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Exhibit 4.1
ARTICLES OF AMENDMENT
CERTIFICATE OF DESIGNATION
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
MANSUR INDUSTRIES INC.
(PURSUANT TO SECTION 607.0602 OF THE
FLORIDA BUSINESS CORPORATION ACT)
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Mansur Industries Inc., a corporation organized and existing under the
Business Corporation Act of the State of Florida (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 607.0602 of
the Business Corporation Act at a meeting duly called and held on May 5, 1999:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Articles of
Incorporation of the Corporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $1.00 per share (the "Preferred Stock"),
of the Corporation and hereby states the designation and number of shares, and
fixes the relative rights, preferences, and limitations thereof as follows:
Series B Convertible Preferred Stock:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock") and the number of shares constituting the Series B Preferred Stock
shall be 150,000, of which 50,000 shares shall be reserved for use in
connection with the payment of dividends on the outstanding shares of Series B
Preferred Stock pursuant to Section 3 hereof. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Series B Preferred Stock to a
number less than the number of shares then outstanding and no increase shall
increase the number of shares of Series B Preferred Stock above the total
number of authorized shares.
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Section 2. RANK. The Series B Preferred Stock shall rank as to
distributions of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary: (i) senior to all of the
Corporation's common stock, par value $.001 per share (the "Common Stock");
(ii) senior to any class or series of capital stock of the Corporation
hereafter created specifically ranking by its terms junior to the Series B
Preferred Stock (collectively, with the Common Stock, "Junior Securities" or
"Junior Stock"); and (iii) on parity with any class or series of capital stock
of the Corporation hereafter created specifically ranking by its terms on
parity with the Series B Preferred Stock ("Parity Securities" or "Parity
Stock"). While any shares of Series B Preferred Stock are outstanding, no
equity securities senior to the Series B Preferred Stock ("Senior Securities")
or Parity Securities shall be authorized or issued without the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of the Series B Preferred Stock, voting
as a class. This prohibition shall not include the authorization or issuance of
any form of debt securities or instruments to a bank or other institution.
Section 3. DIVIDENDS.
(a) The dividend rate payable with respect to the
outstanding shares of Series B Preferred Stock ("Dividend Rate") shall be 8.25%
of the Liquidation Value (as defined below) of each share per annum. During the
period commencing on the date of initial issuance of the Series B Preferred
Stock and continuing through the second anniversary of the date thereof, all
such dividends shall be paid by the Corporation, in lieu of cash, through the
issuance of additional shares of Series B Preferred Stock valued at the
Liquidation Value. Thereafter, all such dividends may, at the option of the
Corporation, be paid in lieu of cash, through the issuance of additional shares
of the Series B Preferred Stock, cash legally available for payment thereof, or
any combination of Series B Preferred Stock and cash whether or not such
dividends have been declared. If dividends are paid by the Corporation through
the issuance of additional shares of Series B Preferred Stock and such
dividends would, but for the provisions hereof, be payable with a fractional
share, the Corporation shall pay, in lieu of such fractional share, cash in an
amount equal to the value of such fractional share. Dividends on the Series B
Preferred Stock shall accrue from the date of issuance or thereafter, from the
most recent date on which dividends were payable, and shall be payable
semi-annually on June 30 and December 31 of each year (each a "Dividend Payment
Date"), commencing on June 30, 1999; provided, however, that if any such day is
a non-business day, the Dividend Payment Date will be the next business day.
Each declared dividend shall be payable to holders of record as they appear at
the close of business on the stock books of the Corporation on June 10 and
December 10 of each year (each of such dates a "Record Date"). Semi-annual
dividend periods (each a "Dividend Period") shall commence on and include the
1st day of July and January of each year and shall end on and include the day
next preceding the next following Dividend Payment Date.
(b) No dividends shall be declared or paid or set
apart for payment on any Common Stock, Parity Stock or Junior Stock during any
semi-annual period unless full dividends on the Series B Preferred Stock for
all Dividend Periods ending prior to or during such semi-annual period have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment. When
dividends are not so paid in full (or a sum sufficient for such full payment is
not so set apart) upon the Series B Preferred Stock and any other Parity Stock,
dividends upon the Series B Preferred Stock and dividends on such other Parity
Stock payable during such semi-annual period shall be declared pro rata so that
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the amount of such dividends so payable per share on the Series B Preferred
Stock and such other Parity Stock shall in all cases bear to each other the
same ratio that full dividends on the shares of Series B Preferred Stock and
full dividends, if any, on shares of such other Parity Stock, bear to each
other. If full dividends on the Series B Preferred Stock have not been declared
and paid or set apart for payment, no dividend or distribution, other than in
shares of Junior Stock, may be declared, set aside or paid on any shares of
Junior Stock. Holders of the Series B Preferred Stock shall not be entitled to
any dividends, whether payable in cash, property or stock, in excess of the
dividends provided for herein. No interest or sum of money in lieu of interest
shall be payable in respect of any declared dividend payment or payments on the
Series B Preferred Stock which may be in arrears. As used herein, the phrase
"set apart" in respect of the payment of dividends shall require deposit of any
funds in a bank or trust company in a separate deposit account maintained for
the benefit of the holders of the Series B Preferred Stock, or, in the case of
payment of dividends through the issuance of shares of the Corporation's Common
Stock, the deposit of certificates representing such shares of Common Stock
with such bank or trust company.
Section 4. VOTING RIGHTS. On all matters to come before the
shareholders of the Corporation, the holders of Series B Preferred Stock will
vote together with the holders of the Common Stock as a single class, with each
share of Series B Preferred Stock entitled to a number of votes equal to the
number of shares of Common Stock into which it is then convertible using the
record date for the taking of such vote of shareholders as the date as of which
the Conversion Price (as hereinafter defined) is calculated except as required
by law. The affirmative vote of the holders of a majority of the outstanding
shares of Series B Preferred Stock shall be necessary for the issuance of
Senior Securities, the authorization or issuance of securities convertible into
such Senior Securities, or the amendment to the Corporation's Articles of
Incorporation so as to adversely affect the Series B Preferred Stock, or waiver
of any other covenants.
To the extent that under Florida law the vote of the
holders of shares of Series B Preferred Stock, voting separately as a class, is
required to authorize a given action of the Corporation, the affirmative vote
or consent of the holders of at least a majority of the outstanding shares of
the Series B Preferred Stock shall constitute the approval of such action by
the class. Holders of shares of Series B Preferred Stock shall be entitled to
notice of all shareholder meetings or written consents with respect to which
they would be entitled to vote, which notice shall be provided pursuant to the
Corporation's bylaws and applicable law.
Section 5. CONVERSION. Subject to and upon compliance with this
SECTION 5, the holders of shares of Series B Preferred Stock shall have
conversion rights as follows:
(a) OPTIONAL CONVERSION. Each holder of a share of
Series B Preferred Stock shall have the right, at any time or from time to time
prior to the Redemption Date (as defined below), at the office of the
Corporation or any transfer agent for the Series B Preferred Stock, to convert
such share of Series B Preferred Stock into that number of fully paid and
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nonassessable shares of Common Stock equal to $100 divided by the Conversion
Price of such share of Series B Preferred Stock as set forth in SECTION 6
hereof. The number of shares of Common Stock into which the Series B Preferred
Stock may be converted is hereinafter referred to as the "Conversion Rate").
Notwithstanding the foregoing, the Corporation shall not be obligated to accept
shares of Series B Preferred Stock for conversion if such conversion would
require the Corporation to issue a certificate or certificates evidencing less
than an aggregate of 50,000 shares of Common Stock on any Date of Conversion
(as defined below).
(b) EARLY CONVERSION EVENT. If, after the first
anniversary of the date of issuance of the shares of Series B Preferred Stock,
the closing bid price of the Common Stock, as reported on Nasdaq (or the
closing sale price if the Common Stock is then traded on any principal national
exchange or Nasdaq National Market) exceeds 175% of the Conversion Price for a
period of twenty (20) consecutive trading days, including the twenty (20)
trading days prior to such first anniversary (the "Calculation Period"), an
early conversion event ("Early Conversion Event") shall have occurred. Upon the
first Early Conversion Event, if any, in each calendar quarter, the aggregate
Liquidation Value of the outstanding shares of Series B Preferred Stock shall
automatically and without any action by the holders of the Series B Preferred
Stock or the Corporation be converted into shares of Common Stock, on a pro
rata basis, in an amount determined in accordance with the following formula:
CPS = [(V-Y)] x 22 x CP
where CPS is the aggregate stated Liquidation Value of the Series B Preferred
Stock to be converted; V is the average daily reported volume of trading in the
Common Stock on all national securities exchanges and/or reported through the
automated quotation system of a registered national securities association
during the Calculation Period and Y is the sum of (i) shares of Common Stock
which the Corporation then has the right to issue upon an "Early Conversion
Event" under the Corporation's outstanding 8 1/4% Subordinated Convertible
Notes due 2003 (the "Convertible Notes"), plus (ii) shares of Common Stock
subject to then effective resale registration statements of the Corporation
other than Registration Statements on Form S 8 or S-4 and other than
registration statements with respect to Common Stock underlying the Convertible
Notes and the Series B Preferred Stock which remain unsold at such time; and CP
is the applicable Conversion Price. For purposes of calculating V, trading
volume in excess of 100,000 shares on any trading day shall not be included,
unless such amounts do not exceed 200% of the trailing 30-day average reported
volume of trading.
Notwithstanding the foregoing, none of the
outstanding shares of Series B Preferred Stock shall be converted as a result
of an Early Conversion Event pursuant to this SECTION 5 unless the resale of
the shares of Common Stock issuable upon such conversion is subject to an
effective Registration Statement under the Securities Act of 1933, as amended
(the "Securities Act"), or an exemption from registration under the Securities
Act is then available. Accrued dividends on the shares of Series B Preferred
Stock converted upon the occurrence of an Early Conversion Event shall be paid
on the next Dividend Payment Date in accordance with SECTION 3 hereof.
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(c) MECHANICS OF CONVERSION. Before a holder shall
be entitled to receive shares of Common Stock upon conversion of shares of
Series B Preferred Stock, the holder of shares of Series B Preferred Stock
shall (i) fax or otherwise deliver a copy of the fully executed notice of
conversion in the form attached hereto as EXHIBIT A ("Notice of Conversion") to
the Corporation at its principal office and to the office of its designated
transfer agent that such holder elects to convert the same, which notice shall
specify the number of shares of Series B Preferred Stock to be converted and
shall contain the Conversion Price (together with a copy of the first page of
each certificate to be converted) prior to 5:00 p.m., Eastern Standard time
(the "Conversion Notice Deadline") on the date of conversion specified on the
Notice of Conversion and (ii) surrender the original certificate or
certificates for the shares of Series B Preferred Stock to be converted, duly
endorsed, and deliver the original Notice of Conversion by either overnight
courier or two-day courier, to the principal office of the Corporation or to
the office of its designated transfer agent; PROVIDED, HOWEVER, that the
Corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon such conversion unless the certificates
evidencing such shares of Series B Preferred Stock are delivered to the
Corporation or its transfer agent as provided above. Upon the conversion of
shares of Series B Preferred Stock in connection with an Early Conversion
Event, the Corporation shall send to the holders of shares of Series B
Preferred Stock a Notice of Early Conversion (in the form attached hereto as
EXHIBIT B) stating the aggregate Liquidation Value of shares of Series B
Preferred Stock to be converted and the number of shares of Common Stock into
which such Liquidation Value shall be converted.
Upon receipt by the Corporation of evidence of the
loss, theft, destruction or mutilation of any certificate representing shares
of Series B Preferred Stock, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Corporation, and upon
surrender and cancellation of any certificate representing shares of Series B
Preferred Stock, if mutilated, the Corporation shall execute and deliver a new
certificate of like tenor and date. No fractional shares of Common Stock shall
be issued upon conversion of the Series B Preferred Stock. In lieu of any
fractional share to which the holder of shares of Series B Preferred Stock
would otherwise be entitled, the Corporation shall pay cash to such holder in
an amount equal to such fraction multiplied by the Conversion Price then in
effect. In the case of a dispute as to the calculation of the Conversion Rate,
the Corporation's calculation shall be deemed conclusive absent manifest error.
The Corporation shall use all reasonable efforts to
issue and deliver within seven (7) business days after delivery to the
Corporation of the certificates representing the shares of Series B Preferred
Stock to be converted, or after such agreement and indemnification, to such
holder of shares of Series B Preferred Stock at the address of the holder on
the books of the Corporation, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid. The
date on which conversion occurs (the "Date of Conversion") shall be deemed to
be the date set forth in such Notice of Conversion, provided (i) that the
advance copy of the Notice of Conversion is delivered to and received by the
Corporation before 5:00 p.m., Eastern Standard time, on the Date of Conversion,
and (ii) that the original stock certificates representing the shares of Series
B Preferred Stock to be converted are received by the Corporation or the
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transfer agent within two (2) business days thereafter. In the case of an Early
Conversion Event, the last date of the Calculation Period shall be deemed to be
the Date of Conversion. The person or persons entitled to receive the shares of
Series B Preferred Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on the
Date of Conversion. In the case of an optional conversion, if the original
certificates representing the shares of Series B Preferred Stock to be
converted are not received by the Corporation or the transfer agent within two
(2) business days after the Date of Conversion or if the facsimile of the
Notice of Conversion is not received by the Corporation or its transfer agent
prior to the Conversion Notice Deadline, the Notice of Conversion, at the
Corporation's option, may be declared null and void.
Following any conversion of shares of Series B
Preferred Stock, such shares of Series B Preferred Stock shall no longer be
outstanding and all rights of a holder with respect to the shares surrendered
for conversion shall immediately terminate except for the right to receive
Common Stock. All shares of Series B Preferred Stock subject of an Early
Conversion Event shall be deemed to be cancelled upon such holder's receipt of
shares of Common Stock in connection with any such conversion.
(d) RESERVATION OF SHARES. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock such number of shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all then outstanding shares of
Series B Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of Series B Preferred Stock, the
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
Section 6. CONVERSION PRICE. The "Conversion Price" per share of the
Series B Preferred Stock shall be $8.25, subject to adjustment as set forth
below, with all such adjustments, if any, being cumulative from the date of
initial issuance of shares of Series B Preferred Stock such that all
outstanding shares of Series B Preferred Stock have the same Conversion Price
regardless of their date of issuance.
6.1 ADJUSTMENT OF THE NUMBER OF SHARES OF COMMON STOCK AND
THE CONVERSION PRICE. The number of shares of Common Stock issuable upon
conversion and the Conversion Price shall be subject to adjustment as follows:
(a) In case the Corporation shall at any time after
the date of the initial issuance of Series B Preferred Stock and prior to the
conversion of all outstanding shares thereof (A) pay a dividend or make a
distribution on its Common Stock in shares of its capital stock (whether in
shares of Common Stock or of capital stock of any other class), (B) subdivide
its outstanding shares of Common Stock into a greater number of shares, (C)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (D) reclassify, reorganize or effect any similar transaction with respect to
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any of its shares of Common Stock, or in substitution or exchange therefor
(other than a change in par value, or from par value to no par value, or from
no par value to par value), then the number and, if applicable, kind of shares
of Common Stock to be received by any Holder shall be adjusted so that the
Holder will be entitled to receive on conversion the number and kind of shares
of capital stock which it would have owned immediately following such action
had its Series B Preferred Stock been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become effective
immediately after the payment date in the case of a dividend or distribution
and shall become effective immediately after the effective date in the case of
a subdivision, combination, reclassification, reorganization or similar
transaction. If, as a result of an adjustment made pursuant to this subsection
(a), a Holder shall become entitled to receive shares of two or more classes of
capital stock of the Corporation, the Board of Directors or a duly authorized
committee thereof shall in good faith determine (which determination shall be
conclusive and binding) the allocation of the Conversion Price between or among
shares of such classes of capital stock. After such allocation, the Conversion
Price and number of shares of each class of capital stock that is issuable upon
conversion shall thereafter be subject to adjustment in a manner and on terms
determined by the Board of Directors (which determination shall be conclusive
and binding) to be as nearly equivalent as practicable to those applicable to
Common Stock under this Section 6.
(b) (i) From the date of the initial issuance of the
shares of Series B Preferred Stock to and including the first anniversary of
the date thereof, if the Corporation shall issue or enter into any agreement to
issue any shares of Common Stock other than Excluded Shares (as hereinafter
defined) for consideration per share (the "Issuance Price") less than the
Conversion Price (as herein defined) per share in effect immediately prior to
such issuance, the Conversion Price in effect immediately prior to such
issuance shall be reduced (but shall not be increased) to the Issuance Price.
(ii) After the first anniversary and prior to the
second anniversary of the initial issuance of the shares of Series B Preferred
Stock, if the Corporation shall issue or enter into any agreement to issue any
shares of Common Stock other than Excluded Shares for consideration per share
less than the Conversion Price per share in effect immediately prior to such
issuance, the Conversion Price in effect immediately prior to such issuance
shall be reduced (but shall not be increased) to the price (calculated to the
nearest cent) determined: by dividing (A) an amount equal to the sum of (1) the
number of shares of Common Stock outstanding on a fully diluted basis
immediately prior to such issuance multiplied by the Conversion Price per share
in effect immediately prior to such issuance and (2) the consideration, if any,
received by the Corporation upon such issuance by (B) the number of shares of
Common Stock outstanding on a fully diluted basis immediately after such
issuance.
(iii) If at any time prior to the second anniversary
of the initial issuance of the shares of Series B Preferred Stock, the
Corporation shall issue or enter into any agreement to issue any shares of
Common Stock other than Excluded Shares for consideration per share greater
than the Conversion Price but lower than the market price per share in effect
immediately prior to such issuance, the Conversion Price in effect immediately
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prior to such issuance shall be reduced (but shall not be increased) to the
price (calculated to the nearest cent) determined by multiplying the Conversion
Price in effect immediately prior to such issuance by the factor determined by
dividing (A) an amount equal to the sum of (1) the number of shares of Common
Stock outstanding on a fully diluted basis immediately prior to such issuance
multiplied by the market price per share in effect immediately prior to such
issuance and (2) the consideration, if any, received by the Corporation upon
such issuance by (B) the number of shares of Common Stock outstanding on a
fully diluted basis immediately after such issuance multiplied by the market
price per share in effect immediately prior to such issuance; PROVIDED,
HOWEVER, no adjustment shall be made to the Conversion Price if (i) such
issuance is in connection with a firm commitment underwritten public offering
or (ii) the consideration per share is equal to or greater than 85% of the
market price per share in effect immediately prior to such issuance. For
purposes hereof, the "market price" as of any measurement date shall be the
average of the closing prices of the Common Stock for each of the 10
consecutive trading days immediately preceding such measurement date.
(c) CERTAIN ADJUSTMENT FACTORS. For the purposes of
any adjustment of the Conversion Price pursuant to paragraph (b) above, the
following provisions shall be applicable:
(x) CASH. In the case of the issuance of
shares of Common Stock for cash, the amount of the
consideration received by the Corporation shall be deemed to
be the amount of the cash proceeds received by the
Corporation for such shares of Common Stock before deducting
therefrom any discounts, commissions, taxes or other expenses
allowed, paid or incurred by the Corporation for any
underwriting or otherwise in connection with the issuance and
sale thereof; and
(y) CONSIDERATION OTHER THAN CASH. In the
case of the issuance of shares of Common Stock (other than
upon the conversion of shares of capital stock or other
securities of the Corporation) for consideration in whole or
in part other than cash, including securities acquired in
exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be
deemed to be the fair value thereof (as determined by the
Board of Directors of the Corporation based on an opinion of
an outside financial advisor of recognized regional or
national standing, which may, but need not, be the
independent public accountants who serve as the regular
auditors of the Corporation (the "Financial Advisor"), whose
determination shall be conclusive and binding), irrespective
of any accounting treatment; and
(z) OPTIONS AND CONVERTIBLE SECURITIES. In
the case of the issuance of (i) options, warrants or other
rights to purchase or acquire shares of Common Stock (whether
or not exercisable immediately following such issuance), (ii)
securities by their terms convertible into or exchangeable
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for shares of Common Stock (whether or not so convertible or
exchangeable immediately following such issuance), or (iii)
options, warrants or rights to purchase such convertible or
exchangeable securities (whether or not exercisable
immediately following such issuance):
(1) the aggregate maximum number
of shares of Common Stock deliverable upon exercise
of such options, warrants or other rights to
purchase or acquire shares of Common Stock shall be
deemed to have been issued at the time such options,
warrants or other rights are first issued and for a
consideration equal to the consideration (determined
in the manner provided in clauses (x) and (y)
above), if any, received by the Corporation upon the
issuance of such options, warrants or other rights
plus the purchase price provided in such options,
warrants or other rights for the shares of Common
Stock covered thereby (if the purchase price per
share of Common Stock is expressed as a range, the
purchase price per share for purposes of this
subparagraph (z)(1) shall be the average of such
range of prices);
(2) the aggregate maximum number
of shares of Common Stock deliverable upon
conversion of or in exchange for any such
convertible or exchangeable securities, or upon the
exercise of options, warrants or other rights to
purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange
thereto shall be deemed to have been issued at the
time such convertible or exchangeable securities or
such options, warrants or other rights are first
issued and for a consideration equal to the
consideration, if any, received by the Corporation
for any such convertible or exchangeable securities
or options, warrants or other rights (excluding any
cash received on account of accrued interest or
accumulated dividends), plus the additional
consideration, if any, to be received by the
