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 30, 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
On October 4, 1996, the Registrant ("Management Technologies, Inc." or
"the Company") placed $750,000 of its Series Z 6% convertible debenture (the
"Series Z Debenture"), maturing December 31, 1997, with various parties,
pursuant to a resolution of the Company's Board of Directors. The amounts
placed and the Series Z Debenture subscribers are as follows:
Rana Investments Company $450,000
RCI Investment Fund Limited $300,000
The Series Z Debenture is convertible at the lower of (i) the average closing
bid for the market price of the Company's stock as traded on the Over-the-
Counter market for a five (5) consecutive business days immediately preceding
the closing date of the debenture or (ii) 70 % of the average closing bid for
the market price of the Company's stock as traded on the Over-the-Counter market
for a five (5) consecutive business days immediately preceding the conversion
date.
In addition, the Company agreed to pay a commission equal to 6% of the
gross proceeds to PennyDome Ltd as compensation for arranging the placement of
its Series Z Debenture. PennyDome Ltd is not an affiliate of the Company.
ITEM 7. EXHIBITS
10.214 Form of Series Z Convertible Debenture
10.215 Form of Offshore Securities Subscription Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MANAGEMENT TECHNOLOGIES, INC.
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(Registrant)
/s/ Peter Morris
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Peter Morris
President & Chief Operating Officer
Dated: New York, New York
October 30, 1996
SERIES Y DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION
S UNDER THE ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS
(AS DEFINED IN REGULATION S UNDER THE ACT) EXCEPT PURSUANT TO
REGISTRATION UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.
No. Y-
US$
MANAGEMENT TECHNOLOGIES, INC.
6% SERIES Y CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series Y 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 6% Series Y
Convertible Debenture Due December 31, 1997, in an aggregate principal amount of
$450,000.
FOR VALUE RECEIVED, the Company promises to pay to the
registered holder hereof and its successors and assigns (the "Holder"), the
principal sum of dollars (US$ ) on December 31, 1997 (the
"Maturity Date"), and to pay interest on the principal sum outstanding, at the
rate of 6% 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 Y Debenture (or one or more predecessor Series Y Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series Y Debentures (the "Debenture Register"); provided, however, that the
Company's obligation to a transferee of this Series Y 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
October 4 1996
between the Company and Holder (the "Subscription Agreement"). The principal
of, and interest on, this Series Y 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 Y 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 Y Debenture on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder
of this Series Y 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 Y Debenture to the extent of the sum
represented by such check plus any amounts so deducted.
This Series Y Debenture is subject to the following additional provisions:
1. The Series Y Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series Y
Debentures are exchangeable for an equal aggregate principal amount of
Series Y 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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2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series Y 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.
3. This Series Y 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 Y Debenture, the Company and any
agent of the Company may treat the person in whose name this Series Y
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 Y Debenture be overdue,
and neither the Company nor any such agent shall be affected by notice to
the contrary.
4.
a) The Holder of this Series Y 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 Y 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 or 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) 100% of the average
closing bid price of the Common Stock for the five (5) business days
immediately preceding the Closing Date. Such conversion shall be
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effectuated by surrendering the Series Y Debentures to be converted
(with a copy, by facsimile or courier, to the Company) to the Company
with the form of conversion notice attached hereto as Exhibit I,
executed by the Holder of this Series Y Debenture evidencing such
Holder's intention to convert this Series Y 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 Y
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 Y 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) 557 6967.
b) Notwithstanding the provisions of paragraph 4(a) hereof, the Company
is entitled, at it option, to redeem part or all of the Series Y
Debentures upon maturity hereof 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 Y 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
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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 Y Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series Y 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 Y Debenture at the time, place,
and rate, and in the coin currency, herein prescribed.
6. 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 Y 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 Y 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
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other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
this Series Y Debenture or the Subscription Agreement shall be false
or misleading in any material respect at the time made; or
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 Y 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
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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
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 Y 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 Y Debenture, or for any claim based hereon, or
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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 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 Y Debenture, by acceptance hereof, agrees that
this Series Y Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series Y 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 Y 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 Y
Debenture will not in any way be affected or impaired thereby.
12. This Series Y Debenture and the agreements referred to in this Series Y
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series Y 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.
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13. This Debenture is one of a series of Company's Series Y Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series Y Debenture shall be governed by and construed in accordance
with the laws of the State of New York.
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
party 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
issuances of the Shares upon conversion in accordance with the following
schedule (where "No. of 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 the 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):
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No. Of 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
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.
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Dated: October 4 1996
MANAGEMENT TECHNOLOGIES, INC.
By: Peter Morris
Title: President and Chief Operating Officer
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EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series E
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
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above Series Y Debenture No. Y-001 into Shares of Common Stock of Management
Technologies, Inc. (the "Company") according to the conditions set forth in such
Series Y 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 Y Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
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* This original Series Y Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
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THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of October 4 1996
(the "Offshore Agreement"), is executed in 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 Series of 6% 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.
1. Agreement To Subscribe; Purchase Price.
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a) Subscription. The undersigned Buyer hereby subscribes for and agrees
to purchase the Sellers Series Y 6% Convertible Debentures
substantially in the form of the Debentures attached as Exhibit A
hereto and having an aggregate original principal amount of U.S. $
(singly, a "Debenture," and collectively, the "Debentures"), at
a purchase price as set forth in subsection (b) herein.
b) Payment. The Purchase Price for the Series Y Debentures shall be $
(the "Purchase Price"), which shall be payable at closing by
delivering immediately available funds in United States Dollars by
wire transfer to the Seller.
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").
2. 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
109(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 by 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.
e) 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.
3. 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 referred to in
Section 2(c) above, 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.
4. Exemption; Reliance on Representations. Buyer understands that the offer
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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.
5. 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
and the Company shall immediately instruct Seller's transfer agent to
issue one or more certificates representing the balance of that number
of shares of Common Stock into which the Debenture are convertible in
accordance with the provisions regarding conversion set forth in
Exhibit A hereto. 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
c) 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.
6. Delivery Instructions. The Debentures being purchased hereunder shall be
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delivered to the Buyer at such time and place as shall be mutually agreed
by Seller and Buyer.
7. Conditions To Seller's Obligation To Sell. Seller's obligation to sell the
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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.
8. 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 in the Agreement.
d) No default by Seller of any provisions of any Series of Debenture.
9. 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.
10. 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.
11. Miscellaneous.
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a) Except as specifically referenced herein, this Offshore Agreement and
the 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 (other than the Agreement)
among the parties related to the transactions described herein is
superseded hereby. The terms and conditions of this Offshore
Agreement and the 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.
Date: October 4 1996
Official Signatory of Seller:
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Management Technologies, Inc.
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
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By:
Title:
Address of Buyer:
