Exhibit 10.2
 
DEBT CONVERSION AGREEMENT
 
THIS DEBT CONVERSION AGREEMENT (the “Agreement”) is made and entered into as of
May 9, 2011 by and among (i) PASSUR Aerospace, Inc., (“Company”), a New York
corporation, and (ii) G.S. Beckwith Gilbert (“Lender”).
 
RECITALS
 
A.       The Company has outstanding notes payable to Lender in the amount of
$14,814,880 as of March 31, 2011 (the “Note”), which Note matures on November 1,
2011.
 
B.        The Company and Lender have agreed that (i) the Company will repay
$4,250,000 in principal amount of the Note, (ii) $5,750,000 of the principal
amount of the Note will be converted into 1,369,048 shares of the Company’s
common stock, par value $0.01 per share (the “Common Stock”) on the terms and
subject to the conditions set forth in this Agreement and (iii) a new note in
the form of Exhibit A attached hereto (the “New Note”) will be issued in a
principal amount equal to the remaining $4,814,880 principal balance of the Note
following such conversion.
 
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Company and Lender hereby agree as follows:

 
ARTICLE I
DEFINITIONS
 
1.1  Definitions.  In addition to the terms defined elsewhere in this Agreement,
the following terms have the meanings indicated:
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 promulgated under
the Securities Act.
 
“Business Day” means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.
 
“Closing” means the closing of the issuance of the Shares pursuant to Section
2.1.
 
“Closing Date” means the date of the Closing.
 
 
 

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“Commission” means the Securities and Exchange Commission.
 
“Common Stock” means the common stock of the Company, par value $0.01 per share.
 
“Eligible Market” means any of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ National Market, the NASDAQ Small Cap Market or the OTCQB.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Lien” means any lien, charge, claim, security interest, encumbrance, right of
first refusal or other restriction.
 
“Person” means any individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or any court or
other federal, state, local or other governmental authority or other entity of
any kind.
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“Securities” means the Shares.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Shares” means an aggregate of 1,369,048 shares of Common Stock, which are being
issued to the Lender at the Closing.
 
“Trading Day” means (a) any day on which the Common Stock is listed or quoted
and traded on its primary Trading Market, (b) if the Common Stock is not then
listed or quoted and traded on any Eligible Market, then a day on which trading
occurs on the NASDAQ National Market (or any successor thereto), or (c) if
trading does not occur on the NASDAQ National Market (or any successor thereto),
any Business Day.
 
“Trading Market” means the NASDAQ National Market or any other Eligible Market
on which the Common Stock is then listed or quoted.
 
“Transfer Agent” means American Stock Transfer & Trust Co., or any other
transfer agent selected by the Company.
 
ARTICLE II
NOTE CANCELLATION; SHARE ISSUANCE; NEW NOTE
 
2.1  Closing.  Subject to the terms and conditions set forth in this Agreement,
at the Closing the Company shall issue to the Lender the Shares.  The Closing
shall take place at the
 
 
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offices of the Company on May __, 2011, or at such other location or time as the
parties may agree.
 
2.2  Closing Deliveries.
 
(a)  At the Closing, the Company shall deliver or cause to be delivered to the
Lender (i) one or more stock certificates, free and clear of all restrictive and
other legends (except as expressly provided in Section 4.1(b) hereof),
evidencing the number of Shares registered in the name of the Lender, (ii)
$4,250,000 by wire transfer of immediately available funds to an account
designed in writing by Lender prior to the Closing and (iii) the New Note in the
form attached hereto as Exhibit A executed by the Company.
 
(b)  At the Closing, the Lender shall deliver or cause to be delivered to the
Company the original Note, which Note shall be marked “CANCELLED.”
 
REPRESENTATIONS AND WARRANTIES
 
2.3  Representations and Warranties of the Company.  The Company hereby
represents and warrants to the Lender as follows:
 
(a)  Organization and Qualification.  The Company is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently
conducted.  The Company is not in violation of any of the provisions of its
certificate of incorporation or bylaws.  The Company is duly qualified to do
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not, individually or
in the aggregate, reasonably be expected to (i) have or result in a material
adverse effect on the results of operations, assets, business or condition
(financial or otherwise) of the Company or (ii) adversely impair the Company's
ability to perform fully on a timely basis its obligations under this Agreement
(either of (i) or (ii), a “Material Adverse Effect”).
 
