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 : August 7, 1996 (Date of earliest event reported)
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(July 5, 1996 )
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MANAGEMENT TECHNOLOGIES, INC.
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(Exact name of Registrant as specified in its Charter)
NEW YORK (State of
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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 July 5, 1996, the Registrant ("Management Technologies, Inc." or "the
Company") placed its 6.75% convertible debenture (the "6.75% Debenture") in the
amount of $2,000,000, maturing July 5, 1999, with RBB Bank ("RBB"), pursuant to
a resolution of the Company's Board of Directors. The 6.75% Debenture is
convertible at the lower of 100 % 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 July 5, 1996 or 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. RBB has the right to convert $1,000,000 of the
6.75 % Debenture starting 41 days from the closing date of the 6.75% Debenture
and the balance of the 6.75% Debenture starting 65 days from the closing date of
the 6.75% Debenture.
In addition, the Company agreed to pay RBB a $200,000 commission as
compensation for arranging the placement of its 6.75% Debenture. RBB is not an
affiliate of the Company.
ITEM 7. EXHIBITS
10.208 Copy of 6.75 % Convertible Debenture issued to RBB dated July 5,
1996.
10.209 Copy of an Offshore Securities Subscription Agreement with RBB
dated July 5, 1995.
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
ANNEX A
FORM OF CONVERTIBLE NOTE
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED PURSUANT TO REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND
HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT. SUCH SECURITIES MAY NOT BE
TRANSFERRED, OFFERED OR SOLD PRIOR TO THE END OF THE FORTY (40) DAY PERIOD (THE
"RESTRICTED PERIOD") COMMENCING ON JULY 5, 1996 UNLESS SUCH TRANSFER, OFFER OR
SALE IS MADE IN AN "OFFSHORE TRANSACTION" AND NOT TO OR FOR THE ACCOUNT OF OR
BENEFIT OF A "U.S. PERSON" (AS SUCH TERMS ARE DEFINED IN REGULATION S) AND IS
OTHERWISE IN ACCORDANCE WITH THE REQUIREMENTS OF REGULATION S. FOLLOWING THE
EXPIRATION OF THE RESTRICTED PERIOD, THE SECURITIES REPRESENTED HEREBY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S.
PERSON UNLESS THE SECURITIES ARE REGISTERED UNDER THE 1933 ACT AND APPLICABLE
STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO
AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
MANAGEMENT TECHNOLOGIES, INC.
6 3/4 % CONVERTIBLE NOTE DUE JULY 8 , 1999
THIS NOTE is one of a duly authorized issue of Convertible Notes 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 3/4% Convertible Note Due July 5 , 1999, in an aggregate principal amount of
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$2,000,000.
FOR VALUE RECEIVED, the Company promises to pay to RBB BANK AG . or the
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registered holder hereof (the "Holder"), the principal sum of $ 2,000,000
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(United States Dollars) on July 5 , 1999 (the "Maturity Date"), and to pay
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interest on the principal sum outstanding from time to time, quarterly in
arrears on 8 October, 8 January, 8 April and 8 July (the Interest Payment Date),
at the rate of 6 3/4 % per annum accruing from the date of issuance. Accrual of
interest shall commence on the first business day to occur after the date hereof
until repayment in full of the principal sum has been made or duly provided for.
Accrued and unpaid interest shall bear interest at the same rate from the due
date of the interest payment, until paid. The interest so payable will be paid
on 8 October, 8 January, 8 April and 8 July to the person in whose name this
Note (or one or more predecessor Notes) is registered on the records of the
Company regarding registration and transfers of the Notes (the "Note Register")
on the tenth day prior to the Interest Payment Date. The principal of, and
interest on, this Note are payable in Common Stock of the Company at the address
last appearing on the Note Register of the Company as designated in writing by
the Holder from time to time. The Company will pay the principal of and
interest upon this Note on the due date, free of any withholding or deduction of
any kind, to the registered Holder of this Note as of the tenth day prior to the
due date and addressed to such Holder at the last address appearing on the Note
Register. The forwarding of such Common Stock of the Company shall constitute a
payment of principal and interest hereunder and shall satisfy and discharge the
liability for principal and interest on this Note to the extent of the Common
Stock so issued.
This Note is subject to the following additional provisions:
l.The Notes are originally issuable in denominations of $50,000 and integral
multiples thereof.
2.The Buyer agrees to file appropriate tax exemption certificates with the
appropriate authorities.
3. If at any time there occurs a transaction in which in excess of 50% of the
Company's voting power is transferred, including any consolidation or merger
of the Company with or into any other corporation or other entity or person
(whether or not the Company is the surviving corporation), or any other
corporate reorganization or transaction or series of related transactions,
the Holders of this Note then outstanding may participate in any such
transaction as a class with common stockholders on the same basis as if this
Note had been converted one day prior to the effective date of such
transaction; provided, however, that at the option of the Holder of this
Note, such Holder may treat the effective date of any transaction that occurs
prior to July 5, 1999 as a redemption date and shall be entitled to have the
Company redeem the Notes at a price equal to 100 % of the outstanding
principal amount of this Note, plus accrued but unpaid interest. Such holder
shall be entitled to make such election at any time up to 10 days after the
effective date of the transaction. The Company shall not effect any stock
split, subdivision or combination with an effective date within three (3)
trading days of the effective date of a merger or consolidation. The Company
shall not make, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of common Stock, with an effective date within three (3)
trading days of the effective date of a merger or consolidation.
4.The Holder of this Note is entitled, at its option, at any time commencing
forty-one (41) days after the Closing Date as defined in the Offshore
Securities Subscription Agreement until maturity hereof to convert one-half
(1/2) or any portion of the principal amount hereof which is at least $50,000
into shares of common stock of the Company ("Shares") at a conversion price
for each share of common stock equal to the lesser of (i) one hundred percent
(100%) of the average closing bid price for the five (5) days immediately
preceding the Closing Date or (ii) seventy percent (70%) of the average
closing bid price for the five (5) trading days immediately preceding the
Conversion Date. The remaining one-half (1/2) of the original principal
amount of this Note will be subject to the above noted terms with the
exception that it will not be convertible into Shares of common stock until
the expiration of sixty-five (65) days after the Closing Date (i.e. one-
half{1/2} of the original aggregate principal amount), provided, however,
that in no event shall the Holder be entitled to convert any portion of this
Note in excess of that portion of this Note upon conversion of which the sum
of (1) the number of shares of Common Stock beneficially owned by the Holder
and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned as a result of the ownership of the unconverted portion
of this Note and (2) the number of shares of Common Stock issuable upon the
conversion of the portion of this Note with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.9% of the
outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13 D-G thereunder, except as otherwise provided in
clause (1) of such proviso.). In the event of any stock split, dividend,
combination or similar event, the conversion price will be subject to
appropriate adjustment. For purposes of this section, the closing bid price
of the common stock shall be the closing bid price as reported by the
National Association of Securities Dealers, Inc. Electronic Bulletin Board,
or the closing bid price in the over-the-counter market or, in the event the
common stock is listed on a stock exchange, the closing bid price on such
exchange as reported in The Wall Street Journal. Such conversion shall be
effectuated by surrendering the Notes to be converted to the Company, with
the form of conversion notice attached to the Note as Exhibit A, executed by
the Holder of the Note evidencing such Holder's intention to convert this
Note, and accompanied, if required by the Company, by proper assignment
hereof in blank. Interest accrued or accruing from the date of issuance to
the date of conversion shall be paid in shares of common stock of the
Company, calculated at the same conversion price as the principal amount as
determined above, and shall constitute payment in full of any such interest
on the same terms as would otherwise apply to the conversion of the principal
amount hereof. 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. The date on which notice of
conversion is given ("Conversion Date") shall be deemed to be the date on
which the Holder notifies to the Company of its intention to convert by
delivery, by facsimile transmission or otherwise, of a copy of the Conversion
Notice (as defined below). Notice may be given by facsimile to the Company
at (+-1-212-557-6967). This Note, together with the original executed copy
of the Notice of Conversion, shall be delivered to the Company as soon as
practicable following the date on which notice of conversion is given as
described above. Any unconverted principal amount and accrued interest
thereon shall at the maturity date be remitted , in shares of common stock.
Upon the surrender of this Note, accompanied by a Notice of Conversion of
Convertible Note in the form attached hereto as Exhibit A, properly completed
and duly executed by the Holder (a "Conversion Notice"), the Company shall
issue and, within three (3) business days (the "Deadline") after such
surrender of this Note with the Conversion Notice, deliver to or upon the
order of the Holder (1) that number of shares of Common Stock for the portion
of the Note converted as shall be determined in accordance herewith and (2) a
new Note in the form hereof for the balance of the principal amount hereof,
if any. Without in any way limiting the Holder's right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree
that if delivery of the Common Stock issuable upon conversion of this Note is
more than one (1) business day after the Deadline (other than a failure due
to the circumstances described in the second paragraph of Section 11 below,
which failure shall be governed by such Section) the Company shall pay to the
Holder $150 per day in cash, for the first day beyond the Deadline and $500
per day for each day thereafter that the Company fails to deliver such Common
Stock. Such cash amount shall be paid to Holder by the fifth day of the
month following the month in which it has accrued or, at the option of the
Holder (by written notice to the Company by the first day of the month
following the month in which it has accrued), shall be added to the principal
amount of this Note, in which event interest shall accrue thereon in
accordance with the terms of this Note and such additional principal amount
shall be convertible into Common Stock in accordance with the terms of this
Note.
The number of shares of Common Stock to be issued upon each conversion of
this Note shall be determined by dividing (i) the sum of (A) that portion of
the principal amount of the Note to be converted plus (B) the "Conversion
Date Interest" (as defined below), by (ii) the Conversion Price in effect on
the date the Conversion Notice is delivered to the Company by the Holder.
Conversion Date Interest means the product of (i) the principal amount of the
Note to be converted, multiplied by (ii) a fraction (A) the numerator of
which is the number of days elapsed since the date of issuance of this Note
and (B) the denominator of which is 365, multiplied by (iii) .0675.
5.No provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Note at the time, place, and rate, herein prescribed. This
Note and all other Notes now or hereafter issued on similar terms are direct
obligations of the Company. This Note ranks equally with all other Notes now
or hereafter issued under the terms set forth herein. In the event of any
liquidation, reorganization, winding up or dissolution repayment of this Note
shall be subordinate in all respects to any other indebtedness for borrowed
money of the Company, whether outstanding as of the date of this Note or
hereafter incurred. Such subordination shall extend without limiting the
generality of the foregoing, to all indebtedness of the Company to banks,
financial institutions, other secured lenders, equipment lessors and
equipment finance companies, but shall exclude trade debts; and any warrants,
options or other securities convertible into stock of the Company shall rank
pari passu with the Notes in all respects.
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.In the event the Company at any time or from time to time after the Closing
Date makes, a dividend or other distribution to Holders of Common Stock
payable in securities of the Company other than shares of Common Stock, then
and in each such event provision shall be made so that the Holders of Notes
shall receive upon conversion thereof pursuant to Paragraph 4 hereof, in
addition to the number of shares of common Stock receivable thereupon, the
amount of such other securities of the Company to which a Holder on the
relevant record or payment date, as applicable, of the number of shares of
Common Stock so receivable upon conversion would have been entitled, plus any
dividends or other distributions which would have been received with respect
to such securities had such Holder thereafter, during the period from the
date of such event to and including the holder conversion date retained such
securities, subject to all other adjustments called for during such period
under this Note with respect to the rights of the Holders of the Notes.
8.In the event that at any time or from time to time after the Closing Date,
the Common Stock issuable upon the conversion of the Note is changed into the
same or different number of shares of any class or classes of stock, whether
by re-capitalization, reclassification or otherwise (other than a subdivision
or combination of shares or stock dividend or reorganization provided for
elsewhere in this Note or a merger or consolidation, provided for in
Paragraph 3), then and in each such event each Holder of Notes shall have the
right thereafter to convert such Note into the kind of stock receivable upon
such re-capitalization, reclassification or other change by holders of shares
of Common Stock, all subject to further adjustment as provided herein. In
such event, the formulae set forth herein for conversion and redemption shall
be equitably adjusted to reflect such change in number of shares or, if
shares of a new class of stock are issued, to reflect the market price of the
class or classes of stock issued in connection with the above described
transaction.
