SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
ON FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report : October 31, 1996
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(Date of earliest event reported) : (October 4, 1996 )
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MANAGEMENT TECHNOLOGIES, INC.
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(Exact name of Registrant as specified in its Charter)
NEW YORK
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(State or other jurisdiction of incorporation)
0-17206 13-3029797
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Commission File No. I.R.S. Employer Identification
630 Third Avenue, New York, NY 10017
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Address of principal Zip Code
executive offices
(212) 557-0022
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Registrant's telephone number,
including area code
ITEM 5. OTHER EVENTS
Between October 4, and October 7, 1996, the Registrant ("Management
Technologies, Inc." or "the Company") placed $3,050,000 of its Series Z 9%
convertible debenture (the "Series Z Debenture"), maturing August 31, 1997, with
various parties, pursuant to a resolution of the Company's Board of Directors.
The Series Z Debenture amounts placed and subscribers are as follows:
FT Trading Company $100,000
UFH Endowment Ltd. $300,000
Asia Equities, Inc. $100,000
Michael Pollack $50,000
Passy Holding $200,000
Avron Finanz $450,000
Guarantee & Financing Corp. $100,000
Albert Yanni $200,000
Eli Gutnick $100,000
Anthony Friedman $100,000
Lampton, Inc. $200,000
Mifal Klita $550,000
Lily Katz $150,000
Gesher Trading Ltd. $100,000
Emes Foundation $100,000
UFH Endowment Ltd. $150,000
Michael Pollack $50,000
Equivest Premier Holdings, Inc. $50,000
The Series Z Debenture is convertible at the lower of (i) 85% of the average
closing bid for the market price of the Company's stock as traded on the Over-
the-Counter market for a five (5) consecutive business days immediately
preceding the closing date of the debenture or (ii) 70 % of the average closing
bid for the market price of the Company's stock as traded on the Over-the-
Counter market for a five (5) consecutive business days immediately preceding
the conversion date.
In addition, the Company agreed to pay a commission equal to 10% of the
gross proceeds to Select Capital Advisors, Inc. as compensation for arranging
the placement of its Series Z Debenture. Select Capital Advisors, Inc. is not
an affiliate of the Company.
ITEM 7. EXHIBITS
10.216 Form of Series Z Convertible Debenture
10.217 Form of Offshore Securities Subscription Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MANAGEMENT TECHNOLOGIES, INC.
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(Registrant)
/s/ Peter Morris
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Peter Morris
President & Chief Operating Officer
Dated: New York, New York
October 31, 1996
EXHIBIT A
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FORM OF SERIES Z DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION
S UNDER THE ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS
(AS DEFINED IN REGULATION S UNDER THE ACT) EXCEPT PURSUANT TO
REGISTRATION UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.
No. US
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$
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MANAGEMENT TECHNOLOGIES, INC.
9% SERIES Z CONVERTIBLE DEBENTURES DUE AUGUST 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series Z Debentures of
Management Technologies, Inc., a corporation duly organized and existing under
the laws of the State of New York (the "Company") designated as its 9% Series Z
Convertible Debenture Due August 31, 1997, in an aggregate principal amount of
$3,300,000.
FOR VALUE RECEIVED, the Company promises to pay to
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the registered holder hereof and its successors and assigns (the "Holder"), the
principal sum of Dollars (US $ ) on August 31,
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1997 (the "Maturity Date"), and to pay interest on the principal sum
outstanding, at the rate of 9% per annum due and payable quarterly. Accrual of
interest shall commence on the first business day to occur after the date hereof
and shall continue until payment in full of the principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Series Z Debenture (or one or more predecessor Series Z Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series Z Debentures (the "Debenture Register"); provided, however, that the
Company's obligation to a transferee of this Series Z Debenture arises only if
such transfer, sale or other disposition is made in accordance with the terms
and conditions of the Offshore Securities Subscription Agreement dated as of
between the Company and
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(the "Subscription Agreement"). The principal of, and interest on, this Series
Z Debenture are payable in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts, at the address last appearing on the Series Z Debenture Register of the
Company as designated in writing by the Holder hereof from time to time. The
Company will pay the principal of and all accrued and unpaid interest due upon
this Series Z Debenture on the Maturity Date, less any amounts required by law
to be deducted or withheld, to the Holder of this Series Z Debenture as of the
tenth (10th) day prior to the Maturity Date and addressed to such Holder at the
last address appearing on the Debenture Register. The forwarding of such check
shall constitute a payment of principal and interest hereunder and shall satisfy
and discharge the liability for principal and interest on this Series Z
Debenture to the extent of the sum represented by such check plus any amounts so
deducted.
This Series Z Debenture is subject to the following additional provisions:
I. The Series Z Debentures are issuable in denominations of Fifty
Thousand Dollars (US$50,000) and integral multiples thereof. The Series Z
Debentures are exchangeable for an equal aggregate principal amount of Series Z
Debentures of different authorized denominations, as requested by the Holders
surrendering the same. No service charge will be made for such registration or
transfer or exchange.
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I. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Series Z Debenture any amounts required to
be withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
I. This Series Z Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged in the U.S. only in compliance with the Securities Act of 1933, as
amended (the "Act") and applicable state securities laws. Prior to due
presentment for transfer of this Series Z Debenture, the Company and any agent
of the Company may treat the person in whose name this Series Z Debenture is
duly registered on the Company's Debenture Register as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes,
whether or not this Series Z Debenture be overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.
I. (a) The Holder of this Series Z Debenture is entitled, at its
option, at any time commencing 45 days after issue hereof to convert any or all
of the original principal amount of this Series Z Debenture and accrued interest
into shares of common stock, $0.01 par value per share, of the Company (the
"Common Stock"), at a conversion price for each share of Common Stock equal to
the Market Price (as defined below) of the Company's Common Stock. For purposes
of this Section 4(a), the "Market Price" shall be the lower of (i) 70% of the
average closing bid price of the Common Stock for the five (5) business days
immediately preceding the conversion date, or (ii) 85% of the average closing
bid price of the Common Stock for the five (5) business days immediately
preceding the subscription date by the subscriber. Such conversion shall be
effectuated by surrendering the Series Z Debentures to be converted to the
Company with the form of conversion notice attached hereto as Exhibit I,
executed by the Holder of this Series Z Debenture evidencing such Holder's
-3-
intention to convert this Series Z Debenture or a specified portion (as above
provided) hereof, and accompanied, if required by the Company, by proper
assignment hereof in blank. Accrued but unpaid interest shall be subject to
conversion. No fractional shares or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded to
the nearest whole share, with the fraction paid in cash at the discretion of the
Company. The date on which notice of conversion is given shall be deemed to be
the date on which the Holder has delivered this Series Z Debenture, with the
conversion notice duly executed, to the Company or, if earlier, the date set
forth in such notice of conversion if the Series Z Debenture is received by the
Company within five (5) business days thereafter. Notice of Conversion may be
delivered to the Company by telecopier to (212) 843-7416.
(b) Notwithstanding the provisions of paragraph 4(a) hereof, the
Company is entitled, at it option, to redeem part or all of the Series Z
Debentures on the Maturity Date by paying to the holder the product of (i) the
Market Price, and (ii) the higher number of shares of Common Stock that would be
issuable for such Series Z Debentures pursuant to the calculations in paragraph
4(a) or to require the Holder to convert pursuant to paragraph 4(a) hereof.
Such payment shall include accrued interest to such date, and shall be less any
amounts required by law to be deducted or withheld. Such payment shall be made
by delivering immediately available funds in United States Dollars by wire
transfer to the Holder, or if no wiring instructions have been provided to the
Company, by cashier's or certified check to the last address of Holder appearing
on the Debenture Register. The wiring of such funds or the forwarding of such
check shall constitute a payment of principal and interest hereunder and shall
satisfy and discharge the liability for principal and interest on this Series Z
Debenture to the extent of the sum represented by such wire or check plus any
amount so deducted.
-4-
I. No provision of this Series Z Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Series Z Debenture at the time, place, and
rate, and in the coin currency, herein prescribed.
