SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 16, 1995
MANAGEMENT TECHNOLOGIES, INC.
Exact name of Registrant as specified in its Charter)
NEW YORK
(State of other jurisdiction of incorporation)
0-17206 13-3029797
Commission File No. I.R.S. Employer Identification
335 Madison Avenue, New York, NY 10017
Address of principal Zip Code
executive offices
(212) 557-0022
Registrant's telephone
number, including area code
ITEM 5.OTHER EVENTS
On June 16, 1995, the Registrant ("Company"),
completed the conversion of a Subordinated Convertible
Note (the "Note") issued to D.H. Blair Investment Banking
Corp. ("Blair") in the principal amount of $323,117 and
accrued interest of $56,939.41, or a total amount of
$380,056.41, for 271,469 shares of common stock. The
shares of common stock issued in conversion of the Note
were registered pursuant to a Registration Statement
declared effective by the Securities and Exchange
Commission on December 3, 1993. The conversion price was
$1.40 per share.
Blair informed the Company that on February 17,
1995, Blair sold a $100,000 interest in the Note to two
individuals. The conversion shares were apportioned
between these two individuals and Blair, accordingly.
EXHIBIT
1. Subordinated Convertible Note in the principal
amount of $323,117
2. Squadron, Ellenoff, Plesent, Sheinfeld & Sorkin
letter dated November 29, 1993
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
Dated: New York, N.Y.
June 22, 1995
MANAGEMENT TECHNOLOGIES, INC.
(Registrant)
By: /s/ Nigel J. Cole
Nigel J. Cole
Chief Financial Officer
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY
AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO OR (ii) RECEIPT BY THE ISSUER OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED
IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS IN
VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS
LEGEND SHALL BE ENDORSED UPON ANY NOTE ISSUED IN EXCHANGE
FOR THIS NOTE.
MANAGEMENT TECHNOLOGIES, INC.
$323,117
No. 57
March 31, 1992
SUBORDINATED CONVERTIBLE NOTE
MANAGEMENT TECHNOLOGIES, INC. a New York corporation
(the "Company"), for value received, hereby promises to
pay to D.H. Blair Investment Banking Corp. or registered
assigns (the "Payee") on May 1, 1994 (the "Maturity
Date") at the offices of the Company, One Penn Plaza, New
York, New York 10119, the principal amount of Three
Hundred Twenty-Three Thousand One Hundred Seventeen
($323,117) Dollars, including the second year's interest
accrued thereon, in such coin or currency of the United
States of America as at the time of payment shall be
legal tender for the payment of public and private debts.
Interest shall be payable at the Prime Rate which shall
mean the Prime Rate announced by the Bank of New York on
the business day immediately preceding the initial
Closing (as defined in the Company's confidential term
sheet, dated February 6, 1992 ("Term Sheet") relating to
a private placement of up to sixty (60) Units ("Private
Placement Units"), each Unit consisting of a $50,000
principal amount subordinated convertible redeemable note
("Note") of the Company, plus one and one-half (1 1/2%)
percent per annum from the date hereof through the
Maturity Date, payable annually in cash and 50,000 Class
C redeemable Common Stock Purchase Warrants ("Warrants").
The Company shall prepay to the Payee in amount equal to
interest for the first 12 months of this Note, discounted
over such period at an interest rate equal to 1% per
annum.<PAGE>
This Note is issued pursuant to a Subscription
Agreement dated as of ,1992, between the Company and the
Payee (the "Subscription Agreement"), a copy of which
agreement is available for inspection at the Company's
principal office. Notwithstanding any provision to the
contrary contained herein, this Note is subject and
entitled to certain terms, conditions, covenants and
agreements contained in the Subscription Agreement. Any
transferee or transferees of the Note, by their
acceptance hereof, assume the obligations of the Payee
in the Subscription Agreement with respect to the
conditions and procedures for transfer of the Note.
Reference to the Subscription Agreement shall in no way
impair the absolute and unconditional obligation of the
Company to pay both principal and interest hereon as
provided herein.
1.Subordination
A. This Note is the direct obligation of the
Company chargeable against all of its property,
whatsoever and wheresoever, both present and future, and,
if divided into separate Notes, all such Notes shall rank
equally and ratably without preference or priority of any
of said Notes over any others thereof. However, the
indebtedness evidenced by this Note and the payment of
the principal of, and interest hereon, shall be at all
times and in all respects wholly subordinate, junior and
subject in right of payment to Senior Indebtedness (as
herein defined) now outstanding or hereinafter incurred.
Without limiting the effect of the foregoing,
"subordinate," as used herein, shall be deemed to mean
that, in the event of any default in the payment of
Senior Indebtedness (after giving effect to "cure"
provisions, if any) or of any liquidation, insolvency,
bankruptcy, reorganization, or similar proceedings
relating to the Company, all sums payable on Senior
Indebtedness shall first be paid in full, with interest,
if any, before any payment is made upon the indebtedness
evidenced by this Note, and, in such event, any payment
or distribution of any character which shall be made in
respect of this Note shall be paid over to the holders
of Senior Indebtedness for application prorata to the
payment thereof, unless and until such Senior
Indebtedness shall have been paid and satisfied in full.
"Senior Indebtedness" shall mean the principal of, and
premium, if any, and interest on, all indebtedness of the
Company to banks, trust companies, insurance companies
and other financial institutions; provided, however, that
Senior Indebtedness shall expressly exclude trade debt.
B. No right of any present or future holder
of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on
the part of the Company or by any non-compliance by the
Company with the terms, provisions and convenants of this
Note, regardless of any knowledge thereof which any such
owner or holder may have or be otherwise charged with.
2.Prepayment
The Company shall have no right to prepay the
principal amount of this Note.
3.Conversion
This Note shall be convertible, together with
interest accrued thereon on the date a holder elects to
convert (the "Conversion Date"), at the option of the
holder hereof, commencing September 1, 1992, into that
number of shares of Common Stock as shall equal the total
principal of the Note, together with such accrued
interest, (A) from September 1, 1992 through
January 31, 1994, divided by the higher of (i) forty
(40%) percent of the average closing bid price of the
Common Stock in the over-the-counter market as reported
by NASDAQ for the twenty (20) days immediately preceding
the Conversion Date (the "Market Price"), but in no event
greater than $3.00 per share and (ii) $2.00 and (B) from
February 1, 1994 through the Maturity Date, divided by
the lower of (i) forty percent (40%) of the Market Price,
but in no event less than $0.25 per share and (ii) $3.00
(the "Conversion Factor").
4.Registration Under the Securities Act of 1933
A.The Company agrees to file a registration
statement under the Securities Act of 1933,
as amended (the "Act"), and use its best efforts to cause such
registration to become on or before September 1, 1992,
registering the shares of Common Stock issued upon
Conversion of the Notes included as part of the Private
Placement Units. All costs and expenses of such
registration and the costs and expenses of any amendment
or supplements necessary to keep such registration
statement current, shall be borne by the Company, except
that the holders shall bear the fees of their own counsel
and any underwriting discounts and commissions applicable
to any of the securities sold by them. The Company shall
maintain the current effectiveness of such registration
statement until the earlier of (i) such time as all
shares of Common Stock issuable upon conversion of the
Notes have been issued; or (ii) the repayment in full of
all principal and interest on the Notes.
5.Indemnification
A.Whenever pursuant to Section 4, a
registration statement relating to the shares of Common
Stock issuable upon conversion of the Notes included as
part of the Private Placement Units, is filed under the
Act, amended or supplemented, the Company will indemnify
and hold harmless each holder of the securities covered
by such registration statement, amendment or supplement
(such holder being hereinafter called the "Distributing
Holder"), and each person, if any, who controls (within
the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such
securities and each person, if any, who controls (within
the meaning of the Act) any such underwriter, against any
losses, claims, damages or liabilities, joint or several,
to which the Distributing Holder, any such controlling
person or any such underwriter may become subject, under
the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in any such registration statement or any preliminary
prospectus or final prospectus constituting a part
thereof or any amendment or supplement thereto, or arise
out of or are based upon the omission to state therein
a material fact required to be stated therein or
necessary to make the statements therein not misleading;
and will reimburse the Distributing Holder and each such
controlling person and underwriter for any legal or other
expenses reasonably incurred by the Distributing Holder
or such controlling person or underwriter in connection
with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out
or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said
final prospectus or said amendment or supplement in
reliance upon and in conformity with written information
furnished by such Distributing Holder or any other
Distributing Holder, for use in the preparation thereof.