9.If at any time or from time to time after the Closing Date there is a capital
reorganization of the Common Stock (other than a re-capitalization,
subdivision, combination, reclassification exchange of shares provided for
elsewhere in this Note) then, as a part of such reorganization, provision
shall be made so that the Holders of the Notes shall thereafter be entitled
to receive upon conversion of the Notes the number of shares of stock or
other securities or property to which a holder of the number of shares of
Common Stock deliverable upon conversion would have been entitled on such
capital reorganization. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Note with respect to the
rights of the Holders of the Notes after the reorganization to the end that
the provisions of this Note shall be applicable after that event and be as
nearly equivalent as may be practicable, including, by way of illustration
and not limitation, by equitably adjusting the formulae set forth herein for
conversion and redemption to reflect the market price of the securities or
property issued in connection with the above described transaction.
10. If one or more of the "Events of Default" as described in paragraph 11
shall occur, the Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by Holder in collecting any
amount due under this Note.
11. 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 Note; or
(b) Any of the representations or warranties made by the Company herein,
in the Offshore Securities Subscription Agreement dated as of July 5, 1996
between the Company and the Holder (the "Subscription Agreement"), or in
any certificate or financial or other statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the execution
and delivery of this Note 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 any other covenant, term,
provision, condition, agreement or obligation of the Company under this
Note and such failure shall continue uncured for a period of thirty (30)
days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts 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 it 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
except mechanics and materialmen's liens incurred in the ordinary course of
business in excess of Two Hundred Thousand Dollars ($200,000) in the
aggregate shall be entered or filed against the Company or any of its
properties or other assets and shall remain 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, stayed or bonded
within sixty (60) days after such institution or 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
NASDAQ.
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 Note immediately due and payable, without presentment,
demand, protest or notice of any kind, 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. In such event, this Note shall be redeemed by the Company
at a redemption price per Note equal to 130% of the entire outstanding
principal amount due hereunder plus accrued but unpaid interest.
12. In the event that at any time on or after the date hereof and prior to the
anniversary of the Closing Date, trading in the shares on the Company's
Common Stock is suspended on the principal market or exchange for such shares
(including the NASDAQ Stock Market), for a period of five consecutive trading
days, other than as a result of the suspension or trading in securities in
general, or if such Shares are delisted, then, at a Holder's option, the
company shall redeem such Holder's Notes at a redemption date designated by
such Holder, and the redemption price provided in Paragraph 11.
13. Notwithstanding anything to the contrary contained herein, each conversion
notice shall contain a representation that, after giving effect to the shares
of the Company's Common Stock to be issued pursuant to such conversion
notice, the total number of shares of the Company's Common Stock deemed
beneficially owned by the Holder, together with all shares of the Company's
Common Stock deemed beneficially owned by the Holder's "affiliates" as
defined in Rule 144 of the Act, will not exceed 4.9% of the total issued and
outstanding shares of the Company's Common Stock. In addition,
notwithstanding anything to the contrary contained herein, the amount of
securities converted during any three month period shall not exceed the
amount provided in Rule 144(e)(1) of the Act.
14. The Holder may, subject to compliance with the Offshore Securities
Subscription Agreement and the provisions of Regulation S, without notice,
transfer or assign this Note or any interest herein and may mortgage,
encumber or transfer any of its rights or interest in and to this Note or any
part hereof and, without limitation, each assignee, transferee and mortgagee
(which may include any affiliate of the Holder) shall have the right to
transfer or assign its interest. Each such assignee, transferee and
mortgagee shall have all of the rights of the Holder under this note.
15. For so long as any amount payable under this Note remains unpaid, the
Company shall furnish to the Holder the following information:
(a) No later than ninety (90) days following the end of each fiscal year,
beginning with the fiscal year ending April 30, 1996, consolidated
balance sheets, statements of income and statements of cash flow and
shareholders' equity of the Company and its subsidiaries, if any,
prepared in accordance with generally accepted accounting principles
("GAAP"), and audited by a firm of independent public accountants.
The Company may satisfy this requirement by delivering its report on
form 10-K for each such year.
(b) Within forty-five (45) days after the end of each quarter (except the
fourth quarter) of each fiscal year, consolidated balance sheets,
statements of income and statements of cash flow and shareholders'
equity of the Company and its subsidiaries. The Company may satisfy
this requirement by delivering its report on form 10-Q for each such
quarter.
16. The Company covenants and agrees that until all amounts due under this Note
have been paid in full, by conversion or otherwise, unless the Holder waives
compliance in writing, the Company shall:
(a) Give prompt written notice to the Holder of any Event of Default as
defined in this Note or of any other matter which has resulted in, or
could reasonably be expected to result in, a materially adverse change
in its financial condition or operations.
(b) Give prompt notice to the Holder of any claim, action or proceeding
which, in the event of any unfavorable outcome, would or could
reasonably be expected to have a material adverse effect on the
financial condition of the Company.