I. The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Series Z Debenture.
8. If one or more of the following described "Events of Default" shall
occur:
(a) The Company shall default in the payment of principal
or interest on this Series Z Debenture; or
(b) Any of the representations or warranties made by the
Company herein, in the Subscription Agreement, or in any
certificate or financial or other written statements heretofore
or hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Series Z
Debenture or the Subscription Agreement shall be false or
misleading in any material respect at the time made; or
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(c) The Company shall fail to perform or observe, in any
material respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Series Z
Debenture and such failure shall continue uncured for a period of
seven (7) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in
writing its liability to pay its debts generally as they mature;
(3) make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent to
the appointment of a trustee, liquidator or receiver for its or
for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be
appointed for the Company or for a substantial part of its
property or business without its consent and shall not be
discharged within thirty (30) days after such appointment; or
(f) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall
assume custody or control of the whole or any substantial portion
of the properties or assets of the Company and shall not be
dismissed within thirty (30) days thereafter; or
(g) Any money judgment, writ or warrant of attachment, or
similar process in excess of One Hundred Thousand ($100,000)
Dollars in the aggregate shall be entered or filed against the
Company or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of fifteen
(15) days or in any event later than five (5) days prior to the
date of any proposed sale thereunder; or
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(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy
law or any law for the relief of debtors shall be instituted by
or against the Company and, if instituted against the Company,
shall not be dismissed within thirty (30) days after such
instruction of the Company shall by any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the
material allegations of, or default in answering a petition filed
in any such proceeding; or
(i) The Company shall have its Common Stock delisted from
an exchange or over-the-counter market.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Series Z Debenture immediately due and payable, without presentment, demand,
protest or notice of any kinds, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately, and without expiration of any
period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law.
9. No recourse shall be had for the payment of the principal of, or the
interest on, this Series Z Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
-7-
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
10. The Holder of this Series Z Debenture, by acceptance hereof, agrees
that this Series Z Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series Z Debenture or
the Shares of Common Stock issuable upon exercise thereof except under
circumstances which will not result in a violation of the Act or any applicable
state Blue Sky law or similar laws relating to the sale of securities.
11. In case any provision of this Series Z Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Series Z Debenture will not
in any way be affected or impaired thereby.
12. This Series Z Debenture and the agreements referred to in this Series
Z Debenture constitute the full and entire understanding and agreement between
the Company and the Holder with respect to the subject hereof. Neither this
Series Z Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and the
Holder.
13. This Debenture is one of a series of Company's Series Z Debentures and
all Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series Z Debenture shall be governed by and construed in
accordance with the laws of the State of New York.
-8-
15. As set forth herein, the Company shall use all reasonable efforts to
issue and deliver, within three business days after the Holder has fulfilled all
conditions and submitted all necessary documents duly executed and in proper
form required for conversion (the "Deadline"), to the Holder or any part
receiving a Debenture by transfer from the Holder (together, a "Holder"), at the
address of the Holder on the books of the Company, a certificate or certificates
for the number of Shares of Common Stock to which the Holder shall be entitled.
The Company understands that a delay in the issuance of the Shares of Common
Stock beyond the Deadline could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Company agrees to pay liquidated
damages to the Holder for late issuance of Shares upon conversion in accordance
with the following schedule (where "No. Business Days Late" is defined as the
number of business days beyond seven (7) business days from the date of receipt
by the Company of a Notice of Conversion and the transfer agent of all necessary
documentation duly executed and in proper form required for conversion,
including the original Debenture to be converted, all in accordance with the
Debenture, Subscription Agreement and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
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1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
-9-
10 $5,000 + $1,000 each
Business Day Late beyond 10 days
The Company shall pay the Holder any liquidated damages incurred under this
Section by check upon the earlier to occur of (i) issuance of the Shares to the
Holder or (ii) each monthly anniversary of the receipt of the Company of such
Holder's Notice of Conversion. Nothing herein shall limit the Holder's right to
pursue actual damages for the Company's failure to issue and deliver shares of
Common Stock to the Subscriber in accordance with the terms of the Debenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated:
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MANAGEMENT TECHNOLOGIES, INC.
By:
Title:
-10-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series Z
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
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above Series Z Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the "Company") according to the conditions set forth in such
Series Z Debenture, as of the date written below.
The undersigned represents that it is not a U.S. Person as defined in
Regulation S promulgated under the Securities Act of 1933, as amended, and is
not converting the Series Z Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
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* This original Series Z Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/eZhibit.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
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THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of
, 1996 (the "Offshore Agreement"), is executed in
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reliance upon the exemption from registration afforded by Regulation S
("Regulation S") as promulgated by the Securities and Exchange Commission
("SEC"), under the Securities Act of 1933, as amended. Capitalized terms used
herein and not defined shall have the meanings given to them in Regulation S.