B.The Distributing Holder will indemnify
and hold harmless the Company, each of its directors,
each of its officers who have signed said registration
statement and such amendments and supplements thereto,
each person, if any, who controls the Company (within the
meaning of the Act) against any losses, claims, damages
or liabilities to which the Company or any such director,
officer or controlling person may become subject, under
the Act or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any
untrue or alleged untrue statement of any untrue or
alleged untrue statement of any material fact contained
in said registration statement, said preliminary
prospectus, said final prospectus, or said amendment or
supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading, in each
case to the extent, but only to the extent that such
untrue statement or alleged untrue statement or omission
or alleged omission was made in said registration
statement, said preliminary prospectus, said final
prospectus or said amendment or supplement in reliance
upon and in conformity with written information
furnished by such Distributing Holder for use in the
preparation thereof; and will reimburse the Company or
any such director, officer or controlling person for any
legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss,
claim, damage, liability or action.
C.Promptly after receipt by an indemnified
party under this Section 5 of notice of the commencement
of any action, such indemnified party will, if a claim
in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the
commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
under this Section 5.
D.In case any such action is brought against
any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party
will be entitled to participate in, and, to the extent
that it may wish, jointly with any other indemnifying
party similarly notified to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 5 for
any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof
other than reasonable costs of investigation.
6. Adjustment of Conversion Factor
(a) Subject to the exceptions referred to in
subsection 6(f) below, in the event the Company shall,
at any time or from time to time after the date hereof,
sell any shares of Common Stock for a consideration per
share less than the current fair market value of the
Common Stock (defined as the last reported sale price of
the Common Stock in the over-the counter market as
reported by NASDAQ on the last business day prior to the
Conversion Date) on the date of the sale or issue any
share of Common Stock as a stock dividend to the holders
of Common Stock, or subdivide or combine the outstanding
shares of Common Stock into a greater or lesser number
of share (any such sale, issuance, subdivision or
combination being herein called a "Change of Shares"),
then, and thereafter upon each further Change of Shares,
the Conversion Factor in effect immediately prior to such
Change of Shares shall be changed to a price (including
any applicable fraction of a cent) determined by
multiplying the Conversion Factor in effect immediately
prior thereto by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such
additional shares and the number of shares of Common
Stock which the aggregate consideration received
(determined as provided in subsection 6(e)(F) below), if
any, for the issuance of such additional shares would
purchase at such current market price per share of Common
Stock, and the denominator of which shall be the sum of
the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares.
Such adjustment shall be made successively whenever such
an issuance is made. Upon each adjustment of the Conversion Factor
pursuant to this Section 6, the total number of shares
of Common Stock which may be acquired upon conversion of
each Note shall be such number of shares (calculated to
the nearest tenth) acquirable at the Conversion Factor
immediately prior to such adjustment multiplied by a
fraction, the numerator of which shall be the Conversion
Factor in effect immediately prior to such adjustment and
the denominator of which shall be the Conversion Factor
in effect immediately after such adjustment.
(b) In case of any reclassification, capital
reorganization or other change of outstanding shares of
Common Stock, or in case of any consolidation or merger
of the Company with or into another corporation (other
than a consolidation or merger in which the Company is
the continuing corporation and which does not result in
any reclassification, capital reorganization or other
change of outstanding shares of Common Stock), or in case
of any sale or conveyance to another corporation of the
property of the Company as, or substantially as, an
entirety (other than a sale/leaseback, mortgage or other
financing transaction), the Company shall cause effective
provision to be made so that each holder of a Note then
outstanding shall have the right thereafter, by
converting such Note, to acquire the kind and number of
shares of stock or other securities or property
(including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation,
merger, sale or conveyance by a holder of the number of
shares of Common Stock that might have been purchased
upon conversion of such Note immediately prior to such
reclassification, capital reorganization or other
change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments
that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 6. The
foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other
changes or outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(c)Irrespective of any adjustments or changes
in the Conversion Factor or the number of shares of
Common Stock which may be acquired upon conversion of the
Notes, the Notes theretofore and thereafter issued shall
continue to express the Conversion Factor per share and
the number of shares which may be acquired thereunder as
the Conversion Factor per share and the number of shares
which may be acquired were expressed in the Notes when
the same were originally issued.
(d)After each adjustment of the Conversion
Factor pursuant to this Section 6, the Company will
promptly prepare a Note signed by the Chairman or
President of the Company setting forth: (i) the
Conversion Factor as so adjusted, (ii) the number of
shares of Common Stock which may be acquired upon
conversion of each Note after such adjustment, and (iii)
a brief statement of the facts accounting for such
adjustment. The Company will promptly cause a brief
summary thereof to be sent by ordinary first class mail
to Blair and to each registered holder of Notes at his
last address as it shall appear on the registry books of
the Company. No failure to mail such notice nor any
defect therein or in the mailing thereof shall affect
the validity thereof except as to the holder to whom the
Company failed to mail such notice, or except as to the
holder whose notice was defective. The affidavit of an
officer of the Company that such notice has been mailed
shall, in the absence of fraud, be prima facie evidence
of the facts stated therein.
(e) For purposes of Section 6 hereof, the
following provisions (A) to (F) shall also be applicable:
A) The number of shares of Common Stock
outstanding at any given time shall include shares
of Common Stock owned or held by or for the account
of the Company and the sale or issuance of such
treasury shares or the distribution of any such
treasury shares shall not be considered a Change of
Shares for purposes of said sections.
(B) No adjustment of the Conversion
Factor shall be made unless such adjustment would
require an increase or decrease of at least $.10 in
such factor; provided that any adjustments which by
reason of this clause (B) are not required to be
made shall be carried forward and shall be made at
the time of and together with the next subsequent
adjustment which, together with any adjustment(s)
so carried forward, shall require an increase or
decrease of at least $.10 in the Conversion Factor
then in effect hereunder.
(C) In case of (1) the sale by the
Company for cash of any rights or warrants to
subscribe for or purchase, or any options for the
purchase of, Common Stock or any securities
convertible into or exchangeable for Common Stock
without the payment of any further consideration
other than cash, if any (such convertible or
exchangeable securities being herein called
"Convertible Securities"), or (2) the issuance by
the Company, without the receipt by the Company of
any consideration therefor, of any rights or
warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or
Convertible Securities, in each case, if (and only
if) the consideration payable to the Company upon
the exercise of such rights, warrants or options
shall consist of cash, whether or not such rights,
warrants or options, or the right to convert or
exchange such Convertible Securities, are
immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of
such rights, warrants or options or upon the
conversion or exchange of such Convertible
Securities (determined by dividing (x) the minimum
aggregate consideration payable to the Company upon
the exercise of such rights, warrants or options,
plus the consideration received by the Company for
the issuance or sale of such rights, warrants or
options, plus, in the case of such Convertible
Securities, the minimum aggregate amount of
additional consideration, if any, other than such
Convertible Securities, payable upon the conversion
or exchange thereof, by (y) the total maximum number
of shares of Common Stock issuable upon the exercise
of such rights, warrants or options or upon the
conversion or exchange of such Convertible
Securities issuable upon the exercise of such
rights, warrants or options) is less than the fair
market value of the Common Stock on the date of the
issuance or sale of such rights, warrants or
options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such
rights, warrants or options or upon the conversion
or exchange of such Convertible Securities (as of
the date of the issuance or sale of such rights,
warrants or options) shall be deemed to be
outstanding shares of Common Stock for purposes of
Section 6 hereof and shall be deemed to have been
sold for cash in an amount equal to such price per
share.
(D) In case of the sale by the Company
for cash of any Convertible Securities, whether or
not the right of conversion or exchange thereunder
is immediately exercisable, and the price per share
for which Common Stock is issuable upon the
conversion or exchange of such Convertible
Securities (determined by dividing (x) the total
amount of consideration received by the Company for
the sale of such Convertible Securities, plus the
minimum aggregate amount of additional
consideration, if any, other than such Convertible
Securities, payable upon the conversion or exchange
thereof, by (y) the total maximum number of shares
of Common Stock issuable upon the conversion or
exchange of such Convertible Securities (as of the
date of the sale of such Convertible Securities)
shall be deemed to be outstanding shares of Common
Stock for purposes of Section 6 hereof and shall be
deemed to have been sold for cash in an amount equal
to such price per share.
(E) If the exercise or purchase price
provided for in any right, warrant or option
referred to in (C) above, or the rate at which any
Convertible Securities referred to in (C) or (D)
above are convertible into or exchangeable for
Common Stock, shall change at any time (other than
under or by reason of provisions designed to protect
against dilution), the Conversion Factor then in
effect hereunder shall forthwith be readjusted to
such Conversion Factor as would have obtained (1)
had the adjustments made upon the issuance or sale
of such rights, warrants, options or Convertible
Securities been made upon the basis of the issuance
of only the number of shares of Common Stock
theretofore actually delivered (and the total
consideration received therefor) upon the exercise
of such rights, warrants or options or upon the
conversion or exchange of such Convertible
Securities, (2) had adjustments been made on the
basis of the Conversion Factor as adjusted under
clause (1) for all transactions (which would have
affected such adjusted Conversion Factor) made after
the issuance or sale of such rights, warrants,
options or Convertible Securities, and (3) had any
such rights, warrants, options or Convertible
Securities then still outstanding been originally
issued or sold at the time of such change. On the
expiration of any such right, warrant or option or
the termination of any such right to convert or
exchange any such Convertible Securities, the
Conversion Factor then in effect hereunder shall
forthwith be readjusted to such Conversion Factor
as would have obtained (a) had the adjustments made
upon the issuance or sale of such rights, warrants,
options or Convertible Securities been made upon the
basis of the issuance of only the number of shares
of Common Stock theretofore actually delivered (and
the total consideration received therefor) upon the
exercise of such rights, warrants or options or upon
the conversion or exchange of such Convertible
Securities and (b) had adjustments been made on the
basis of the Conversion Factor as adjusted under
clause (a) for all transactions (which would have
affected such adjusted Conversion Factor) made after
the issuance or sale of such rights, warrant,
options or Convertible Securities.
(F) In case of the sale for cash of any
shares of Common Stock, any Convertible Securities,
any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or
Convertible Securities, the consideration received
by the Company therefore shall be deemed to be the
gross sales price therefor without deducting
therefrom any expense paid or incurred by the
Company or any underwriting discounts or commissions
or concessions paid or allowed by the Company in
connection therewith.
(f) No adjustment to the Conversion Factor of
the Notes or to the number of shares of Common Stock
which may be acquired upon conversion of each Note will
be made, however,
(i) upon the exercise of any options,
warrants or convertible securities presently
outstandings; or
(ii) upon the grant or exercise or any
other options which may hereafter be granted
or exercised under any employee benefit plan
of the Company or otherwise to outside
directors of the Company as consideration for
their agreement to serve on the Company's Board
of Directors; or
(iii) upon the sale or exercise of the
Warrants; or
(iv) upon the issuance of any shares of
Common Stock sold in the Company's initial
public offering, or upon exercise of the Class
A or Class B Warrants comprising any Unites
sold in the Company's initial public offering;
or
(v) upon the issuance or sale of Common
Stock or Convertible Securities upon the
exercise of any rights or warrants to subscribe
for or purchase, or any options for the
purchase of, Common Stock or Convertible
Securities, whether or not such rights,
warrants or options were outstanding on the
date of the original sale of the Warrants or
were thereafter issued or sold; or
(vi) upon the issuance or sale of Common
Stock upon conversion or exchange of any
Convertible Securities, whether or not any
adjustment in the Purchase Price was made or
required to be made upon the issuance or sale
of such Convertible Securities and whether or
not such Convertible Securities were
outstanding on the date of the original sale
of the Warrants or were thereafter issued or
sold; or
(vii) upon any amendment to or change in
the terms of any rights or warrants to
subscribe for or purchase, or options for the
purchase of, Common Stock or Convertible
Securities or in the terms of any Convertible
Securities, including, but not limited to, any
extension of any expiration date of any such
right, warrant or option, any change in any
exercise or purchase price provided for in any
such right, warrant or option, any extension
of any date through which any Convertible
Securities are convertible into or exchangeable
for Common Stock or any change in the rate at
which any Convertible Securities are
convertible into or exchangeable for Common
Stock (other than rights, warrants, options or
Convertible Securities issued or sold after the
close of business on the date of the original
issuance of the Notes (i) for which an
adjustment in the Conversion Factor then in
effect was theretofore made or required to be
made, upon the issuance or sale thereof, or
(ii) for which such an adjustment would have
been required had the exercise or purchase
price of such rights, warrants or options at
the time of the issuance or sale thereof or the
rate of conversion or exchange of such
Convertible Securities, been the price or rate
as changed, in which case the provisions of
Section 6(e)(E) hereof shall be applicable if,
but only if, the exercise or purchase price
thereof, as changed, consists of cash or
requires the payment of additional
consideration, if any, consisting of cash and
the Company did not receive any consideration
other than cash, if any, in connection with
such change).