(c) At all times reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of this
Note such number of its duly authorized shares of common stock as
shall from time to time be sufficient to effect the conversion of the
outstanding principal balance of this Note into shares of common
stock. If the company does not have a sufficient number of shares of
Common Stock available to satisfy the Company's obligations to a
Holder of Notes upon receipt of a conversion notice or is otherwise
unable to issue such shares of Common Stock in accordance with the
terms of this Note (a "Conversion Default"), from and after the tenth
(10th) day following a Conversion Default (which for all purposes
shall be deemed to have occurred upon the Company's receipt of the
applicable conversion notice), each Holder of the Notes shall have the
right to demand from the Company immediate redemption of the Notes in
cash at a redemption price per Note equal to 130% of the outstanding
principal amount of the Note, plus accrued but unpaid interest on the
Note; provided, however, that no notice of redemption may be delivered
by a Holder subsequent to receipt by such holder of notice from the
Company (sent by overnight or 2-day courier with a copy sent by
facsimile) of availability of sufficient shares of Common Stock to
perfect conversion (a "Post-Default Conversion") of all the Notes;
provided further that such right shall be reinstated if the Company
shall thereafter fail to perfect such Post-Default Conversion by
delivery of Common Stock certificates in accordance with the
applicable provision of Paragraph 4 hereof and payment of all accrued
and unpaid interest in cash with respect thereto within five business
days of delivery of the notice of Post-Default Conversion. In
addition to the foregoing, upon a Conversion Default, the rate of
interest on all of the Notes shall, to the maximum extent of the law,
be increased by two percent (2%) (i.e., from 6 3/4% to 5 3/4%
commencing on the first day of the thirty (30) day period (or part
thereof) following a Conversion Default; an additional two percent
(2%) commencing on the first day of each of the second and third such
thirty (30) day periods (or part thereof); an additional one percent
(1%) on the first day of each consecutive thirty (30) day period (or
part thereof) thereafter until such securities have been duly
converted or redeemed as herein provided. Any such interest which is
not paid when due shall, to the maximum extent permitted by law,
accrue interest until paid at the rate from time to time applicable to
interest on the Notes as to which the Conversion Default has occurred.
(d) Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Note and
(i) in the case of loss, theft or destruction, upon provision of
indemnity reasonably satisfactory to it and/or its transfer agent, or
(ii) in the case of mutilation, upon surrender and cancellation of
this Note,
the Company at its expense will execute and deliver a new Note, dated
the date of the lost, stolen, destroyed or mutilated Note.
17. The Holder of this Note, by acceptance hereof, agrees that this Note is
being acquired for investment and that such Holder will not offer, sell or
otherwise dispose of this Note 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 laws or similar laws
relating to the sale of securities.
18. In case any provision of this Note 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 Note will not in any way
be affected or impaired thereby.
19. This Note and the Offshore Securities Subscription Agreement between the
Company and the Holder constitutes the full and entire understanding and
agreement between the Company and the Holder with respect to the subject
hereof. Neither this Note nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.
20. This Note shall be governed by and construed in accordance with the laws of
the state of New York.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
BY: MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris /s/ Paul Ekon
Name: Peter Morris Name: Paul Ekon
Title. President and Chief Operating Officer Title C.E.O.
BY: RBB BANK AG
/s/ Herbert Strauss
Name: Herbert Strauss
Title: Head Trader
July 8, 1996
MTCI acknowledges that RBB Bank holds the debenture for many different clients
and RBB Bank assures MTCI that on any conversion, no single holder is the
beneficial owner of more than 4.9% of the outstanding common shares,
consequently the 4.9% rule used to determine the amounts of shares issued on
conversion should apply to the end clients and not to the representative bank
RBB. With this assurance, MTCI shall grant conversion upon request after the
applicable time periods stated in the subscription agreement. Should any single
client hold more than 4.9% RBB bank will file the proper documents with the
Securities and Exchange Commission.
/s/ Herbert Strauss /s/ Peter Morris
Herbert Strauss Peter Morris
RBB Bank Management Technologies Inc.
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
RE: 6 3/4% CONVERTIBLE NOTE OF MANAGEMENT TECHNOLOGIES, INC.
IN THE PRINCIPAL AMOUNT OUTSTANDING OF $ 2,000,000 .
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The undersigned hereby irrevocably elects to convert $ of the
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outstanding principal amount of the above referenced Note No. into
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Shares of common stock of MANAGEMENT TECHNOLOGIES, INC. (the "Company")
according to the conditions hereof, as of the date written below. The
undersigned represents and warrants that (i) all of the requirements of
Regulation S promulgated under the Securities Act of 1933, as amended (the
"Securities Act") applicable to the undersigned have been complied with by the
undersigned and (ii) the undersigned has not engaged in any transaction or
series of transactions that is a part of or a plan or scheme to evade the
registration requirements of the Securities Act.
Date of Conversion*
Applicable Conversion Price
Signature
Name
Address:
---------------------------------------
* This original Note and Notice of Conversion must be received by the Company by
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) EXCEPT
PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement (the "Agreement"), dated July
5 , 1996, is entered into by and between Management Technologies, Inc., a
- - --
company incorporated in the state of New York (the "Company"), and RBB Bank
----
AG (the "Buyer").
-
The Company has offered for sale outside the United States (as that term is
defined in Regulation S ("Regulation S") under the United States Securities Act
of 1933, as amended (the "Act") to the Buyer, $ 2,000,000 of 6 3/4 %
- -
Convertible Notes due July 5, 1999 (the "Securities"), the total offering of
$2,000,000 of 6 3/4% Convertible Notes due July 8 , 1999, convertible into
-
common stock of the Company. Interest on the Securities will be payable
quarterly in arrears on 8 October, 8 January, 8 April and 8 July and on
conversion in common stock of the Company. The terms on which the Securities
may be converted into Common Shares (such Common Shares underlying the
Securities being referred to herein as "Shares") and the other terms of the
Securities are set forth in the Form of Convertible Note attached as Annex A.
Capitalized terms used herein and not defined herein shall have the meanings
given to them in Regulation S as the same may be amended from time to time.
The parties hereto agree as follows:
1. Purchase and Sale of Securities. Upon the basis of the representations and
--------------------------------
warranties, and subject to the terms and conditions, set forth in this
Agreement, the Company covenants and agrees to sell to the Buyer on the Closing
Date (as hereinafter defined) $ 2,000,000 of the Securities at a price of 100%
- -
of the original principal amount, and upon the basis of the representations and
warranties, and subject to the terms and conditions, set forth in this
Agreement, the Buyer covenants and agrees to purchase from the Company, on the
Closing Date $ 2,000,000 of the Securities of the Company at 100% of the
- -
original principal amount.
2. Closing Instructions to Escrow Agent. (a) The closing of the purchase and
-------------------------------------
sale of the Securities pursuant to Section 1 hereof shall take place on or
before July 5 , 1996 (the "Closing Date") after the Company has delivered to the
-
offices of Baratta and Goldstein (the "Escrow Agent") located at 597 Fifth
Avenue, New York, NY 10117, Phone (212) 750 9700, Fax (212) 750 8297.
Convertible Notes (each a "Convertible Note") representing the Securities in
denominations of not less than $50,000 and registered in the names provided by
the Buyer (representing the maximum amount of Securities to be purchased by the
Buyer hereunder).
(b) The Company and the Buyer agree that they shall instruct the Escrow
Agent as follows:
(i) On the Closing Date, for each Convertible Note subscribed for and
delivered to the Escrow Agent pursuant to paragraph 2(a) above, the Escrow Agent
shall release payment of the Purchase Price for the Securities in immediately
available funds to the Company's account as provided. The Escrow Agent shall
return to the Company any Convertible Notes that the Buyer does not purchase on
the Closing Date. If the closing shall not have taken place by July 5 , 1996,
--
this agreement shall terminate unless extended in writing by mutual agreement.
(ii) The Escrow Agent will make delivery of the number of Convertible
Notes set forth in clause (2a) above in accordance with the instructions of the
Buyer subject to customary settlement procedures.
3. Representations and Warranties of the Buyer: The Buyer understands and
--------------------------------------------
represents and warrants to, and agrees with the Company that:
(a) The Buyer understands that no federal or state agency has passed
on, or made any recommendation or endorsement of the Securities.
(b) The Buyer acknowledges that, in making the decision to purchase
the Securities, it has relied solely upon independent investigations made by it
and not upon any representations made by the Company with respect to the Company
or the Securities, except for the representations and warranties in this
Agreement, the Convertible Note, the Registration Rights Agreement, the Officers
Certificate and the Opinion of Counsel, attached and made a part hereof as per
Annexe D, except that the Buyer has received, reviewed and relied upon copies of
the Form 10-Q for the quarter ended January 31, 1996, the Form 10-K for the
year ended April 30, 1995, filed by the Company pursuant to the Securities
Exchange Act of 1934, as amended, and all other filings and all forms 8K up to
the current time since April 30, 1995, defined as "Exchange Act Reports".
(c) The Buyer understands that the Securities are being offered and
sold to it in reliance on specific exemptions from or non-application of the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understanding of the Buyer set forth
herein in order to determine the applicability of such exemptions and the
suitability of the Buyer to acquire the Securities.
(d) The Buyer is not a U.S. Person (as defined in Regulation S) and
is not and will not be an affiliate (as defined in the Exchange Act) of the
Company.
(e) No offer of the Securities was made to the Buyer while the Buyer
was present in the United States.
(f) At the time the buy order for the Securities was originated the
Buyer was located outside the United States and is outside the United States on
the date of the execution and delivery of this agreement and on the Closing
Date.
(g) The Buyer is aware that the Securities have not been and will not
be registered under the Act (except as may be required under the Registration
Rights Agreement) and may only be offered or sold pursuant to registration under
the Act or an available exemption therefrom.
(h) The Buyer (i) will not, during the period commencing on the
Closing Date and ending 40 days after the Closing Date (the "Restricted
Period"), offer or sell the Securities in the United States, to a U.S. Person or
for the account or benefit of a U.S. Person or other than in accordance with
Rule 903 or 904 and all other sections, as applicable, of Regulation S, and (ii)
will, after the expiration of the Restricted Period, offer, sell, pledge or
otherwise transfer the Securities only pursuant to registration under the Act or
an available exemption therefrom and, in any case, in accordance with applicable
federal and state securities laws.
(i) The Buyer and its affiliates have complied, and will comply, with
the offering restrictions, and any other requirements, of Regulation S.
(j) The transactions contemplated by this Agreement (i) have not been
pre-arranged by the Buyer with a purchaser located in the United States which is
a U.S. Person, and (ii) are not part of a plan or scheme by the Buyer to evade
the registration provisions of the Act.
(k) The Buyer will be purchasing the Securities for its account for
the purpose of investment and not (i) with a view to, or for sale in connection
with, any distribution thereof or (ii) for the account or on behalf of any U.S.
Person.
(l) Neither the Buyer nor any of its affiliates has entered, has the
intention of entering, or will during the Restricted Period enter into, with any
U.S. Person, any put option, short position or other similar instrument or
-
position with respect to the Securities or securities into which the Securities
are convertible.
4. Registration Rights On or prior to the Closing Date, the Company and Buyer
-------------------
agree to execute a Registration Rights Agreement in the form substantially set
out in Annex C attached hereto.
5. Conversion of Securities The Securities may be converted into the Shares,
------------------------
as herein defined, at the option of the holder thereof under the terms set forth
in the Form of Convertible Note, attached hereto as Annex A.
6. Representations and Warranties of the Company. The Company represents and
---------------------------------------------
warrants to, and agrees with, the Buyer that:
(a) The Company has been duly incorporated and is validly existing as
a Corporation in good standing under the laws of New York.
(b) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity;
and the Company has full corporate power and authority necessary to enter into
this Agreement and to perform its obligations thereunder.
(c) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company
or any of its affiliates is required for execution of this Agreement, including,
without limitation, the issuance and sale of the Securities, or the performance
of its obligations hereunder.
(d) Except as disclosed to the Buyer or its representatives in
writing, neither the sale of Securities pursuant to, nor the performance of its
obligations under this Agreement by the Company will (i) violate , conflict
with, result in a breach of, or constitute a default (or an event which with the
giving of notice or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the articles of incorporation, charter or bye-
laws of the Company or any of its affiliates, (B) any decree, judgment, order,
law, treaty, rule, regulation or determination applicable to the Company or any
of its affiliates or any court, governmental agency or body, or arbitrator
having jurisdiction over the Company or any of its affiliates or over the
properties or assets of the Company or any of its affiliates, (C) the terms of
any bond, debenture, note or any other evidence of indebtedness, or any
agreement, stock option or other similar plan, indenture, lease, mortgage, deed
of trust or other instrument to which the Company or any of its affiliates is a
party, by which the Company or any of its affiliates is bound, or to which any
of the properties of the Company or any of its affiliates is subject, or (D) the
terms of any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company or any of its affiliates is a party to; or (ii)
result in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its affiliates.