(b)  Authorization; Enforcement.  The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder.  The
execution and delivery of this Agreement by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders in
connection therewith.  This Agreement has been (or upon delivery will be) duly
executed by the Company and is, or when delivered in accordance with the terms
hereof, will constitute, the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws of general application relating to or
affecting the enforcement of creditors rights generally, and
 
 
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(ii) the effect of rules of law governing the availability of specific
performance and other equitable remedies.
 
(c)  No Conflicts.  The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby do not and will not (i) conflict with or violate any provision of the
Company’s certificate of incorporation or bylaws, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company debt or otherwise) to which the Company is a party or by
which any property or asset of the Company is bound or affected, except to the
extent that such conflict, default, termination, amendment, acceleration or
cancellation right would not reasonably be expected to have a Material Adverse
Effect, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are
subject), or by which any property or asset of the Company is bound or affected,
except to the extent that such violation would not reasonably be expected to
have a Material Adverse Effect.
 
(d)  Issuance of the Securities.  The Securities are duly authorized and, when
issued and paid for in accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens and shall not
be subject to preemptive rights or similar rights of stockholders.
 
2.4  Representations and Warranties of the Lender.  The Lender represents and
warrants to the Company as follows:
 
(a)  Organization; Authority.  The Lender has all requisite authority and the
capacity to enter into and consummate the transactions contemplated by this
Agreement.  The performance of Lender’s obligations hereunder has been duly
authorized by all necessary action on the part of the Lender and will not
contravene any law, rule or regulation binding on the Lender.  This Agreement
has been duly executed and delivered by the Lender and constitutes the valid and
binding obligation of the Lender, enforceable against him in accordance with its
terms.
 
(b   Intent.  The Lender is acquiring the Securities for investment purposes
only and not with a view to or for distributing or reselling such Securities or
any part thereof, without prejudice, however, to the Lender 's right, subject to
the provisions of this Agreement, at all times to sell or otherwise dispose of
all or any part of such Securities pursuant to an effective registration
statement under the Securities Act or under an exemption from such registration
and in compliance with applicable federal and state securities laws.  The Lender
understands that the Lender must bear the economic risk of this investment
indefinitely, unless the Securities are registered pursuant to the Securities
Act and any applicable state securities or blue sky laws or an exemption from
such registration is available, and that the Company has no present intention of
registering the resale of any such Securities.  Nothing
 
 
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contained herein shall be deemed a representation or warranty by the Lender to
hold Securities for any period of time.
 
(c)  Lender Status.  At the time the Lender was offered the Shares, he was, and
at the date hereof he is, an “accredited investor” as defined in Rule 501(a)
under the Securities Act.  The Lender is not a member of the National
Association of Securities Dealers, Inc.
 
(d)  Reliance on Exemptions.  The Lender understands that the Shares are being
offered to the Lender in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Lender’s compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Lender set forth herein in order to determine the
availability of such exemptions and the eligibility of the Lender to acquire the
Securities.
 
(e)  Experience of the Lender.  The Lender, either alone or together with his
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  The Lender is able to bear the economic risk of
an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.
 
(f)  Access to Information.  The Lender is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in securities representing an investment decision like that involved
in the acquisiton of the Securities.  The Lender acknowledges that he has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as he has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and its financial
condition, results of operations, business, properties, management and prospects
sufficient to enable him to evaluate his investment; and (iii) the opportunity
to obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to the investment.  Neither such inquiries nor
any other investigation conducted by or on behalf of the Lender or his
representatives or counsel shall modify, amend or affect the Lender 's right to
rely on the truth, accuracy and completeness of the Disclosure Materials and the
Company's representations and warranties contained in this Agreement.  To the
extent that any of the information the Lender has received from the Company is
material nonpublic information, the Lender has consented to the receipt of such
material nonpublic information and the Lender understands that state and federal
laws including, without limitation, United States securities laws impose
limitations on the dissemination of such information and trading in securities
when in possession of such information, and the Lender agrees that he shall not
use such material nonpublic information in any manner that violates Federal or
state securities laws.  The Lender understands that such his investment in the
Securities involves a high degree of risk.
 