(g) As used in this Section 6, the term
"Common Stock" shall mean and include the
Company's Common Stock authorized on the
date of the original issue of the Notes and
shall also include any capital stock of
any class of the Company thereafter
authorized which shall not be limited to
a fixed sum or percentage in respect of
the rights of the holders thereof to
participate in dividends and in the
distribution of assets upon the voluntary
liquidation, dissolution or winding up of
the Company; provided, however, that the
shares issuable upon conversion of the
Notes shall include only shares of such
class designated in the Company's Certificate
of Incorporation as Common Stock on the
date of the original issue of the Notes or (i),
in the case of any reclassification, change,
consolidation, merger, sale or conveyance of
the character referred to in Section 6(b)
hereof, the stock, securities or property
provided for in such section or (ii), in the
case of any reclassification or change in
the outstanding shares of Common Stock
issuable upon conversion of the Notes as
a result of a subdivision or combination or
consisting or a change in par value, or
from par value to no par value, or from no
par value to par value, such shares of
Common Stock as so reclassified or changed.
(h) Any determination as to whether an
adjustment in the Conversion Factor in
effect hereunder is required pursuant to
Section 6, or as to the amount
of any such adjustment, if required,
shall be binding upon the holders of the
Notes and the Company if made in
good faith by the Board of Directors
of the Company.
(i) If and whenever the Company shall grant
to the holders of Common Stock, as such, rights or
warrants to subscribe for or to purchase, or any options
for the purchase of, Common Stock or securities
convertible into or exchangeable for or carrying a right,
warrant or option to purchase Common Stock, the Company
shall concurrently therewith grant to each of the then
registered holders of the Notes all of such rights,
warrants or options being granted by the Company, such
holder were the holder of record of the number of whole
shares of Common Stock then issuable upon conversion
(assuming, for purposes of this section 6(i), that
conversion of Notes is permissible during periods prior
to the Conversion Date) of his Notes. Such grant by the
Company to the holders of the Notes shall be in lieu of
any adjustment which otherwise might be called for
pursuant to this Section 6.
7.Covenants of Company
The Company convenants and agrees that, so long
as this Note shall be outstanding, it will:
(i) Promptly pay and discharge all lawful
taxes, assessments, and governmental charges or
levies imposed upon the Company or upon its income
and profits, or upon any of its property, before the
same shall become in default, as well as all lawful
claims for labor, materials and supplies which, if
unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however,
that the Company shall not be required to pay and
discharge any such tax, assessment, charge, levy or
claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings
and the Company shall set aside on its books
adequate reserves with respect to any such tax,
assessment, charge, levy or claim so contested;
(ii) Do or cause to be done all things
necessary to preserve and keep in full force and
effect its corporate existence, rights and
franchises and comply with all laws applicable to
the Company as its counsel may advise;
(iii) At all times maintain, preserve,
protect and keep its property used or useful in the
conduct of its business in good repair, working
order and condition, and from time to time make all
needful and proper repairs, renewals, replacements,
betterments and improvements thereto;
(iv) Keep adequately insured by all
financially sound reputable insurers, all property
of a character usually insured by similar
corporations and carry such other insurance as is
usually carried by similar corporations; and
(v) At all times keep true and correct
books, records and accounts.
(vi) Engage in any material non-day-to-
day transaction to which an officer, director or
controlling stockholder of the Company is directly
or indirectly a party without first obtaining the
approval of a majority of independent member of the
Board of Directors.
8.Events of Default
A. This Note shall become and be due and
payable upon written demand made by the holder
hereof if one or more of the following events,
herein called events of default, shall happen and
be continuing:
(i) Default in the payment of the
principal and accrued interest on this Note when and
as the same shall become due and payable, whether
by acceleration or otherwise;
(ii) Default in the due observance
or performance of any covenant, condition or
agreement on the part of the Company to be observed
or performed pursuant to the terms hereof and such
default shall continue uncured for thirty (30) days
after written notice thereof, specifying such
default, shall have been given to the Company by the
holder of the Note;
(iii) Default in the payment of any
Senior Indebtedness or in the due observance or
performance of any covenant, condition or agreement
on the part of the Company with respect to any
Senior Indebtedness with the result that such Senior
Indebtedness shall become due and payable prior to
the due date otherwise specified therefor and such
default shall continue uncured or such acceleration
shall not be rescinded or annulled within thirty
(30) days after written notice thereof to the
Company from the holder of this Note;
(iv) Application for, or consent to,
the appointment of a receiver, trustee or liquidator
of the Company or of its property;
(v) Admission in writing of the
Company's inability to pay its debts as they mature;
(vi) General assignment by the
Company for the benefit of creditors;
(vii) Filing by the Company of a
voluntary petition in bankruptcy or a petition or
an answer seeking reorganization, or an arrangement
with creditors;
(viii) Entering against the Company
of a court order approving a petition filed against
it under the Federal bankruptcy laws, which order
shall not have been vacated or set aside or
otherwise terminated within sixty (60) days;
(ix) The sale by the Company of
substantially all of its assets; or
(x) The merger by the Company with
or into another corporation, other than for purposes
of changing domicile; or
(xi) A material breach of the
Company's representations contained in the
Subscription Agreement.