This Agreement has been executed by the undersigned "Buyer" in connection
with the private placement of a 9% Series Z Convertible Debentures of Management
Technologies, Inc., a corporation organized under the laws of the State of New
York, with its principal executive offices located at 630 Third Avenue, New
York, New York 10017 (hereinafter referred to as "Seller"). Buyer hereby
represents and warrants to, and agrees with Seller:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN
REGULATION S OF THE 1933 ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS (AS DEFINED IN REGULATION S OF THE 1933 ACT) EXCEPT
PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT.
I. Agreement To Subscribe; Purchase Price.
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(a) Subscription. The undersigned Buyer hereby subscribes for and
agrees to purchase a portion of the Sellers 9% Series Z Convertible Debentures
substantially in the form of the Debentures attached as Exhibit A hereto and
having an aggregate original principal amount of U.S. $3,300,000 (singly, a
"Debenture," and collectively, the "Debentures"), at a purchase price as set
forth in subsection (b) herein.
(b) Payment. The Purchase Price for Buyer's portion of the
Debentures shall be $ (the "Purchase Price"), which shall be payable
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at closing by delivering immediately available funds in United States Dollars by
wire transfer to Barry B. Globerman, Esq., 110 E. 59th Street, New York, N.Y.
10022 for closing by delivery of securities versus payment for each series of
Debentures.
(c) Closing. Subject to the satisfaction of the conditions set forth
in Sections 7 and 8 hereof, the closing of the transactions contemplated by this
Offshore Agreement shall occur from time to time as set forth in the Agreement,
or such earlier or later date as is mutually agreed to in writing by Buyer and
Seller (the "Closing Dates").
I. Buyer Representations; Access to Information.
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(a) Offshore Transaction. In connection with the purchase and sale of the
Debentures, Buyer represents and warrants to, and covenants and agrees with
Seller as follows:
(i) Buyer is not a natural person and is not organized
under the laws of any jurisdiction within the United States, was not
formed by a U.S. Person (as defined in Section 902(o) of Regulation S)
principally for the purpose of investing in securities not registered
under the 1933 Act and is not otherwise a U.S. Person. Buyer is not,
and on the closing date will not be, an affiliate of Seller;
(ii) At the time the buy order was originated, Buyer was
outside the United States and is outside of the United States as of
the date of the execution and delivery of this Offshore Agreement;
(iii) No offer to purchase the Debentures or the common
stock of Seller issuable upon conversion of the Debentures
(collectively, the "Securities"), was made by Buyer in the United
States;
(iv) Buyer is purchasing the Securities for its own account
and Buyer is qualified to purchase the Securities under the laws of
its jurisdiction of residence, and the offer and sale of the
Securities will not violate the securities or other laws of such
jurisdiction;
(v) All offers and sales of any of the Securities by Buyer
prior to the end of the Restricted Period (as hereinafter defined)
shall be made in compliance with any applicable securities laws of any
applicable jurisdiction and in accordance with Rule 903 and 904, as
applicable, of Regulation S or pursuant to registration of the
Securities under the 1933 Act or pursuant to an exemption from
registration. In any case, none of the Securities have been and will
be offered or sold by Buyer to, or for the account or benefit of, a
U.S. Person or within the United States until after the end of the
forty (40) day period commencing on the later of (x) the date of
closing of the offering of the Securities or (y) the date of the first
offer of the Securities to persons other than distributors (the
"Restricted Period"), as certified by Buyer to Seller;
(vi) The transactions contemplated by this Offshore
Agreement (a) have not been and will not be pre-arranged by Buyer with
a purchaser located in the United States or a purchaser which is a
U.S. Person, and (b) are not and will not be part of a plan or scheme
by Buyer, to evade the registration provisions of the 1933 Act;
(vii) Buyer understands that the Securities are not
registered under the 1933 Act and are being offered and sold to it in
reliance on specific exclusions from the registration requirements of
Federal and State securities laws, and that Seller is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Buyer set forth herein in order
to determine the applicability of such exclusions and the suitability
of Buyer and any purchaser from Buyer to acquire the Securities;
(viii) Buyer shall take all reasonable steps to ensure
its compliance with Regulation S and shall promptly send to each
purchaser (x) who acts as a distributor, underwriter, dealer or other
person receiving a selling concession, fee or other remuneration in
respect of any of the Securities, or (y) who purchases prior to the
expiration of the Restricted Period referred to in subparagraph (v)
