EXHIBIT 4.2
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.
MANSUR INDUSTRIES INC.
8 1/4% SUBORDINATED CONVERTIBLE NOTE DUE 2003
$____________ FEBRUARY ___, 1998
NEW YORK, NEW YORK
FOR VALUE RECEIVED, Mansur Industries Inc., a Florida corporation (the
"Company"), promises to pay to ___________ (the "Holder") or registered assigns,
the principal amount of __________ Dollars ($_________), or such greater amount
as determined in accordance with SECTION 3 hereof, and to pay interest (computed
on the basis of a 360 day year of twelve 30 day months) on the unpaid principal
amount hereof (as determined in accordance with SECTION 3 hereof) at the rate of
eight and one-quarter percent (8 1/4%) per annum. Principal and accrued but
unpaid interest 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 subordinated convertible notes
(collectively, the "Notes") issued by the Company to several holders
(collectively, the "Holders") pursuant to a Subordinated Convertible Note
Purchase Agreement dated February ___, 1998 (the "Agreement"). 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
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Event of Default 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.
(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
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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 (the "Incurrence") unless, after giving pro forma effect to
the Incurrence thereof, the ratio of Total Debt (as defined below) to
Consolidated EBITDA (as defined below) 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 $5,000,000 of Total Debt (excluding the 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 principles, (a) in respect of money borrowed or evidenced by
a promissory note, debenture or like written obligation to pay money (including
the 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
for 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;
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(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 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 noncash 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.
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3. INTEREST.
Interest shall be paid semi-annually on the unpaid principal
amount hereof at the rate of eight and one-quarter percent (8 1/4%) per annum on
each August ___ and February ___, commencing on August ___, 1998 (each an
"Interest Payment Date"), and on the Maturity Date; provided, however, that the
accrued interest that would otherwise be due on each Interest Payment Date prior
to February ___, 2000 shall be added to the principal amount of this Note then
outstanding and thereafter be principal of this Note for all purposes. After
February ___, 2000, the Company may elect to pay the accrued interest due on
each Interest Payment Date in cash; provided, however, if the Company fails to
pay the accrued interest due on any Interest Payment Date after February ___,
2000 in cash, such accrued interest shall be added to the principal amount of
this Note then outstanding and be principal under this Note for all purposes.
4. MATURITY
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 February
___, 2003 (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 as determined in accordance with SECTION 3 and accrued
interest thereon shall be discharged.
From and after February ___, 1999, 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 February ___, 1999 (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
6
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 subject
to an effective Registration Statement, provided, however, the foregoing
condition shall terminate upon the expiration of the Effectiveness Period.
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 as determined in accordance with SECTION 3 and accrued interest thereon to
be converted on the Conversion Date (as defined below) by the then applicable
Conversion Price.
(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
or delivery of the Notice of Early 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 (optional or automatic) 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.
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(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
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 shares 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.
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(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 any time after 36
months from the date of this Note pursuant to the following schedule:
(i) After 36 months, but prior to 48 months, from the date of
this Note, at a redemption price of 104% of the principal
amount plus any accrued but unpaid interest.
(ii) After 48 months from the date of issuance, at a
redemption price of 102% of the principal amount plus any
accrued but unpaid interest.
(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 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").
9
(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, 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;
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(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") 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
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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.
(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.
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(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 a 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 Mansur Industries Inc., 8305 N.W. 27th Street, Suite 107, Miami
Florida 33122, with a copy to Greenberg Traurig Hoffman Lipoff Rosen & Quentel
P.A., 1221 Brickell Avenue, Miami, Florida 33131, Attention: Gary Epstein, 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.
(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
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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.
MANSUR INDUSTRIES INC.
BY:____________________________
Paul I. Mansur
Chief Executive Officer
Attest:
_______________________________
SECRETARY
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EXHIBIT A
NOTICE OF CONVERSION
The undersigned being the holder of the attached Subordinated
Convertible Note(s) (the "Note(s)") due the Maturity Date (as defined in the
Note) of Mansur Industries 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:
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EXHIBIT B
NOTICE OF EARLY CONVERSION EVENT
Mansur Industries 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 ______, 199_,
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: ________________________
Mansur Industries Inc.
By: ________________________
Name:
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