B. The Company agrees that notice of the
occurrence of any event of default will be promptly
given to the holder at his or her registered address
by certified mail.
C. In case of any one or more of the
events of default specified above shall happen and
be continuing, the holder of this Note may proceed
to protect and enforce his rights by suit in the
specific performance of any convenant or agreement
contained in this Note or in aid of the exercise of
any power granted in this Note or may proceed to
enforce the payment of this Note or to enforce any
other legal or equitable rights as such holder.
9. Miscellaneous
A. This Note has been issued by the
Company pursuant to authorization of the Board of
Directors of the Company which provides for an
aggregate of up to $3,000,000 in face amount of
identical Notes to be issued.
B. The Company may consider and treat
the person in whose name this Note shall be
registered as the absolute owner thereof for all
purposes whatsoever (whether or not this Note shall
be overdue) and the Company shall not be affected
by any notice to the contrary. The registered owner
of this Note shall have the right to transfer it by
assignment (subject to the limitations on transfer
contained in the Subscription Agreement) and the
transferee thereof shall, upon his registration as
owner of this Note, become vested with all the
powers and rights of the transferor. Registration
of any new owner shall take place upon presentation
of this Note to the Company at its offices, One Penn
Plaza, New York, NY 10119 together with a duly
authenticated assignment. In case of transfer by
operation of law, the transferee agrees to notify
the Company of such transfer and of his address, and
to submit appropriate evidence regarding the
transfer so that this Note may be registered in the
name of the transferee. This note is transferable
only on the books of the Company by the holder
hereof, in person or by attorney, on the surrender
hereof, duly endorsed. Communications sent to any
registered owner shall be effective as against all
holders or transferees of the Note not registered
at the time of sending the communication.
C. Payments of interest shall be made
as specified above to the registered owner of this
Note. Payment of principal and interest shall be
made to the registered owner of this Note upon
presentation of this Note upon or after maturity.
D. This Note shall be construed and
enforced in accordance with the laws of the State
of New York.
E. No recourse shall be had for the
payment of the principal or interest of this Note
against any incorporator or any past, present or
future stockholder, officer, director or agent of
the Company or of any successor corporation, either
directly or through the Company or any success or
corporation, under any statute or by the enforcement
of any assessment or otherwise, all such liability
of the incorporators, stockholders, officers,
directors and agents being waived, released and
surrendered by the holder hereof by the acceptance
of this Note.
IN WITNESS WHEREOF, MANAGEMENT
TECHNOLOGIES, INC. has caused this Note to be
signed in its name by its Chairman of the Board.
MANAGEMENT TECHNOLOGIES, INC.
By: /s/Clifford Brune
Clifford Brune
Vice President
SQUADRON, ELLENOFF, PLESENT, SHEINFELD & SORKIN
551 FIFTH AVENUE
NEW YORK, NY 10176
212-661-6500
HOWARD M SQUADRON JEFFREY W RUBIN OF COUNSEL
THEODORE ELLENOFF STUART M STEIN DAVID G.CARLSON
STANLEY PLESENT EUGENIE C GAVENCHAK STANLEYI LEHRER
IRA S SHEINFELD HOWARD M TOPAZ DAVID MILLER
IRA LEE SORKIN DAVID I KOVACS JACOB M USADI
DAVID ALTER MITCHELL R LUBART -----------
MICHAEL R KLEINERMAN SHARON STEIN TELECOPIER
HARVEY HOROWITZ HARVEY M. KATZ 212-697-6686
NEAL M. GOLDMAN JOSEPH R. RACKMAN ----------
ELLIOT G. SAGOR MARK J. WEINSTEIN WRITER'S DIRECT
JOEL I PAPERNIK PHILIP E. ALTMAN DIAL NUMBER
MICHAEL H. KING LAWRENCE A. JACOBS
IRA S. GREENE KENNETH R. KOCH
ARTHUR D. STOUT III STEPHEN J. GULOTTA, JR.
SLADE R. METCALF ALAN KATZ
JUDITH R. COHEN JOSEPH R. GAGLIANO, JR.
