder of an exemption from registration, and that the certificates evidencing the Note Shares, shall bear a legend substantially to the effect of the legend on the first page hereof. 11 (b) COMPLIANCE WITH LAWS. The Holder agrees to comply with all applicable laws, rules and regulations of all federal and state securities regulators, including but not limited to, the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., and applicable state securities regulators with respect to disclosure, filings and any other requirements resulting in any way from the issuance or conversion of this Note. 11. OTHER MATTERS (a) BINDING EFFECT; ASSIGNMENT. The provisions of this Note shall be binding upon and inure to the benefit of the parties hereto and the successors and assigns of the Company. (b) FURTHER ACTIONS. At any time and from time to time, the Company and the Holder agree, without further consideration, to take such actions and to execute and deliver such documents as the other may reasonably request to consummate the transactions contemplated in this Note. (c) MODIFICATION; WAIVER. This Note sets forth the entire understanding of the Company and the Holder with respect to the subject matter hereof and supersedes all existing agreements between them concerning such subject matter. This Note may be amended, modified, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the Company and Holders of at least fifty-one percent (51%) in principal amount of the Notes at the time outstanding; provided, however, that the consent of the Holder shall be required to modify the terms of this Note affecting the payment of principal amount of, or interest on, such Holder's Note or the term of such Holder's Note. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof or hereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other or further exercise hereof or the exercise of any other right, power or privilege hereunder. Any waiver must be in writing. The rights and remedies provided herein are cumulative and are not exclusive of any rights or remedies which any party may otherwise have at law or in equity. (d) NOTICES. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered against receipt if to (i) the Company, to SystemOne Technologies Inc., 8305 N.W. 27th Street, Suite 107, Miami Florida 33122, with a copy to Greenberg Traurig, P.A., 1221 Brickell Avenue, Miami, Florida 33131, Attention: Ira N. Rosner, Esq. and (ii) the Holder to such Holder at its last address as shown on the Note Register (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10(d)). Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party's address which shall be deemed given at the time of receipt thereof. 12 (e) SEVERABILITY. If any provision of this Note is invalid, illegal, or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. The rate of interest on this Note is subject to any limitations imposed by applicable usury laws. (f) HEADINGS. The headings in this Note are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Note. (g) GOVERNING LAW. This Agreement shall be governed by and construed in all respects under the laws of the State of New York, without reference to its conflict of laws rules or principles. Any suit, action, proceeding or litigation arising out of or relating to this Agreement shall be brought and prosecuted in such federal or state court or courts located within the State of New York as provided by law. The parties hereby irrevocably and unconditionally consent to the jurisdiction of each such court or courts located within the State of New York and to service of process by registered or certified mail, return receipt requested, or by any other manner provided by applicable law, and hereby irrevocably and unconditionally waive any right to claim that any suit, action, proceeding or litigation so commenced has been commenced in an inconvenient forum. (h) DUE AUTHORIZATION. The execution and delivery of this Note and the consummation of the transactions contemplated herein have been authorized by the Board of Directors of the Company. IN WITNESS WHEREOF, the Company has caused this Note to be executed on its behalf by its Chief Executive Officer thereunto duly authorized. SYSTEMONE TECHNOLOGIES INC. By: _______________________ Paul I. Mansur Chief Executive Officer Attest: By: _________________________ Pierre G. Mansur President 13 EXHIBIT A NOTICE OF CONVERSION The undersigned being the holder of the attached 8.25% Subordinated Convertible Note(s) Due on December 31, 2005 (the "Note(s)") of SystemOne Technologies Inc. (the "Corporation"), hereby exercises the option to convert the Note(s) into Note Shares (as defined in the Note(s)) in accordance with the terms of the Note(s). The undersigned directs that the Note Shares be issued in the name of the holder of the attached Note and delivered as soon as practicable and in accordance with the provisions of the Note(s) to: Full address: ________________________________________ ________________________________________ ________________________________________ ________________________________________ Date: ______________________________________ By _________________________________________ Name: ______________________________________ 14 EXHIBIT B NOTICE OF EARLY CONVERSION EVENT SystemOne Technologies Inc. (the "Company") hereby notifies __________, the holder of $___________ principal amount of its Subordinated Convertible Note(s) (the "Note(s)") due the Maturity Date (as defined in the Note), that an Early Conversion Event occurred on ______, 200_, and as such, you are hereby directed to surrender the Note as $______ of principal amount of such Note has been automatically converted into Note Shares (as defined in the Note) in accordance with the terms of the Note. Unless otherwise instructed, the Company shall issue the Note Shares and a new Note for the balance of the principal of the Note not converted in the name of the holder of the attached Note and deliver same as soon as practicable and in accordance with the provisions of the Note(s) to the address set forth in the Note Register. Date: ________________________ SystemOne Technologies Inc. By: ________________________ Name: 15 EX-4.3 5 g79773exv4w3.txt FORM OF 8.25% SUBORDINATED CONVERTIBLE NOTE (PIK) EXHIBIT 4.3 FORM OF NEW JUNIOR PIK PAY NOTE THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (II) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE ISSUER, OR OTHER COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR OTHER SIMILAR SECURITIES LAW. SYSTEMONE TECHNOLOGIES INC. 8.25% SUBORDINATED CONVERTIBLE NOTE DUE DECEMBER 31, 2005 $[[DOLLARAMT]] DECEMBER 9, 2002 NEW YORK, NEW YORK FOR VALUE RECEIVED, SystemOne Technologies Inc. (f/k/a Mansur Industries Inc.), a Florida corporation (the "Company"), promises to pay to [[Holder]] (the "Holder") or registered assigns, the principal amount of [[WordDollars]] Dollars ($[[DollarAmt]]), and to pay interest (computed on the basis of a 360 day year of twelve 30 day months) on the unpaid principal amount hereof at the rate of eight and one-fourth percent (8.25%) per annum on such dates as set forth in Section 3 hereof. Principal hereunder shall be due and payable in cash on the Maturity Date (as defined in Section 4 hereof), subject to the terms and conditions of Sections 5 and 6 hereof. This Note is one of several 8.25% Subordinated Convertible Notes Due December 31, 2005 (collectively, the "Notes") issued by the Company to several holders (collectively, the "Holders") pursuant to that certain Exchange Agreement dated December 9, 2002 (the "Agreement"), by and among the Company the Holders and the Secured Note Holders (as defined therein). Unless otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to them in the Agreement. This Note is subject to the following terms and conditions: 1. UNSECURED OBLIGATIONS; SUBORDINATION. This Note and the amounts payable hereunder, including principal, premium, if any, and accrued interest shall be unsecured obligations of the Company, and shall be subordinate and junior to all indebtedness of the Company presently existing or hereinafter incurred by the Company from time to time in accordance with Section 2(h) hereof. 2. COVENANTS. The Company covenants and agrees that, so long as this Note is outstanding and unpaid: (a) PAYMENT OF NOTE. The Company will punctually pay or cause to be paid the principal, premium, if any, and interest on this Note at the dates and places and in the manner specified herein. Any sums required to be withheld from any payment of principal, premium, if any, or interest on this Note by operation of law or pursuant to any order, judgment, execution, treaty, rule or regulation may be withheld by the Company and paid over in accordance therewith. In the event any restriction is placed upon payment of principal, premium, if any, or interest by virtue of a currency or monetary control law, rule or regulation of the United States Federal Government, as set forth in a written notice delivered to the Holder within thirty (30) days after the imposition of such a restriction, such payments shall be deposited to the account of the payee in a bank, trust company or other financial institution, as directed by the payee. Such payment or deposit will be deemed payment to the Holder. Nothing in this Note or in any other agreement between the Holder and the Company shall require the Company to pay, or the Holder to accept, interest in an amount which would subject the Holder to any penalty or forfeiture under applicable law. In the event that the payment of any charges, fees or other sums due under this Note or provided for in any other agreement between the Company and the Holder are or could be held to be in the nature of interest and would subject the Holder to any penalty or forfeiture under applicable law, then ipso facto the obligations of the Company to make such payment to the Holder shall be reduced to the highest rate authorized under applicable law and, in the event that the Holder shall have ever received, collected, accepted or applied as interest any amount in excess of the maximum rate of interest permitted to be charged by applicable law, such amount which would be excess interest under applicable law shall be applied first to the reduction of principal then outstanding, and, second, if such principal amount is paid in full, any remaining excess shall forthwith be returned to the Company. (b) MAINTENANCE OF CORPORATE EXISTENCE; MERGER AND CONSOLIDATION. The Company will at all times cause to be done all things necessary or appropriate to preserve and keep in full force and effect its corporate existence and the corporate existence of any significant subsidiary (as defined in Rule 405 of the Rules and Regulations under the Securities Act ("Significant Subsidiary")) and it shall not consolidate with or merge into any other corporation or transfer all or substantially all of its assets to any person unless (i) the corporation formed by such consolidation or into which the Company is merged or to which all or substantially all of the assets of the Company are transferred is a corporation that expressly assumes all of the obligations of the Company under this Note and (ii) after giving effect to such transaction, no Event of Default, as defined in Section 8(a) below, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing. (c) MAINTENANCE OF PROPERTIES. The Company will reasonably maintain in good repair, working order and condition, reasonable wear and tear excepted, its properties and other assets, and those of any Significant Subsidiary, and from time to time make all necessary or desirable repairs, renewals and replacements thereto. 