 
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(g)  Private Placement.  The Lender acknowledges and understands that neither
the Company nor any Person acting on the Company’s behalf has sold or offered to
sell or solicited any offer to buy the Securities that are being sold hereunder
by means of any form of general solicitation or advertising, including, but not
limited to, any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio; or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
 
(h)  No Legal, Tax or Investment Advice.  The Lender understands that nothing in
this Agreement or any other materials presented by or on behalf of the Company
to the Lender in connection with the acquisition of the Securities constitutes
legal, tax or investment advice.  The Lender has consulted such legal, tax and
investment advisors as he, in his sole discretion, has deemed necessary or
appropriate in connection with his acquisition of the Securities.  The Lender
acknowledges that he has made his own independent decision that the investment
in the Securities is suitable and appropriate for the Lender.
 
(i)  Common Stock Not Listed.  The Lender understands and acknowledges that the
Common Stock is not currently listed or quoted on an Eligible Market or any
other national securities exchange that the Company is under no obligation to so
list the Common Stock and that there is no assumption by any Party hereto that
the Common Stock will be so listed.
 
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
 
3.1  Transfer Restrictions.
 
(a)  The Lender covenants and agrees that Securities will only be disposed of
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from the registration requirements of the
Securities Act, and in compliance with any applicable state securities laws.  In
connection with any transfer of Securities other than pursuant to an effective
registration statement or to the Company, except as otherwise set forth herein,
the Company may require the transferor to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act.
 
(b)  The Lender agrees to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing Securities:
 
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
 
 
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NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) following any sale of such Securities pursuant to Rule
144 or (ii) if such Securities are eligible for sale under Rule 144 or (iii) if
such legend is not required under applicable requirements of the Securities
Act.  At such time as a legend is no longer required for certain Securities, the
Company will, promptly, following the delivery by the Lender to the Company or
the Transfer Agent of a legended certificate representing such Securities,
deliver or cause to be delivered to the Lender a certificate representing such
Securities that is free from all restrictive and other legends.  The Company may
not make any notation on its records or give instructions to any transfer agent
of the Company that enlarge the restrictions on transfer set forth in this
Section.
 
In the event the above legend is removed from any Security and thereafter the
effectiveness of a registration statement covering such Security is suspended or
the Company determines that a supplement or amendment thereto is required by
applicable securities laws, then the Company may immediately place a
stop-transfer order against the certificates with respect to the sale of any
Security pursuant to such registration statement, and upon reasonable advance
notice to the Lender, the Company may require that the above legend be placed on
any such Security that cannot then be sold pursuant to an effective registration
statement or under Rule 144 and the Lender shall cooperate in the replacement of
such legend.  Such legend shall thereafter be removed when such Security may
again be sold pursuant to an effective registration statement or under Rule 144.
 
Notwithstanding the foregoing, the Lender agrees that no such transfer shall be
made in violation of the Securities Act.
 
3.2  Integration.  The Company shall not, and shall use its commercially
reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Lender, or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market.
 
3.3  Securities Laws Disclosure; Publicity.  The Company and the Lender shall
consult with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency with respect to the transactions contemplated hereby, and
neither party shall issue any such press release or otherwise make any such
public statement, filing or other communication without the prior consent of the
other, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party, to the extent
practicable, with prior notice of such public statement, filing or other
communication.
 
 
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ARTICLE IV
CONDITIONS

4.1  Conditions Precedent to the Obligations of the Lender.  The obligation of
the Lender to acquire the Securities at the Closing is subject to the
satisfaction or waiver by the Lender, at or before the Closing, of each of the
following conditions:
 
(a)  Representations and Warranties.  The representations and warranties of the
Company contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing as though made on and as of such
date; and
 
(b)  Performance.  The Company shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by it at or prior to
the Closing.
 
4.2  Conditions Precedent to the Obligations of the Company.  The obligation of
the Company to issue the Securities and the New Note at the Closing is subject
to the satisfaction or waiver by the Company, at or before the Closing, of each
of the following conditions:
 
(a)  Representations and Warranties.  The representations and warranties of the
Lender contained herein shall be true and correct in all material respects as of
the date when made and as of the Closing Date as though made on and as of such
date; and
 
(b)  Performance.  The Lender shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Lender at or
prior to the Closing.
 
(c)  Cancelled Note.  The Lender shall have delivered, or caused to be
delivered, to the Company, the original Note as described in Section 2.2(b) of
this Agreement.
 
ARTICLE V
MISCELLANEOUS
 
5.1  Fees and Expenses.  Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.  The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of the Securities.
 
5.2  Entire Agreement.  This Agreement, together with the Exhibits and Schedules
hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.  At or after the
Closing, and without further consideration, the Company will execute and deliver
to the Lender such further documents as may be reasonably requested in order to
give practical effect to the intention of the parties under this Agreement.
 