above, a confirmation or other notice to the purchaser stating that
the purchaser is subject to the same restrictions on offers and sales
as Buyer pursuant to Section 901(c)(2)(iv) of Regulation S;
(ix) None of Buyer, its affiliates or persons acting on
their behalf have conducted and shall not conduct any "directed
selling efforts" as that term is defined in Rule 902(b) of Regulation
S; nor has Buyer conducted any general solicitation relating to the
offer and sale of any of the Securities in the United States or
elsewhere;
(x) This Offshore Agreement has been duly authorized,
validly executed and delivered on behalf of Buyer and is a valid and
binding agreement in accordance with its terms, subject to general
principals of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(xi) The execution and delivery of this Offshore Agreement
and the consummation of the purchase of the Securities, and the
transactions contemplated by this Offshore Agreement do not and will
not conflict with or result in a breach by Buyer of any of the terms
of provisions of, or constitute a default under, the articles of
incorporation or by-laws (or similar constitutive documents) of Buyer
or any indenture, mortgage, deed of trust, or other material agreement
or instrument to which Buyer is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule
or regulation of the United States or any State thereof or any
applicable decree, judgment or order of any Federal or State court,
Federal or State regulatory body, administrative agency or other
United States governmental body having jurisdiction over Buyer or any
of its properties or assets;
(xii) All invitation, offers and sales of or in respect
of, any of the Securities, by Buyer and any distribution by Buyer of
any documents relating to any offer by it of any of the Securities
will be in compliance with applicable laws and regulations and will be
made in such a manner that no prospectus need be filed and no other
filing need be made by Seller with any regulatory authority or stock
exchange in any country or any political sub-division of any country;
(xiii) Buyer will not make any offer or sale of the
Securities by any means which would not comply with the laws and
regulations of the territory in which such offer or sale takes place
or to which such offer or sale is subject or which would in connection
with any such offer or sale impose upon Seller any obligation to
satisfy any public filing or registration requirement or provide or
publish any information of any kind whatsoever or otherwise undertake
or become obligated to do any act; and
(xiv) Neither the Buyer nor any of its affiliates has
entered, has the intention of entering, or will during the Restricted
Period enter into any put option, short position or other similar
instrument or position with respect to any of the Securities or
securities of the same class as the Securities.
(b) No Government Recommendation or Approval. Buyer understands that
no Federal or State or foreign government agency has passed on or made any
recommendation or endorsement of the Securities.
(c) Current Public Information. Buyer acknowledges that it and its
advisors, if any, have been furnished with all materials relating to the
business, finances and operations of Seller and all materials relating to the
offer and sale of the Securities which have been requested by Buyer. Buyer
further acknowledges that it and its advisors, if any, have received complete
and satisfactory answers to such inquiries.
(d) Buyer's Sophistication. Buyer acknowledges that the purchase of
the Securities involves a high degree of risk, including the total loss of
Buyer's investment. Buyer has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
purchasing the Securities.
(d) Tax Status. Buyer is not a "10-percent Shareholder" (as defined
in Section 871(h)(3)(B) of the U.S. Internal Revenue Code) of Seller.
I. Seller Representations.
----------------------
(a) Reporting Company Status. Seller is a "Reporting Issuer" as
defined by Rule 902 of Regulation S. Seller has registered its Common Stock,
$0.01 per value per share (the "Common Stock"), pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Common
Stock is listed and trades on NASDAQ. Seller has filed all material required to
be filed pursuant to all reporting obligations under either Section 13(a) or
15(d) of the Exchange Act for a period of at least twelve (12) months
immediately preceding the offer or sale of the Securities (or for such shorter
period that Seller has been required to file such material).
(b) Current Public Information. Seller has furnished Buyer with
copies of its most recent reports filed under the Exchange Act and other
publicly available documents.
(c) Offshore Transaction. Seller has not offered or sold any of the
Securities to any person in the United States, any identifiable groups of U.S.
citizens abroad, or to or for any U.S. Person, as such terms are used in
Regulation S.
(i) At the time the buy order was originated, Seller and/or
its agents reasonably believe the Buyer was outside of the United
States and was not a U.S. person, based on the representations of
Buyer.
(ii) Seller and/or its agents reasonably believe that the
transaction has not been pre-arranged with a buyer in the United
States, based on the representations of Buyer.