2 (d) PAYMENT OF TAXES. The Company will, and will cause any Significant Subsidiary to, pay or discharge or cause to be paid, set aside for payment or discharge, before the same shall become delinquent, all taxes, assessments and governmental charges levied or imposed upon the Company or any Significant Subsidiary, as the case may be, or upon their respective income, profits or property; provided, that neither the Company nor any Significant Subsidiary shall be required to pay or discharge, or cause to be paid or discharged, any such tax, assessment, charge or claim whose amount or validity is being contested in good faith by appropriate proceedings. (e) COMPLIANCE WITH STATUTES. The Company will, and will cause any Significant Subsidiary to, comply in all material respects with all applicable statutes and regulations of the United States of America and of any state or municipality, and of any agency thereof, in respect of the conduct of business and the ownership of property by the Company or any Significant Subsidiary; provided, that nothing contained in this Section 1(e) shall require the Company or a Significant Subsidiary to comply with any such statute or regulations so long as its legality or applicability shall be contested in good faith. (f) RESTRICTIONS ON DIVIDENDS, REDEMPTIONS, ETC. The Company will not, and will cause its subsidiaries (other than wholly-owned subsidiaries) not to, (i) declare or pay any dividend or make any other distribution of the Company, except dividends or distributions payable in equity securities of the Company, or (ii) purchase, redeem or otherwise acquire or retire for value any equity securities of the Company, except (A) equity securities acquired upon conversion or exchange thereof into other equity securities of the Company and (B) any equity security issued to employees, directors of others performing services in accordance with agreements providing for such repurchase at original cost upon termination of employment, membership on the Board of Directors or other affiliation with the Company. (g) TRANSACTIONS WITH AFFILIATES. Neither the Company nor any Significant Subsidiary will itself, and will not permit any of their respective officers or directors, or holder of 5% or more of the Company's common stock ("Common Stock"), to engage in any transaction of any kind or nature with any affiliate of the Company or any Significant Subsidiary, other than transactions with any wholly-owned subsidiary of the Company or any Significant Subsidiary or pursuant to the terms of any agreement existing as of the date hereof between the Company or any Significant Subsidiary and any affiliate of the Company or any Significant Subsidiary, unless such transaction, or in the case of a course of related or similar transactions or continuing transactions, such course of transactions or continuing transactions is or are approved by independent directors of the Company or is or are upon terms which are fair to the Company or any Significant Subsidiary and which are reasonably similar to, or more beneficial to the Company or any Significant Subsidiary than the terms deemed likely to be obtained in similar transactions with unrelated persons under the same circumstances. (h) LIMITATION OF INCURRENCE OF INDEBTEDNESS. The Company will not, and will not permit any of its subsidiaries to, at any time, incur, create, assume or guarantee, or otherwise become or be liable in any manner with respect to any indebtedness (other than indebtedness incurred to refinance any indebtedness outstanding on the date hereof or otherwise permitted hereunder) (the "Incurrence") unless, after giving pro forma effect of the Incurrence thereof, the ratio of Total Debt (as defined below) to Consolidated EBITDA (as defined below) 3 for any period of twelve months then most recently ended shall be less than 6.0:1.0; provided, however, the Company may incur up to $10,000,000 of Total Debt (excluding the New Junior Notes) at any time. "Total Debt" shall mean the principal amount of all indebtedness of the Company and its subsidiaries, determined on a consolidated basis in accordance with generally accepted accounting principals, (a) in respect of money borrowed or evidenced by a promissory note, debenture or like written obligation to pay money (including the New Junior Notes); (b) in respect of any capital lease obligation; (c) obligations incurred or assumed as part of the deferred purchase price of any assets acquired by the Company or its subsidiaries; (d) all obligations or liabilities of others secured by a lien on any asset owned by the Company or any of its subsidiaries, irrespective of whether such obligation or liability is assumed, to the extent of the lesser of such obligation or liability or the fair market value of such asset; and (e) any guarantees by the Company or its subsidiaries of any indebtedness of another person or entities, provided, however, that in determining the indebtedness of the Company or any subsidiary, all liabilities of which the Company or any subsidiary is jointly and severally liable with one or more other persons or entities (including, without limitation, all liabilities of any partnership or joint venture of which the Company is a general partner or co-venturer) shall be included at the full amount thereof without regard to any right the Company or subsidiary may have against any such other person or entity for contribution or indemnity. The term "Consolidated EBITDA" shall mean for any period for which the amount thereof is to be determined, the Consolidated Net Income (as defined below) for such period plus the aggregate amounts deducted in determining such Consolidated Net Income in respect of (i) Interest Expense (as defined below) for such period, (ii) income and other taxes measured by income or profits for such period, and (iii) Depreciation and Amortization Expense (as defined below) for such period. The term "Consolidated Net Income" shall mean, for any period, the consolidated net income (or loss) of the Company and its subsidiaries for such period determined in accordance with generally accepted accounting principles applied on a consistent basis, after eliminating all offsetting debits and credits between the Company and its subsidiaries, operating expenses, provisions for all taxes and reserves (including reserves for deferred income taxes) and other items to be eliminated in accordance with generally accepted accounting principles, but, in any event, excluding: (i) any net gains or net losses (less all fees and expenses related thereto) on the sale or other disposition of investments or fixed or capital assets, and any taxes on such excluded gains and any tax deductions or credits on account of any such excluded losses; (ii) all items properly classified as extraordinary in accordance with generally accepted accounting principles; (iii) net earnings and losses of any subsidiary accrued prior to the date it became a subsidiary; (iv) net earnings and losses of any person or entity (other than a subsidiary), substantially all the assets of which have been acquired by the Company or any 4 subsidiary in any manner, realized by such other person or entity prior to the date of such acquisition, except to the extent that any such earnings have been received by the Company or such subsidiary in the form of cash dividends or other similar cash distributions; (v) net earnings and losses of any person or entity (other than a subsidiary) which shall have been merged into or consolidated with the Company or any subsidiary prior to the date of such merger or consolidation; (vi) any portion of the net earnings of any subsidiary which for any reason is unavailable for payment of dividends to the Company or any subsidiary; (vii) earnings or losses resulting from any reappraisal, revaluation, write-up or write-down of assets during such period; (viii) any income resulting from any excess of the equity in any person or entity at the date of acquisition thereof over the amount invested in such person or entity; (ix) any net gain arising from the acquisition of any capital stock or other securities of the Company or any subsidiary; (x) any deferred credit or amortization thereof from the acquisition of any properties or assets of any person or entity; and (xi) any net gain from the collection of the proceeds of life insurance policies. The term "Depreciation and Amortization Expense" shall mean, for any period, without duplication, the total expense of the Company and its subsidiaries during such period for depreciation, amortization of intangible assets and other non-cash charges, all calculated in accordance with generally accepted accounting principles. The term "Interest Expense" shall mean, for any period, without duplication, the aggregate of all interest paid or accrued, including, without limitation, amortization of debt issuance costs, of the Company and its subsidiaries as determined on a consolidated basis in accordance with generally accepted accounting principles. 3. INTEREST. Interest shall be paid in cash semi-annually on the unpaid principal amount hereof at the rate of eight and one-quarter percent (8.25%) per annum on each June 30 and December 31, commencing on December 31, 2002 (each an "Interest Payment Date"), and concluding on the Maturity Date; provided, however, that the accrued interest that would otherwise be due on each Interest Payment Date prior to the Maturity Date shall be added to the principal amount of this Note then outstanding and thereafter be principal of this Note for all purposes. 