SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
FIRST AMENDMENT TO
CURRENT REPORT
ON FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report : March 26, 1996 (Date of earliest event reported)
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December 15, 1995
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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 December 15, 1995, Management Technologies, Inc. ("the Company")
entered into a letter agreement (the ``etter Agreement'') with Israel Trading
Fund Ltd. (``TF'') and Select Capital Advisors, Inc. (``Select Capital'') with
regard to the placement and subscription of the Company's 9% Subordinated
Convertible Debentures (the ``ebentures'') in the original aggregate amount of
$6,000,000, maturing on December 31, 1997, pursuant to a resolution of the
Company's Board of Directors. Under the Letter Agreement, the Debentures were
to be subscribed in four tranches as follows:
1. The Series A Debentures, in the original amount of $1,250,000 were due to
close on or prior to December 15, 1995, subject to the Company's arranging
for its management or others (1) to acquire $1,000,000 of common shares of
the Company (``hares'') on or prior to December 22, 1995 and (2) to
execute a commitment prior to such date for the acquisition of $250,000 of
additional Shares which note will mature on or prior to April 30, 1996.
The Company met the conditions precedent for the closing of the Series A
debentures as evidenced in letters dated December 15, 1995 and annexed
hereto as Exhibits 10.181 and 10.182. The amount of the Series A
Debentures was increased to $1,950,000 by letter agreement dated December
22, 1995. The Series A Debentures are convertible at the lower of $.48 per
share or 62.5% 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. On
December 29, 1995, the Company completed all of the transactions wherein
the Company issued six Series A Debentures in the aggregate amount of
$1,850,000 as follows:
HOLDER AMOUNT CLOSING
DATE
Torah Vachesed $600,000 December
Lezra Vesad 20, 1995
Shulamit Pritzker $550,000 December
20,1995
Dovasar S.A. $200,000 December
29, 1995
Aaron Meyer Gee $400,000 December
22,1995
Chava Fischman $100,000 December
29, 1995
The following tranch `A'' debentures have been presented for conversion at
$0.48 per share:
CONVERSION CO
NV
ER
SI
ON
DATE HOLDER AMOUNT SHARES
February 20, 1996 Torah Vachesed Lezra $300,000 625,000
Vesad
February 26, 1996 Shulamit Pritzker $200,000 416,667
March 4, 1996 Torah Vachesed Lezra $300,000 625,000
Vesad
March 4, 1996 Dovasar S.A. $200,000 416,667
March 4, 1996 Chava Fischman $100,000 208,333
2. The Series B Debentures, in the amount of $1,500,000 were due to close on
or prior to February 10, 1996, subject to the Company's not suffering a
loss for the quarter ending January 31, 1996 per the Company's unaudited
financial statements for the quarter ending January 31, 1996, as certified
by the Company's President and Chief Financial Officer. The Series B
Debentures are convertible at the lower of $.53 per share or 62.5% 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. On February 16, 1996, the
Company completed transactions wherein the Company issued Series B
Debentures in the aggregate amount of $1,500,000 as follows:
HOLDER AMOUNT CLOSING DATE
Henry Zieleniec $300,000 January 25, 1996
Raphael Lapidus $100,000 January 29, 1996
Miriam Herzel $100,000 January 29, 1996
Yosef Yud $400,000 January 29, 1996
Menachem Begun $450,000 January 29, 1996
Shulamit Pritzker $150,000 February 16, 1996
On March 12, 1996, the Company filed a Quarterly Report on Form 10-QSB with
the Securities and Exchange Commission showing a net profit of $17,000 for
the quarter ended January 31, 1996.
3. The Series C Debentures, in the original amount of $1,500,000 was due to
close on or prior to March 15, 1996 subject to the Company entering into at
least two contracts with financial institutions for the purchase of the
Company's products, which contracts would generate not less than $2,000,000
in gross revenues, and not less than $1,000,000 in gross revenues would be
recognizable on or prior to April 30, 1996. The Company met said
condition by the closing of software sales to Cariplo and Landes Rheinland
Pflaz which will generate $2,400,000 in gross revenue, of which $1,600,000
will be recognized on or prior to April 30, 1996. The Board of Directors
of the Company resolved to approve an amendment to the terms and amount of
the Series C Debentures, and pursuant to said resolution, the Company, ITF
and Select Capital agreed to amend the Letter Agreement to increase Tranch
`C'' to $3,050,000 and to amend the Tranch ``C'' conversion terms to the
lower of $0.85 per share or 62.5% 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 from the lower of $1.04 per share or 62.5% 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. On February 28, 1996, the Company
completed transactions wherein the Company issued four Series C Debentures
in the aggregate amount of $3,050,000 as follows:
HOLDER AMOUNT CLOSING DATE
Shulamit Pritzker $650,000 February 28, 1996
Joseph Weinburg $500,000 February 28, 1996
Torah Vachesed Lezra Vesad $400,000 February 28, 1996
Josef Yud $500,000 February 28, 1996
Aaron Meyer Gee $500,000 February 28, 1996
Dovasar S.A. $500,000 February 28, 1996
4. Series D Debenture, in the amount of $1,750,000 is due to close on or prior
to May 15, 1996, subject to the Company not suffering a loss in the fiscal
year ending April 30, 1996 per the Company's unaudited financial statements
for the year ending April 30, 1996, as certified by the Company's President
and Chief Financial Officer. Series D Debentures are convertible at the
lower of $1.38 per share or 62.5% 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.
The Debentures are all due and payable on December 31, 1997, and all
principal and interest is convertible by the Holders thereof into Shares. The
conversion period starts 45 days from the closing date of the respective
Debenture issuances and ends on the maturity date of the respective Debentures.
In the event that the Debentures are not converted by the Holders thereof at
maturity, then in that event, the Debentures are automatically converted by
their terms into Shares. The Shares to be issued upon conversion are issued
pursuant to a Regulation "S" exemption of the Securities Act of 1933, as
amended. The Holders have represented that they qualify pursuant to the
exemption.
The Company agreed to pay 5% of face amount of all Debentures (`Gross
proceeds') to ITF, 5% of Gross Proceeds Select Capital, 3% of Gross Proceeds
to Barrocas & Behzadi Investments and 0.5% to London Select Entreprises Ltd. In
addition, the Company agreed to issue to Barrocas & Behzadi that number of
shares equivalent to 1% of the Gross Proceeds, with a share price based on the
lower of $0.75 per Share or the bid price on the Debentures closing date, and 1
one (1) warrant (the `Warrants'') to purchase one (1) Share per $10 of Gross
Proceeds as directed by ITF and Select Capital. The Warrants are exercisable at
after June 15, 1996 at $0.69 per Share and expire in two and a half years.
ITEM 7. EXHIBITS
10.115. Copy of Letter Agreement dated December 15, 1995 with Israel
Trading Fund, Ltd. and Select Capital Advisors, Inc. (*)
10.116. Copy of Letter Agreement dated December 22, 1995 with Israel
Trading Fund, Ltd. and Select Capital Advisors, Inc. (*)
10.117 Copy of Agreement For Consulting Services with Barrocas and
Behzadi Investments dated November 27, 1995. (*)
10.118 Copy of 9% Convertible A Debenture issued to Torah Vachesed Lezra
Vesad dated December 19, 1995. (*)
10.119 Copy of Escrow Agreement with Barry B. Globerman, dated December
20, 1995.
10.120 Copy of a Treasury Order dated December 20, 1995. (*)
10.121 Copy of an Offshore Securities Subscription Agreement with Torah
Vachesed Lezra Vesad dated December 20, 1995. (*)
10.122 Copy of 9% Convertible A Debenture issued to Schulamit Pritzker
dated December 19, 1995. (*)
10.123 Copy of Escrow Agreement with Barry B. Globerman, dated December
20, 1995. (*)
10.124 Copy of a Treasury Order dated December 20, 1995. (*)
10.125 Copy of an Offshore Securities Subscription Agreement with
Schulamit Pritzker dated December 20, 1995 (*)
10.126 Copy of 9% Convertible A Debenture issued to Aaron Meyer Gee
dated December 22, 1995. (*)
10.127 Copy of Escrow Agreement with Barry B. Globerman, dated December
22, 1995. (*)
10.128 Copy of a Treasury Order dated December 20, 1995. (*)
10.129 Copy of an Offshore Securities Subscription Agreement with Aaron
Meyer Gee dated December 22, 1995 (*)
10.130 Copy of 9% Convertible A Debenture issued to Dovasar S.A., dated
December 29, 1995. (*)
10.131 Copy of Escrow Agreement with Barry B. Globerman, dated December
29, 1995. (*)
10.132 Copy of a Treasury Order dated December 29, 1995. (*)
10.133 Copy of an Offshore Securities Subscription Agreement with
Dovasar S.A. dated December 29, 1995 (*)
10.134 Copy of 9% Convertible A Debenture issued to Chava Fischman,
dated December 29, 1995. (*)
10.135 Copy of Escrow Agreement with Barry B. Globerman, dated December
29, 1995. (*)
10.136 Copy of a Treasury Order dated December 29, 1995. (*)
10.137 Copy of an Offshore Securities Subscription Agreement with Shava
Fischman dated December 29, 1995 (*)
10.138 Copy of 9% Convertible B Debenture issued to Henry Zieleniec,
dated January 25, 1996. (*)
10.139 Copy of Escrow Agreement with Barry B. Globerman, dated January
25, 1996. (*)
10.140 Copy of a Treasury Order dated January 25, 1996. (*)
10.141 Copy of an Offshore Securities Subscription Agreement with Henry
Zieleniec dated January 25, 1996. (*)
10.142 Copy of 9% Convertible B Debenture issued to Raphael Lapidus,
dated January 29, 1996. (*)
10.143 Copy of Escrow Agreement with Barry B. Globerman, dated January
29, 1996. (*)
10.144 Copy of a Treasury Order dated January 29, 1996. (*)
10.145 Copy of an Offshore Securities Subscription Agreement with
Raphael Lapidus dated January 29, 1996. (*)
10.146 Copy of 9% Convertible B Debenture issued to Miriam Herzel, dated
January 29, 1996. (*)
10.147 Copy of Escrow Agreement with Barry B. Globerman, dated January
29, 1996. (*)
10.148 Copy of a Treasury Order dated January 29, 1996. (*)
10.149 Copy of an Offshore Securities Subscription Agreement with Miriam
Herzel dated January 29, 1996 (*)
10.150 Copy of 9% Convertible B Debenture issued to Yosef Yud, dated
January 29, 1996. (*)
10.151 Copy of Escrow Agreement with Barry B. Globerman, dated January
29, 1996. (*)
10.152 Copy of a Treasury Order dated January 29, 1996 (*)
10.153 Copy of an Offshore Securities Subscription Agreement with Yosef
Yud dated January 29, 1996. (*)
10.154 Copy of 9% Convertible B Debenture issued to Menachem M. Begun,
dated January 30, 1996. (*)
10.155 Copy of Escrow Agreement with Barry B. Globerman, dated January
30, 1996. (*)
10.156 Copy of a Treasury Order dated January 30, 1996 (*)
10.157 Copy of an Offshore Securities Subscription Agreement with
Menachem M. Begun dated January 30, 1996. (*)
10.159 Letter Agreement between the Company, ITF and Select Capital
dated February 28, 1996
10.160 Copy of 9% Convertible C Debenture issued to Shulamit Pritzker,
dated February 28, 1996.
10.161 Copy of Escrow Agreement with Barry B. Globerman, dated February
28, 1996.
10.162 Copy of a Treasury Order dated February 27, 1996
10.163 Copy of an Offshore Securities Subscription Agreement with
Shulamit Pritzker dated February 27, 1996.
10.164 Copy of 9% Convertible C Debenture issued to Joseph Weinburg,
dated February 28, 1996.
10.165 Copy of Escrow Agreement with Barry B. Globerman, dated February
28, 1996.
10.166 Copy of a Treasury Order dated February 28, 1996
10.167 Copy of an Offshore Securities Subscription Agreement with Joseph
Weinburg dated February 28, 1996.
10.168 Copy of 9% Convertible C Debenture issued to Torah Vachesed Lezra
Vesad, dated February 28, 1996.
10.169 Copy of Escrow Agreement with Barry B. Globerman, dated February
27, 1996.
10.170 Copy of a Treasury Order dated February 27, 1996
10.171 Copy of an Offshore Securities Subscription Agreement with Torah
Vachesed Lezra Vesad, dated February 28, 1996.
10.172 Copy of 9% Convertible C Debenture issued to Yosef Yud, dated
February 28, 1996.
10.173 Copy of Escrow Agreement with Barry B. Globerman, dated February
28, 1996.
10.174 Copy of a Treasury Order dated February 28, 1996.
10.175 Copy of an Offshore Securities Subscription Agreement with Yosef
Yud, dated February 28, 1996.
10.176 Copy of 9% Convertible C Debenture issued to Aaron Meyer Gee,
dated February 28, 1996.
10.177 Copy of Escrow Agreement with Barry B. Globerman, dated February
28, 1996.
10.178 Copy of a Treasury Order dated February 28, 1996.
10.179 Copy of an Offshore Securities Subscription Agreement with Aaron
Meyer Gee, dated February 28, 1996.
10.180 Copy of 9% Convertible C Debenture issued to Dovasar S.A., dated
February 29, 1996.
10.181 Copy of Escrow Agreement with Barry B. Globerman, dated February
29, 1996.
10.182 Copy of a Treasury Order dated February 29, 1996.
10.183 Copy of an Offshore Securities Subscription Agreement with
Dovasar S.A., dated February 29, 1996.
10.184 Letter from Management Technologies, Inc. to Barry B. Globerman
dated December 15, 1995.
10.185 Letter from MTi Abraxsys Systems, Inc. to Management
Technologies, Inc. dated December 15, 1995.
(*) incorporated by reference to exhibit likewise numbered to the Company's
current report on Form 8-K filed on February 8, 1996.
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/ Paul Ekon
--------------------------
Paul Ekon
Chief Executive Officer
Dated: New York, New York
MANAGEMENT TECHNOLOGIES, INC.
630 THIRD AVENUE
NEW YORK, NEW YORK 10017
February 28, 1996
Israel Trading Fund Ltd.
50 Broad Street
New York, N.Y. 10017
Gentlemen:
This letter hereby amends that certain agreement dated December 15,
1995 between us (the `Agreement'') as follows:
1. Paragraph 5 is hereby amended to increase the amount of Series C
Debentures from $1,500,000 to $3,050,000, and wherever said amount is mentioned
in the Agreement it is hereby amended to read $3,050,000. Paragraph 5 is also
amended to decrease the conversion price form the lower of $1.04 or 62.5% of the
average of the closing bid price of the Shares for the 5 consecutive days prior
to the date of conversion, to the lower of $0.85 or 62.5% of the average of the
closing bid price of the Shares for the 5 consecutive days prior to the date of
conversion.
I. 2. Other that as set forth above, all other terms of the Agreement
shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement this
28th day of February, 1996.
MANAGEMENT TECHNOLOGIES, INC.
/s/ Paul Ekon
By: Paul Ekon
Chief Executive Officer
Agreed To and Accepted By:
SELECT CAPITAL ADVISORS, INC.
By:
ISRAEL TRADING FUND LTD.
By
SERIES C 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. C-001
US$650,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES C CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series C Debentures of
Management Technologies, Inc., a corporation duly organized and existing under
the laws of the State of New York (the `Company'') designated as its 9% Series
C Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $3,050,000.
FOR VALUE RECEIVED, the Company promises to pay to Shulamit Pritzker, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Six Hundred And Fifty Thousand Thousand Dollars (US$650,000)
on December 31, 1997 (the `Maturity Date''), and to pay interest on the
principal sum outstanding, at the rate of 9% per annum due and payable
quarterly. Accrual of interest shall commence on the first business day to
occur after the date hereof and shall continue until payment in full of the
principal sum has been made or duly provided for. The interest so payable will
be paid to the person in whose name this Series C Debenture (or one or more
predecessor Series C Debentures) is registered on the records of the Company
regarding registration and transfers of the Series C Debentures (the `Debenture
Register'); provided, however, that the Company's obligation to a transferee of
this Series C 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 February 28, 1996 between the Company and
Holder (the `Subscription Agreement''). The principal of, and interest on,
this Series C 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 C
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 C Debenture on the Maturity Date, less any
amounts required by law to be deducted or withheld, to the Holder of this Series
C 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 C Debenture to the extent of the sum represented by such
check plus any amounts so deducted.
This Series C Debenture is subject to the following additional provisions:
1. The Series C Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series C
Debentures are exchangeable for an equal aggregate principal amount of
Series C 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 C 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 C 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 C Debenture, the Company and
any agent of the Company may treat the person in whose name this Series C
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 C 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 C 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 C 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) 62.5% of the
average closing bid price of the Common Stock for the five (5)
business days immediately preceding the conversion date, or (ii)
$0.85. Such conversion shall be effectuated by surrendering the
Series C Debentures to be converted (with a copy, by facsimile or
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courier, to the Company) to the Escrow Agent and/or Company with the
form of conversion notice attached hereto as Exhibit I, executed by
the Holder of this Series C Debenture evidencing such Holder's
intention to convert this Series C 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 C
Debenture, with the conversion notice duly executed, to the Escrow
Agent and/or Company or, if earlier, the date set forth in such notice
of conversion if the Series C 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 C
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 C Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
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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 C Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series C 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 C 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 C 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 C 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 C 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 C 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 C 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 C 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 C Debenture, by acceptance hereof, agrees that
this Series C Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series C 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 C 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 C
Debenture will not in any way be affected or impaired thereby.
12. This Series C Debenture and the agreements referred to in this Series C
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series C 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.
-8-
13. This Debenture is one of a series of Company's Series C Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series C Debenture 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.
Dated: February 28, 1996 MANAGEMENT TECHNOLOGIES, INC.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series C
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series C Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series C 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 C Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series C Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/exhibit.
ESCROW AGREEMENT
----------------
Barry B. Globerman, Esq.
110 E. 59th Street
New York, N.Y.
U.S.A. 10022
Gentlemen:
MANAGEMENT TECHNOLOGIES, INC., a corporation organized under the
Business Corporation Law of New York (the `Corporation'') and the undersigned
(the `Holder'') have requested that you (the ``Escrow Agent'') act as their
agent in respect of the conversion of $650,000 Series C Debentures
(collectively, the `Series C Debenture'') of the Corporation. An irrevocable
treasury order directing issuance of the Common Shares in the capital of the
Corporation issuable upon conversion of the Debentures is being delivered to you
pursuant to a Resolution of the Board of Directors made on December 15, 1995,
and an Offshore Securities Subscription Agreement delivered by the Holder to the
Corporation (collectively referred to as the `Resolution and Agreement'').
The Treasury Order is to be held by you as Escrow Agent until the
Shareholder elects to convert the Debentures in accordance with its terms and
thereafter the Treasury Order is to be delivered by you to American Stock
Transfer & Trust Company, the transfer agent for the Corporation in New York, at
40 Wall Street, New York, New York (the `Transfer Agent'') with the correct
number of Common Shares to be issued upon conversion of the Debentures shall be
duly entered on the Treasury Order pursuant to instructions to the Corporation
from the Holder. Such calculation shall be by both the Corporation and the
Holder be in accordance with the provisions of Paragraph 4 of the Debenture, a
copy of which is attached to this Escrow Agreement as Schedule `A''. In the
event that there is a difference between the two calculations, you will enter
the large number in the Treasury Order and direct the Transfer Agent in the
Treasury Order to issue a separate share certificate to you representing the
difference between the results of the two calculations (the `Difference
Certificate''. Thereafter, you will deliver the share certificate or
certificates representing the Common Shares except the Difference Certificate as
you are directed by the Holder.
You shall be entitled to act and rely upon any written statement,
request, notice or instructions respecting the transactions covered by this
Escrow Agreement given to you by the Corporation, and/or any of the undersigned,
pursuant to the Resolution and Agreement not only as to the authorization,
validity and effectiveness thereof, but also as to the correctness and
acceptability of any information therein contained.
It is understood that you assume no responsibility or liability to any
person, other than to deal with the Treasury Order deposited with you and the
Debentures deposited with you by the Holder duly endorsed for transfer (the
`Deposit Documents'') and share certificates representing Common Shares
received on conversion of the Debentures from the Transfer Agent in accordance
with the provisions hereof. In case of the issuance of a Difference
Certificate, the decision of an independent chartered accountant agreed to by
the Corporation and the Escrow Agent and paid for by the Corporation will be
final. You will deliver the Difference Certificate to the Holder or to the
direction of the Holder if such decision supports the higher result of
calculation of the number of Common Shares issuable on conversion of the
Debentures and will surrender it to the Corporation through the agency of the
Transfer Agent for cancellation or for partial cancellation and/or issue of a
smaller or larger number of Common Shares if such calculation is in favor of a
result other than the calculation upon which issue the Difference Certificate is
based.
-2-
As Escrow Agent, you make no representations with respect to and shall
have no responsibility for the application of funds by the Corporation or any
registration statement or transaction in securities.
It is further agreed that:
1.The Escrow Agent shall be protected in relying upon the accuracy, acting in
reliance upon the contents, and assuming the genuineness, of any notice,
demand, certificate, signature or other document which is given to the Escrow
Agent pursuant to the Resolution and Agreement or this Agreement without the
necessity of Escrow Agent verifying the truth or accuracy of any such notice,
demand, certificate, signature, instrument or other document;
2.The Escrow Agent shall not be bound in any way by any other agreement or
understanding between any other party, whether or not the Escrow Agent has
knowledge thereof or consents thereto unless such consent is given in
writing;
3.The Escrow Agent's sole duties and responsibilities shall be to receive the
Deposit Documents, enter the number of Common Shares to be issued on
conversion of the Debentures pursuant to the Agreement on the Treasury Order,
submit the Treasury Order to the Transfer Agent with the other Deposit
Documents and hold and disburse the share certificates representing the
Common Shares in accordance with the Resolution and Agreement and this
Agreement;
4.Upon the delivery of all the share certificates representing the Common
Shares to the Shareholder in accordance with the Agreement and Resolution and
this Agreement, the Escrow Agent shall be relived and released from any
-3-
liability under this Agreement other than to the Corporation in respect of
the issuance of Excess Shares; and
5.The Escrow Agent shall be indemnified by the parties against any liabilities,
damages, losses, costs or expenses incurred by, or claim or charges made
against, the Escrow Agent (including reasonable counsel fees and court costs)
by reason of the Escrow Agent's acting or failing to act in connection with
any of the matters contemplated by the Agreements or this Agreement or in
carrying out the terms of the Agreements and this Agreement, except as a
result of Escrow Agent's negligence or wilful misconduct.
This Agreement shall be governed by the substantive laws of the State
of New York.
Dated: February 28, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By: /s Paul Ekon
------------------------------ -----------------------------
Paul Ekon
Chief Executive Officer
MTi
630 Third Avenue
15th Floor
New York
10017
USA
Telephone
+1 (212) 983 5620
Facsimile
+1 (212) 557 6967
February 27, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Shulamit Pritzker (the `Registered Holder'') is the registered holder of
$650,000 Series C Debentures of Management Technologies, Inc. (the
`Corporation'') (collectively, the ``Debentures'');
B. The Registered Holder has the right pursuant to Paragraph 4 of the
Debenture to convert the Debentures into Common Shares in the capital of
the Corporation at the times and in the manner set out in such Debentures;
C. Pursuant to a resolution of the Board of Directors of the Corporation duly
passed on December 15, 1995, this irrevocable Treasury Order has been
delivered to Mr. Barry Globerman, Attorney of New York, New York, as escrow
agent (the `Escrow Agent'') for and on behalf of the Registered Holder for
the purpose of facilitating delivery to the Escrow Agent for and on behalf
of the Registered Holder of a share certificate representing that number of
validly issued Common Shares in the capital of the Corporation to which the
Registered Shareholder will be entitled upon conversion of some or all, as
the case may be, of the Debentures upon presentation to you, as transfer
agent of the Corporation in New York, at your address set out above during
business hours of;
1. proof to your satisfaction that the person presenting the following
documents is the Escrow Agent who is named in this Treasury Order;
2. the certificate or certificates representing the Debenture to be
converted duly endorsed by the Registered Holder; and
3. this Treasury Order (collectively, the `Conversion Documents'').
NOW, THEREFORE, YOU ARE IRREVOCABLY AUTHORIZED AND DIRECTED to deliver to the
Escrow Agent upon presentation of the Conversion Documents on or after April 12,
1996, a share certificate or certificates without legend or stop transfer order
representing the number of fully paid Common Shares in the capital of the
Corporation set out below registered in the name of the Registered Shareholder.
The undersigned certifies that the Corporation shall have received the full
consideration for the said Common Shares and that they shall be fully paid and
non-assessable upon presentation to you of the Conversion Documents.
Number of Number of
Name Common Shares Debentures
- ---- ------------- ----------
Address
-------
Shulamit 28 Rachov One in the
Pritzker DovSadan amount of
Jerusalem $650,000
Israel
/s/ Paul Ekon
By: Paul Ekon
Chief Executive Officer
On behalf of the Board of Directors of
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of February 27,
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 9% 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.
--------------------------------------
a) Subscription. The undersigned Buyer hereby subscribes for and agrees
to purchase the Sellers 9% Convertible Debentures substantially in the
form of the Debentures attached as Exhibit B, C, D and E hereto and
having an aggregate original principal amount of U.S. $6,000,000
(singly, a `Debenture,'' and collectively, the ``Debentures''), at a
purchase price as set forth in subsection (b) herein.
b) Payment. The Purchase Price for Buyer's portion of the Debentures
shall be $650,000 for the Series C Debentures (the `Purchase
Price'), which shall be payable at closing pursuant to the Letter
Agreement between the Company and Israel Trading Fund Ltd. dated
December 15, 1995 (the `Agreement'') by delivering immediately
available funds in United States Dollars by wire transfer to Barry B.
Globerman, Esq., 110 E. 59th Street, New York, N.Y. 10022 for closing
by delivery of securities versus payment for each series of
Debentures.
c) Closing. Subject to the satisfaction of the conditions set forth in
Sections 7 and 8 hereof, the closing of the transactions contemplated
by this Offshore Agreement shall occur from time to time as set forth
in the Agreement, or such earlier or later date as is mutually agreed
to in writing by Buyer and Seller (the `Closing Dates'').
2. Buyer Representations; Access to Information.
--------------------------------------------
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
--------------------------------------
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.
---------------------------
a) Debentures. Upon the conversion of the Debentures, the holder thereof
shall submit such Debenture and Notice of Conversion to the Escrow
Agent with a copy to Company and Escrow Agent shall immediately
deliver the Irrevocable Treasury Orders in its possession pursuant to
the Agreement to the Transfer Agent. Upon receipt of the Shares, the
Escrow Agent will deliver the Shares to the holder. In the event the
Irrevocable Treasury Orders for Shares are not sufficient, Seller
shall, within five (5) business days of receipt of notice from Escrow
Agent, 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 or Debentures 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
---------------------
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
-----------------------------------------
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.
-------------
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.
g) Notwithstanding the foregoing Agreement, the Buyers shall have the
right in their sole and absolute discretion to determine whether to
purchase the Series C, C and D Debentures. In the event the Buyers
decide not to purchase the Series C or C or D Debentures, neither the
Company nor the Buyers shall have any further liability one to the
other except with respect to the Series A Debentures. However, if the
Buyers do not close on the purchase of the Series C Debentures, the
Company shall not be required to honor the representation in paragraph
15(q).
IN WITNESS WHEREOF, the undersigned have executed this Offshore
Agreement as of the date first set forth above.
Official Signatory of Seller:
----------------------------
Management Technologies, Inc.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
Official Signatory of Buyer:
---------------------------
/s/ Shulamit Pritzker
By: Shulamit Pritzker
Title:
----------------------------------
Shulamit Pritzker
Address of Buyer:
28 Rachov DovSadan
Jerusalem
Israel
SERIES C 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. C-002
US$500,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES C CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series C Debentures of
Management Technologies, Inc., a corporation duly organized and existing under
the laws of the State of New York (the `Company'') designated as its 9% Series
C Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $3,050,000.
FOR VALUE RECEIVED, the Company promises to pay to Joseph Weinberg, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Five Hundred Thousand Thousand Dollars (US$500,000) on December
31, 1997 (the `Maturity Date''), and to pay interest on the principal sum
outstanding, at the rate of 9% per annum due and payable quarterly. Accrual of
interest shall commence on the first business day to occur after the date hereof
and shall continue until payment in full of the principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Series C Debenture (or one or more predecessor Series C Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series C Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series C 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
February 28, 1996 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series C 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 C 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 C
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series C 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 C Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series C Debenture is subject to the following additional provisions:
1. The Series C Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series C
Debentures are exchangeable for an equal aggregate principal amount of
Series C 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.
-2-
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series C 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 C 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 C Debenture, the Company and
any agent of the Company may treat the person in whose name this Series C
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 C 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 C 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 C 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) 62.5% of the
average closing bid price of the Common Stock for the five (5)
business days immediately preceding the conversion date, or (ii)
$0.85. Such conversion shall be effectuated by surrendering the
Series C Debentures to be converted (with a copy, by facsimile or
-3-
courier, to the Company) to the Escrow Agent and/or Company with the
form of conversion notice attached hereto as Exhibit I, executed by
the Holder of this Series C Debenture evidencing such Holder's
intention to convert this Series C 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 C
Debenture, with the conversion notice duly executed, to the Escrow
Agent and/or Company or, if earlier, the date set forth in such notice
of conversion if the Series C 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 C
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 C Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
-4-
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 C Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series C 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 C 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 C 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 C 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
-5-
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
this Series C 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 C 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
-6-
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 C 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 C Debenture, or for any claim based hereon, or
-7-
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 C Debenture, by acceptance hereof, agrees that
this Series C Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series C 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 C 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 C
Debenture will not in any way be affected or impaired thereby.
12. This Series C Debenture and the agreements referred to in this Series C
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series C 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.
-8-
13. This Debenture is one of a series of Company's Series C Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series C Debenture 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.
Dated: February 28, 1996 MANAGEMENT TECHNOLOGIES, INC.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series C
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series C Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series C 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 C Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series C Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/exhibit.
ESCROW AGREEMENT
----------------
Barry B. Globerman, Esq.
110 E. 59th Street
New York, N.Y.
U.S.A. 10022
Gentlemen:
MANAGEMENT TECHNOLOGIES, INC., a corporation organized under the
Business Corporation Law of New York (the `Corporation'') and the undersigned
(the `Holder'') have requested that you (the ``Escrow Agent'') act as their
agent in respect of the conversion of $500,000 Series C Debentures
(collectively, the `Series C Debenture'') of the Corporation. An irrevocable
treasury order directing issuance of the Common Shares in the capital of the
Corporation issuable upon conversion of the Debentures is being delivered to you
pursuant to a Resolution of the Board of Directors made on December 15, 1995,
and an Offshore Securities Subscription Agreement delivered by the Holder to the
Corporation (collectively referred to as the `Resolution and Agreement'').
The Treasury Order is to be held by you as Escrow Agent until the
Shareholder elects to convert the Debentures in accordance with its terms and
thereafter the Treasury Order is to be delivered by you to American Stock
Transfer & Trust Company, the transfer agent for the Corporation in New York, at
40 Wall Street, New York, New York (the `Transfer Agent'') with the correct
number of Common Shares to be issued upon conversion of the Debentures shall be
duly entered on the Treasury Order pursuant to instructions to the Corporation
from the Holder. Such calculation shall be by both the Corporation and the
Holder be in accordance with the provisions of Paragraph 4 of the Debenture, a
copy of which is attached to this Escrow Agreement as Schedule `A''. In the
event that there is a difference between the two calculations, you will enter
the large number in the Treasury Order and direct the Transfer Agent in the
Treasury Order to issue a separate share certificate to you representing the
difference between the results of the two calculations (the `Difference
Certificate''. Thereafter, you will deliver the share certificate or
certificates representing the Common Shares except the Difference Certificate as
you are directed by the Holder.
You shall be entitled to act and rely upon any written statement,
request, notice or instructions respecting the transactions covered by this
Escrow Agreement given to you by the Corporation, and/or any of the undersigned,
pursuant to the Resolution and Agreement not only as to the authorization,
validity and effectiveness thereof, but also as to the correctness and
acceptability of any information therein contained.
It is understood that you assume no responsibility or liability to any
person, other than to deal with the Treasury Order deposited with you and the
Debentures deposited with you by the Holder duly endorsed for transfer (the
`Deposit Documents'') and share certificates representing Common Shares
received on conversion of the Debentures from the Transfer Agent in accordance
with the provisions hereof. In case of the issuance of a Difference
Certificate, the decision of an independent chartered accountant agreed to by
the Corporation and the Escrow Agent and paid for by the Corporation will be
final. You will deliver the Difference Certificate to the Holder or to the
direction of the Holder if such decision supports the higher result of
calculation of the number of Common Shares issuable on conversion of the
Debentures and will surrender it to the Corporation through the agency of the
Transfer Agent for cancellation or for partial cancellation and/or issue of a
smaller or larger number of Common Shares if such calculation is in favor of a
result other than the calculation upon which issue the Difference Certificate is
based.
-2-
As Escrow Agent, you make no representations with respect to and shall
have no responsibility for the application of funds by the Corporation or any
registration statement or transaction in securities.
It is further agreed that:
1.The Escrow Agent shall be protected in relying upon the accuracy, acting in
reliance upon the contents, and assuming the genuineness, of any notice,
demand, certificate, signature or other document which is given to the Escrow
Agent pursuant to the Resolution and Agreement or this Agreement without the
necessity of Escrow Agent verifying the truth or accuracy of any such notice,
demand, certificate, signature, instrument or other document;
2.The Escrow Agent shall not be bound in any way by any other agreement or
understanding between any other party, whether or not the Escrow Agent has
knowledge thereof or consents thereto unless such consent is given in
writing;
3.The Escrow Agent's sole duties and responsibilities shall be to receive the
Deposit Documents, enter the number of Common Shares to be issued on
conversion of the Debentures pursuant to the Agreement on the Treasury Order,
submit the Treasury Order to the Transfer Agent with the other Deposit
Documents and hold and disburse the share certificates representing the
Common Shares in accordance with the Resolution and Agreement and this
Agreement;
4.Upon the delivery of all the share certificates representing the Common
Shares to the Shareholder in accordance with the Agreement and Resolution and
this Agreement, the Escrow Agent shall be relived and released from any
-3-
liability under this Agreement other than to the Corporation in respect of
the issuance of Excess Shares; and
5.The Escrow Agent shall be indemnified by the parties against any liabilities,
damages, losses, costs or expenses incurred by, or claim or charges made
against, the Escrow Agent (including reasonable counsel fees and court costs)
by reason of the Escrow Agent's acting or failing to act in connection with
any of the matters contemplated by the Agreements or this Agreement or in
carrying out the terms of the Agreements and this Agreement, except as a
result of Escrow Agent's negligence or wilful misconduct.
This Agreement shall be governed by the substantive laws of the State
of New York.
Dated: February 28, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By /s/ Paul Ekon
------------------------------ -------------------------
Paul Ekon
Chief Executive Officer
MTi
630 Third Avenue
15th Floor
New York
10017
USA
Telephone
+1 (212) 983 5620
Facsimile
+1 (212) 557 6967
February 28, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Joseph Weinberg (the `Registered Holder'') is the registered holder of
$500,000 Series C Debentures of Management Technologies, Inc. (the
`Corporation'') (collectively, the ``Debentures'');
B. The Registered Holder has the right pursuant to Paragraph 4 of the
Debenture to convert the Debentures into Common Shares in the capital of
the Corporation at the times and in the manner set out in such Debentures;
C. Pursuant to a resolution of the Board of Directors of the Corporation duly
passed on December 15, 1995, this irrevocable Treasury Order has been
delivered to Mr. Barry Globerman, Attorney of New York, New York, as escrow
agent (the `Escrow Agent'') for and on behalf of the Registered Holder for
the purpose of facilitating delivery to the Escrow Agent for and on behalf
of the Registered Holder of a share certificate representing that number of
validly issued Common Shares in the capital of the Corporation to which the
Registered Shareholder will be entitled upon conversion of some or all, as
the case may be, of the Debentures upon presentation to you, as transfer
agent of the Corporation in New York, at your address set out above during
business hours of;
1. proof to your satisfaction that the person presenting the following
documents is the Escrow Agent who is named in this Treasury Order;
2. the certificate or certificates representing the Debenture to be
converted duly endorsed by the Registered Holder; and
3. this Treasury Order (collectively, the `Conversion Documents'').
NOW, THEREFORE, YOU ARE IRREVOCABLY AUTHORIZED AND DIRECTED to deliver to the
Escrow Agent upon presentation of the Conversion Documents on or after April 13,
1996, a share certificate or certificates without legend or stop transfer order
representing the number of fully paid Common Shares in the capital of the
Corporation set out below registered in the name of the Registered Shareholder.
The undersigned certifies that the Corporation shall have received the full
consideration for the said Common Shares and that they shall be fully paid and
non-assessable upon presentation to you of the Conversion Documents.
Number of Number of
Name Common Shares Debentures
- ---- ------------- ----------
Address
-------
Joseph Givat Moshe 9 One in the
Weinberg Jerusalem amount of
Israel $500,000
By: Paul Ekon
Chief Executive Officer
On behalf of the Board of Directors of
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of February 27,
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 9% 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.
--------------------------------------
a) Subscription. The undersigned Buyer hereby subscribes for and agrees
to purchase the Sellers 9% Convertible Debentures substantially in the
form of the Debentures attached as Exhibit B, C, D and E hereto and
having an aggregate original principal amount of U.S. $6,000,000
(singly, a `Debenture,'' and collectively, the ``Debentures''), at a
purchase price as set forth in subsection (b) herein.
b) Payment. The Purchase Price for Buyer's portion of the Debentures
shall be $500,000 for the Series C Debentures (the `Purchase
Price'), which shall be payable at closing pursuant to the Letter
Agreement between the Company and Israel Trading Fund Ltd. dated
December 15, 1995 (the `Agreement'') by delivering immediately
available funds in United States Dollars by wire transfer to Barry B.
Globerman, Esq., 110 E. 59th Street, New York, N.Y. 10022 for closing
by delivery of securities versus payment for each series of
Debentures.
c) Closing. Subject to the satisfaction of the conditions set forth in
Sections 7 and 8 hereof, the closing of the transactions contemplated
by this Offshore Agreement shall occur from time to time as set forth
in the Agreement, or such earlier or later date as is mutually agreed
to in writing by Buyer and Seller (the `Closing Dates'').
2. Buyer Representations; Access to Information.
--------------------------------------------
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
--------------------------------------
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.
---------------------------
a) Debentures. Upon the conversion of the Debentures, the holder thereof
shall submit such Debenture and Notice of Conversion to the Escrow
Agent with a copy to Company and Escrow Agent shall immediately
deliver the Irrevocable Treasury Orders in its possession pursuant to
the Agreement to the Transfer Agent. Upon receipt of the Shares, the
Escrow Agent will deliver the Shares to the holder. In the event the
Irrevocable Treasury Orders for Shares are not sufficient, Seller
shall, within five (5) business days of receipt of notice from Escrow
Agent, 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 or Debentures 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
---------------------
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
-----------------------------------------
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.
-------------
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.
g) Notwithstanding the foregoing Agreement, the Buyers shall have the
right in their sole and absolute discretion to determine whether to
purchase the Series C, C and D Debentures. In the event the Buyers
decide not to purchase the Series C or C or D Debentures, neither the
Company nor the Buyers shall have any further liability one to the
other except with respect to the Series A Debentures. However, if the
Buyers do not close on the purchase of the Series C Debentures, the
Company shall not be required to honor the representation in paragraph
15(q).
IN WITNESS WHEREOF, the undersigned have executed this Offshore
Agreement as of the date first set forth above.
Official Signatory of Seller:
----------------------------
Management Technologies, Inc.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
Official Signatory of Buyer:
---------------------------
/s/ Joseph Weinburg
By: Joseph Weinburg
Title:
----------------------------------
Joseph Weinberg
Address of Buyer:
Givat Moshe 9
Jerusalem
Israel
SERIES C 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. C-003
US$400,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES C CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series C Debentures of
Management Technologies, Inc., a corporation duly organized and existing under
the laws of the State of New York (the `Company'') designated as its 9% Series
C Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $3,050,000.
FOR VALUE RECEIVED, the Company promises to pay to Torah Vachesed Lezra
Vesad, the registered holder hereof and its successors and assigns (the
`Holder''), the principal sum of Four Hundred Thousand Thousand Dollars
(US$400,000) on December 31, 1997 (the `Maturity Date''), and to pay interest
on the principal sum outstanding, at the rate of 9% per annum due and payable
quarterly. Accrual of interest shall commence on the first business day to
occur after the date hereof and shall continue until payment in full of the
principal sum has been made or duly provided for. The interest so payable will
be paid to the person in whose name this Series C Debenture (or one or more
predecessor Series C Debentures) is registered on the records of the Company
regarding registration and transfers of the Series C Debentures (the `Debenture
Register'); provided, however, that the Company's obligation to a transferee of
this Series C 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 February 28, 1996 between the Company and
Holder (the `Subscription Agreement''). The principal of, and interest on,
this Series C 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 C
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 C Debenture on the Maturity Date, less any
amounts required by law to be deducted or withheld, to the Holder of this Series
C 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 C Debenture to the extent of the sum represented by such
check plus any amounts so deducted.
This Series C Debenture is subject to the following additional provisions:
1. The Series C Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series C
Debentures are exchangeable for an equal aggregate principal amount of
Series C 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.
-2-
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series C 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 C 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 C Debenture, the Company and
any agent of the Company may treat the person in whose name this Series C
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 C 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 C 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 C 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) 62.5% of the
average closing bid price of the Common Stock for the five (5)
business days immediately preceding the conversion date, or (ii)
$0.85. Such conversion shall be effectuated by surrendering the
Series C Debentures to be converted (with a copy, by facsimile or
-3-
courier, to the Company) to the Escrow Agent and/or Company with the
form of conversion notice attached hereto as Exhibit I, executed by
the Holder of this Series C Debenture evidencing such Holder's
intention to convert this Series C 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 C
Debenture, with the conversion notice duly executed, to the Escrow
Agent and/or Company or, if earlier, the date set forth in such notice
of conversion if the Series C 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 C
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 C Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
-4-
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 C Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series C 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 C 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 C 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 C 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
-5-
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
this Series C 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 C 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
-6-
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 C 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 C Debenture, or for any claim based hereon, or
-7-
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 C Debenture, by acceptance hereof, agrees that
this Series C Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series C 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 C 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 C
Debenture will not in any way be affected or impaired thereby.
12. This Series C Debenture and the agreements referred to in this Series C
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series C 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.
-8-
13. This Debenture is one of a series of Company's Series C Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series C Debenture 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.
Dated: February 28, 1996 MANAGEMENT TECHNOLOGIES, INC.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series C
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series C Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series C 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 C Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
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* This original Series C Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/exhibit.
ESCROW AGREEMENT
----------------
Barry B. Globerman, Esq.
110 E. 59th Street
New York, N.Y.
U.S.A. 10022
Gentlemen:
MANAGEMENT TECHNOLOGIES, INC., a corporation organized under the
Business Corporation Law of New York (the `Corporation'') and the undersigned
(the `Holder'') have requested that you (the ``Escrow Agent'') act as their
agent in respect of the conversion of $400,000 Series C Debentures
(collectively, the `Series C Debenture'') of the Corporation. An irrevocable
treasury order directing issuance of the Common Shares in the capital of the
Corporation issuable upon conversion of the Debentures is being delivered to you
pursuant to a Resolution of the Board of Directors made on December 15, 1995,
and an Offshore Securities Subscription Agreement delivered by the Holder to the
Corporation (collectively referred to as the `Resolution and Agreement'').
The Treasury Order is to be held by you as Escrow Agent until the
Shareholder elects to convert the Debentures in accordance with its terms and
thereafter the Treasury Order is to be delivered by you to American Stock
Transfer & Trust Company, the transfer agent for the Corporation in New York, at
40 Wall Street, New York, New York (the `Transfer Agent'') with the correct
number of Common Shares to be issued upon conversion of the Debentures shall be
duly entered on the Treasury Order pursuant to instructions to the Corporation
from the Holder. Such calculation shall be by both the Corporation and the
Holder be in accordance with the provisions of Paragraph 4 of the Debenture, a
copy of which is attached to this Escrow Agreement as Schedule `A''. In the
event that there is a difference between the two calculations, you will enter
the large number in the Treasury Order and direct the Transfer Agent in the
Treasury Order to issue a separate share certificate to you representing the
difference between the results of the two calculations (the `Difference
Certificate''. Thereafter, you will deliver the share certificate or
certificates representing the Common Shares except the Difference Certificate as
you are directed by the Holder.
You shall be entitled to act and rely upon any written statement,
request, notice or instructions respecting the transactions covered by this
Escrow Agreement given to you by the Corporation, and/or any of the undersigned,
pursuant to the Resolution and Agreement not only as to the authorization,
validity and effectiveness thereof, but also as to the correctness and
acceptability of any information therein contained.
It is understood that you assume no responsibility or liability to any
person, other than to deal with the Treasury Order deposited with you and the
Debentures deposited with you by the Holder duly endorsed for transfer (the
`Deposit Documents'') and share certificates representing Common Shares
received on conversion of the Debentures from the Transfer Agent in accordance
with the provisions hereof. In case of the issuance of a Difference
Certificate, the decision of an independent chartered accountant agreed to by
the Corporation and the Escrow Agent and paid for by the Corporation will be
final. You will deliver the Difference Certificate to the Holder or to the
direction of the Holder if such decision supports the higher result of
calculation of the number of Common Shares issuable on conversion of the
Debentures and will surrender it to the Corporation through the agency of the
Transfer Agent for cancellation or for partial cancellation and/or issue of a
smaller or larger number of Common Shares if such calculation is in favor of a
result other than the calculation upon which issue the Difference Certificate is
based.
-2-
As Escrow Agent, you make no representations with respect to and shall
have no responsibility for the application of funds by the Corporation or any
registration statement or transaction in securities.
It is further agreed that:
1.The Escrow Agent shall be protected in relying upon the accuracy, acting in
reliance upon the contents, and assuming the genuineness, of any notice,
demand, certificate, signature or other document which is given to the Escrow
Agent pursuant to the Resolution and Agreement or this Agreement without the
necessity of Escrow Agent verifying the truth or accuracy of any such notice,
demand, certificate, signature, instrument or other document;
2.The Escrow Agent shall not be bound in any way by any other agreement or
understanding between any other party, whether or not the Escrow Agent has
knowledge thereof or consents thereto unless such consent is given in
writing;
3.The Escrow Agent's sole duties and responsibilities shall be to receive the
Deposit Documents, enter the number of Common Shares to be issued on
conversion of the Debentures pursuant to the Agreement on the Treasury Order,
submit the Treasury Order to the Transfer Agent with the other Deposit
Documents and hold and disburse the share certificates representing the
Common Shares in accordance with the Resolution and Agreement and this
Agreement;
4.Upon the delivery of all the share certificates representing the Common
Shares to the Shareholder in accordance with the Agreement and Resolution and
this Agreement, the Escrow Agent shall be relived and released from any
-3-
liability under this Agreement other than to the Corporation in respect of
the issuance of Excess Shares; and
5.The Escrow Agent shall be indemnified by the parties against any liabilities,
damages, losses, costs or expenses incurred by, or claim or charges made
against, the Escrow Agent (including reasonable counsel fees and court costs)
by reason of the Escrow Agent's acting or failing to act in connection with
any of the matters contemplated by the Agreements or this Agreement or in
carrying out the terms of the Agreements and this Agreement, except as a
result of Escrow Agent's negligence or wilful misconduct.
This Agreement shall be governed by the substantive laws of the State
of New York.
Dated: February 27, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By: /s/ Paul Ekon
------------------------------ --------------------------
Paul Ekon
Chief Executive Officer
MTi
630 Third Avenue
15th Floor
New York
10017
USA
Telephone
+1 (212) 983 5620
Facsimile
+1 (212) 557 6967
February 27, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Salomon Sampson (the `Registered Holder'') is the registered holder of
$400,000 Series C Debentures of Management Technologies, Inc. (the
`Corporation'') (collectively, the ``Debentures'');
B. The Registered Holder has the right pursuant to Paragraph 4 of the
Debenture to convert the Debentures into Common Shares in the capital of
the Corporation at the times and in the manner set out in such Debentures;
C. Pursuant to a resolution of the Board of Directors of the Corporation duly
passed on December 15, 1995, this irrevocable Treasury Order has been
delivered to Mr. Barry Globerman, Attorney of New York, New York, as escrow
agent (the `Escrow Agent'') for and on behalf of the Registered Holder for
the purpose of facilitating delivery to the Escrow Agent for and on behalf
of the Registered Holder of a share certificate representing that number of
validly issued Common Shares in the capital of the Corporation to which the
Registered Shareholder will be entitled upon conversion of some or all, as
the case may be, of the Debentures upon presentation to you, as transfer
agent of the Corporation in New York, at your address set out above during
business hours of;
1. proof to your satisfaction that the person presenting the following
documents is the Escrow Agent who is named in this Treasury Order;
2. the certificate or certificates representing the Debenture to be
converted duly endorsed by the Registered Holder; and
3. this Treasury Order (collectively, the `Conversion Documents'').
NOW, THEREFORE, YOU ARE IRREVOCABLY AUTHORIZED AND DIRECTED to deliver to the
Escrow Agent upon presentation of the Conversion Documents on or after April 12,
1996, a share certificate or certificates without legend or stop transfer order
representing the number of fully paid Common Shares in the capital of the
Corporation set out below registered in the name of the Registered Shareholder.
The undersigned certifies that the Corporation shall have received the full
consideration for the said Common Shares and that they shall be fully paid and
non-assessable upon presentation to you of the Conversion Documents.
Number of Number of
Name Common Shares Debentures
- ---- ------------- ----------
Address
-------
Torah Vachesed PO Box 13109 One in the
Lezra Vesad Tel Aviv amount of
Israel $400,000
/s/ Paul Ekon
By: Paul Ekon
Chief Executive Officer
On behalf of the Board of Directors of
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of February 27,
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 9% 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.
--------------------------------------
a) Subscription. The undersigned Buyer hereby subscribes for and agrees
to purchase the Sellers 9% Convertible Debentures substantially in the
form of the Debentures attached as Exhibit B, C, D and E hereto and
having an aggregate original principal amount of U.S. $6,000,000
(singly, a `Debenture,'' and collectively, the ``Debentures''), at a
purchase price as set forth in subsection (b) herein.
b) Payment. The Purchase Price for Buyer's portion of the Debentures
shall be $400,000 for the Series C Debentures (the `Purchase
Price'), which shall be payable at closing pursuant to the Letter
Agreement between the Company and Israel Trading Fund Ltd. dated
December 15, 1995 (the `Agreement'') by delivering immediately
available funds in United States Dollars by wire transfer to Barry B.
Globerman, Esq., 110 E. 59th Street, New York, N.Y. 10022 for closing
by delivery of securities versus payment for each series of
Debentures.
c) Closing. Subject to the satisfaction of the conditions set forth in
Sections 7 and 8 hereof, the closing of the transactions contemplated
by this Offshore Agreement shall occur from time to time as set forth
in the Agreement, or such earlier or later date as is mutually agreed
to in writing by Buyer and Seller (the `Closing Dates'').
2. Buyer Representations; Access to Information.
--------------------------------------------
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
--------------------------------------
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.
---------------------------
a) Debentures. Upon the conversion of the Debentures, the holder thereof
shall submit such Debenture and Notice of Conversion to the Escrow
Agent with a copy to Company and Escrow Agent shall immediately
deliver the Irrevocable Treasury Orders in its possession pursuant to
the Agreement to the Transfer Agent. Upon receipt of the Shares, the
Escrow Agent will deliver the Shares to the holder. In the event the
Irrevocable Treasury Orders for Shares are not sufficient, Seller
shall, within five (5) business days of receipt of notice from Escrow
Agent, 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 or Debentures 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
---------------------
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
-----------------------------------------
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.
-------------
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.
g) Notwithstanding the foregoing Agreement, the Buyers shall have the
right in their sole and absolute discretion to determine whether to
purchase the Series C, C and D Debentures. In the event the Buyers
decide not to purchase the Series C or C or D Debentures, neither the
Company nor the Buyers shall have any further liability one to the
other except with respect to the Series A Debentures. However, if the
Buyers do not close on the purchase of the Series C Debentures, the
Company shall not be required to honor the representation in paragraph
15(q).
IN WITNESS WHEREOF, the undersigned have executed this Offshore
Agreement as of the date first set forth above.
Official Signatory of Seller:
----------------------------
Management Technologies, Inc.
By: Paul Ekon
Title: Chief Executive Officer
Official Signatory of Buyer:
---------------------------
/s/ Salomon Sampson
By: Salomon Sampson
Title: Secretary
Torah Vachesed Lezra Vesad
Address of Buyer:
PO Box 13109
Tel Aviv
Israel
SERIES C 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. C004
US$500,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES C CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series C Debentures of
Management Technologies, Inc., a corporation duly organized and existing under
the laws of the State of New York (the `Company'') designated as its 9% Series
C Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $3,050,000.
FOR VALUE RECEIVED, the Company promises to pay to Yosef Yud, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Five Hundred Thousand Thousand Dollars (US$500,000) on December
31, 1997 (the `Maturity Date''), and to pay interest on the principal sum
outstanding, at the rate of 9% per annum due and payable quarterly. Accrual of
interest shall commence on the first business day to occur after the date hereof
and shall continue until payment in full of the principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Series C Debenture (or one or more predecessor Series C Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series C Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series C 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
February 28, 1996 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series C 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 C 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 C
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series C 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 C Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series C Debenture is subject to the following additional provisions:
1. The Series C Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series C
Debentures are exchangeable for an equal aggregate principal amount of
Series C 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.
-2-
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series C 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 C 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 C Debenture, the Company and
any agent of the Company may treat the person in whose name this Series C
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 C 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 C 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 C 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) 62.5% of the
average closing bid price of the Common Stock for the five (5)
business days immediately preceding the conversion date, or (ii)
$0.85. Such conversion shall be effectuated by surrendering the
Series C Debentures to be converted (with a copy, by facsimile or
-3-
courier, to the Company) to the Escrow Agent and/or Company with the
form of conversion notice attached hereto as Exhibit I, executed by
the Holder of this Series C Debenture evidencing such Holder's
intention to convert this Series C 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 C
Debenture, with the conversion notice duly executed, to the Escrow
Agent and/or Company or, if earlier, the date set forth in such notice
of conversion if the Series C 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 C
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 C Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
-4-
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 C Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series C 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 C 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 C 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 C 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
-5-
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
this Series C 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 C 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
-6-
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 C 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 C Debenture, or for any claim based hereon, or
-7-
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 C Debenture, by acceptance hereof, agrees that
this Series C Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series C 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 C 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 C
Debenture will not in any way be affected or impaired thereby.
12. This Series C Debenture and the agreements referred to in this Series C
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series C 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.
-8-
13. This Debenture is one of a series of Company's Series C Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series C Debenture 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.
Dated: February 28, 1996 MANAGEMENT TECHNOLOGIES, INC.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series C
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series C Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series C 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 C Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series C Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/exhibit.
ESCROW AGREEMENT
----------------
Barry B. Globerman, Esq.
110 E. 59th Street
New York, N.Y.
U.S.A. 10022
Gentlemen:
MANAGEMENT TECHNOLOGIES, INC., a corporation organized under the
Business Corporation Law of New York (the `Corporation'') and the undersigned
(the `Holder'') have requested that you (the ``Escrow Agent'') act as their
agent in respect of the conversion of $500,000 Series C Debentures
(collectively, the `Series C Debenture'') of the Corporation. An irrevocable
treasury order directing issuance of the Common Shares in the capital of the
Corporation issuable upon conversion of the Debentures is being delivered to you
pursuant to a Resolution of the Board of Directors made on December 15, 1995,
and an Offshore Securities Subscription Agreement delivered by the Holder to the
Corporation (collectively referred to as the `Resolution and Agreement'').
The Treasury Order is to be held by you as Escrow Agent until the
Shareholder elects to convert the Debentures in accordance with its terms and
thereafter the Treasury Order is to be delivered by you to American Stock
Transfer & Trust Company, the transfer agent for the Corporation in New York, at
40 Wall Street, New York, New York (the `Transfer Agent'') with the correct
number of Common Shares to be issued upon conversion of the Debentures shall be
duly entered on the Treasury Order pursuant to instructions to the Corporation
from the Holder. Such calculation shall be by both the Corporation and the
Holder be in accordance with the provisions of Paragraph 4 of the Debenture, a
copy of which is attached to this Escrow Agreement as Schedule `A''. In the
event that there is a difference between the two calculations, you will enter
the large number in the Treasury Order and direct the Transfer Agent in the
Treasury Order to issue a separate share certificate to you representing the
difference between the results of the two calculations (the `Difference
Certificate''. Thereafter, you will deliver the share certificate or
certificates representing the Common Shares except the Difference Certificate as
you are directed by the Holder.
You shall be entitled to act and rely upon any written statement,
request, notice or instructions respecting the transactions covered by this
Escrow Agreement given to you by the Corporation, and/or any of the undersigned,
pursuant to the Resolution and Agreement not only as to the authorization,
validity and effectiveness thereof, but also as to the correctness and
acceptability of any information therein contained.
It is understood that you assume no responsibility or liability to any
person, other than to deal with the Treasury Order deposited with you and the
Debentures deposited with you by the Holder duly endorsed for transfer (the
`Deposit Documents'') and share certificates representing Common Shares
received on conversion of the Debentures from the Transfer Agent in accordance
with the provisions hereof. In case of the issuance of a Difference
Certificate, the decision of an independent chartered accountant agreed to by
the Corporation and the Escrow Agent and paid for by the Corporation will be
final. You will deliver the Difference Certificate to the Holder or to the
direction of the Holder if such decision supports the higher result of
calculation of the number of Common Shares issuable on conversion of the
Debentures and will surrender it to the Corporation through the agency of the
Transfer Agent for cancellation or for partial cancellation and/or issue of a
smaller or larger number of Common Shares if such calculation is in favor of a
result other than the calculation upon which issue the Difference Certificate is
based.
-2-
As Escrow Agent, you make no representations with respect to and shall
have no responsibility for the application of funds by the Corporation or any
registration statement or transaction in securities.
It is further agreed that:
1.The Escrow Agent shall be protected in relying upon the accuracy, acting in
reliance upon the contents, and assuming the genuineness, of any notice,
demand, certificate, signature or other document which is given to the Escrow
Agent pursuant to the Resolution and Agreement or this Agreement without the
necessity of Escrow Agent verifying the truth or accuracy of any such notice,
demand, certificate, signature, instrument or other document;
2.The Escrow Agent shall not be bound in any way by any other agreement or
understanding between any other party, whether or not the Escrow Agent has
knowledge thereof or consents thereto unless such consent is given in
writing;
3.The Escrow Agent's sole duties and responsibilities shall be to receive the
Deposit Documents, enter the number of Common Shares to be issued on
conversion of the Debentures pursuant to the Agreement on the Treasury Order,
submit the Treasury Order to the Transfer Agent with the other Deposit
Documents and hold and disburse the share certificates representing the
Common Shares in accordance with the Resolution and Agreement and this
Agreement;
4.Upon the delivery of all the share certificates representing the Common
Shares to the Shareholder in accordance with the Agreement and Resolution and
this Agreement, the Escrow Agent shall be relived and released from any
-3-
liability under this Agreement other than to the Corporation in respect of
the issuance of Excess Shares; and
5.The Escrow Agent shall be indemnified by the parties against any liabilities,
damages, losses, costs or expenses incurred by, or claim or charges made
against, the Escrow Agent (including reasonable counsel fees and court costs)
by reason of the Escrow Agent's acting or failing to act in connection with
any of the matters contemplated by the Agreements or this Agreement or in
carrying out the terms of the Agreements and this Agreement, except as a
result of Escrow Agent's negligence or wilful misconduct.
This Agreement shall be governed by the substantive laws of the State
of New York.
Dated: February 28, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By /s/ Paul Ekon
------------------------------ ------------------------------
Paul Ekon
Chief Executive Officer
MTi
630 Third Avenue
15th Floor
New York
10017
USA
Telephone
+1 (212) 983 5620
Facsimile
+1 (212) 557 6967
February 28, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Yosef Yud (the `Registered Holder'') is the registered holder of $500,000
Series C Debentures of Management Technologies, Inc. (the `Corporation'')
(collectively, the `Debentures'');
B. The Registered Holder has the right pursuant to Paragraph 4 of the
Debenture to convert the Debentures into Common Shares in the capital of
the Corporation at the times and in the manner set out in such Debentures;
C. Pursuant to a resolution of the Board of Directors of the Corporation duly
passed on December 15, 1995, this irrevocable Treasury Order has been
delivered to Mr. Barry Globerman, Attorney of New York, New York, as escrow
agent (the `Escrow Agent'') for and on behalf of the Registered Holder for
the purpose of facilitating delivery to the Escrow Agent for and on behalf
of the Registered Holder of a share certificate representing that number of
validly issued Common Shares in the capital of the Corporation to which the
Registered Shareholder will be entitled upon conversion of some or all, as
the case may be, of the Debentures upon presentation to you, as transfer
agent of the Corporation in New York, at your address set out above during
business hours of;
1. proof to your satisfaction that the person presenting the following
documents is the Escrow Agent who is named in this Treasury Order;
2. the certificate or certificates representing the Debenture to be
converted duly endorsed by the Registered Holder; and
3. this Treasury Order (collectively, the `Conversion Documents'').
NOW, THEREFORE, YOU ARE IRREVOCABLY AUTHORIZED AND DIRECTED to deliver to the
Escrow Agent upon presentation of the Conversion Documents on or after April 13,
1996, a share certificate or certificates without legend or stop transfer order
representing the number of fully paid Common Shares in the capital of the
Corporation set out below registered in the name of the Registered Shareholder.
The undersigned certifies that the Corporation shall have received the full
consideration for the said Common Shares and that they shall be fully paid and
non-assessable upon presentation to you of the Conversion Documents.
Number of Number of
Name Common Shares Debentures
- ---- ------------- ----------
Address
-------
Yosef Yud Malche Israel One in the
2 Jerusalem amount of
Israel $500,000
/s/ Paul Ekon
By: Paul Ekon
Chief Executive Officer
On behalf of the Board of Directors of
SERIES C 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. C-005
US$500,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES C CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series C Debentures of
Management Technologies, Inc., a corporation duly organized and existing under
the laws of the State of New York (the `Company'') designated as its 9% Series
C Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $3,050,000.
FOR VALUE RECEIVED, the Company promises to pay to Aaron Meyer Gee, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Five Hundred Thousand Thousand Dollars (US$500,000) on December
31, 1997 (the `Maturity Date''), and to pay interest on the principal sum
outstanding, at the rate of 9% per annum due and payable quarterly. Accrual of
interest shall commence on the first business day to occur after the date hereof
and shall continue until payment in full of the principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Series C Debenture (or one or more predecessor Series C Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series C Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series C 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
February 28, 1996 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series C 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 C 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 C
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series C 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 C Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series C Debenture is subject to the following additional provisions:
1. The Series C Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series C
Debentures are exchangeable for an equal aggregate principal amount of
Series C 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.
-2-
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series C 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 C 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 C Debenture, the Company and
any agent of the Company may treat the person in whose name this Series C
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 C 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 C 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 C 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) 62.5% of the
average closing bid price of the Common Stock for the five (5)
business days immediately preceding the conversion date, or (ii)
$0.71. Such conversion shall be effectuated by surrendering the
Series C Debentures to be converted (with a copy, by facsimile or
-3-
courier, to the Company) to the Escrow Agent and/or Company with the
form of conversion notice attached hereto as Exhibit I, executed by
the Holder of this Series C Debenture evidencing such Holder's
intention to convert this Series C 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 C
Debenture, with the conversion notice duly executed, to the Escrow
Agent and/or Company or, if earlier, the date set forth in such notice
of conversion if the Series C 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 C
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 C Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
-4-
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 C Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series C 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 C 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 C 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 C 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
-5-
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
this Series C 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 C 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
-6-
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 C 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 C Debenture, or for any claim based hereon, or
-7-
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 C Debenture, by acceptance hereof, agrees that
this Series C Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series C 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 C 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 C
Debenture will not in any way be affected or impaired thereby.
12. This Series C Debenture and the agreements referred to in this Series C
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series C 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.
-8-
13. This Debenture is one of a series of Company's Series C Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series C Debenture 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.
Dated: February 28, 1996 MANAGEMENT TECHNOLOGIES, INC.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series C
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series C Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series C 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 C Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series C Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/exhibit.
SERIES C 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. C-005
US$500,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES C CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series C Debentures of
Management Technologies, Inc., a corporation duly organized and existing under
the laws of the State of New York (the `Company'') designated as its 9% Series
C Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $3,050,000.
FOR VALUE RECEIVED, the Company promises to pay to Aaron Meyer Gee, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Five Hundred Thousand Thousand Dollars (US$500,000) on December
31, 1997 (the `Maturity Date''), and to pay interest on the principal sum
outstanding, at the rate of 9% per annum due and payable quarterly. Accrual of
interest shall commence on the first business day to occur after the date hereof
and shall continue until payment in full of the principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Series C Debenture (or one or more predecessor Series C Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series C Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series C 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
February 28, 1996 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series C 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 C 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 C
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series C 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 C Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series C Debenture is subject to the following additional provisions:
1. The Series C Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series C
Debentures are exchangeable for an equal aggregate principal amount of
Series C 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.
-2-
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series C 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 C 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 C Debenture, the Company and
any agent of the Company may treat the person in whose name this Series C
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 C 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 C 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 C 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) 62.5% of the
average closing bid price of the Common Stock for the five (5)
business days immediately preceding the conversion date, or (ii)
$0.71. Such conversion shall be effectuated by surrendering the
Series C Debentures to be converted (with a copy, by facsimile or
-3-
courier, to the Company) to the Escrow Agent and/or Company with the
form of conversion notice attached hereto as Exhibit I, executed by
the Holder of this Series C Debenture evidencing such Holder's
intention to convert this Series C 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 C
Debenture, with the conversion notice duly executed, to the Escrow
Agent and/or Company or, if earlier, the date set forth in such notice
of conversion if the Series C 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 C
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 C Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
-4-
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 C Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series C 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 C 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 C 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 C 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
-5-
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
this Series C 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 C 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
-6-
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 C 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 C Debenture, or for any claim based hereon, or
-7-
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 C Debenture, by acceptance hereof, agrees that
this Series C Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series C 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 C 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 C
Debenture will not in any way be affected or impaired thereby.
12. This Series C Debenture and the agreements referred to in this Series C
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series C 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.
-8-
13. This Debenture is one of a series of Company's Series C Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series C Debenture 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.
Dated: February 28, 1996 MANAGEMENT TECHNOLOGIES, INC.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series C
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series C Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series C 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 C Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series C Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/exhibit.
ESCROW AGREEMENT
----------------
Barry B. Globerman, Esq.
110 E. 59th Street
New York, N.Y.
U.S.A. 10022
Gentlemen:
MANAGEMENT TECHNOLOGIES, INC., a corporation organized under the
Business Corporation Law of New York (the `Corporation'') and the undersigned
(the `Holder'') have requested that you (the ``Escrow Agent'') act as their
agent in respect of the conversion of $500,000 Series C Debentures
(collectively, the `Series C Debenture'') of the Corporation. An irrevocable
treasury order directing issuance of the Common Shares in the capital of the
Corporation issuable upon conversion of the Debentures is being delivered to you
pursuant to a Resolution of the Board of Directors made on December 15, 1995,
and an Offshore Securities Subscription Agreement delivered by the Holder to the
Corporation (collectively referred to as the `Resolution and Agreement'').
The Treasury Order is to be held by you as Escrow Agent until the
Shareholder elects to convert the Debentures in accordance with its terms and
thereafter the Treasury Order is to be delivered by you to American Stock
Transfer & Trust Company, the transfer agent for the Corporation in New York, at
40 Wall Street, New York, New York (the `Transfer Agent'') with the correct
number of Common Shares to be issued upon conversion of the Debentures shall be
duly entered on the Treasury Order pursuant to instructions to the Corporation
from the Holder. Such calculation shall be by both the Corporation and the
Holder be in accordance with the provisions of Paragraph 4 of the Debenture, a
copy of which is attached to this Escrow Agreement as Schedule `A''. In the
event that there is a difference between the two calculations, you will enter
the large number in the Treasury Order and direct the Transfer Agent in the
Treasury Order to issue a separate share certificate to you representing the
difference between the results of the two calculations (the `Difference
Certificate''. Thereafter, you will deliver the share certificate or
certificates representing the Common Shares except the Difference Certificate as
you are directed by the Holder.
You shall be entitled to act and rely upon any written statement,
request, notice or instructions respecting the transactions covered by this
Escrow Agreement given to you by the Corporation, and/or any of the undersigned,
pursuant to the Resolution and Agreement not only as to the authorization,
validity and effectiveness thereof, but also as to the correctness and
acceptability of any information therein contained.
It is understood that you assume no responsibility or liability to any
person, other than to deal with the Treasury Order deposited with you and the
Debentures deposited with you by the Holder duly endorsed for transfer (the
`Deposit Documents'') and share certificates representing Common Shares
received on conversion of the Debentures from the Transfer Agent in accordance
with the provisions hereof. In case of the issuance of a Difference
Certificate, the decision of an independent chartered accountant agreed to by
the Corporation and the Escrow Agent and paid for by the Corporation will be
final. You will deliver the Difference Certificate to the Holder or to the
direction of the Holder if such decision supports the higher result of
calculation of the number of Common Shares issuable on conversion of the
Debentures and will surrender it to the Corporation through the agency of the
Transfer Agent for cancellation or for partial cancellation and/or issue of a
smaller or larger number of Common Shares if such calculation is in favor of a
result other than the calculation upon which issue the Difference Certificate is
based.
-2-
As Escrow Agent, you make no representations with respect to and shall
have no responsibility for the application of funds by the Corporation or any
registration statement or transaction in securities.
It is further agreed that:
1.The Escrow Agent shall be protected in relying upon the accuracy, acting in
reliance upon the contents, and assuming the genuineness, of any notice,
demand, certificate, signature or other document which is given to the Escrow
Agent pursuant to the Resolution and Agreement or this Agreement without the
necessity of Escrow Agent verifying the truth or accuracy of any such notice,
demand, certificate, signature, instrument or other document;
2.The Escrow Agent shall not be bound in any way by any other agreement or
understanding between any other party, whether or not the Escrow Agent has
knowledge thereof or consents thereto unless such consent is given in
writing;
3.The Escrow Agent's sole duties and responsibilities shall be to receive the
Deposit Documents, enter the number of Common Shares to be issued on
conversion of the Debentures pursuant to the Agreement on the Treasury Order,
submit the Treasury Order to the Transfer Agent with the other Deposit
Documents and hold and disburse the share certificates representing the
Common Shares in accordance with the Resolution and Agreement and this
Agreement;
4.Upon the delivery of all the share certificates representing the Common
Shares to the Shareholder in accordance with the Agreement and Resolution and
this Agreement, the Escrow Agent shall be relived and released from any
-3-
liability under this Agreement other than to the Corporation in respect of
the issuance of Excess Shares; and
5.The Escrow Agent shall be indemnified by the parties against any liabilities,
damages, losses, costs or expenses incurred by, or claim or charges made
against, the Escrow Agent (including reasonable counsel fees and court costs)
by reason of the Escrow Agent's acting or failing to act in connection with
any of the matters contemplated by the Agreements or this Agreement or in
carrying out the terms of the Agreements and this Agreement, except as a
result of Escrow Agent's negligence or wilful misconduct.
This Agreement shall be governed by the substantive laws of the State
of New York.
Dated: February 28, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By: /s/ Paul Ekon
------------------------------ ----------------------------
Paul Ekon
Chief Executive Officer
MTi
630 Third Avenue
15th Floor
New York
10017
USA
Telephone
+1 (212) 983 5620
Facsimile
+1 (212) 557 6967
February 28, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Aaron Meyer Gee (the `Registered Holder'') is the registered holder of
$500,000 Series C Debentures of Management Technologies, Inc. (the
`Corporation'') (collectively, the ``Debentures'');
B. The Registered Holder has the right pursuant to Paragraph 4 of the
Debenture to convert the Debentures into Common Shares in the capital of
the Corporation at the times and in the manner set out in such Debentures;
C. Pursuant to a resolution of the Board of Directors of the Corporation duly
passed on December 15, 1995, this irrevocable Treasury Order has been
delivered to Mr. Barry Globerman, Attorney of New York, New York, as escrow
agent (the `Escrow Agent'') for and on behalf of the Registered Holder for
the purpose of facilitating delivery to the Escrow Agent for and on behalf
of the Registered Holder of a share certificate representing that number of
validly issued Common Shares in the capital of the Corporation to which the
Registered Shareholder will be entitled upon conversion of some or all, as
the case may be, of the Debentures upon presentation to you, as transfer
agent of the Corporation in New York, at your address set out above during
business hours of;
1. proof to your satisfaction that the person presenting the following
documents is the Escrow Agent who is named in this Treasury Order;
2. the certificate or certificates representing the Debenture to be
converted duly endorsed by the Registered Holder; and
3. this Treasury Order (collectively, the `Conversion Documents'').
NOW, THEREFORE, YOU ARE IRREVOCABLY AUTHORIZED AND DIRECTED to deliver to the
Escrow Agent upon presentation of the Conversion Documents on or after April 13,
1996, a share certificate or certificates without legend or stop transfer order
representing the number of fully paid Common Shares in the capital of the
Corporation set out below registered in the name of the Registered Shareholder.
The undersigned certifies that the Corporation shall have received the full
consideration for the said Common Shares and that they shall be fully paid and
non-assessable upon presentation to you of the Conversion Documents.
Number of Number of
Name Common Shares Debentures
- ---- ------------- ----------
Address
-------
Aaron Meyer 37 Bar Ilan One in the
Gee Street amount of
Jerusalem $500,000
Israel
/s/ Paul Ekon
By: Paul Ekon
Chief Executive Officer
On behalf of the Board of Directors of
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of February 28,
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 9% 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.
--------------------------------------
a) Subscription. The undersigned Buyer hereby subscribes for and agrees
to purchase the Sellers 9% Convertible Debentures substantially in the
form of the Debentures attached as Exhibit B, C, D and E hereto and
having an aggregate original principal amount of U.S. $6,000,000
(singly, a `Debenture,'' and collectively, the ``Debentures''), at a
purchase price as set forth in subsection (b) herein.
b) Payment. The Purchase Price for Buyer's portion of the Debentures
shall be $500,000 for the Series C Debentures (the `Purchase
Price'), which shall be payable at closing pursuant to the Letter
Agreement between the Company and Israel Trading Fund Ltd. dated
December 15, 1995 (the `Agreement'') by delivering immediately
available funds in United States Dollars by wire transfer to Barry B.
Globerman, Esq., 110 E. 59th Street, New York, N.Y. 10022 for closing
by delivery of securities versus payment for each series of
Debentures.
c) Closing. Subject to the satisfaction of the conditions set forth in
Sections 7 and 8 hereof, the closing of the transactions contemplated
by this Offshore Agreement shall occur from time to time as set forth
in the Agreement, or such earlier or later date as is mutually agreed
to in writing by Buyer and Seller (the `Closing Dates'').
2. Buyer Representations; Access to Information.
--------------------------------------------
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
--------------------------------------
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.
---------------------------
a) Debentures. Upon the conversion of the Debentures, the holder thereof
shall submit such Debenture and Notice of Conversion to the Escrow
Agent with a copy to Company and Escrow Agent shall immediately
deliver the Irrevocable Treasury Orders in its possession pursuant to
the Agreement to the Transfer Agent. Upon receipt of the Shares, the
Escrow Agent will deliver the Shares to the holder. In the event the
Irrevocable Treasury Orders for Shares are not sufficient, Seller
shall, within five (5) business days of receipt of notice from Escrow
Agent, 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 or Debentures 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
---------------------
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
-----------------------------------------
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.
-------------
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.
g) Notwithstanding the foregoing Agreement, the Buyers shall have the
right in their sole and absolute discretion to determine whether to
purchase the Series C, C and D Debentures. In the event the Buyers
decide not to purchase the Series C or C or D Debentures, neither the
Company nor the Buyers shall have any further liability one to the
other except with respect to the Series A Debentures. However, if the
Buyers do not close on the purchase of the Series C Debentures, the
Company shall not be required to honor the representation in paragraph
15(q).
IN WITNESS WHEREOF, the undersigned have executed this Offshore
Agreement as of the date first set forth above.
Official Signatory of Seller:
----------------------------
Management Technologies, Inc.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
Official Signatory of Buyer:
---------------------------
/s/ Aaron Meyer Gee
By: Aaron Meyer Gee
Title:
----------------------------------
Aaron Meyer Gee
Address of Buyer:
37 Bar Ilan Street
Jerusalem
Israel
SERIES C 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. C-006
US$500,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES C CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series C Debentures of
Management Technologies, Inc., a corporation duly organized and existing under
the laws of the State of New York (the `Company'') designated as its 9% Series
C Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $3,050,000.
FOR VALUE RECEIVED, the Company promises to pay to Dovasar S.A., the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Five Hundred Thousand Thousand Dollars (US$500,000) on December
31, 1997 (the `Maturity Date''), and to pay interest on the principal sum
outstanding, at the rate of 9% per annum due and payable quarterly. Accrual of
interest shall commence on the first business day to occur after the date hereof
and shall continue until payment in full of the principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Series C Debenture (or one or more predecessor Series C Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series C Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series C 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
February 29, 1996 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series C 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 C 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 C
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series C 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 C Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series C Debenture is subject to the following additional provisions:
1. The Series C Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series C
Debentures are exchangeable for an equal aggregate principal amount of
Series C 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.
-2-
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series C 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 C 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 C Debenture, the Company and
any agent of the Company may treat the person in whose name this Series C
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 C 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 C 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 C 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) 62.5% of the
average closing bid price of the Common Stock for the five (5)
business days immediately preceding the conversion date, or (ii)
$0.85. Such conversion shall be effectuated by surrendering the
Series C Debentures to be converted (with a copy, by facsimile or
-3-
courier, to the Company) to the Escrow Agent and/or Company with the
form of conversion notice attached hereto as Exhibit I, executed by
the Holder of this Series C Debenture evidencing such Holder's
intention to convert this Series C 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 C
Debenture, with the conversion notice duly executed, to the Escrow
Agent and/or Company or, if earlier, the date set forth in such notice
of conversion if the Series C 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 C
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 C Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
-4-
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 C Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series C 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 C 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 C 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 C 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
-5-
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
this Series C 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 C 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
-6-
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 C 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 C Debenture, or for any claim based hereon, or
-7-
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 C Debenture, by acceptance hereof, agrees that
this Series C Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series C 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 C 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 C
Debenture will not in any way be affected or impaired thereby.
12. This Series C Debenture and the agreements referred to in this Series C
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series C 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.
-8-
13. This Debenture is one of a series of Company's Series C Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series C Debenture 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.
Dated: February 29, 1996 MANAGEMENT TECHNOLOGIES, INC.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series C
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series C Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series C 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 C Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series C Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/exhibit.
ESCROW AGREEMENT
----------------
Barry B. Globerman, Esq.
110 E. 59th Street
New York, N.Y.
U.S.A. 10022
Gentlemen:
MANAGEMENT TECHNOLOGIES, INC., a corporation organized under the
Business Corporation Law of New York (the `Corporation'') and the undersigned
(the `Holder'') have requested that you (the ``Escrow Agent'') act as their
agent in respect of the conversion of $500,000 Series C Debentures
(collectively, the `Series C Debenture'') of the Corporation. An irrevocable
treasury order directing issuance of the Common Shares in the capital of the
Corporation issuable upon conversion of the Debentures is being delivered to you
pursuant to a Resolution of the Board of Directors made on December 15, 1995,
and an Offshore Securities Subscription Agreement delivered by the Holder to the
Corporation (collectively referred to as the `Resolution and Agreement'').
The Treasury Order is to be held by you as Escrow Agent until the
Shareholder elects to convert the Debentures in accordance with its terms and
thereafter the Treasury Order is to be delivered by you to American Stock
Transfer & Trust Company, the transfer agent for the Corporation in New York, at
40 Wall Street, New York, New York (the `Transfer Agent'') with the correct
number of Common Shares to be issued upon conversion of the Debentures shall be
duly entered on the Treasury Order pursuant to instructions to the Corporation
from the Holder. Such calculation shall be by both the Corporation and the
Holder be in accordance with the provisions of Paragraph 4 of the Debenture, a
copy of which is attached to this Escrow Agreement as Schedule `A''. In the
event that there is a difference between the two calculations, you will enter
the large number in the Treasury Order and direct the Transfer Agent in the
Treasury Order to issue a separate share certificate to you representing the
difference between the results of the two calculations (the `Difference
Certificate''. Thereafter, you will deliver the share certificate or
certificates representing the Common Shares except the Difference Certificate as
you are directed by the Holder.
You shall be entitled to act and rely upon any written statement,
request, notice or instructions respecting the transactions covered by this
Escrow Agreement given to you by the Corporation, and/or any of the undersigned,
pursuant to the Resolution and Agreement not only as to the authorization,
validity and effectiveness thereof, but also as to the correctness and
acceptability of any information therein contained.
It is understood that you assume no responsibility or liability to any
person, other than to deal with the Treasury Order deposited with you and the
Debentures deposited with you by the Holder duly endorsed for transfer (the
`Deposit Documents'') and share certificates representing Common Shares
received on conversion of the Debentures from the Transfer Agent in accordance
with the provisions hereof. In case of the issuance of a Difference
Certificate, the decision of an independent chartered accountant agreed to by
the Corporation and the Escrow Agent and paid for by the Corporation will be
final. You will deliver the Difference Certificate to the Holder or to the
direction of the Holder if such decision supports the higher result of
calculation of the number of Common Shares issuable on conversion of the
Debentures and will surrender it to the Corporation through the agency of the
Transfer Agent for cancellation or for partial cancellation and/or issue of a
smaller or larger number of Common Shares if such calculation is in favor of a
result other than the calculation upon which issue the Difference Certificate is
based.
-2-
As Escrow Agent, you make no representations with respect to and shall
have no responsibility for the application of funds by the Corporation or any
registration statement or transaction in securities.
It is further agreed that:
1.The Escrow Agent shall be protected in relying upon the accuracy, acting in
reliance upon the contents, and assuming the genuineness, of any notice,
demand, certificate, signature or other document which is given to the Escrow
Agent pursuant to the Resolution and Agreement or this Agreement without the
necessity of Escrow Agent verifying the truth or accuracy of any such notice,
demand, certificate, signature, instrument or other document;
2.The Escrow Agent shall not be bound in any way by any other agreement or
understanding between any other party, whether or not the Escrow Agent has
knowledge thereof or consents thereto unless such consent is given in
writing;
3.The Escrow Agent's sole duties and responsibilities shall be to receive the
Deposit Documents, enter the number of Common Shares to be issued on
conversion of the Debentures pursuant to the Agreement on the Treasury Order,
submit the Treasury Order to the Transfer Agent with the other Deposit
Documents and hold and disburse the share certificates representing the
Common Shares in accordance with the Resolution and Agreement and this
Agreement;
4.Upon the delivery of all the share certificates representing the Common
Shares to the Shareholder in accordance with the Agreement and Resolution and
this Agreement, the Escrow Agent shall be relived and released from any
-3-
liability under this Agreement other than to the Corporation in respect of
the issuance of Excess Shares; and
5.The Escrow Agent shall be indemnified by the parties against any liabilities,
damages, losses, costs or expenses incurred by, or claim or charges made
against, the Escrow Agent (including reasonable counsel fees and court costs)
by reason of the Escrow Agent's acting or failing to act in connection with
any of the matters contemplated by the Agreements or this Agreement or in
carrying out the terms of the Agreements and this Agreement, except as a
result of Escrow Agent's negligence or wilful misconduct.
This Agreement shall be governed by the substantive laws of the State
of New York.
Dated: February 29, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By: /s/ Paul Ekon
------------------------------ ------------------------------
Paul Ekon
Chief Executive Officer
MTi
630 Third Avenue
15th Floor
New York
10017
USA
Telephone
+1 (212) 983 5620
Facsimile
+1 (212) 557 6967
February 29, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Joseph Goldenberg (the `Registered Holder'') is the registered holder of
$500,000 Series C Debentures of Management Technologies, Inc. (the
`Corporation'') (collectively, the ``Debentures'');
B. The Registered Holder has the right pursuant to Paragraph 4 of the
Debenture to convert the Debentures into Common Shares in the capital of
the Corporation at the times and in the manner set out in such Debentures;
C. Pursuant to a resolution of the Board of Directors of the Corporation duly
passed on December 15, 1995, this irrevocable Treasury Order has been
delivered to Mr. Barry Globerman, Attorney of New York, New York, as escrow
agent (the `Escrow Agent'') for and on behalf of the Registered Holder for
the purpose of facilitating delivery to the Escrow Agent for and on behalf
of the Registered Holder of a share certificate representing that number of
validly issued Common Shares in the capital of the Corporation to which the
Registered Shareholder will be entitled upon conversion of some or all, as
the case may be, of the Debentures upon presentation to you, as transfer
agent of the Corporation in New York, at your address set out above during
business hours of;
1. proof to your satisfaction that the person presenting the following
documents is the Escrow Agent who is named in this Treasury Order;
2. the certificate or certificates representing the Debenture to be
converted duly endorsed by the Registered Holder; and
3. this Treasury Order (collectively, the `Conversion Documents'').
NOW, THEREFORE, YOU ARE IRREVOCABLY AUTHORIZED AND DIRECTED to deliver to the
Escrow Agent upon presentation of the Conversion Documents on or after April 14,
1996, a share certificate or certificates without legend or stop transfer order
representing the number of fully paid Common Shares in the capital of the
Corporation set out below registered in the name of the Registered Shareholder.
The undersigned certifies that the Corporation shall have received the full
consideration for the said Common Shares and that they shall be fully paid and
non-assessable upon presentation to you of the Conversion Documents.
Number of Number of
Name Common Shares Debentures
- ---- ------------- ----------
Address
-------
Dovasar S.A. c/o Gondla One in the
8040 Zurich amount of
Switzerland $500,000
/s/ Paul Ekon
By: Paul Ekon
Chief Executive Officer
On behalf of the Board of Directors of
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of February 29,
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 9% 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.
--------------------------------------
a) Subscription. The undersigned Buyer hereby subscribes for and agrees
to purchase the Sellers 9% Convertible Debentures substantially in the
form of the Debentures attached as Exhibit B, C, D and E hereto and
having an aggregate original principal amount of U.S. $6,000,000
(singly, a `Debenture,'' and collectively, the ``Debentures''), at a
purchase price as set forth in subsection (b) herein.
b) Payment. The Purchase Price for Buyer's portion of the Debentures
shall be $500,000 for the Series C Debentures (the `Purchase
Price'), which shall be payable at closing pursuant to the Letter
Agreement between the Company and Israel Trading Fund Ltd. dated
December 15, 1995 (the `Agreement'') by delivering immediately
available funds in United States Dollars by wire transfer to Barry B.
Globerman, Esq., 110 E. 59th Street, New York, N.Y. 10022 for closing
by delivery of securities versus payment for each series of
Debentures.
c) Closing. Subject to the satisfaction of the conditions set forth in
Sections 7 and 8 hereof, the closing of the transactions contemplated
by this Offshore Agreement shall occur from time to time as set forth
in the Agreement, or such earlier or later date as is mutually agreed
to in writing by Buyer and Seller (the `Closing Dates'').
2. Buyer Representations; Access to Information.
--------------------------------------------
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
--------------------------------------
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.
---------------------------
a) Debentures. Upon the conversion of the Debentures, the holder thereof
shall submit such Debenture and Notice of Conversion to the Escrow
Agent with a copy to Company and Escrow Agent shall immediately
deliver the Irrevocable Treasury Orders in its possession pursuant to
the Agreement to the Transfer Agent. Upon receipt of the Shares, the
Escrow Agent will deliver the Shares to the holder. In the event the
Irrevocable Treasury Orders for Shares are not sufficient, Seller
shall, within five (5) business days of receipt of notice from Escrow
Agent, 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 or Debentures 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
---------------------
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
-----------------------------------------
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.
-------------
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.
g) Notwithstanding the foregoing Agreement, the Buyers shall have the
right in their sole and absolute discretion to determine whether to
purchase the Series C, C and D Debentures. In the event the Buyers
decide not to purchase the Series C or C or D Debentures, neither the
Company nor the Buyers shall have any further liability one to the
other except with respect to the Series A Debentures. However, if the
Buyers do not close on the purchase of the Series C Debentures, the
Company shall not be required to honor the representation in paragraph
15(q).
IN WITNESS WHEREOF, the undersigned have executed this Offshore
Agreement as of the date first set forth above.
Official Signatory of Seller:
----------------------------
Management Technologies, Inc.
/s/ Paul Ekon
By: Paul Ekon
Title: Chief Executive Officer
Official Signatory of Buyer:
---------------------------
/s/ Joseph Goldenberg
By: Joseph Goldenberg
Title: Director
Dovasar S.A.
Address of Buyer:
c/o Gondla
8040 Zurich
Switzerland
MANAGEMENT TECHNOLOGIES, INC.
335 MADISON AVENUE
NEW YORK, NEW YORK 10017
December 15, 1995
Mr. Barry Globerman, Esq.
110 East 59th Street
New York, New York 10022
Dear Barry:
As agreed and accepted to by Israel Trading Fund and Select Capital Advisers
Inc., the funds invested by the staff and management will be received by the
22nd December 1995.
Your sincerely,
/s/ Peter Morris
Peter Morris
MTi Abraxsys Systems MTi
15th December 1995
24a Southwark Street
London
SE1 1TY
United Kingdom
Telephone
+44(0)171 357 7292
Facsimile
+44(0) 171 357 6650
Patrick Huguenin
Company Secretary
MTi New York
335 Madison Avenue
New York
NY 10017
USA
Dear Patrick
This note serves to confirm the commitment the Paul Ekon will invest 250,000$
into MTCI via Reg S by no later than April 31, 1996.
Yours sincerely
/s/ Paul Ekon
Paul Ekon