 
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5.3  Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon actual receipt by the party to whom such notice is required to be
given.  The addresses and facsimile numbers for such notices and communications
are those set forth on the signature pages hereof, or such other address or
facsimile number as may be designated in writing hereafter, in the same manner,
by such Person.
 
5.4  Amendments; Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Lender, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought.  No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
 
5.5  Construction.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
 
5.6  Successors and Assigns.  This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns.  The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Lender. The Lender may not assign his
rights under this Agreement without the prior written consent of the Company.
 
5.7  No Third-Party Beneficiaries.  This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.
 
5.8  Governing Law; Venue; Waiver Of Jury Trial.  ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE COMPANY AND LENDER HEREBY IRREVOCABLY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF
NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY
THE COMPANY OR LENDER HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF
 
 
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THIS AGREEMENT).  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN
EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING
CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW.  THE COMPANY AND LENDER HEREBY WAIVE ALL RIGHTS
TO A TRIAL BY JURY.
 
5.9  Survival.  The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery and/or exercise of
the Securities, as applicable.
 
5.10  Execution.  This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  In the event that any signature is delivered by
facsimile transmission or electronic mail via the portable document format (PDF)
or other electronic means, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such signature page were an
original thereof.
 
5.11  Severability.  If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
 
5.12  Replacement of Securities.  If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
 
5.13  Remedies.  In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Lender and the
Company will be entitled to specific performance under this Agreement.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.
 
5.14  Adjustments in Share Numbers and Prices.  In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or
other securities or
 
 
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rights convertible into, or entitling the holder thereof to receive directly or
indirectly shares of Common Stock), combination or other similar
recapitalization or event occurring after the date hereof, each reference in
this Agreement to a number of shares shall be amended to appropriately account
for such event.
 

[SIGNATURE PAGES TO FOLLOW]

 
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IN WITNESS WHEREOF, the parties hereto have caused this Debt Conversion
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 
 

 
 
PASSUR AEROSPACE, INC.
 
By:           /s/ James T. Barry                         
                                                      
Name:      James T. Barry
Title:         Chief Executive Officer
 
Address for Notice:
 
PASSUR Aerospace, Inc.
One Landmark Square, Suite 1900
Stamford, Connecticut 06901
Facsimile No.:  (203) 629-2970
Telephone No.: (203) 622-4086
Attn:  Jeffrey P. Devaney, CFO

 
 
 
With a copy to:
Cadwalader, Wickersham & Taft LLP

One World Financial Center
New York, New York 10281
Facsimile No.:  (212) 504-6666
Telephone No.: (212) 504-5555
Attn:  Dennis J. Block, Esq.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR LENDER FOLLOWS]
 

 
 

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/s/ G.S. Beckwith Gilbert                                                      
G.S. BECKWITH GILBERT

 
Address for Notice:
 
35 Vista Drive
Greenwich, CT 06830
 
 
 

 

 
 

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EXHIBIT A
 
SECURED PROMISSORY NOTE
 
 $4,814,880
STAMFORD, CONNECTICUT
AS OF May __, 2011
 

(a)      For value received, PASSUR Aerospace, Inc. (formerly MEGADATA
CORPORATION), a New York corporation (hereinafter referred to as “Borrower”),
hereby unconditionally PROMISES TO PAY to the order of G.S. Beckwith Gilbert
(“Lender”), or his permitted assigns, to an account designated by Lender, in
lawful money of the United States of America and in immediately available funds,
the principal sum of Four million eight hundred fourteen thousand eight hundred
eighty dollars ($4,814,880) together with interest on the unpaid principal
amount of this Note.  Interest on the Note shall accrue at the annual rate of
nine percent (9%), payable as follows:  interest at the annual rate of six
percent (6%) will be payable in cash, and the remaining interest at the annual
rate of three percent (3%) will be payable in cash or added to the principal of
the Note (PAYMENT IN KIND) at the option of the Company.  Interest payments
shall be made annually at October 31 of each year.
 
The principal amount evidenced hereby will be repaid in full on November 1,
2014.  All accrued and unpaid interest hereunder as of November 1, 2014, shall
be payable on such date.
 