4. MATURITY 5 If this Note is not converted into Common Stock in accordance with Section 5 hereof or redeemed in accordance with Section 6 hereof, the principal amount of this Note as determined in accordance with Section 2 hereof, together with accrued but unpaid interest, shall be due and payable in cash on December 31, 2005 (the "Maturity Date"). 5. CONVERSION All, but not less than all, of the principal amount of this Note as determined in accordance with Section 3 of this Note and accrued interest thereon may be converted into shares of Common Stock (the "Note Shares") at the option of the Holder at any time on or prior to the Maturity Date, subject to the terms and conditions set forth in this Section 5 or, if earlier, prior to the date fixed for redemption pursuant to Section 6 hereof. Upon conversion into Note Shares pursuant to this paragraph, the principal amount of this Note and accrued interest thereon, as determined in accordance with Section 3, shall be discharged. From and after the date hereof, if 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 (as defined below) for a period of twenty (20) consecutive trading days, including the twenty (20) trading days prior to the date hereof (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 principal amount of the Notes (as determined in accordance with Section 3 hereof) shall automatically and without any action by the Holder or the Company be converted into the Company's Common Stock, on a pro rata basis, in an amount determined in accordance with the following formula: CN = V X 22 X CP where CN is the principal amount of the Notes to be converted; V is the average daily reported volume of trading in the Company's 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 CP is the Conversion Price (as hereinafter defined). Notwithstanding the foregoing, none of the outstanding principal of the Notes shall be converted as a result of an Early Conversion Event pursuant to this Section 5 unless the resale of the Note Shares is eligible for resale pursuant to Rule 144(k) under the Securities Act of 1933, as amended (the "Act") or pursuant to an effective registration statement under the Act. Accrued interest on the principal amount converted upon the occurrence of an Early Conversion Event shall be paid on the next Interest Payment Date in accordance with Section 3 hereof. (a) CONVERSION PRICE. The "Conversion Price" shall equal seventeen dollars ($17.00) (subject to adjustment under certain circumstances). The number of Note Shares into which this Note may be converted shall be determined by dividing the aggregate amount of outstanding principal on this Note and accrued interest thereon, as determined in accordance with Section 3, to be converted on the Conversion Date (as defined below) by the then applicable Conversion Price. 6 (b) METHOD OF CONVERSION. Before the Holder shall be entitled to receive Note Shares upon the conversion of this Note, the Holder shall surrender this Note and deliver a Notice of Conversion (in the form attached hereto as Exhibit A) in the event of conversion at the option of the Holder to the office of the Company or its designated agent. The Notice of Conversion shall state therein the amount(s) in which the certificate(s) for Note Shares are to be issued. Upon the conversion of this Note, in whole or in part, in connection with an Early Conversion Event the Company shall send to the Holder of this Note a Notice of Early Conversion (in the form attached hereto as Exhibit B) stating the amount of principal of the Note to be converted and the number of shares of Common Stock into which such principal shall be converted. The time of conversion (the "Conversion Date") shall be the close of business on the first business day following the date on which the Company receives the Notice of Conversion in the event of conversion at the option of the Holder or the last date of a Calculation Period in the event of conversion upon an Early Conversion Event, as the case may be. Interest on the principal amount of Notes converted ceases to accrue on and after the Conversion Date of such principal amount. (c) ISSUANCE OF NOTE SHARES. The Company shall, as soon as practicable after surrender of this Note and receipt of the Notice of Conversion and receipt of this Note, but in no event more than three (3) business days thereafter, issue and deliver to the Holder, a certificate(s) for the number of Note Shares to which the Holder shall be entitled as aforesaid. (d) NO FRACTIONAL SHARES. No fractional Note Shares shall be issuable upon conversion of this Note. If the conversion of this Note and any other Note(s) held by the Holder, in the aggregate would result in the issuance of a fractional share of Common Stock, such fractional share shall be rounded up to the nearest whole share and issued to the Holder. (e) ADJUSTMENT OF CONVERSION PRICE; MERGER. (i) If the Company at any time or from time to time while this Note is issued and outstanding shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment of a dividend in Common Stock or in any right to acquire Common Stock), or if the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the Conversion Price in effect immediately before such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. If the Company shall declare or pay, without consideration, any dividend on the Common Stock payable in any right to acquire Common Stock for no consideration, then the Company shall be deemed to have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of shares issuable upon exercise of such rights to acquire Common Stock. (ii) If the Common Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares 7 provided for in Section 5(e)(i)), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted so that the Note Shares shall be convertible into, in lieu of the number of shares of Common Stock which the Holder would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of Note Shares that would have been subject to receipt by the Holder upon payment of Note Shares on this Note immediately before that change. (iii) In case of any consolidation or merger of the Company with any other corporation, limited liability company or any other entity (each such transaction, a "Merger"), the entity formed by the Merger shall succeed to the covenants, stipulations, promises and the agreements contained in this Note. In the event of a Merger, the Company shall make appropriate provisions so that the Holder shall have the right thereafter to convert this Note into the kind and amount of securities receivable upon such Merger by a Holder of the number of securities into which this Note could have been converted immediately prior to a Merger. The above provisions shall similarly apply to successive Mergers. (iv) Upon the occurrence of each adjustment or readjustment of any Conversion Price pursuant to this Section 5(e), the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder a notice setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. (f) RESERVATION OF STOCK. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Notes into Note Shares, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Notes; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all of the Notes then, the Company will take such corporate action as in the opinion of its counsel may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including without limitation, engaging in best efforts to obtain the requisite shareholder approval. (g) ISSUE TAXES. The Company shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of Note Shares; provided, that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by the Holder in connection with any such conversion. 6. REDEMPTION (a) The principal amount of this Note plus any accrued but unpaid interest may be redeemed by the Company in cash at a redemption price of one hundred and two percent (102%) of the principal amount plus any accrued but unpaid interest. 8 (b) Notice of intention to redeem this Note pursuant to Section 6(b) will be given to the Holders by mailing notice thereof to such Holders' address as listed in the Note Register. Such notice will be deemed to have been given on the date of mailing as evidenced by an affidavit from the Chief Executive Officer or the Chief Financial Officer of the Company. Notice will be given not more than sixty (60) days nor less than thirty (30) days prior to the redemption date. 7. REGISTRATION: REGISTRATION OF TRANSFER AND EXCHANGE OF THIS NOTE (a) The Company shall keep or cause to be kept a note register (the "Note Register") for the Notes in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of the Notes and the registration of transfers of the Notes. (b) Subject to the restrictions on transfer set forth herein, this Note may be exchanged, at the option of each Holder, for other Notes in any authorized denominations, of a like aggregate principal amount, upon surrender of this Note to be exchanged at the offices of the Company or its designated agent (either, the "Registrar"). (c) All Notes issued upon any registration of transfer or exchange of this Note shall be valid obligations of the Company, evidencing the same debt, and entitling the Holder to the same benefits under this Note. (d) Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Registrar, duly executed by the Holder thereof or such Holder's attorney duly authorized in writing. (e) No charge shall be made to a Holder for any registration of transfer or exchange of Notes. (f) Prior to due presentment for registration of transfer of any Note, the Company may treat the person in whose name any Note is registered (as of the day of determination) as the Holder for the purpose of receiving payments of principal of and interest on such Note and for all other purposes, and neither the Company nor any agent of the Company shall be affected by notice to the contrary. 8. DEFAULT (a) DEFAULT. For purposes of this Section 8, the term "Significant Subsidiary" shall have the same meaning as defined in Rule 405 of the Rules and Regulations under the Securities Act, except that the applicable percentage expressed in each of the conditions under such Rule 405 shall be 25% instead of 10%. The occurrence of any one or more of the following events shall constitute an event of default (each an "Event of Default") hereunder: (i) if the Company fails to make payment of any sum payable with respect to the Note, which failure is not cured within ten (10) business days of the stated due date of such payment, or if the Company violates any of the agreements, 9 promises, covenants, terms and conditions of any of, the Notes and such violation remains uncured for ten (10) business days after the earlier of (i) the date of the applicable Notice of Event of Default (as defined below) or (ii) the date that a Responsible Officer (as defined below) acquires knowledge of any such violation. (ii) if any warranty, representation or statement of fact made herein by the Company is false or misleading in any material respect when made; (iii) if the Company or any Significant Subsidiary fails to maintain its corporate existence and such failure remains uncured for ten (10) business days after earlier of (i) the date of the applicable Notice of Event of Default (as defined below) or (ii) the date that a Responsible Officer (as defined below) acquires knowledge of any such failure; (iv) if the Company or any Significant Subsidiary becomes insolvent (however defined or evidenced) or makes an assignment for the benefit of creditors; (v) if there shall be filed by or against the Company or any Significant Subsidiary any petition for any relief under the bankruptcy laws of the United States now or hereafter in effect or any proceeding shall be commenced with respect to the Company or any Significant Subsidiary under any insolvency, readjustment of debt, reorganization, dissolution, liquidation or similar law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity), provided that in the case of any involuntary filing or the commencement of any involuntary proceeding against the Company or any Significant Subsidiary such proceeding or petition shall have continued undismissed and unvacated for at least 60 days; (vi) if any proceeding, procedure or remedy supplementary to or in enforcement of a final non-appealable judgment (other than any judgment that would not have a Material Adverse Effect on the Company or any Significant Subsidiary, taken as a whole) shall be commenced against, or with respect to any material property of, the Company or any Significant Subsidiary; or (vii) if any petition or application to any court or tribunal, at law or in equity, shall be filed by or against the Company or any Significant Subsidiary for the appointment of any receiver or trustee for the Company or any Significant Subsidiary or any material part of the property of the Company or any Significant Subsidiary, provided that in the case of any involuntary filing against the Company or any Significant Subsidiary, such proceeding or appointment shall have continued undismissed and unvacated for at least 60 days. (b) NOTICE OF EVENT OF DEFAULT. Upon the Chairman, the Chief Executive Officer, the Chief Financial Officer (or principal accounting officer), or any President (each a "Responsible Officer") of the Company acquiring knowledge of the existence of an Event of Default, the Company shall send to the Holder a written notice ("Notice of Event of Default") 10 specifying the nature and period of existence of any Event of Default and what action the Company is taking or proposes to take with respect thereto. (c) REMEDIES UPON DEFAULT. If any Event of Default shall occur for any reason, then and in any such event, in addition to all rights and remedies of the Holder under applicable law or otherwise, all such rights and remedies being cumulative, not exclusive and enforceable alternatively, successively and concurrently, the Holder may, at its option, declare any or all amounts owing under this Note, to be due and payable, whereupon the then unpaid balance hereof, together with all accrued and unpaid interest thereon, shall forthwith become due and payable, together with interest accruing thereafter at the then applicable interest rate stated above until the indebtedness evidenced by this Note is paid in full, plus the costs and expenses of collection hereof, including, but not limited to, attorney's fees and legal expenses. (d) THE COMPANY'S WAIVERS. The Company (i) waives diligence, demand, presentment, protest and notice of any kind, (ii) agrees that it will not be necessary for the Holder to first institute suit in order to enforce payment of this Note and (iii) consents to any one or more extensions or postponements of time of payment, release, surrender or forbearance or other indulgence, without notice or consent. The pleading of any statute of limitations as a defense to any demand against the Company is hereby expressly waived by the Company. (e) CERTAIN OBLIGORS. The Holder may proceed against the Company and any guarantors or endorsees hereof in such order and manner as the Holder may choose. 9. OTHER PROVISIONS RELATING TO RIGHTS OF THE HOLDER OF THIS NOTE (a) RIGHTS OF THE HOLDER OF THIS NOTE. This Note shall not entitle the Holder to any of the rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of shareholders or any other proceedings of the Company. This Section 9(a) shall not affect the rights of the Holder in its capacity as a shareholder of the Company upon conversion of this Note and issuance to the Holder of Note Shares pursuant to Section 5 hereof. (b) LOST, STOLEN, MUTILATED OR DESTROYED NOTE. If this Note shall be mutilated, lost, stolen, or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen, or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen, or destroyed but only upon receipt of evidence (which may consist of a signed affidavit of the Holder), of such loss, theft, or destruction of such Note, and of the ownership thereof, and indemnity, if requested, all reasonably satisfactory to the Company. 10. SECURITIES LAW COMPLIANCE (a) RESTRICTIONS ON TRANSFER. The Holder and the Company understand that each of (i) the Holder's right to convert this Note and (ii) the ability of the Company to issue the Note Shares are subject to full compliance with the provisions of all applicable securities laws and the availability thereunder of an exemption from registration, and that the certificates evidencing the Note Shares, shall bear a legend substantially to the effect of the legend on the first page hereof. 11 (b) COMPLIANCE WITH LAWS. The Holder agrees to comply with all applicable laws, rules and regulations of all federal and state securities regulators, including but not limited to, the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., and applicable state securities regulators with respect to disclosure, filings and any other requirements resulting in any way from the issuance or conversion of this Note. 11. OTHER MATTERS (a) BINDING EFFECT; ASSIGNMENT. The provisions of this Note shall be binding upon and inure to the benefit of the parties hereto and the successors and assigns of the Company. (b) FURTHER ACTIONS. At any time and from time to time, the Company and the Holder agree, without further consideration, to take such actions and to execute and deliver such documents as the other may reasonably request to consummate the transactions contemplated in this Note. (c) MODIFICATION; WAIVER. This Note sets forth the entire understanding of the Company and the Holder with respect to the subject matter hereof and supersedes all existing agreements between them concerning such subject matter. This Note may be amended, modified, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the Company and Holders of at least fifty-one percent (51%) in principal amount of the Notes at the time outstanding; provided, however, that the consent of the Holder shall be required to modify the terms of this Note affecting the payment of principal amount of, or interest on, such Holder's Note or the term of such Holder's Note. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof or hereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other or further exercise hereof or the exercise of any other right, power or privilege hereunder. Any waiver must be in writing. The rights and remedies provided herein are cumulative and are not exclusive of any rights or remedies which any party may otherwise have at law or in equity. (d) NOTICES. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered against receipt if to (i) the Company, to SystemOne Technologies Inc., 8305 N.W. 27th Street, Suite 107, Miami Florida 33122, with a copy to Greenberg Traurig, P.A., 1221 Brickell Avenue, Miami, Florida 33131, Attention: Ira N. Rosner, Esq. and (ii) the Holder to such Holder at its last address as shown on the Note Register (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10(d)). Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party's address which shall be deemed given at the time of receipt thereof. 12 (e) SEVERABILITY. If any provision of this Note is invalid, illegal, or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. The rate of interest on this Note is subject to any limitations imposed by applicable usury laws. (f) HEADINGS. The headings in this Note are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Note. (g) GOVERNING LAW. This Agreement shall be governed by and construed in all respects under the laws of the State of New York, without reference to its conflict of laws rules or principles. Any suit, action, proceeding or litigation arising out of or relating to this Agreement shall be brought and prosecuted in such federal or state court or courts located within the State of New York as provided by law. The parties hereby irrevocably and unconditionally consent to the jurisdiction of each such court or courts located within the State of New York and to service of process by registered or certified mail, return receipt requested, or by any other manner provided by applicable law, and hereby irrevocably and unconditionally waive any right to claim that any suit, action, proceeding or litigation so commenced has been commenced in an inconvenient forum. (h) DUE AUTHORIZATION. The execution and delivery of this Note and the consummation of the transactions contemplated herein have been authorized by the Board of Directors of the Company. IN WITNESS WHEREOF, the Company has caused this Note to be executed on its behalf by its Chief Executive Officer thereunto duly authorized. SYSTEMONE TECHNOLOGIES INC. By: ____________________________ Paul I. Mansur Chief Executive Officer Attest: By: _________________________ Pierre G. Mansur President 13 EXHIBIT A NOTICE OF CONVERSION The undersigned being the holder of the attached 8.25% Subordinated Convertible Note(s) Due on December 31, 2005 (the "Note(s)") of SystemOne Technologies Inc. (the "Corporation"), hereby exercises the option to convert the Note(s) into Note Shares (as defined in the Note(s)) in