Corporation upon the conversion or exchange of such
securities and the exercise of any options, warrants
or other rights (the consideration in each case to
be determined in the manner provided in clauses (x)
and (y) above);
(3) on any change in the number of
shares of Common Stock deliverable upon exercise of
any such options, warrants or other rights which
have become exercisable or conversion of or exchange
of such convertible or exchangeable securities which
have become convertible or exchangeable, or any
change in the consideration to be received by the
Corporation upon such exercise, conversion or
exchange, the Conversion Price as then in effect
shall forthwith be readjusted to such Conversion
Price as would have been obtained had such
adjustment been made upon the original issuance of
such options, warrants or other rights; provided,
however, no adjustment shall be made with respect to
such options, warrants or other rights exercised
prior to such change, or securities converted or
exchanged prior to such change;
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(4) on the expiration or
cancellation of any such options, warrants or other
rights, or the termination of the right to convert
or exchange such convertible or exchangeable
securities, if the Conversion Price shall have been
adjusted upon such securities being issued or
becoming exercisable, convertible or exchangeable,
such Conversion Price shall forthwith be readjusted
to such Conversion Price as would have been obtained
had an adjustment been made on the basis of the
issuance of only the number of shares of Common
Stock actually issued upon the exercise of such
options, warrants or other rights, or upon the
conversion or exchange of such securities; and
(5) if the Conversion Price shall
have been adjusted when such options, warrants or
other rights were first issued or such convertible
or exchangeable securities were first issued, no
further adjustment of the Conversion Price shall be
made for the actual issuance of shares of Common
Stock upon the exercise, conversion or exchange
thereof.
(d) EXCLUDED SHARES. "Excluded Shares" shall mean
(i) any shares of Common Stock issued in a transaction described in Section
6(a) of this Agreement; and (ii) issuances of shares of Common Stock from time
to time pursuant to employment agreements, stock option or bonus plans
authorized by the Board of Directors of the Corporation as of the date hereof,
(iii) issuances of Common Stock, or warrants, options or rights to acquire
shares of Common Stock, or securities convertible into or exchangeable for
Common Stock pursuant to the terms of any acquisition by the Corporation of all
or substantially all of the operating assets, or more than fifty percent (50%)
of the voting capital stock or other management interest of any business entity
in a transaction negotiated on an arms-length basis and expressly approved in
advance by the Board of Directors of the Corporation; (iv) issuances of shares
of Common Stock from time to time upon the exercise, exchange or conversion of
warrants, options, convertible securities, the Notes (whether or not
outstanding as of the date hereof) or other securities outstanding as of the
date hereof, and (v) issuances of shares of Common Stock from time to time
pursuant to the anti-dilution provisions of other securities.
(e) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at
least 1.2% in such price; PROVIDED, HOWEVER, that any adjustments which by
reason of this subsection (e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 6 shall be made to the nearest tenth of a cent or to the
nearest one-hundredth of a share, as the case may be.
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(f) The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Corporation, and the disposition of any such shares shall be considered
an issuance of Common Stock for the purposes of this Section 6.
6.2 RIGHTS TO PURCHASE OTHER SECURITIES. If any of the
following shall occur:
(a) any consolidation or merger to which the
Corporation is a party, other than a consolidation or a merger in which the
Corporation is the continuing or surviving Corporation and which does not
result in any reclassification of, or change (other than as a result of a
subdivision or combination) in, outstanding shares of the Common Stock, or
(b) any sale or transfer to another corporation or
entity of all or substantially all of the assets of the Corporation;
then, and in either such case, the Holder of each share of Series B Preferred
Stock then outstanding shall have the right to purchase the kind and amount of
shares of stock and/or other securities and property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock issuable upon conversion of such stock immediately prior to such
consolidation, merger, sale, or transfer. The provisions of this Section 6.2
shall similarly apply to successive consolidations, mergers, sales or transfers.
6.3 NOTICE OF ADJUSTMENT. Whenever the number of shares of
Common Stock issuable upon the conversion of each share of Series B Preferred
Stock or the Conversion Price of such shares of Series B Preferred Stock is
adjusted or reduced, as herein provided, the Corporation shall mail by first
class, postage prepaid, to each Holder (a) notice of any reduction on or before
the day the reduction takes effect, which shall state the reduced Conversion
Price and the period during which it will be in effect and/or (b) a certificate
setting forth the number of shares of Common Stock issuable upon the conversion
of each share of Series B Preferred Stock and the Conversion Price on such
shares of Series B Preferred Stock after adjustment setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.
6.4 NO ADJUSTMENT FOR DIVIDEND. No adjustment in respect of
any cash dividends shall be made while the Series B Preferred Stock is
outstanding or upon the conversion of the Series B Preferred Stock.
6.5 CERTAIN EVENTS. If any event occurs as to which in the
reasonable judgment of the Board of Directors of the Corporation , in good
faith, the other provisions of this Section 6 are not strictly applicable but
the lack of any adjustment would not in the opinion of the Board of Directors
of the Corporation fairly reflect the purchase rights of the Holders of the
Series B Preferred Stock in accordance with the basic intent and principles of
the provisions of this Agreement then the Board of Directors of the Corporation
shall appoint a Financial Advisor which shall give its opinion upon the
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adjustment, if any, on a basis consistent with the basic intent and principles
established and the other provisions of this Section 6, necessary to preserve,
without dilution, the exercise rights of the Holders. Upon receipt of such
opinion, the Corporation shall forthwith make the adjustments described therein
which adjustments shall be conclusive and binding.