MARK L. GOLDSTEIN MARK H. JACKSON
JAMES H. STEVRALIA
November 29, 1993
Management Technologies, Inc.
335 Madison Avenue
New York, NY 10017
Re: Registration Statement on Form S-3 of
Management Technologies, Inc. (the "Company")
Dear Sirs:
We are rendering this opinion in connection with the
registration by the Company on a registration statement
on Form S-3 (the "Registration Statement") with respect
to the registration under the Securities Act of 1933, as
amended (the "Act"), of the following: (i) the offering
and sale by the Company to the holders of its 3,993,000
outstanding Class A Warrants (the "Class A Warrants") of
up to 3,993,000 units, each consisting of one share of
the common stock, $.01 par value, of the Company (the
"Common Stock") (collectively, the "A Warrant Shares")
and one and one-twelfth Class B Warrants (collectively,
the "Underlying Class B Warrants"), issuable upon
exercise of the Class A Warrants; (ii) the offering and
sale by the Company to the holders of its 1,245,750
outstanding Class B Warrants (the "Class B Warrants")
and, upon exercise of the Underlying Class B Warrants,
to the holders of up to 5,571,566 Underlying Class B
Warrants of up to 5,571,566 shares of Common Stock
issuable upon exercise of the Class B Warrants and the
Underlying Class B Warrants (collectively the "B Warrant
Shares"); (iii) the offering and sale by the Company to
the holders of its 16,539,779 outstanding Class C
Warrants (the "Class C Warrants" and, together with the
Class A Warrants, the Underlying Class B Warrants and the
Class B Warrants, the "Warrants") of up to 16,539,779
shares of Common stock issuable upon conversion of the
Class C Warrants (collectively, the "C Warrant Shares"
and, together with the A Warrant Shares and the B Warrant
shares, the "Warrant Shares"); (iv) the offering and sale
by the Company to holders of its outstanding 8%
Subordinated Convertible Notes (the "Notes") of up to 14,
175,000 shares of Common Stock issuable upon conversion
thereof (collectively, the "Conversion Shares"); and (v)
the resale from time to time by the selling stockholders
named in the Registration Statement (the "Selling
Stockholders") of the Resale Shares, as defined in the
Registration Statement (the Underlying Class B Warrants,
the Warrant Shares, the Conversion Shares and the Resale
Shares are sometimes hereinafter referred to as the
"Securities").
In so acting, we have examined such certificates of
public officials and certificates of officers of the
Company and such corporate records and other documents
and have made such examinations of law as we have deemed
relevant and necessary in order to give the opinions
hereinafter set forth. In this connection, we have
assumed (i) the genuineness of signatures on, and the
authenticity of, all documents so examined and (ii) that
there will be no change in the applicable law or facts
between the date of this opinion and the date of sale of
the Securities by the Company or the Selling
Shareholders, as the case may be. We have also assumed
the effectiveness of the anti-dilutive adjustments to the
number and terms of the Class A Warrants, Class B
Warrants and Underlying Class B Warrants, announced by
the Company on November 29, 1993 and to be effective
December 13, 1993. As to the accuracy of matters of
fact, we have relied upon the above-mentioned
certificates and upon representations supplied by the
Company or its officers and agents.
Based upon the foregoing, we are of the opinion
that:
1. The Resale Shares (other than any C Warrant
Shares included in the Resale Shares) have been validly
authorized and issued and are fully-paid and non-
assessable.
2. When (a) the applicable provisions of the Act
and such "Blue Sky" or other securities laws as may be
applicable have been complied with and (b) the Warrants
have been duly exercised, or the Notes have been duly
converted, in accordance with their respective terms
(including the terms of their respective grants), the
Warrant Shares (including any C Warrant Shares included
in the Resale Shares) and the Conversion Shares,
respectively, will be validly authorized and issued,
fully paid, and non-assessable.
3. When (a) the applicable provisions of the Act
and such "Blue Sky" or other securities laws as may be
applicable have been complied with and (b) the Class A
Warrants have been duly exercised in accordance with
their respective terms (including the terms of their
respective grants), the Underlying B Warrants will be
validly authorized and issued.
We hereby consent to the filing of this opinion as
Exhibit 5 to the Registration Statement and to the
reference to us contained under the heading "Legal
Opinion." In giving the foregoing consent, we do not
admit that we are in the category of persons whose
consent is required under Section 7 of the Act or the
rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/Squadron, Ellenoff,
Plesent, Sheinfeld &
Sorkin