accordance with the terms of the Note(s). The undersigned directs that the Note Shares be issued in the name of the holder of the attached Note and delivered as soon as practicable and in accordance with the provisions of the Note(s) to: Full address: _____________________________________ _____________________________________ _____________________________________ _____________________________________ Date:__________________________________ By_____________________________________ Name:__________________________________ 14 EXHIBIT B NOTICE OF EARLY CONVERSION EVENT SystemOne Technologies Inc. (the "Company") hereby notifies ______________, the holder of $___________ principal amount of its Subordinated Convertible Note(s) (the "Note(s)") due the Maturity Date (as defined in the Note), that an Early Conversion Event occurred on ______, 200_, and as such, you are hereby directed to surrender the Note as $______ of principal amount of such Note has been automatically converted into Note Shares (as defined in the Note) in accordance with the terms of the Note. Unless otherwise instructed, the Company shall issue the Note Shares and a new Note for the balance of the principal of the Note not converted in the name of the holder of the attached Note and deliver same as soon as practicable and in accordance with the provisions of the Note(s) to the address set forth in the Note Register. Date:________________________ SystemOne Technologies Inc. By: ________________________ Name: 15 EX-4.4 6 g79773exv4w4.txt FORM OF WARRANT FOR THE PUCHASE OF SHARES EXHIBIT 4.4 FORM OF NEW WARRANT 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. AS OF DECEMBER 9, 2002 SYSTEMONE TECHNOLOGIES INC. (INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA) WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK NO. WRT-[[WARRANTNO.]] FOR VALUE RECEIVED, SYSTEMONE TECHNOLOGIES INC., a Florida corporation (the "Company"), hereby certifies that [[Holder]] or assigns (the "Holder") is entitled, subject to the provisions of this Warrant, to purchase from the Company, up to [[Warrants]] fully paid and non-assessable shares of Common Stock at a price of $.01 per share (the "Exercise Price"). The term "Common Stock" means the Common Stock, par value $.001 per share, of the Company as constituted on the date of issuance of this Warrant. The number of shares of Common Stock to be received upon the exercise of this Warrant may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter referred to as "Warrant Stock." The term "Other Securities" means any other equity or debt securities that may be issued by the Company in addition thereto or in substitution for the Warrant Stock in accordance with the terms hereof. The term "Company" means and includes the corporation named above as well as (i) any immediate or more remote successor corporation resulting from the merger or consolidation of such corporation (or any immediate or more remote successor corporation of such corporation) with another corporation, or (ii) any corporation to which such corporation (or any immediate or more remote successor corporation of such corporation) has transferred its property or assets as an entirety or substantially as an entirety. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone. The Holder agrees with the Company that this Warrant is issued, and all the rights hereunder shall be held subject to, all of the conditions, limitations and provisions set forth herein. 1. EXERCISE OF WARRANT. 1.1 CASH EXERCISE. This Warrant may be exercised, in whole or in part, at any time, or from time to time, during the period commencing on the date hereof and expiring 5:00 p.m. Eastern Standard Time on December 31, 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 (subject to the limitations on exercise hereinabove set forth in Section 1.1) (a "Warrant Exchange"), at any time, or from time to time, during the period commencing on the date hereof and ending on the Expiration Date, into the number of shares of Common Stock determined in accordance with this Section 1.2, by presentation and surrender of this Warrant to the Company at its principal office, or at the office of its stock transfer agent, if any, accompanied by a notice (a "Notice of Exchange") stating that this Warrant is being exchanged and the number of shares of Common Stock to be exchanged. In connection with any Warrant Exchange, this Warrant shall represent the right to subscribe for and acquire the number of shares of Common Stock (rounded to the nearest whole number) equal to (i) the number of shares specified by the Holder in its Notice of Exchange (the "Total Number") less the number of shares equal to the quotient obtained by dividing (A) the product of the Total Number and the then applicable Exercise Price by (B) the then fair market value (determined in accordance with Section 3 below) per share of Common Stock. If this Warrant should be exchanged in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable hereunder. Upon receipt by the Company of this Warrant, together with a duly executed Notice of Exchange, at its office, or by the stock transfer agent of the Company at its office, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exchange, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the 2 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 or the NASDAQ Over-the-Counter Bulletin Board, 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 of the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined by the Board of Directors of the Company in good faith. 4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations, entitling the Holder or Holders thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, subject to the provisions of Section 7 hereof, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants that carry the same rights upon presentation hereof at the office of the Company or at the office of its 3 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) or in case after such date the Company (or any such other entity) shall consolidate with or merge into another entity or convey all or substantially all of its assets to another entity, then, and in each such case, the Holder of this Warrant upon the exercise thereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the securities and property receivable upon the exercise of this Warrant prior to such consummation, the securities or property to which such Holder would have been entitled upon such consummation if such Holder had exercised this Warrant immediately prior thereto; in each such case, the terms of this Warrant shall be applicable to the securities or property receivable upon the exercise of this Warrant after such consummation. 6.3 NO DILUTION. (a) From the date of issuance of this Warrant until the 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, hereinafter referred to as 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 4 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 and from time to time thereafter, (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 8.25% Subordinated Convertible Notes Due December 31, 2005, the Company's outstanding Secured Notes Due December 31, 2005 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. 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 after the date of issuance of this Warrant, the Company shall issue or enter into any agreement to issue any shares of Common Stock other than Excluded Shares for consideration per share lower than the market price (as defined below) per share, but (solely during the Reset Period) greater 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 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 for which trades of the Common Stock have been reported. (c) 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 5 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. (d) For further clarity, any change to the exercise price or other terms of the 8.25% Subordinated Convertible Notes Due December 31, 2005 shall not count to 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. (e) The Exercise Price shall be subject to adjustment from time to time as previously provided in this section 6.3. Upon each adjustment of the Exercise Price, the holder of the Warrant evidenced hereby shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares of Common Stock (calculated to the nearest whole share pursuant to Section 3) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment and dividing the product by the Exercise Price resulting from such adjustment. 6.4 CERTIFICATE AS TO ADJUSTMENTS. In each case of an adjustment in the number of shares of Warrant Stock or Other Securities receivable on the exercise of this Warrant, or the Exercise Price, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate executed by an executive officer of the Company setting forth such adjustment and showing in detail the facts upon which such adjustment is based. The Company will forthwith mail a copy of each such certificate to the Holder. 6.5 NOTICES OF RECORD DATE, ETC. In case: (a) the Company shall take a record of the holders of its Common Stock (or Other Securities at the time receivable upon the exercise of the Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend at the same rate as the rate of the last cash dividend theretofore paid) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities, or to receive any other right; or (b) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another entity, or any conveyance of all or substantially all of the assets of the Company to another entity; or (c) of any voluntary or involuntary dissolution, liquidation, partial liquidation or winding up of the Company, or (d) any event resulting in the expiration of the Reset Period, then, and in each such case, the Company shall mail or cause to be mailed to each Holder of the Warrant at the time outstanding a notice specifying, as the case may be, (i) the date on which a 6 record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding up is to take place, and the time, if any, to be fixed, as to which the holders of record of Common Stock (or such other securities at the time receivable upon the exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding up. Such notice shall be mailed at least 20 days prior to the date therein specified. 7. TRANSFER TO COMPLY WITH THE SECURITIES ACT. Notwithstanding any other provision contained herein, this Warrant and any Warrant Stock or Other Securities may not be sold, transferred, pledged, hypothecated or otherwise disposed of except as follows: (a) to a person who, in the opinion of counsel reasonably acceptable 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 of 1933 (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. 7 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. SYSTEMONE TECHNOLOGIES INC. By:___________________________ Name: Paul I. Mansur Title: Chief Executive Officer 8 WARRANT EXERCISE FORM The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing ____________ shares of Common Stock of SystemOne Technologies 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__________________________________________________ 9 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 SystemOne Technologies 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 10 EX-4.5 7 g79773exv4w5.txt FORM OF PROMISSORY NOTE DATED DECEMBER 9, 2002 EXHIBIT 4.5 FORM OF NEW SECURED NOTE SYSTEMONE TECHNOLOGIES INC. PROMISSORY NOTE $__________________ As of December 9, 2002 New York, New York SECTION 1. General. SYSTEMONE TECHNOLOGIES INC., a Florida corporation (hereinafter referred to as the "Borrower"), with offices at 8305 N.W. 27th Street, Miami, Florida 33122, for value received, hereby promises to pay to _________________, or registered assigns, the principal amount of $______________, on the Maturity Date (as defined in the Loan Agreement hereinafter described), in such coin or currency of the United States of America as at the time of payment shall be legal tender therein for the payment of public and private debts and to pay interest on such principal amount at the rates and on the dates described in Section 2.3 of the Loan Agreement hereinafter described. The Borrower further agrees to pay interest at such rates described in the Loan Agreement on any overdue principal and (to the extent permitted by law) on any overdue interest, from the due date thereof until the obligation of the Borrower with respect to the payment thereof shall be discharged; all payments and prepayments of principal of this Note and all payments of the interest on this Note to be made at ____________, or such other location as shall be specified in writing by the holder of this Note to the Borrower. SECTION 2. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state. SECTION 3. Related Agreements. This Note is issued pursuant to, and is one of the Notes referred to in, the Loan Agreement dated as of August 7, 2000, as amended by that First Amendment dated as of November 10, 2000, that Second Amendment dated as of November 30, 2000, that Third Amendment dated as of February 27, 2002, that Fourth Amendment dated as of September 30, 2002 and that Fifth Amendment dated as of the date first set forth above (herein referred to as the "Loan Agreement") among the Borrower, Hanseatic Americas LDC, Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P., and is entitled to the benefits and is subject to the provisions thereof (including, without limitation, those providing for the optional and mandatory prepayment of this Note and the acceleration of the maturity hereof), and to the benefits of the Security Agreement, August 7, 2000, as amended by that First Amendment to Security Agreement dated November 10, 2000, that Second Amendment to Security Agreement dated November 30, 2000, and that Third Amendment to Security Agreement dated the date first set forth above, as from time to time further amended, among the Borrower, Hanseatic Americas LDC, Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P. Copies of such agreements may be obtained by any holder of this Note at the principal executive offices of the Borrower. SECTION 4. SUBORDINATION. THE RIGHTS AND REMEDIES OF THE HOLDER HEREOF ARE SUBJECT TO AND SUBORDINATED TO THE TERMS AND PROVISIONS OF A SUBORDINATION AGREEMENT, DATED NOVEMBER 30, 2000, ENTERED INTO WITH HANSA FINANCE LIMITED LIABILITY COMPANY, A DELAWARE LIMITED LIABILITY COMPANY. SECTION 5. Registration. The Borrower shall keep or cause to be kept a note register for the Notes in which the Borrower shall provide for the registration of the Notes and the registration of transfers of the Notes. The Borrower shall keep this register in a manner that causes the Notes to be in registered form within the meaning of Section 163(f) of the Internal Revenue Code of 1986, as amended, and the applicable treasury regulations. Prior to due presentment for registration of transfer of any Note, the Borrower may treat the person in whose name any Note is registered (as of the day of determination) as the holder of such Note for the purpose of receiving payments of principal of and interest on such Note and for all other purposes, and neither the Borrower nor any agent of the Borrower shall be affected by notice to the contrary. IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first-above written. ATTEST: SYSTEMONE TECHNOLOGIES INC. By:_______________________________ By:_____________________________ Name: Pierre G. Mansur Name: Paul I . Mansur Title: President Title: Chief Executive Officer -2- EX-4.6 8 g79773exv4w6.txt WAIVER AGREEMENT DATED DECEMBER 9, 2002 EXHIBIT 4.6 WAIVER WAIVER AGREEMENT This WAIVER AGREEMENT, dated as of December 9, 2002 ("Agreement"), is entered into among SystemOne Technologies Inc., a Florida corporation (the "Company"), Hanseatic Americas LDC ("Hanseatic"), Environmental Opportunities Fund II, LP ("Environmental II"), and Environmental Opportunities Fund II (Institutional), LP ("Environmental Institutional" and collectively with Hanseatic and Environmental II, the "Holders"). WITNESSETH: WHEREAS, the Holders collectively own (i) all of the Company's outstanding shares of Series D Convertible Preferred Stock, $1.00 par value per share ("Series D Stock"), and (ii) Warrants (the "Warrants") to purchase an aggregate of 1,514,286 shares of the Company's common stock, $.001 par value per share ("Common Stock"); WHEREAS, the terms of the Series D Stock and the Warrants give the Holders the right to certain Antidilution Rights (as defined below) resulting from the Company's issuance of (i) warrants to purchase an aggregate of 750,000 shares of Common Stock at an exercise price of $.01 per share in connection with the proposed exchange of certain of the Company's outstanding securities pursuant to an Exchange Agreement (the "Exchange Agreement") to be executed on or about the date hereof, by and among the Company, the Holders and the Junior Note Holders (as defined therein) and (ii) warrants to purchase an aggregate of 250,000 shares of Common Stock (such warrants referenced in clauses (i) and (ii) above being referred to collectively as the "New Warrants") to be issued to the Holders in connection with this Agreement (collectively, the "Issuance"); WHEREAS, the Holders are willing to waive the Antidilution Rights with respect to the Issuance, and, as consideration for such waiver the Company will issue New Warrants to the Holders; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Waivers. a. Warrants. Pursuant to Section 6.3 of the Warrants, as a result of the Issuance the Holders would have been entitled to an antidilution adjustment (the "Warrant Antidilution Rights") to the Exercise Price (as defined in the Warrants) of the Warrants. In consideration of and effective upon issuance of the New Warrants pursuant to Section 2 hereof, the Holders hereby waive the Warrant Antidilution Rights with respect to the Issuance and the issuance and sale of shares of Common Stock pursuant to exercises of the New Warrants, it being understood that Section 6.3 of the Warrants shall otherwise remain in full force and effect with respect to any other issuances of securities by the Company in accordance with its terms. 1 b. Series D Preferred Stock. Pursuant to Section 6.1(b) of the Certificate of Designation of the Series D Stock (the "Certificate of Designation"), as a result of the Issuance the Holders would have been entitled to an antidilution adjustment (the "Series D Antidilution Rights" and collectively with the Warrant Antidilution Rights, the "Antidilution Rights") to the Conversion Price (as defined in the Certificate of Designation) of the Series D Stock. In consideration of and effective upon issuance of the New Warrants pursuant to Section 2 hereof, the Holders hereby waive the Series D Antidilution Rights with respect to the Issuance and the issuance and sale of shares of Common Stock pursuant to exercises of the New Warrants, it being understood that Section 6.1(b) of the Certificate of Designation shall otherwise remain in full force and effect with respect to any other issuances of securities by the Company in accordance with its terms. 2. Issuance of the New Warrants. Simultaneously with the consummation of the transactions contemplated by the Exchange Agreement, the Company will issue to the Holders New Warrants to purchase an aggregate of 250,000 shares of Common Stock at an exercise price of $.01 per share. The New Warrants will be (i) issued in the form attached hereto as Exhibit A, and (ii) allocated to the Holders in accordance with Exhibit B. 3. Representations and Warranties of the Company. The Company hereby represents and warrants to the Holders as follows: a. Representations and Warranties in the Exchange Agreement. Each of the representations and warranties made by the Company in the Exchange Agreement is true and correct on the date hereof, with the same effect as though the text of all such representations and warranties was fully included herein. b. Power and Capacity; Authorization. This Agreement and the New Warrants have been duly and validly executed and delivered by the Company, and this Agreement and the New Warrants constitute, legal, valid and binding obligations of the Company, enforceable against it in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws relating to, or affecting generally the enforcement of creditors' rights and remedies or by other equitable principles of general application. c. No Violation. Neither the execution, delivery and performance by the Company of this Agreement and the New Warrants nor the fulfillment of and compliance with the respective terms hereof and thereof by the Company, will: i. conflict with or result in a breach of the terms, conditions or provisions of; ii. constitute a default or event of default under (with due notice, lapse of time or both); iii. give any third party the right to accelerate any obligation under; or iv. result in a violation of; or require any authorization, consent, approval, exemption or other action by, notice to, or filing with any authority pursuant to, the charter or 2 bylaws of the Company or any applicable regulation, order or any contract to which the Company or its properties or any Company capital stock or securities, are subject. d. Valid Issuance of New Warrants. The New Warrants, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, will be free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws and are not subject to preemptive rights created by statute, the Company's Articles of Incorporation or bylaws or any agreement to which the Company is a party or by which it is bound. The Common Stock issuable upon exercise of the Warrants has been duly and validly reserved for issuance and, upon issuance, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws and are not subject to preemptive rights created by statute, the Company's Articles of Incorporation or bylaws or any agreement to which the Company is a party or by which it is bound. 