(e) The Company has an authorized capitalization consisting of
200,000,000 shares of Common Stock, par value $.01 per share, and nil shares of
Preferred Stock, par value $ NIL per share ("Preferred Stock"). The Company
- --
has issued and outstanding 28869631 shares of Common Stock and nil
- ----------
shares of Preferred Stock on the date hereof. All of the issued shares of
capital stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable; prior to the Closing Date, the authorized
capitalization shall include the Securities, and upon issuance, the Shares. The
shares of Common Stock issuable upon conversion of the Securities, when issued
and delivered in accordance with the terms of the Securities, will be duly and
validly issued, fully paid and non-assessable. The issuance of the Shares will
not be in violation of any preemptive or similar rights of the holders of any
securities of the Company. The Securities (i) are free and clear of any
security interests, liens, claims or other encumbrances, (ii) have been duly and
validly authorized and on the Closing Date will be duly and validly issued,
fully paid and non assessable, (iii) will not have been, individually and
collectively, issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company, (iv) will not subject
the holders thereof to personal liability by reason of being such holders, and
(v) the Shares underlying the Securities are quoted on, and will be, following
the completion of the Restricted Period (if sold in accordance with the
provisions of this Agreement and Regulation S as then in effect), eligible for
trading on, the National Association of Securities Dealers Inc. Small
Capitalization Market ("Nasdaq").
(f) The Company is a Reporting Issuer (as defined in Regulation S)
and as such has fulfilled its reporting obligations under the Exchange Act, to
the extent set forth in such definition. The Company's stock is duly listed on
the Nasdaq and the Company has received no notice, oral or written, with respect
to its continued eligibility for such listing. The Company hereby agrees,
promptly following the Closing of the transactions contemplated by this
Agreement, to take such action to cause the Underlying Stock to be listed on
Nasdaq upon expiration of the Restricted Period. The Company further agrees, if
the Company applies to have the Common Stock traded on any other principal stock
exchange or market, it will include in such application the Shares and will take
such other action as is necessary or desirable to cause the Shares to be listed
on such other exchange or market upon expiration of the Restricted Period.
(g) The Exchange Act Reports are the only filings made by the Company
since April 30, 1995 pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act. The Company will cause its Common Stock to continue to be
registered under Section 12(g) or 12(b) of the Securities Exchange Act of 1934,
will comply in all respects with its reporting and filing obligations under said
Act, and will not take any action or file any document (whether or not permitted
by said Act or the rules thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting and filing obligations under said Act.
The Company will take all action necessary to continue the listing and trading
of its Common Stock on Nasdaq and will comply in all respects with the Company's
reporting, filing and other obligations under the bye-laws or rules of the NASD
and Nasdaq.
(h) The Company has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company
does not have any subsidiaries except as listed in Annex E hereto. The Company
and each such subsidiary, if any, is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary other than those in which the failure so to qualify would not have a
Material Adverse Effect. "Material Adverse Effect" means any adverse effect on
the business, operations, properties, prospects, or financial condition of the
entity with respect to which such term is used and which is material to such
entity.
(i) The Company had furnished or made available to the Buyer true and
correct copies of the Company's Certificate of Incorporation as in effect on the
date hereof (the "Certificate of Incorporation"), and the Company's Bye-Laws, as
in effect on the date hereof (the "Bye-Laws").
(j) The Company has delivered or made available to the Buyer true and
complete copies of the Exchange Act Reports (including, without limitation,
proxy information and solicitation materials). The Company has not provided to
the Buyer any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed. As of their respective dates, the Exchange Act Reports
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such Exchange Act
Reports, and none of the Exchange Act Reports contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Exchange Act Reports comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(k) Except as set forth in the financial statements and other
documents filed by the Company under the Exchange Act, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to April 30, 1995 and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
such financial statements, which individually or in the aggregate, are not
material to the financial condition or operating results of the Company. The
Company has not provided to any Buyer any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by the
Company but which has not been so disclosed.
(l) Since April 30, 1995 there has been no material adverse change
and no material adverse development in the business, properties, operations,
financial condition, results of operations or prospects of the Company, except
as disclosed in accordance with the Exchange Act.
(m) There is no material action, suit, proceeding, inquiry or to the
knowledge of the Company or any of its subsidiaries, investigation before or by
any court, public board, government agency, self-regulatory organization or body
pending or to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company or any of its subsidiaries, except
as disclosed in the SEC documents.
(n) Neither the Company, nor any or its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of the Securities under the Act.
(o) The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, finder's fees or similar payments
by the Buyer relating to this Agreement of the transactions contemplated hereby.
(p) As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, free of preemptive
rights, shares of Common Stock for the purpose of enabling the Company to
satisfy any obligation to issue shares of its Common Stock upon conversion of
the Securities; provided, however, that the number of shares so reserved shall
at all times be at least 10,000,000 . The number of shares so
- -------------
reserved may be reduced by the number of shares actually delivered pursuant to
the conversion of the Securities (provided that in no event shall the number of
shares so reserved be less than the number required to satisfy the remaining
conversion rights on the unconverted Securities) and the number of shares so
reserved shall be increased to reflect stock splits and stock dividends and
distributions.
(q) The Company will take all steps necessary to preserve and
continue the corporate existence of the Company.
(r) No legend has been or shall be placed on the Securities or share
certificates representing the Securities or Shares and no note or stock transfer
instructions have been or shall be given to the Company's transfer agent with
respect thereto other than as set forth in Section 10.
(s) Based upon the truth and accuracy of the representations and
warranties made by the Buyer, the sale of the Securities pursuant to this
Agreement will be made in accordance with the provisions and requirements of
Regulation S and applicable state law.
(t) No offer to sell the Securities was made by the Company to any
person in the United States.
(u) None of the Company, any affiliate of the Company, or any person
acting on behalf of the Company or any such affiliate has engaged, or will
engage, in any Directed Selling Efforts as that term is defined in Regulation S
with respect to the Securities nor any general solicitation of the Securities.
(v) The transactions contemplated by this Agreement (i) have not been
pre-arranged with a purchaser who is in the United States or is a U.S. Person,
and (ii) are not part of a plan or scheme to evade the registration provisions
of the Act.
(w) The Company undertakes and agrees to make all necessary filings
in connection with this offering as required by the laws and regulations of all
appropriate jurisdictions and securities exchanges in the United States of
America.
(x) Each party shall indemnify the other against any loss, cost or
damages (including reasonable attorney's fees and expenses) incurred as a result
of such parties' breach of any representation, warranty, covenant or agreement
in this Agreement.
7. 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 3(h) hereof shall include
statements to the effect that the Securities have not been registered under the
1933 Act and that the Buyer, may not directly or indirectly offer or sell the
Securities in the United States or to a U.S. Persons (other than distributors)
unless the Securities are registered under the 1933 Act, or an exemption from
the registration requirements of the 1933 Act 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. Seller represents that all
offering materials and documents used in connection with the offers and sales of
the Securities prior to the Closing of the transactions contemplated herein have
complied with the foregoing.
8. Covenants of the Company. (a) The Company agrees that during the period
---------------------------
beginning on the date hereof and ending 90 days following the Closing Date, the
Company will not, without the prior written consent of a "majority-in-interest"
of the Buyers, negotiate or contract with any party to obtain additional equity
financing (including debt financing with an equity component) in any form (the
"Future Offerings"). In addition, the Company will not conduct any Future
Offerings during the period beginning on the 90th day following the date hereof
and ending 90 days following the Closing Date unless it shall have first
delivered to the Buyers at least ten (10) business days prior to the closing of
such Future Offering, written notice describing the proposed Future Offering,
including the terms and conditions thereof, and providing the Buyers an option
during such ten (10) day period to purchase all or any portion of their "pro-
rata" share of the securities being offered in the Future Offerings on the same
terms as contemplated by such Future Offering (the limitations referred to in
this and the immediately preceding sentence are collectively referred to as the
"Capital Raising Limitation"). The Capital Raising Limitation shall not apply
to any transaction involving the Company's commercial banking arrangements or
issuances of securities in connection with a merger, consolidation or sale of
assets, or in connection with any strategic partnership or joint venture (the
primary purpose of which is not to raise equity capital), or in connection with
the disposition or acquisition of a business, product or license by the Company
(so long as the securities so issued are "restricted securities" within the
meaning of Rule 144 under the 1933 Act and do not carry registration or piggy
back rights for at least 360 days from the date of this Agreement) or exercise
of options by employees, consultants or directors. The terms (i) "majority-in-
interest" means Buyers holding more than 50% of the Common Stock underlying the
Securities (treating the Securities on an as converted basis) and (ii) "pro-rata
share" means the principal amount of the Securities initially purchased divided
by the aggregate principal amount of all Securities sold hereunder.
(b) The parties shall use their best efforts timely to satisfy each of the
conditions described in Section 9 of this Agreement.
(c) So long as the Buyers beneficially own any of the Securities, the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination.
(d) The Company agrees to send the following reports to each Buyer until
such Buyer transfers, assigns, or sells all of the Securities: (i) within ten
(10) days after the filing with the SEC, a copy of its Annual Report on Form 10-
K, its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; and
(ii) within one (1) day after release, copies of all press releases issued by
the Company or any of its subsidiaries.
(e) The Company shall at all times have authorized, and reserved for the
purpose of issuance, a sufficient number of shares of Common Stock to provide
for the full conversion of the outstanding Securities and issuance of the
Conversion Shares in connection therewith (based on the Conversion Price of the
Securities in effect from time to time). In that regard, on the Closing Date,
the Company shall have at least 10,000,000 shares reserved for issuance upon
---
conversion of the Securities (subject to adjustment in order to comply with the
immediately preceding sentence); provided that the Company shall not reduce the
number of shares of Common Stock reserved for issuance upon conversion of the
Securities without the consent of a majority-in-interest of the Buyers, which
consent will not be unreasonably withheld.
(f) So long as the Buyer beneficially owns any Securities, the Company
shall maintain its corporate existence, except in the event of a merger,
consolidation or sale of all or substantially all of the Company's assets, as
long as the surviving or successor entity in such transaction (i) assumes the
Company's obligations hereunder and under the agreements and instruments entered
into in connection herewith and (ii) is a publicly traded corporation whose
Common Stock is listed for trading on the AMEX, the NYSE or the NASDAQ.
(g) The Company and the Buyers agree that the Closing Date shall be deemed
to be a conclusion of the offering of the Securities contemplated hereby. The
Company acknowledges and agrees that, for purposes of clarifying and specifying
the applicable Restricted Period under Regulation S, the Buyers intend to
observe as the Restricted Period (as defined in Regulation S) for the
Securities, the period of 40 days commencing on the Closing Date and ending 40
days thereafter.
(h) The Conversion Shares and the certificates evidencing the same shall
at all times be free of legends (except as provided in Section 11 below), "stock
transfer restriction." or other restrictions, except for covenants of the Buyers
expressly set forth in this Agreement.
9. Conditions Precedent to the Buyers' Obligation. The obligations of the
-----------------------------------------------
Buyer hereunder are subject to the performance by the Company of its obligations
hereunder and to the satisfaction of the following additional conditions
precedent:
(a) The Buyer shall receive, on the Closing Date, an opinion of
independent counsel to the Company, dated the Closing Date, confirming the
representations made by the Company in Sections 6(a) through and including 6(f),
6(h) and 6(m) hereof, and such other matters as Buyer reasonably requests. The
form of such opinion shall be as set forth in Annex D hereof.
(b) Delivery of the notes representing the Securities with
restrictive legend to the Escrow Agent as set forth herein.