(iii) No offer to buy or sell the Securities was or will
be made by Seller to any person in the United States.
(iv) The offer and sale of the Securities by Seller pursuant
to this Offshore Agreement will be made in accordance with the
provisions and requirements of Regulation S provided that the
representations and warranties of Buyer in Section 2(a) hereof are
true and correct.
(v) The transactions contemplated by this Offshore
Agreement (a) have not been and will not be pre-arranged by Seller
with a purchaser located in the United States or a purchaser which is
a U.S. Person, and (b) are not and will not be part of a plan or
scheme by Seller to evade the registration provisions of the 1933 Act.
(d) No Directed Selling Efforts. In regard to this transaction, none
of Seller, its affiliates or persons acting on their behalf have conducted any
"directed selling efforts" as that term is defined in Rule 902 of Regulation S
nor has Seller conducted any general solicitation relating to the offer and sale
of any of the Securities in the United States or elsewhere.
(e) Concerning the Securities. The issuance, sale and delivery of
the Debentures have been duly authorized by all required corporate action on the
part of Seller, and when issued, sold and delivered in accordance with the terms
hereof and thereof for the consideration expressed herein and therein, will be
duly and validly issued, fully paid and non-assessable. The Common Stock
issuable upon conversion of the Debenture has been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Debentures,
shall be duly and validly issued, fully paid, and non-assessable and will not
subject the holders thereof, if such persons are non-U.S. persons, to personal
liability by reason of being such holders. There are no pre-emptive rights of
any shareholder of Seller.
(f) Subscription Agreement. This Offshore Agreement has been duly
authorized, validly executed and delivered on behalf of Seller and is a valid
and binding agreement in accordance with its terms, subject to general
principals of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally.
(g) Non-contravention. The execution and delivery of this Offshore
Agreement and the consummation of the issuance of the Securities and the
transactions contemplated by this Offshore Agreement do not and will not
conflict with or result in a breach by Seller of any of the
terms or provisions of, or constitute a default under, the articles of
incorporation or by-laws of Seller, or any indenture, mortgage, deed of trust,
or other material agreement or instrument to which Seller is a party or by which
it or any of its properties or assets are bound, or any existing applicable law,
rule or regulation of the United States or any State thereof or any applicable
decree, judgment or order of any Federal or State court, Federal or State
regulatory body, administrative agency or other United States governmental body
having jurisdiction over Seller or any of its properties or assets.
(h) Approvals. Seller is not aware of any authorization, approval or
consent of any governmental body which is legally required for the issuance and
sale of the Debentures and the Common Stock issuable upon conversion thereof to
persons who are non-U.S. Persons, as contemplated by this Offshore Agreement.
(i) Seller will not engage in other Regulation S Transactions for a
period of 6 months from the closing of the transaction.
I. Exemption; Reliance on Representations. Buyer understands that
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the offer and sale of the Securities are not being registered under the 1933
Act. Seller and Buyer are relying on the rules governing offers and sales made
outside the United States pursuant to Regulation S.
I. Transfer Agent Instructions.
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(a) Debentures. Upon the conversion of the Debentures, the holder
thereof shall submit such Debenture and Notice of Conversion to the Company with
a copy to the Escrow Agent and the Company shall immediately advise its Transfer
Agent to issue the appropriate number of Shares and deliver such Shares as
directed by holder. The Seller shall act as Debenture Registrar and shall
maintain an appropriate ledger containing the necessary information with respect
to each Debenture.
(b) Common Stock to be Issued Without Restrictive Legend. After the
expiration of the Restricted Period, upon the conversion of any Debenture by a
person who is a non-U.S. Person, Seller shall instruct Seller's transfer agent
to issue Stock Certificates without restrictive legend in the name of Buyer (or
its nominee (being a non-U.S. Person) or such non-U.S. Persons as may be
designated by Buyer prior to the closing) and in such denominations to be
specified at conversion representing the number of shares of Common Stock
issuable upon such conversion, as applicable; it being understood that on the
day following the expiration of the Restricted Period, the Securities will be
held by a non-U.S. person. Seller warrants that no instructions other than
these instructions and instructions to impose a "stop transfer" instruction with
respect to the certificates until the end of the Restricted Period have been
given or will be given to the transfer agent and that the Common Stock shall
otherwise be freely transferable on the books and records of Seller. Nothing in
this Section 5, however, shall affect in any way Buyer's or such nominee's
obligations and agreements to comply with all applicable securities laws upon
resale of the Securities.