4. Representations and Warranties of the Holders. Each of the Holders hereby represents and warrants to the Company that each of the representations and warranties made by the Holders in the Exchange Agreement is true and correct on the date hereof, with the same effect as though the text of all such representations and warranties was fully included herein. 5. No other Amendments. Except as specifically amended hereby, the Warrants and the Certificate of Designation are and remain unmodified and in full force and effect. 6. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without regard to such state's principles of conflict of laws. 7. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. SYSTEMONE TECHNOLOGIES INC. By: /s/ Paul I. Mansur - ---------------------- Name: Paul I. Mansur Title: Chief Executive Officer ENVIRONMENTAL OPPORTUNITIES FUND II, L.P. ENVIRONMENTAL OPPORTUNITIES FUND II (INSTITUTIONAL), L.P. By: Fund II Mgt. Co., LLC General Partner By: /s/ Bruce McMaken ----------------- Name: Bruce McMaken Title: Manager HANSEATIC AMERICAS LDC By: Hanseatic Corporation By: /s/ Paul A. Biddelman --------------------- Name: Paul A. Biddelman Title: President 4 EXHIBIT A FORM OF NEW WARRANT 5 EXHIBIT B ALLOCATION
HOLDER NEW WARRANTS - -------------------------------------------------------------------------- Environmental Opportunities Fund II, L.P. 26,750 - -------------------------------------------------------------------------- Environmental Opportunities Fund II 98,250 (Institutional), L.P. - -------------------------------------------------------------------------- Hanseatic Americas LDC 125,000 - --------------------------------------------------------------------------
6 EX-4.7 9 g79773exv4w7.txt LETTER AGREEMENT EXHIBIT 4.7 MANDATORY REDEMPTION DATE EXTENSION [LETTERHEAD OF SYSTEMONE] - -------------------------------------------------------------------------------- SystemOne Technologies Inc. - 8305 NW 27th Street - Suite 107 - Miami, FL 33122 - Tel: 305-593-8015 - Fax: 305-593-8016 December 9, 2002 To the holders of Preferred Stock set forth on the signature page hereto: RE: MANDATORY REDEMPTION RIGHTS PURSUANT TO SECTION 10(b) OF EACH OF THE CERTIFICATES OF DESIGNATION (THE "CERTIFICATES OF DESIGNATIONS") OF THE SERIES B CONVERTIBLE PREFERRED STOCK, SERIES C CONVERTIBLE PREFERRED STOCK AND SERIES D CONVERTIBLE PREFERRED STOCK (COLLECTIVELY, THE "PREFERRED STOCK") OF SYSTEMONE TECHNOLOGIES INC. (THE "COMPANY"). Ladies and Gentlemen: Pursuant to Section 10(b) of each of the Certificates of Designation, the Company is obligated to redeem all of the outstanding shares of Preferred Stock on May 17, 2004 (the "Mandatory Redemption Date"). Concurrently herewith, the Company is exchanging its currently outstanding 8.25% Subordinated Convertible Notes due February 23, 2003, for new 8.25% Subordinated Convertible Notes (the "Notes") due December 31, 2005. Section 2(f) of the Notes prohibits the Company from, without the consent of the holders of the Notes, redeeming any of its outstanding equity securities while the Notes remain outstanding. If the Preferred Stock is not redeemed on or prior to the Mandatory Redemption Date, then pursuant to Section 10(d) of the Certificates of Designation, the conversion price for the Preferred Stock would be reduced. Effective upon execution hereof, the undersigned holders of 100% of the outstanding shares of the Preferred Stock (the "Holders") hereby agree that the Mandatory Redemption Date shall be deemed to be the earlier to occur of (i) the 90th day after the date that all of the Notes shall have been repaid in full and (ii) March 31, 2006, but in no event shall the Mandatory Redemption Date be deemed to occur prior to May 17, 2004. Each of the Holders agrees further that such Holder shall not transfer any shares of Preferred Stock unless the transferee acknowledges and agrees to the terms hereof. [remainder of this page intentionally left blank] EXHIBIT 4.7 MANDATORY REDEMPTION DATE EXTENSION If the foregoing is acceptable, please execute a copy of this letter agreement in the space provided and return such executed copy to the undersigned. Very truly yours, SYSTEMONE TECHNOLOGIES INC. By: /s/ Paul I. Mansur ------------------ Paul I. Mansur Chief Executive Officer Agreed to an accepted as of the date first above written: Holders: ENVIRONMENTAL OPPORTUNITIES FUND II, L.P. HANSEATIC AMERICAS LDC ENVIRONMENTAL OPPORTUNITIES FUND II (INSTITUTIONAL), L.P. By: Hanseatic Corporation By: Fund II Mgt. Co., LLC By: /s/ Paul A. Biddelman General Partner --------------------- Paul A. Biddelman President By: /s/ Bruce McMaken ----------------- Bruce McMaken Manager ENVIRONMENTAL OPPORTUNITIES FUND, L.P. By: Environmental Opportunities Management Co., LLC General Partner By: /s/ Bruce McMaken ------------------ Bruce McMaken Manager EX-10.1 10 g79773exv10w1.txt FIFTH AMENDMENT TO LOAN AGREEMENT EXHIBIT 10.1 Fifth Amendment FIFTH AMENDMENT TO LOAN AGREEMENT THIS FIFTH AMENDMENT (this "Amendment") is made as of this 9th day of December, 2002, by and among SystemOne Technologies Inc. (f/k/a Mansur Industries Inc.), a Florida corporation (the "Borrower"), Hanseatic Americas LDC ("Hanseatic"), Environmental Opportunities Fund II, LP ("Environmental II") and Environmental Opportunities Fund II (Institutional), LP ("Environmental Institutional", and collectively with Hanseatic and Environmental II, the "Lenders"). RECITALS WHEREAS, the Borrower and the Lenders are parties to that certain Loan Agreement dated August 7, 2000, as amended by a First Amendment to Loan Agreement dated as of November 10, 2000, a Second Amendment to Loan Agreement dated as of November 30, 2000, a Third Amendment to Loan Agreement dated as of February 27, 2002 and a Fourth Amendment to Loan Agreement dated as of September 30, 2002 (as amended, the "Loan Agreement") and in connection therewith the Borrower issued to the Lenders promissory notes in the aggregate principal amount of $3,300,000 (the "Outstanding Notes") and warrants exercisable for in the aggregate 942,858 shares of the Borrower's common stock, $.001 par value; and WHEREAS, as part of the recapitalization of the Borrower and pursuant to the Exchange Agreement (the "Exchange Agreement"), dated December 9, 2002, by and among the Borrower, the Lenders and the additional parties thereto, the Borrower and the Lenders desire to cancel the Outstanding Notes and amend the Loan Agreement and Loan Documents (as defined in the Loan Agreement) to (i) increase the principal amount outstanding thereunder to include the interest accrued from, respectively, the Closing Date and the Supplemental Closing Date (each as defined in the Loan Agreement) to the date hereof, (ii) change the Maturity Date (as defined in the Loan Agreement) from September 30, 2002 to December 31, 2005, (iii) change the interest rate from sixteen percent (16%) per annum to ten percent (10%) per annum, and (iv) issue new promissory notes (the "New Notes"), all according to the terms of the Loan Agreement as amended by this Amendment; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Article I, Section 1.1 (xxxvi) of the Loan Agreement is hereby amended by deleting Article I, Section 1.1 (xxxvi) in its entirety and substituting therefor a new Article I, Section 1.1 (xxxvi) to read as follows: (xxxvi) The term "Maturity Date" shall mean December 31, 2005. 2. Article I, Section 1.1 (xxxviii) of the Loan Agreement is hereby amended by deleting Article I, Section 1.1 (xxxviii) in its entirety and substituting therefor a new Article I, Section 1.1 (xxxviii) to read as follows: (xxxviii) The term "Notes" shall mean those notes, each in the form attached hereto as Exhibit A dated as of the Closing Date, executed by the Borrower, as the maker, and delivered to each Lender, as payee, in the aggregate principal amount of $4,418,373, which Notes, collectively, evidence the Loan under this Agreement. 3. Article I, Section 1.1 (xxxxviii) of the Loan Agreement is hereby amended by deleting Article I, Section 1.1 (xxxxviii) in its entirety and substituting therefor a new Article I, Section 1.1 (xxxxviii) to read as follows: (xxxxviii) The term "Security Agreement" shall mean that certain Security Agreement in the form attached hereto as Exhibit C, dated the Closing Date, and amended by that certain First Amendment dated November 10, 2000, that certain Second Amendment dated November 30, 2000 and that certain Third Amendment dated December 9, 2002, as from time to time further amended, whereby the Borrower has pledged, assigned, hypothecated, conveyed, transferred, given and granted to the Lenders, and each of them, a continuing pledge, of and security interest in all of the security described therein. 4. Article I, Section 1.1 (lviii) of the Loan Agreement is hereby amended by deleting Article I, Section 1.1 (lviii) in its entirety and substituting therefor a new Article I, Section 1.1 (lviii) to read as follows: (lviii) The term "Outstanding Notes" shall mean the Borrower's promissory notes in the aggregate principal amount of $3,300,000 issued pursuant to this Agreement to the Lenders, respectively, on the Supplemental Closing Date. 5. The following new section is hereby added immediately following the definition of "Supplemental Closing Date" under Article I (which, together with the preceding clause (lviv) shall be re-designated, respectively, clause (lix) and clause (lx) thereof): (lxi) The term "Second Supplemental Closing Date" shall mean December 9, 2002. 