(c) The Company shall have delivered to the Buyer a certificate in
form and substance reasonably satisfactory to the Buyer, executed by an
executive officer of the Company, to the effect that all the conditions to the
Closing shall have been satisfied and the representations and warranties of the
Company herein are true and correct as of the date when made and as of the
Closing Date, and certifying as to the Company's Certificate of Incorporation,
Bye-Laws, resolutions authorizing transaction, and incumbency of Company
officers.
(d) The Company and the Buyer shall have entered into the
Registration Rights Agreement contemplated by Section 4.
10. Legends. (a) The certificates representing the Securities and the Shares
--------
issued during the Restricted Period, shall bear the following legend (the
"Legend"):
"The securities represented hereby have been issued pursuant to Regulation
S promulgated under the Securities Act of 1933, as amended (the "1933
Act"), and have not been registered under the 1933 Act. Such securities
may not be transferred, offered or sold prior to the end of the forty (40)
day period (the "Restricted Period") commencing on July 5 , 1996 unless
---
such transfer, offer or sale is made in an "offshore transaction" and not
to or for the account of or benefit of a "U.S. Person" (as such terms are
defined in Regulation S) and is otherwise in accordance with the
requirements of Regulation S. Following expiration of the Restricted
Period, the securities represented hereby may not be offered, sold or
otherwise transferred in the United States or to a U.S. Person unless the
securities are registered under the 1933 Act and applicable state
securities laws, or such offers, sales and transfers are made pursuant to
an available exemption from the registration requirements of those laws."
(b) Following the expiration of the Restricted Period, the Company
will remove or will promptly instruct its transfer agent to remove the Legend
from the Securities and, if applicable, from the Shares issued during the
Restricted Period (and will instruct its transfer agent to issue without the
Legend, the Shares issuable upon any conversion or exercise occurring after the
Restricted Period), if the Buyer holding such Securities or any other person in
whose name such certificates have been or are to be issued shall have delivered
a certificate (a "Removal Certificate") to the Company to the following effect:
"The undersigned acknowledges that the securities to which this certificate
relates have not been registered under Securities Act of 1933, as amended
(the "1933 Act") and that offers, sales or other transfer of such
securities must be made in compliance with Regulation S promulgated under
the 1933 Act, pursuant to an effective registration statement under the
1933 Act or pursuant to an available exemption from registration, and the
undersigned certifies that the undersigned has not made, nor will the
undersigned make or cause to be made, any offer, sale or other transfer of
such securities, in violation of the 1933 Act, other applicable securities
laws or the rules and regulations of the Securities and Exchange
Commission."
(c) Upon the submission, at any time after the expiration of the
Restricted Period, by a Buyer of a written request for legend removal for the
purpose of a bona fide pledge or deposit of the Securities with a margin
account, together with the certificates for which the legend removal is being
requested, the Company will reissue or will promptly instruct its transfer agent
to reissue the certificates representing the Securities to be so pledged or
deposited without the Legend, and no Removal Certificate shall be required to be
delivered in connection therewith.
(d) Notwithstanding the provisions of this Section 11, if with
respect to the Company's receipt of a Removal Certificate from any person, prior
to any removal of the Legend, there shall have been after the date hereof any
amendment to the 1933 Act or Regulation S or any no action letter or
interpretative release shall have been promulgated by the Securities and
Exchange Commission after the date hereof which explicitly disallows the removal
of the Legend under the circumstances in which the request that it be removed is
being made, then the Company shall have no obligation to remove or to instruct
its transfer agent to remove the Legend, unless the Company shall have received
from the person requesting such removal a written letter of counsel to such
person reasonably acceptable to the Company and its counsel confirming that the
Legend may be so removed or share certificates may be so issued without the
Legend without violation of the 1933 Act. If the person requesting a removal of
the Legend is unable to supply the legal opinion referred to above then the
Company shall, upon demand of such person, be obligated to register the Common
Stock for resale pursuant to the terms of the Registration Rights Agreement.
11. Transfer Agent Instructions. The Company's transfer agent (the "Transfer
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Agent") will be instructed to reserve for issuance such number of shares of the
Company's Common Stock as would be issuable if the Convertible Notes were
converted on the Closing Date and such additional number of shares as, from time
to time, shall be necessary to provide for the issuance of Shares upon the
conversion of the Convertible Notes. Additionally, the Company shall deliver to
its transfer agent at closing irrevocable instructions substantially in the form
set forth in Annex B attached hereto, pursuant to which the transfer agent shall
be instructed to issue upon conversion the number of shares provided for in the
Convertible Note being converted on the terms provided for therein without
restrictive legend, registered in the names provided by the Holders. The
Company warrants and covenants that no instructions restricting the
transferability of the Securities and the Shares other than the instructions in
the immediately preceding sentence and instructions for a "stop transfer"
instruction until the end of the Restricted Period have been given, or shall be
given, to the Transfer Agent, and that the Securities and the Shares shall
otherwise be freely transferable on the books and records of the Company.
Nothing in this section, however, shall affect in any way the obligations and
agreement of the Buyer to comply with all applicable federal, state and foreign
securities laws upon resale of the Securities.
12. Miscellaneous. (a) This Agreement may be executed in one or more
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counterparts and it is not necessary that signatures of all parties appear on
the same counterpart, but such counterparts together shall constitute but one
and the same agreement.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the state of New York.
(c) This agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective successors, and no other person shall
have any right or obligation hereunder. This Agreement shall not be assignable
by either party without the prior written consent of the other, and any
assignment in violation hereof shall be void. Notwithstanding the foregoing,
the Buyer may assign its rights in this Agreement to, and the provisions of this
Agreement shall inure to the benefit of, and be enforceable by, any transferee
of any of the Securities or Shares.
(d) This Agreement together with the Note and the Registration
Rights Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersede all prior oral or written proposals or
agreements related thereto. This Agreement may not be amended or any provision
hereof waived, in whole or in part, except by a written amendment signed by both
of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year above written.
BY: MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris /s/ Paul Ekon
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Name: Peter Morris Name: Paul Ekon
Title. President and Chief Operating Officer Title C.E.O.
BY: RBB BANK AG
/s/ Herbert Strauss
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Name: Herbert Strauss