Section 7. STATUS OF CONVERTED OR REACQUIRED SHARES. Any shares of
Series B Preferred Stock converted into shares of Common Stock pursuant to
SECTION 5 hereof or purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the conversion
or acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Series B Preferred Stock and may be reissued
as part of a new series of preferred stock subject to the conditions and
restrictions on issuance set forth herein, in the Articles of Incorporation, or
in any other Certificate of Designation creating a series of preferred stock or
any similar stock or as otherwise required by law.
Section 8. LIQUIDATION, DISSOLUTION OR CHANGE OF CONTROL.
(a) In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the holders of
shares of Series B Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to shareholders under
applicable law, prior and in preference to any distribution to holders of the
Common Stock or any Junior Securities but in parity with any distribution to
holders of Parity Securities, an amount of $100 per share (the "Liquidation
Value"), plus a sum equal to all dividends accrued on such shares (whether or
not declared) and unpaid for the then current Dividend Period. If upon the
occurrence of such event, the assets and funds to be distributed among the
holders of shares of Series B Preferred Stock and Parity Securities shall be
insufficient to permit the payment to such holders of the full preferential
amounts due to the holders of shares of Series B Preferred Stock and Parity
Securities, respectively, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed among the holders of
shares of Series B Preferred Stock and Parity Securities, pro rata, based on
the respective liquidation amounts to which each such series of stock is
entitled by the Corporation's Articles of Incorporation and any certificate of
designation of preferences.
(b) Upon the completion of the distribution required
by subsection 8(a) above, if assets remain in the Corporation, they shall be
distributed to holders of Parity Securities (unless holders of Parity
Securities have received distributions pursuant to subsection 8(a)) and Junior
Securities in accordance with the Corporation's Articles of Incorporation,
including any duly adopted certificate(s) of designation of preferences.
(c) (i) Upon a Change of Control (as defined below)
of the Corporation, each holder of the Series B Preferred Stock will have the
option to require the Corporation to repurchase such holder's shares of Series
B Preferred Stock at a price per share equal to the Liquidation Value plus any
accrued and unpaid dividends. A "Change of Control" shall have occurred: (A)
when any person or group is or becomes the beneficial owner of 50% or more of
the then outstanding voting shares of the Corporation, (B) when, during any
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period of two consecutive years after the closing of the sale of the Series B
Preferred Stock, individuals who at the beginning of such period constituted
the Corporation's Board of Directors, or whose nomination for election by the
Corporation's shareholders was approved by a vote of a majority of the
directors of the Corporation then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
directors then in office or (C) upon any sale, transfer or other conveyance of
all or substantially all of the assets of the Corporation.
(ii) Upon the occurrence of a Change of Control, the
Corporation will offer to repurchase (the "Change of Control Purchase Offer")
all outstanding shares of Series B Preferred Stock, and each holder of
outstanding shares of Series B Preferred Stock will have the right to require
that the Corporation repurchase such holder's shares of Series B Preferred
Stock, at the price set forth in clause (i) of this subsection 8(c). Within 30
days following any Change of Control, the Corporation shall mail a notice, by
first class mail, to each holder of record of Series B Preferred Stock (a
"Change of Control Notice"), at his address of record, stating:
(A) that a Change of Control has occurred
and that such holder has the right to require the Corporation
to purchase such holder's shares of Series B Preferred Stock
at the price set forth above;
(B) the circumstances and relevant facts
regarding such Change of Control;
(C) the date on which the Corporation will
repurchase any shares of Series B Preferred Stock which the
holders require the Corporation to repurchase in accordance
with this subsection 8(c), which date shall be no earlier
than 30 days nor later than 60 days from the date such Change
of Control Notice is mailed (the "Change of Control Purchase
Date");
(D) that, unless the Corporation defaults
in making such payment, any shares of Series B Preferred
Stock accepted for payment pursuant to the Change of Control
Purchase Offer shall cease to accrue dividends after the
Change of Control Purchase Date;
(E) that holders of Series B Preferred
Stock electing to have their shares repurchased pursuant to
any Change of Control Purchase Offer shall be required to
surrender the original certificates for the shares of Series
B Preferred Stock at the address specified in the notice, at
least three business days before the Change of Control
Purchase Date; and
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(F) that the holders of Series B Preferred
Stock shall be entitled to withdraw their election if the
Corporation receives, not later than the last business day
prior to the Change of Control Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the
name of the holder, the number of shares of Series B
Preferred Stock the holder delivered for repurchase and a
statement that such holder is withdrawing his election to
have such shares repurchased.
(iii) Each holder of shares of Series B Preferred
Stock electing to have such shares purchased by the Corporation pursuant to
this subsection 8(c) shall deliver to the Corporation at its principal office,
at least three business days prior to the Change of Control Purchase Date, the
original certificate or certificate(s) for the shares to be purchased duly
endorsed, together with written notice to the Corporation specifying the number
of shares of Series B Preferred Stock to be purchased. Holders of Series B
Preferred Stock will be entitled to withdraw their election if the Corporation
receives, not later than one business day prior to the Change of Control
Purchase Date, a telegram, facsimile transmission or letter, at its principal
office, setting forth the name of the holder, the number of shares of Series B
Preferred Stock which were delivered by the holder for purchase by the
Corporation and a statement that such holder is withdrawing his election to
have such shares purchased.
(iv) Promptly following the Change of Control
Purchase Date, the Corporation will mail or deliver to each holder of shares of
Series B Preferred Stock who properly tendered such shares to the Corporation
for purchase pursuant to this subsection 8(c) and did not withdraw such
election, at his, her or its address of record, an amount equal to the purchase
price for the shares of Series B Preferred Stock so delivered for purchase as
set forth in this subsection 8(c). Unless the Corporation shall have defaulted
in the payment of the purchase price for shares of Series B Preferred Stock
tendered for purchase by the Corporation, all rights of the holders of such
shares (except the right to receive the purchase price therefor) shall cease
with respect to such shares on the Change of Control Purchase Date and such
shares shall not, after the Change of Control Purchase Date, be deemed to be
outstanding and shall not have the status of Series B Preferred Stock.
(v) The Corporation will comply, to the extent
applicable, with the requirements of Section 14(e) of the Securities Exchange
Act of 1934, as amended, and any other applicable securities laws or
regulations in connection with the repurchase of Series B Preferred Stock
pursuant to this subsection 8(c). To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this subsection
8(c), the Corporation will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section by virtue thereof.
Section 9. CONSOLIDATION, MERGER, ETC. Except as set forth in Section
8(c) hereof, in the event of a merger, reorganization, recapitalization or
similar event of or with respect to the Corporation (a "Corporate Change")
(other than a Corporate Change in which all or substantially all of the
consideration received by the holders of the Corporation's equity securities
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upon such Corporate Change consists of cash or assets other than securities
issued by the acquiring entity or any affiliate thereof), the Series B
Preferred Stock shall be assumed by the acquiring entity and thereafter the
Series B Preferred Stock shall be convertible into such class and type of
securities as the holder of shares of Series B Preferred Stock would have
received had such holder converted the Series B Preferred Stock immediately
prior to such Corporate Change.
Section 10. REDEMPTION.
(a) OPTIONAL REDEMPTION. Subject to earlier
conversion, commencing on May 17, 2002 and continuing through the Mandatory
Redemption Date (as defined below), the Corporation shall have the right,
exercisable at any time and from time to time, to redeem shares of Series B
Preferred Stock of the following prices plus the payment of all accrued and
unpaid dividends:
Year Redeemed Price
------------- -----
2002 104% of Liquidation Value
2003 102% of Liquidation Value
If less than all of the outstanding shares of Series
B Preferred Stock are called for redemption pursuant to this SECTION 10(A),
shares of Series B Preferred Stock shall be redeemed on a pro rata basis among
the holders thereof. Each holder of Series B Preferred Stock will be given
notice of such redemption and will have the right to convert the Series B
Preferred Stock into shares of Common Stock prior to the redemption date
specified in such notice.
(b) MANDATORY REDEMPTION.
(i) The Corporation will be required to
redeem the outstanding shares of Series B Preferred Stock on May 17, 2004 (the
"Mandatory Redemption Date"), at a redemption price per share equal to the
Liquidation Value plus accrued and unpaid dividends.
(ii) If at any time, (A) the Corporation
shall breach the terms and conditions contained in this certificate of
designation, (B) the Corporation shall breach any representation, warranty, or
covenant contained in that certain Series B Convertible Stock Purchase
Agreement, dated May 6, 1999, between the Corporation and the holders of the
Series B Preferred Stock or any subsequent Series B Stock Purchase agreement
with like terms, or (C) the Corporation shall fail to make a dividend payment
on a Dividend Payment Date (each a "Breach"), and any holder of shares of
Series B Preferred Stock shall give written notice to the Corporation of its
desire to have the Corporation redeem its shares of Series B Preferred Stock,
such shares shall be redeemed by the Corporation at a redemption price per
share equal to the greater of the amounts that would at that time be payable
under Section 10(a) hereof had the Corporation exercised its right to redeem
the shares of Series B Preferred Stock thereunder or the Liquidation Value plus
accrued and unpaid dividends; PROVIDED, HOWEVER, no holder shall have the right
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to request a redemption of its shares of Series B Preferred Stock pursuant to
this SECTION 10(b)(II) unless and until the Corporation shall have failed to
cure any such Breach within a period of ten (10) days after having received
written notice thereof.
(c) MECHANICS OF REDEMPTION. Notice of redemption of
the Series B Preferred Stock, specifying the redemption date and place of
redemption, shall be given by first class mail to each holder of record of the
shares to be redeemed, at his address of record, not less than 30 nor more than
60 calendar days prior to the date upon which the Corporation shall redeem the
Series B Preferred Stock (the "Redemption Date"). Each such notice shall also
specify the redemption price applicable to the shares to be redeemed. If less
than all the shares owned by such holder are then to be redeemed, the notice
shall also specify the number of shares thereof which are to be redeemed and
the fact that a new certificate or certificates representing any unredeemed
shares shall be issued without cost to such holder.
(i) Notice of redemption of shares of the
Series B Preferred Stock having been given as provided in SECTION 10(B), then
unless the Corporation shall have defaulted in the payment of the redemption
price and all accrued and unpaid dividends (whether or not declared), all
rights of the holders thereof (except the right to receive the redemption price
and all accrued and unpaid dividends, whether or not declared) shall cease with
respect to such shares on the Redemption Date and such shares shall not, after
the Redemption Date, be deemed to be outstanding and shall not have the status
of Series B Preferred Stock. In case fewer than all the shares represented by
any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
(ii) Shares of the Series B Preferred Stock
are not subject or entitled to the benefit of a sinking fund.