Notwithstanding the foregoing, the principal amount of the indebtedness
evidenced hereby together with all accrued interest shall be immediately due and
payable upon written notice to Borrower from Lender upon the happening of any of
the following Events of Default:
 
(a)     Any representation or warranty in the Securities Purchase Agreement,
dated September 18, 1996, between Borrower and Lender shall be untrue or
incorrect in any material respect;
 
(b)     Any of the assets of Borrower shall be attached, seized, levied upon or
subjected to a writ or distress warrant, or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors of
Borrower and shall remain unstayed or undismissed for thirty (30) consecutive
days; or any person other than Borrower shall apply for the appointment of a
receiver, trustee or custodian for any of the assets of Borrower and shall
remain unstayed or undismissed for thirty (30) consecutive days; or Borrower
shall have concealed, removed or permitted to be concealed or removed, any part
of its property, with the intent to hinder, delay or defraud its creditors or
any of them or made or suffered a transfer of any of its property or the
incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar law;
 
(c)      A case or proceeding shall have been commenced against Borrower in a
court having competent jurisdiction seeking a decree or order in respect of
Borrower (i) under title 11 of the United States Code, as now constituted or
hereafter amended, or any
 
 
 

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other applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) of Borrower or of any substantial part of its properties,
or (iii) ordering the winding-up or liquidation of the affairs of Borrower and
such case or proceeding shall remain undismissed or unstayed for thirty (30)
consecutive days or such court shall enter a decree or order granting the relief
sought in such case or proceeding;
 
(d)      Borrower shall (i) file a petition seeking relief under title 11 of the
United States Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii)
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
Borrower or of any substantial part of its properties, (iii) fail generally to
pay its debts as such debts become due, or (iv) take any corporate action in
furtherance of any such action;
 
(e)       Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $100,000 in the
aggregate shall be rendered against Borrower and the same shall not be vacated,
stayed, bonded, paid or discharged for a period of thirty (30) days; or
 
(f)        Any other event shall have occurred which would have a material
adverse effect on Borrower or its assets or financial condition in Lender’s
reasonable judgment and Lender shall have given Borrower at least twenty (20)
days notice thereof.
 
As security for any and all liabilities of the Borrower to Lender, now existing
or hereafter arising hereunder, or otherwise, Lender is hereby given a lien upon
and a security interest in any and all moneys or other property (i.e., goods and
merchandise, as well as any and all documents relative thereto; also, funds,
securities, chooses in action and any and all other forms of property whether
real, personal or mixed, and any right, title or interest of the Borrower
therein or thereto), and/or the proceeds thereof, including (without limitation
of the foregoing) that in safekeeping or in which Borrower may have any
interest.  In the event of the happening of any one or more Events of Default,
Lender shall have all of the rights and remedies provided to a secured party by
the Uniform Commercial Code in effect in New York State at that time and, in
addition thereto, the Borrower further agrees that (1) in the event that notice
is necessary, written notice delivered to the Borrower at its principal
executive offices ten business days prior to the date of public sale of the
property subject to the lien and security interest created herein or prior to
the date after which private sale or any other disposition of said property will
be made shall constitute reasonable notice, but notice given in any other
reasonable manner or at any other reasonable time shall be sufficient, (2) in
the event of sale or other disposition of such property, Lender may apply the
proceeds of any such sale or disposition to the satisfaction of Lenders
reasonable attorneys’ fees, legal expenses and other costs and expenses incurred
in connection with the retaking, holding, preparing for sale, and selling of the
property, and (3) without precluding any other methods of sale, the sale of
property shall have been made in a commercially reasonable manner if conducted
in conformity with reasonable commercial practices of banks disposing of similar
property.
 
 
 

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The Borrower and Lender agree that, in the event that a conservator, guardian,
trustee, executor or other legal representative (the “Representative”) shall be
appointed or otherwise authorized by law to administer Borrower’s estate, and
such Representative succeeds to the rights and obligations of Borrower under
this Note, such Representative shall forbear from exercising any of its rights
under this Note (or applicable law with respect to this Note and the
indebtedness hereunder) for the remainder of the term of this Note, including
but not limited to rights arising hereunder or under applicable law upon or in
connection with any default or Event of Default hereunder.
 
Demand, presentment, protest and notice of nonpayment and protest are hereby
waived by Borrower.
 
This Note has been executed, delivered and accepted in the State of New York and
shall be interpreted, governed by, and construed in accordance with, the laws of
the State of New York.
 

 
PASSUR Aerospace, Inc.
         
Date
By:
        Name:  Jeffrey P. Devaney       Title:  Chief Financial Officer