6. Article II, Section 2.2 of the Loan Agreement is hereby amended by deleting Article II, Section 2.2 in its entirety and substituting therefor a new Article II, Section 2.2 to read as follows: Section 2.2 Notes. The obligation of the Borrower to repay all monies advanced by the Lenders, and each of them, to the Borrower in connection with the Loan shall be evidenced by the Notes, each in the form of Exhibit A annexed hereto. On the Second Supplemental Closing Date, the Borrower shall have duly executed and delivered to each Lender, in substitution for the Outstanding Note held thereby, a Note, which shall (i) be dated as of the Second Supplemental Closing Date, (ii) be registered in the name of the Lender to whom issued, (iii) 2 have a principal sum equal to the aggregate amounts advanced by such Lender to the Borrower plus all interest accrued from the Closing Date through the Second Supplemental Closing Date, which shall be payable in the amounts and on the dates provided for in Section 2.4 hereof and (iv) bear interest at the rates payable on the dates and in the manner provided for in Section 2.3 hereof. 7. Article II, Section 2.3 of the Loan Agreement is hereby amended by deleting Article II, Section 2.3 in its entirety and substituting therefor a new Article II, Section 2.3 to read as follows: Section 2.3 Interest. Each Note shall bear interest computed daily from the Second Supplemental Closing Date until final repayment in full of said Note in accordance with Section 2.4 of this Agreement. Each note shall bear interest at a rate of ten percent per annum (10%) to be applied to the principal amount of the Note as set forth therein until final repayment in full of said Note. Interest on the Loan and the Notes shall be due and payable on the Maturity Date and continuing thereafter until the Loan and Notes are repaid in full. 8. Annex 1 to the Loan Agreement is hereby amended by deleting Annex 1 in its entirety and substituting therefor a new Annex 1 to read as follows:
Proportionate Allocation of Initial Lender Proportionate Share Amount of Loan Warrants - ------ ------------------- -------------- --------------------- Hanseatic Americas LDC 450 Park Avenue, Suite 2302 New York, New York 10022 50% $2,209,187 471,429 Environmental Opportunities Fund II, L.P. c/o Sanders Morris Harris 3100 Chase Tower 10.7% $ 472,766 100,886 600 Travis Street, Suite 3100 Houston, Texas 77002 Environmental Opportunities Fund II (Institutional), L.P. c/o Sanders Morris Harris 3100 Chase Tower 600 Travis Street, Suite 3100 39.3% $1,736,421 370,543 Houston, Texas 77002
9. Exhibit A to the Loan Agreement is hereby deleted in its entirety and Exhibit A annexed hereto is hereby substituted therefor. 10. Except as specifically amended hereby, the Loan Agreement is and remains unmodified and in full force and effect and is hereby ratified and confirmed. 3 11. Contemporaneously with the execution of this Amendment, Lenders shall deliver the Outstanding Notes to the Borrower. Contemporaneously with the execution of this Amendment, the Borrower shall (i) cancel the Outstanding Notes and (ii) deliver the New Notes to the Lenders, in the form required by the Loan Agreement, as amended hereby and acceptable to the Lenders. 12. Contemporaneously herewith, the parties hereto shall execute and deliver an Amendment to the Security Agreement in the form of Exhibit B annexed hereto. 13. This Amendment shall be deemed a contract made under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State. 14. This Amendment may be executed in counterparts and each of such counterparts shall for all purposes be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. SYSTEMONE TECHNOLOGIES INC. By: /s/ Paul I. Mansur ------------------ Name: Paul I. Mansur Title: Chief Executive Officer LENDERS ENVIRONMENTAL OPPORTUNITIES FUND II, L.P. HANSEATIC AMERICAS LDC ENVIRONMENTAL OPPORTUNITIES FUND II (INSTITUTIONAL), L.P. By: Hanseatic Corporation By: Fund II Mgt. Co., LLC By: /s/ Paul A. Biddelman General Partner ---------------------- Name: Paul A. Biddelman Title: President By:/s/ Bruce McMaken ----------------- Name: Bruce McMaken Title: Manager 5 EX-10.2 11 g79773exv10w2.txt THIRD AGREEMENT TO SECURITY AGREEMENT EXHIBIT 10.2 THIRD AMENDMENT TO SECURITY AGREEMENT THIS THIRD AMENDMENT TO SECURITY AGREEMENT (this "Amendment") is made as of this 9th day of December, 2002, by and among SystemOne Technologies Inc. (f/k/a Mansur Industries Inc.), a Florida corporation (the "Company"), Hanseatic Americas LDC, Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P. (collectively, the "Lenders"). RECITALS WHEREAS, the Company and the Lenders are parties to that certain Loan Agreement dated August 7, 2000, as amended by a First Amendment to Loan Agreement dated as of November 10, 2000, a Second Amendment to Loan Agreement dated as of November 30, 2000, a Third Amendment to Loan Agreement dated as of February 27, 2002, and a Fourth Amendment to Loan Agreement dated as of September 30, 2002 (as amended, the "Loan Agreement") and in connection therewith the parties also executed that certain Security Agreement dated August 7, 2000, as amended by a First Amendment to Security Agreement dated as of November 10, 2000 and a Second Amendment to Security Agreement dated as of November 30, 2000 (the "Security Agreement"); WHEREAS, the Company and the Lenders are contemporaneously herewith amending the Loan Agreement and now desire to amend the Security Agreement according to the terms of this Amendment; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The first recital of the Security Agreement is hereby amended by deleting the first recital in its entirety and substituting therefor a new first recital to read as follows: WHEREAS, under the terms and conditions of a Loan Agreement dated as of August 7, 2000 and as amended on November 10, 2000, November 30, 2000, February 27, 2002, September 30, 2002 and December 9, 2002, as may from time to time be amended (hereinafter referred to as the "Loan Agreement"), among the Borrower and the Lenders, The Borrower is indebted to the Lenders in the aggregate principal amount of $4,418,373 (hereinafter referred to as the "Loan"), which Loan is to be evidenced by certain Notes issued pursuant to the Loan Agreement (hereinafter referred to, collectively, as the "Notes"), with payment of the Notes and any other obligations of the Borrower to the Lender to be secured as provided for in the Loan Agreement; 2. Except as specifically amended hereby, the Security Agreement is and remains unmodified and in full force and effect and is hereby ratified and confirmed. 3. This Amendment shall be deemed a contract made under the laws of the State of Florida and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State. 4. This Amendment may be executed in counterparts and each of such counterparts shall for all purposes be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above. SYSTEMONE TECHNOLOGIES INC. By: /s/ Paul I. Mansur ------------------ Name: Paul I. Mansur Title: Chief Executive Officer LENDERS HANSEATIC AMERICAS LDC By: Hanseatic Corporation By: /s/ Paul A. Biddelman --------------------- Name: Paul A. Biddelman Title: President ENVIRONMENTAL OPPORTUNITIES FUND II, L.P. ENVIRONMENTAL OPPORTUNITIES FUND II (INSTITUTIONAL), L.P. By: Fund II Mgt. Co., LLC General Partner By: /s/ Bruce McMaken ----------------- Name: Bruce McMaken Title: Manager 3 EX-10.3 12 g79773exv10w3.txt LETTER AGREEMENT DATED DECEMBER 9, 2002 EXHIBIT 10.3 [SYSTEMONE LETTERHEAD] December 9, 2002 To the Investors set forth on the signature page hereto: RE: WARRANTS (THE "WAIVER WARRANTS") TO PURCHASE AN AGGREGATE OF 250,000 SHARES (THE "SHARES") OF COMMON STOCK, $.001 PAR VALUE PER SHARE, OF SYSTEMONE TECHNOLOGIES INC. (THE "COMPANY") AT AN EXERCISE PRICE OF $.01 PER SHARE TO BE ISSUED PURSUANT TO THAT CERTAIN WAIVER AGREEMENT DATED DECEMBER 9, 2002 TO THE HOLDERS NAMED THEREIN. Ladies and Gentlemen: The Company and the Investors (as defined in the Letter Agreement hereinafter referenced) previously entered into a Letter Agreement dated February 27, 2002 (the "Letter Agreement") regarding Registrable Securities of the Company (as that term is defined therein). The Company and the Investors hereby supplement the Letter Agreement such that the Shares issued or issuable upon exercise of the Waiver Warrants shall be deemed Registrable Securities under the Loan Agreement (as defined thereunder) for purposes of paragraphs (a) through (c) of the Letter Agreement. Except as supplemented hereby, the Letter Agreement shall remain unchanged and in full force and effect; it being acknowledged and agreed that for purposes of the foregoing Registrable Securities, Loan Agreement, the Effectiveness Period (as defined under the Loan Agreement) shall extend until the earliest to occur of (a) two years from the date of exercise of the last Waiver Warrant to be exercised prior to the expiration thereof, (b) the date on which the holders of the foregoing Registrable Securities have completed the sale or distribution described in the registration statement relating thereto, or (c) the date on which such Registrable Securities may be sold under Rule 144(k) in the reasonable opinion of counsel to the Company provided that the Company's transfer agent has accepted an instruction from the Company to such effect). If the foregoing is acceptable, please execute a copy of this letter agreement in the space provided and return such executed copy to the undersigned. Very truly yours, SYSTEMONE TECHNOLOGIES INC. By:/s/ Paul I. Mansur ------------------ Paul I. Mansur Chief Executive Officer Exhibit 10.3 Agreed to an accepted as of the date first above written: Investors: ENVIRONMENTAL OPPORTUNITIES FUND II, L.P. HANSEATIC AMERICAS LDC ENVIRONMENTAL OPPORTUNITIES FUND II (INSTITUTIONAL), L.P. By: Hanseatic Corporation By: Fund II Mgt. Co., LLC General Partner By: /s/ Paul A. Biddelman --------------------- Paul A. Biddelman President By: /s/ Bruce McMaken ----------------- Bruce McMaken Manager ENVIRONMENTAL OPPORTUNITIES FUND, L.P. By: Environmental Opportunities Management Co., LLC General Partner By: /s/ Bruce McMaken ----------------- Bruce McMaken Manager -----END PRIVACY-ENHANCED MESSAGE-----


	Item 5. Other Events
	Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
EXHIBIT INDEX
SIGNATURES
Exchange Agreement dated December 9, 2002
Form of 8.25% Subordinated Convertible Note (PCP)
Form of 8.25% Subordinated Convertible Note (PIK)
Form of Warrant for the Puchase of Shares
Form of Promissory Note dated December 9, 2002
Waiver Agreement dated December 9, 2002
Letter Agreement
Fifth Amendment to Loan Agreement
Third Agreement to Security Agreement
Letter Agreement dated December 9, 2002

Table of Contents

Table of Contents

Table of Contents

Table of Contents