(iii) Notwithstanding the foregoing, if
notice of redemption shall have been given pursuant to this SECTION 10 and any
holder of the Series B Preferred Stock shall, prior to the close of business on
the date three business days next preceding the Redemption Date, give written
notice to the Corporation pursuant to SECTION 5 hereof of the conversion of any
or all of the shares held by the holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Corporation),
then the redemption shall not become effective as to such shares and the
conversion shall become effective as provided in SECTION 5.
(iv) If on the Mandatory Redemption Date
funds legally available to the Corporation for redemption of all outstanding
shares of Series B Preferred Stock are insufficient to redeem all such shares
of Series B Preferred Stock, such available funds shall be used by the
Corporation to redeem shares of Series B Preferred Stock from all holders
ratably in proportion to the full number of shares they would otherwise be
entitled to have redeemed. In the event that less than all outstanding shares
of Series B Preferred Stock are redeemed on the Mandatory Redemption Date, the
Corporation will continue to redeem shares of Series B Preferred Stock from
time to time as soon as practicable after funds become legally available
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therefor (ratably if the funds legally available remain insufficient to redeem
all shares required to be redeemed) until all shares of Series B Preferred
Stock required to be redeemed shall have been redeemed. Until actually
redeemed, each share of Series B Preferred Stock will continue to enjoy all
rights and benefits hereof, including the right to convert into shares of
Common Stock.
(d) CONVERSION PRICE ADJUSTMENT FOR FAILURE TO
REDEEM. If the Corporation fails to redeem all outstanding shares of Series B
Preferred Stock on the Mandatory Redemption Date, then, without any action by
the holders of shares of Series B Preferred Stock, the then current Conversion
Price respecting any shares of Series B Preferred Stock not redeemed by the
Corporation shall be reduced (but shall not be increased) to the greater of:
(i) fifty percent (50%) of the then current Conversion Price, and (ii) the
closing price of the Common Stock as reported by Nasdaq (or such principal
national exchange on which the Common Stock is then listed) on the Mandatory
Redemption Date.
Section 11. AMENDMENT. The Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least a majority of the outstanding shares of Series B Preferred
Stock, voting together as a single class.
Section 12. NOTICES. Written notice of each meeting of the
shareholders of the Corporation shall be given by first-class mail not less
than ten (10) days prior to such meeting to each holder of record of the Series
B Preferred Stock to the address of such record holder shown on the
Corporation's records.
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IN WITNESS WHEREOF, this Certificate of Designation has been executed
on behalf of the Corporation by its Chief Executive Officer this 13th day of
May, 1999.
MANSUR INDUSTRIES INC.
By: /s/ Paul I. Mansur
----------------------------------
Paul I. Mansur
Chief Executive Officer
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EXHIBIT A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER
IN ORDER TO CONVERT THE SERIES B PREFERRED STOCK)
The undersigned hereby irrevocably elects to convert ______ shares of
Series B Preferred Stock, represented by stock certificate No(s).
________________ (the "Series B Preferred Stock Certificates") into shares of
common stock, par value $.001 per share ("Common Stock"), of Mansur Industries
Inc., (the "Corporation") according to the conditions of the Certificate of
Designation of Series B Preferred Stock, as of the date written below. If
shares are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto. No fee
will be charged to the holder for any conversion, except for transfer taxes, if
any.
The undersigned represents and warrants that all offers and sales by
the undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Series B Preferred Stock shall be made pursuant to
registration of such shares of Common Stock under the Securities Act of 1933,
as amended, or pursuant to an exemption from registration under such Act.
Conversion Calculations:
-------------------------------------
Date of Conversion
-------------------------------------
Applicable Conversion Price
Signature
-------------------------------------
-------------------------------------
Name
Address:
-------------------------------------
-------------------------------------
*No shares of Common Stock will be issued until the original Series B Preferred
Stock Certificate(s) to be converted and the Notice of Conversion are received
by the Corporation or its designated Transfer Agent. The original Stock
Certificate(s) representing the Series B Preferred Stock to be converted and
the Notice of Conversion must be received by the Corporation or its designated
Transfer Agent by the second business day following the Date of Conversion, or
the Notice of Conversion, at the Corporation's option, may be declared null and
void.
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EXHIBIT B
NOTICE OF EARLY CONVERSION EVENT
Mansur Industries Inc. (the "Corporation ") hereby notifies
____________________, the holder of ___________ shares (the "Shares") of the
Corporation 's Series B Preferred Stock (the "Series B Preferred Stock"), that
an Early Conversion Event occurred on __________, and as such, you are hereby
directed to surrender the Shares as $______ of the aggregate Liquidation Value
of such Shares has been automatically converted into shares of the Corporation
's common stock, par value $.001 per share (the "Conversion Shares"), in
accordance with the terms of the Certificate of Designation respecting the
Series B Preferred Stock.
Unless otherwise instructed, the Corporation shall issue the
Conversion Shares and a new certificate representing the Shares not converted
in the name of the holder of the Shares and deliver same as soon as practicable
and in accordance with the provisions of the Certificate of Designation to the
address set forth in the Corporation 's register respecting the Series B
Preferred Stock.
Date: ________________________
MANSUR INDUSTRIES INC.
By:
----------------------------------
Name:
Title:
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