I. Delivery Instructions. The Debentures being purchased hereunder
---------------------
shall be delivered to the Buyer at such time and place as shall be mutually
agreed by Seller and Buyer.
I. Conditions To Seller's Obligation To Sell. Seller's obligation
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to sell the Debentures is conditioned upon:
(a) The receipt and acceptance by Buyer of this Offshore Agreement as
evidenced by execution of this Offshore Agreement by Buyer.
(b) Delivery into the closing depository of good funds by Buyer as
payment in full of the purchase price of the Debentures pursuant to the Offshore
Agreement.
I. Conditions To Buyer's Obligation To Purchase. Buyer's obligation
--------------------------------------------
to purchase the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Offshore Agreement
as evidenced by execution of this Offshore Agreement by the duly authorized
officer of Seller.
(b) Delivery of the Debentures as described herein.
(c) Satisfaction of the conditions set forth in the Offshore
Agreement.
(d) No default by Seller of any provisions of any Series of
Debenture.
I. Offering Materials. All offering materials and documents used in
------------------
connection with offers and sales of the Securities prior to the expiration of
the Restricted Period referred to in Section 2(a)(v) hereof shall include
statements to the effect that the Securities have not been registered under the
1933 Act or applicable state securities laws, and that neither Buyer, nor any
direct or indirect purchaser of the Securities from Buyer, may directly or
indirectly offer or sell the Securities in the United States or to or for the
account or benefit of U.S. Persons (other than distributors) unless the
Securities are registered under the 1933 Act any applicable state securities
laws, or any exemption from the registration requirements of the 1933 Act or
such state securities laws is available. Such statements shall appear (1) on
the cover of any prospectus or offering circular used in connection with the
offer or sale of the Securities, (2) in the underwriting section of any
prospectus or offering circular used in connection with the offer or sale of the
Securities, and (3) in any advertisement made or issued by Seller, Buyer, any
other distributor, any of their respective affiliates, or any person acting on
behalf of any of the foregoing.
I. No Shareholder Approval. Seller hereby agrees that from the
-----------------------
Closing Date until the issuance of Common Stock upon the conversion of the
Debentures, Seller will not take any action which would require Seller to seek
shareholder approval of such issuance.
I. Miscellaneous.
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(a) Except as specifically referenced herein, this Offshore Agreement
constitutes the entire contract between the parties, and neither party shall be
liable or bound to the other in any manner by any warranties, representations or
covenants except as specifically set forth herein. Any previous agreement among
the parties related to the transactions described herein is superseded hereby.
The terms and conditions of this Offshore Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
hereto. Nothing in this Offshore Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Offshore Agreement, except as expressly provided herein.
(b) Buyer is an independent contractor, and is not the agent of
Seller. Buyer is not authorized to bind Seller, or to make any representations
or warranties on behalf of Seller.
(c) Seller makes no representations or warranty with respect to
Seller, its finances, assets, business prospects or otherwise. Buyer will advise
each purchaser, if any, and potential purchaser of the Securities, of the
foregoing sentence, and that such purchaser is relying on its own investigation
with respect to all such matters, and that such purchaser will be given access
to any and all documents and Seller personnel as it may reasonably request for
such investigation.
(d) All representations and warranties contained in this Offshore
Agreement by Seller and Buyer shall survive the closing of the transactions
contemplated by this Offshore Agreement.
(e) This Offshore Agreement shall be construed in accordance with the
internal laws of the State of New York, and shall be binding upon the successors
and assigns of each party hereto. This Offshore Agreement may be executed in
counterparts, and the facsimile transmission of an executed counterpart to this
Offshore Agreement shall be effective as an original.
(f) Seller and Buyer shall consult with each other in issuing any
press releases or otherwise making public statements with respect to the
transactions contemplated hereby. Neither party shall issue any press release
or otherwise make any public statement without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed.
IN WITNESS WHEREOF, the undersigned have executed this Offshore
Agreement as of the date first set forth above.
Official Signatory of Seller:
----------------------------
Management Technologies, Inc.
By:
Title:
Official Signatory of Buyer:
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By:
Title:
Address of Buyer:
