SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report : February 5, 1996 (Date of earliest event reported)
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December 15, 1995
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MANAGEMENT TECHNOLOGIES, INC. Exact name of
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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, the Registrant ("the Company") entered into a
letter agreement (the `Letter Agreement'') with Israel Trading Fund Ltd.
(`ITF'') and Select Capital Advisors, Inc. (``Select Capital'') with regard to
the placement and subscription of the Company's 9% Subordinated Convertible
Debentures (the `Debentures'') in the aggregate amount of $6,000,000, maturing
on December 31, 1997. Under the Letter Agreement, the Debentures are to be
subscribed in four tranches as follows:
1. Series A Debenture, in the amount of $1,250,000 was 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 (`Shares'') 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. Series A
Debenture was increased to $1,950,000 by letter agreement dated December
22, 1995.
2. Series B Debenture, in the amount of $1,500,000 is 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.
3. Series C Debenture, in the amount of $1,500,000 is 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.
4. Series D Debenture, in the amount of $1,750,000 is die 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.
The Debentures are due and payable on December 31, 1997, and all principal
and interest is convertible by the Holders into Shares. The conversion period
starts 45 days from the closing date of the Debentures and ends on the maturity
date of the Debentures. In the event that the Debentures are not converted by
the Holders 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.
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.
Series B Debentures are convertible at the lower of $.69 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.
Series C Debentures are convertible at 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.
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.
On December 29, 1995, the Company completed transactions wherein the
Company issued six Series A Debentures in the aggregate amount of $1,850,000 to
Torah Vachesed Lezra Vesad, Schulamit Kritzker, Dovasa S.A., Aron Meyer Gee, and
Chava Fischman.
On February 5, 1996, the Company completed transactions wherein the Company
issued four Series B Debentures in the aggregate amount of $1,850,000 to Henry
Zieleniec, Raphael Lapidus, Miriam Herzel, and Yosef Yud. The Series B
Debentures completed on February 5, 1996 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.
The Company agreed to pay 5% of 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 Shares to Barrocas & Behzadhi in a number equivalent to 1% of the gross
proceeds, 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 Debenture 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 20, 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 Aron 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 Aron
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 Fishman, 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 Zielenic,
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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MANAGEMENT TECHNOLOGIES, INC.
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(Registrant)
/s/ Peter Morris
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Peter Morris
President & Chief Operating Officer
Dated: New York, New York
February 5, 1996
MANAGEMENT TECHNOLOGIES, INC.
630 THIRD AVENUE
NEW YORK, NEW YORK 10017
December 15, 1995
Israel Trading Fund Ltd.
50 Broad Street
New York, N.Y. 10017
Gentlemen:
This letter will confirm the understanding between Management
Technologies, Inc. (the `Company'') and certain investors represented by Israel
Trading Fund Ltd. (hereinafter referred to as `Investors'') in connection with
the subscription and purchase by Investors of a series of Company's 9%
Subordinate Convertible Debentures (hereinafter referred to in the aggregate as
`Debentures'' or individually as ``Series A, B, C or D Debentures'' as
applicable) totaling up to $6,000,000 in an offering pursuant to Regulation S
under the Securities Act of 1933 (`Securities Act'') upon the following terms
and conditions (this letter is hereinafter referred to as the `Agreement''):
Series A Debentures
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1. On or prior to December 15, 1995 Investors shall enter into one or more
subscription agreements to purchase an aggregate of $6,000,000 of Company's
Debentures and shall close on the purchase of $1,250,000 of Series A
Debentures. 100% of the principal amount and accrued interest of the
Series A Debentures or any part thereof shall be convertible by the holder
45 days or later after the date of its issuance into shares of the Company
common stock $.01 par value (`Shares'') at a conversion price for each
Share equal to the lower of (a) $.48 or (b) 62.5% of the average of the
closing bid price of the Shares for the 5 consecutive trading days prior to
the date of conversion. The Series A Debentures shall mature on December
31, 1997 and if not converted prior to maturity shall automatically convert
at such time upon the terms set forth above.
2. As a condition precedent to the purchase by Investors of Series A
Debentures, the Company shall arrange for its management and or others to
acquire $1,000,000 of Shares on or prior to December 22, 1995 and to
execute a note prior to such date for the acquisition of $250,000 of
additional Shares which note shall mature on or prior to April 30, 1996.
In the event the foregoing condition is not satisfied, Investors shall have
the right but not the obligation to purchase the Series A Debentures.
Series B Debentures
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3. On or prior to February 10, 1996, Investors shall close on the purchase of
$1,500,000 of Series B Debentures. 100% of the principal and accrued
interest of the Series B Debentures or any part thereof shall be
convertible by the holder 45 days or later after the date of issuance into
Shares at a conversion price per Share equal to the lower of (a) $.69 or
(b) 62.5% of the average of the closing bid price of the Shares for the 5
consecutive trading days prior to the date of conversion. The Series B
Debentures shall mature on December 31, 1997 and if not converted prior to
maturity shall automatically convert at such time upon the terms set forth
above.
4. As a condition precedent to the purchase by Investors of Series B
Debentures, the Company shall be required to provide unaudited profit and
loss statements under generally accepted accounting principles for the
quarter ended January 31, 1996 indicating that the Company had not suffered
a loss for such quarter. Such statements shall be provided on or prior to
February 10, 1996 and shall be certified by the President and the Chief
Financial Officer of the Company. If the foregoing condition is not
satisfied, Investors shall have the right, but not the obligation in their
sole discretion, to purchase the Series B Debentures.
Series C Debentures
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5. On March 15, 1996, Investors shall close on the purchase of $1,500,000 of
Series C Debentures. 100% of the principal and accrued interest of the
Series C Debentures or any part thereof shall be convertible by the holder
45 days or later after the date of issuance into Shares at a conversion
price per Share equal to the lower of (a) $1.04 or (b) 62.5% of the average
of the closing bid price of the Shares for the 5 consecutive trading days
prior to the date of conversion. This Series C Debentures shall mature on
December 31, 1997 and if not converted prior to maturity shall
automatically convert at such time upon the terms set forth above.
6. As a condition precedent to the purchase by Investors of Series C
Debentures, the Company shall provide written documentation acceptable to
the Investors that the Company has entered into at least 2 contracts with
financial institutions for the purchase of the Company's products which
sales would generate not less than $2,000,000 in gross revenues with at
least $1,000,000 of such revenues to be recognized prior to April 30, 1996
and the remainder in its 1997 fiscal year. If the foregoing condition is
not satisfied Investors shall have the right, but not the obligation in
their sole discretion, to purchase the Series C Debentures.
Series D Debentures
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7. On or prior to May 15, 1996 Investors shall close on the purchase of
$1,750,000 of Series D Debentures. 100% of the principal and accrued
interest of the Series D Debentures or any part thereof shall be
convertible by the holder 45 days or later after the date of issuance into
Shares at a conversion price per Share equal to the lower of (a) $1.38 or
(b) 62.5% of the average of the closing bid price of the Shares for the 5
consecutive trading days prior to the date of conversion. The Series D
Debentures shall mature on December 31, 1997 and if not converted prior to
maturity shall automatically convert at such time upon the terms set forth
above. Either party must notify the other party by May 1, 1996 of its
intention not to fund or accept funding of this transaction.
8. As a condition precedent to the purchase by Investors of Series D
Debentures, the Company shall be required to provide the Investors with
unaudited profit and loss statements of the Company which indicate that the
Company has not suffered a loss for the fiscal year ending April 30, 1996.
Such profit and loss statements shall be provided prior to May 15, 1996 and
shall be certified by the President and Chief Financial Officer of the
Company. If the foregoing condition is not satisfied Investors shall have
the right, but not the obligation in their sole discretion, to purchase the
Series D Debentures. Notwithstanding the foregoing both the Company and/or
the Investors at either's sole discretion shall have the right not to
proceed with the purchase and/or sale of the Series D Debentures.
Documentation
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9. Prior to December 15, 1995, Company and Investors shall enter into a
Subscription Agreement substantially in the form attached hereto as Exhibit
A, and upon the closing of the purchase of each Series of Debentures the
Company shall execute Debenture(s) substantially in the form attached
hereto as Exhibits B, C, D and E.
Escrow of Shares
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10. Within 5 days of execution by the Company of each Debenture, Company shall
deliver Irrevocable Treasury Orders for the issuance of Shares (upon
conversion of the Debentures) to be held in escrow by Barry B. Globerman,
Attorney-at-law, 110 East 59th Street, 23rd Floor, New York, N.Y. 10022
(`Escrow Agent'') under the terms set forth herein. The Treasury Orders
for the number of shares to be held in escrow shall be completed by the
Escrow Agent upon conversion of each Series of Debentures pursuant to the
formulas set forth in the Debentures. Each and every stock certificate
issued upon conversion of the Debentures shall be issued without any
legend.
Conversion
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11. In order to convert a Debenture or any portion thereof, the Investors shall
surrender such Debenture to the Escrow Agent accompanied by a written
statement designating the principal amount of such Debenture, or portion
thereof, to be so converted with a copy to the Company. Escrow Agent shall
then deliver the corresponding number of Treasury Orders for the
appropriate number of Shares and upon receipt deliver the Shares to
Investor pursuant to Investor's written instructions. In the case in which
the Debenture is converted in part only, Company shall, upon such
conversion, execute and deliver to Investor at the expense of Company, a
new Debenture of authorized denominations in principal amount equal to the
unconverted portion of such Debenture. If the last day for exercise of the
right to convert shall not be a business day, then such right may be
exercised on the next succeeding business day. Any Treasury Orders not
required for conversion of the Debentures shall be returned to Company.
Indemnification of Escrow Agent
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12. Company and Investors shall indemnify and hold free and harmless Escrow
Agent from any and all losses, expenses, liabilities and damages (including
but not limited to reasonable attorney's fees, and amounts, paid in
settlement) resulting from claims asserted against Escrow Agent with
respect to the performance of any of the provisions of this Agreement.
Fees, Expenses and Warrants.
---------------------------
13. Upon the closing of the purchase of each Series of Debentures Company shall
pay an amount equal to 10% of the purchase price of each Series of
Debentures, 5% to Israel Trading Fund (`ITF'') and/or its designees and 5%
to Select Capital Advisors, Inc. (`Select'') and/or its designees. The
Escrow Agent shall have the right to withhold such amounts from funds
deposited with it by Investors and shall remit the net amount to Company.
14. Upon the closing of the purchase of each Series of Debentures, Company
shall issue warrants pursuant to Regulation S to non-U.S. affiliates of ITF
and Select to purchase one share for each $10 of Debentures purchased, 50%
of which shall be issued as directed by ITF and 50% of which shall be
issued as directed by Select (`Warrants''). The Warrants shall be
exercisable after June 15, 1996 at $.69 per Share and shall be exercisable
at any time within 21/2 years of issuance.
Representations and Warranties of Company
-----------------------------------------
15. Company warrants, represents and covenants that:
a) The principal place of business of Company, the chief executive office
and other places of business of Company, the designated agent for
service of process on behalf of Company, the books and records
relating to the Shares are, and have been during the six-month period
prior to the date hereof, located at the address set forth below.
b) Company will, at its sole cost and expense, perform all acts and
execute all documents requested by Investors from time to time to
evidence, perfect, maintain or enforce Investor's interest earned
herein or otherwise in furtherance of the provisions of the Agreement;
c) except for any trade names set forth on the Exhibit attached
--
hereto, Company has not during the five-year period prior to the date
hereof been known by or used any trade name, fictitious name or any
corporate name other than Company's name as set forth next to its
signature below;
d) the financial statements of Company for the fiscal years ended April
30, 1995, are true and correct and have been prepared in accordance
with generally accepted accounting principles consistently followed
throughout
the periods involved. The consolidated balance sheets and the related
notes fairly present the financial position of Company as of the
respective dates thereof, and the consolidated statements of income
and retained earnings and the related notes fairly present the results
of the operations of Company for the respective periods indicated.
There as been no material adverse change in the condition, financial
or otherwise of Company taken as a whole since September 30, 1995;
e) Company is a corporation duly organized and existing and in good
standing under the laws of the State of New York and has the corporate
power to own its properties and to carry on its business as now being
conducted and as proposed to be conducted. Company is qualified to do
business as a foreign corporation and is in good standing in every
jurisdiction in which such qualification is necessary under applicable
provisions of law;
f) there are no actions, suits or proceedings or, to the knowledge of
Company, threatened against or affecting Company which may result in
any material adverse change in the business, properties or condition
of Company;
g) Company enjoys peaceful and undisturbed possession under all of the
leases to which it is a party or under which it is operating. All of
such leases are valid and subsisting and none of them is in default;
h) neither the execution and delivery of this Agreement nor the
Debentures, the consummation of the transactions herein or therein
contemplated, the fulfillment of the terms hereof or thereof, nor
compliance with the terms and provisions hereof or thereof, will
conflict with or result in a breach of any of the terms, conditions,
or provisions of any corporate restriction or of any agreement or
instrument to which Company is now a party or by which is bound, or
constitute a default thereunder, or results in the creation or
imposition of any lien, charge, security interest, or encumbrance of
any nature whatsoever upon any of the property or assets of Company
pursuant to the terms of any such agreement or instrument;
i) Company has filed, or has received extensions of time to file, all tax
returns which are required to be filed by any jurisdiction to which
Company is or was subject, and has paid or provided for payment of,
all taxes as shown on said returns or pursuant to any assessment
received by Company and does not know of any proposed assessment of
additional taxes or any basis therefor for all taxable years up to and
including the taxable year ending April 30, 1995. The Investors
realize that the Company presently owes Pounds1,920,000 to the
Department of Revenue in the United Kingdom.
j) upon receipt by Company of payment for the Debentures as provided
herein, the Debentures will have been duly authorized, executed, and
issued and will constitute valid and legally binding obligations of
Company enforceable in accordance with their terms and will be
entitled to the benefits provided by this Agreement.
k) the authorized and outstanding capital stock of Company consists of
200,000,000 shares of common stock, par value $.01 per share, of which
16,740,913 are currently outstanding. All of Company's outstanding
common stock has been duly and validly authorized and issued and is
fully paid and nonassessable. The Shares to be issued upon conversion
of the Debentures or exercise of the Warrants pursuant to this
Agreement have been duly and validly authorized and are sufficient in
number for the conversion of the entire principal amount of the
Debentures and Warrants at the conversion and exercise price,
respectively. The Company has 4,832,850 shares issuable under certain
existing subscription and other agreements. Company has granted or
issued, or agreed to grant options and warrants to acquire 7,598,963
shares of its common stock, excluding warrants issuable pursuant to
dilution of `C'' warrants other than the Debentures and Warrants to
be issued pursuant to this Agreement. The Company has granted
warrants to purchase shares of its common stock in numbers pegged to
its stock price through November of 1996. Company holds 0 shares of
its common stock in its Treasury;
l) the common stock of Company is listed on the NASDAQ stock market and
has been duly registered with the Securities and Exchange Commission
(the `SEC'') in accordance with section 12(g) of the Securities
Exchange Act of 1934, as amended (herein called the `Exchange Act'').
Said common stock is the only `equity securities'' (as defined in the
Exchange Act) of Company required to be registered under Section 12 of
the Exchange Act. The Company will undertake to make all filings
necessary with all regulatory authorities to list the Shares upon
their issuance.
m) Company represents and warrants that the net proceeds of the sale of
the Debenture will be added to the general funds of Company and will
be used for working capital and to pay off debt; and
n) Company is a `Reporting Issuer,'' as defined by Rule 902 of
Regulation S under the Act, which has a class of securities registered
pursuant to Section 12(b) or 12(g) of the Exchange Act or is required
to file reports pursuant to Section 15(d) of the Exchange Act.
o) Other than the Debentures the only money indebtedness of Company over
$500,000 is as listed on Exhibit 150 hereto. Company will not incur
any additional indebtedness, except in ordinary course of business
without the prior written consent of Investors. The restriction
contained in the last sentence expires on the date of conversion of
the last closed tranche of the Debentures.
p) Company shall, on or prior to December 15, 1995, obtain the consent of
the Company's officers, directors and 10% stockholders that they will
not sell, transfer, pledge or assign any Shares that they own or
acquire for a period of 8 months from the date of this Agreement. The
Company's officers shall also use all reasonable efforts to obtain a
similar consent in connection with the shares owned by the investors
represented by D.H. Blair & Co.
q) Company shall not sell any Shares pursuant to Regulation S for a
period of 5 months from the date of the funding of the last tranche
funded hereunder, subject to closing of tranches A and B hereunder.
Representations and Warranties of Investors
-------------------------------------------
16. Investors hereby represent and warrant to Company as follows:
a) Investors have the legal capacity and all necessary authority to enter
into and perform this Agreement and to consummate the transactions
contemplated hereby;
b) Investors represent and warrant that they are not `U.S. persons'' as
defined by Rule 902 of Regulation S under the Act, that the offer and
sale of the Debentures and Shares is not taking place in the United
States of America, but rather in an off-shore transaction, and that
Investors acknowledge their understanding that the offer and sale of
the Shares is intended to be exempt from the registration requirements
of the Act by virtue of Regulation S of such Act;
c) This Agreement has been duly authorized, executed and delivered by
Investors and constitutes a legal, valid and binding obligation of
Investors, enforceable against Investors in accordance with its terms;
d) The execution and delivery of this Agreement and the performance of
the obligations imposed hereunder will not result in a violation of
any order, decree or judgment of any court or governmental agency
having jurisdiction over Investors or Investors' properties, will not
conflict with, constitute a default under, or result in the breach of,
any contract, agreement, or other instrument to which Investors are a
party or are otherwise bound and no consent, authorization or order
of, or filing or registration with, any court, governmental, or
regulatory authority is required in connection with the execution and
delivery of this Agreement and any related agreements or the
performance by Investors of their obligations hereunder;
e) There is no litigation or proceeding pending or, to the best knowledge
of Investors, threatened, against Investors which would have any
effect on the validity or performance of this Agreement;
f) Investors:
i) are aware of the circumstances under which Investors are required
to take and hold the Debentures and Shares pursuant to the
requirements of the Act, and any applicable state securities or
`Blue Sky'' law or laws;
ii) are aware that the Debentures and Shares have not been registered
under the Act and may not be transferred or otherwise disposed of
unless they are subsequently registered under the Act or an
exemption from such registration is available;
iii) have been fully informed that an opinion of Company's counsel
will be delivered to Company's transfer agent and to Investors
opining that the Shares may be transferred or sold by Investors
on the forty-first (41st) day from the date of issuance of each
Series of Debentures without restriction subject to the Company
and Investors meeting all regulatory requirements applicable at
such time;
iv) are aware that neither Company nor Escrow Agent is under any
obligation to cause the Shares to be registered under the Act or
to comply with any applicable exemption under the Act with
respect to the Shares;
v) have such knowledge and experience in financial and business
matters that Investors are capable of evaluating the merits and
risks of the purchase of the Debentures and Shares and making an
informed investment decision with respect thereto, has evaluated
the merits and risks of the purchase of the Debentures and
Shares, and is able to bear the economic risk of purchasing the
Debentures and Shares and can afford the complete loss of the
investment;
vi) are purchasing the Debentures and Shares for its own account for
investment purposes and not with a view to `distribute the
Debentures and Shares as that term is defined in the Act; and
vii) have been provided with any and all written information and
materials concerning Company and its business which it has
requested.
g) Neither Company, nor any person acting on behalf of Company, has
offered to sell, offered for sale or sold the Debentures and/or Shares
to Investors by means of any form of general public solicitation or
advertising.
h) Investors are `accredited investors'' as the term is defined in the
Rules and Regulations promulgated under the Act, and are sufficiently
sophisticated to make informed and educated investment decisions,
including the transaction contemplated hereby.
i) Investors were not formed for the sole purpose of investing in the
Debentures and Shares herein, and have other substantial business and
investments.
j) Investors have received the Company's Report on Form 10KSB for the
year ended April 30, 1995, as amended, the Company's Report on Form
10QSB for the quarter ended July 31, 1995, and the Company's Reports
on Form 8-K filed since April 30, 1995.
17. Miscellaneous
-------------
18. Amendment and Waivers. This Agreement may be amended or any of its
---------------------
restrictions or provisions may be waived only with the written consent of
Investors.
19. Survival of Covenants, Agreements, Representations and Warranties. All
-----------------------------------------------------------------
covenants, agreements, representations, and warranties made herein and in
certificates delivered pursuant hereto shall survive the execution and
delivery of the Debentures, and shall continue in full force and effect as
long as the Debentures are outstanding and unpaid.
20. Entire Agreement: No Oral Change. This Agreement embodies the entire
--------------------------------
agreement and understanding between Company and Investors relating to the
subject matter hereof, and supersedes all prior agreements and
understandings relating to such subject matter. This Agreement may not be
changed orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, or discharge
is sought. If any provisions of this Agreement are not consistent with the
provisions of any other agreement, then the provisions of this Agreement
shall control.
21. Notices, Requests, Consents, etc. All notices, requests, consents, and
--------------------------------
other communications hereunder shall be in writing and shall be delivered,
or mailed by registered mail, postage prepaid, addressed: (a) if to
Investors, to Investors' address to which this Agreement is addressed, or
to such other address as may have been furnished to Company in writing with
a copy to Escrow Agent; or (b) if to Company, to its address set forth
below or to such other address as may have been furnished to Investors by
Company in writing.
22. Law Governing. This Agreement and the Debentures shall be construed in
-------------
accordance with and governed by the laws of the State of New York. The
parties hereto hereby consent to the jurisdiction of the state and federal
courts of the State and County of New York and the United States of America
and agree that any dispute arising hereof shall be litigated in said
jurisdiction.
23. Company Right To Reject Investors' Purchase. If the average closing bid
-------------------------------------------
prices of the Shares for the 5 consecutive trading days prior to the date
of purchase of any Series of Debentures by Investors is below $.50 per
Share, Company shall have the absolute right not to close on the sale of
such Series of Debentures to Investors.
24. Investors' Obligation To Fund. Notwithstanding the foregoing Agreement,
-----------------------------
the Investors shall have the right in their sole and absolute discretion to
determine whether to purchase the Series B, C and D Debentures. In the
event the Investors decide not to purchase the Series B or C or D
Debentures, neither the Company nor the Investors shall have any further
liability one to the other except with respect to the Series A Debentures.
However, if the Investors do not close on the purchase of the Series B
Debentures, the Company shall not be required to honor the representation
in paragraph 15(q).
IN WITNESS WHEREOF, the parties hereto have signed this Agreement this
15th day of December, 1995.
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Agreed To and Accepted By:
SELECT CAPITAL ADVISORS, INC.
/s/ Ronald G. Williams
By: Ronald G. Williams, Pres.
ISRAEL TRADING FUND LTD.
/s/ E. Schlisser
MANAGEMENT TECHNOLOGIES, INC.
630 THIRD AVENUE
NEW YORK, NEW YORK 10017
December 22, 1995
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 1 is hereby amended to increase the amount of Series A
Debentures from $1,250,000 to $1,950,000, and wherever said amount is mentioned
in the Agreement it is hereby amended to read $1,950,000.
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
20th day of December, 1995.
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
President & COO
Agreed To and Accepted By:
SELECT CAPITAL ADVISORS, INC.
By: /s/ Ronald G. Williams
Ronald G. Williams, President
ISRAEL TRADING FUND LTD.
By:
AGREEMENT FOR CONSULTING SERVICES
---------------------------------
This agreement is made this 27th day of November, 1995, in Denver, Colorado
by and between Management Technologies, Inc., 335 Madison Avenue, New York, NY
10017, a New York Corporation, hereinafter referred to as `MTCI'' as Barrocas &
Behzadi Investments, 820 Sixteenth Street, Ste 520, Denver, CO 80202, a Colorado
Corporation, hereinafter referred to as `Consultant''.
Section I
---------
Purpose of Engagement
---------------------
MTCI hereby contracts with Consultant to act as its advisor with respect to
providing financial consulting which may include capital formation,
establishment of credit lines, multiple financing strategies, and public
relations support activities to MTCI.
Section II
----------
Consultant's Fee
----------------
Client shall pay to Consultant for all services rendered, in accordance
with Section I above, a fee of any gross proceeds raised as follows: 3% (U.S.)
in cash, and 1% in unregistred Rule 144 securities based on the bid price of .75
cents or the bid price of stock at closing, whichever is lower. Consultant fees
will be paid by MTCI and due upon receipt of any portion of any offering
proceeds that may be received as a result of multiple closings.
Section III
-----------
Term
----
The term of this Agreement shall commence upon execution hereof and shall
continue so long as neither party hereto shall provide notice of termination as
defined herein below in section V.
Section IV
----------
Reliance, Representations and Indemnification
---------------------------------------------
All services and work produced by Consultant shall be deemed confidential,
and for the exclusive use and benefit of MTCI only.
Section V
---------
Termination
-----------
This agreement may be terminated at any time by either party providing ten
(10) days notice of the same to the non-terminating party at the address
indicated herein or such other address as the parties may so designate.
Section VI
----------
Miscellaneous
-------------
1. Assignability - Neither party shall have the right to assign any right
-------------
or obligation under this Agreement without the prior written approval of the
other party.
2. Severability - If any provision, paragraph or subparagraph of this
------------
Agreement is adjudged by any court to be void or unenforceable in whole or in
part, this adjudication shall not affect the validity of the remainder of the
Agreement. Each provision, paragraph or subparagraph of this Agreement is
including any other provision, paragraph or subparagraph of this Agreement is
separable from every other provision, paragraph and subparagraph and constitutes
a separate and distinct covenant.
3. Attorney Fees - If a dispute arises between the parties hereto and such
-------------
dispute can only be resolved by litigation then, in such case, the prevailing
party in such litigation shall be entitled to recover all costs of such action,
including but not limited to reasonable attorney fees.
4. Governing Law - This agreement shall be subject to and governed by the
-------------
laws of the state of Colorado.
5. Amendment - This agreement may only be amended in writing, duly endorsed
---------
by the parties hereto.
IN WITNESS WHEREOF the parties have executed this Agreement effective the first
date written above.
Barrocas & Behzadi Investments
Subject to minimum of 2M$ being raised
By: /s/ Fred Behzadi Changed from 4 to 2 as per agreement of
Partner Board
Management Technologies, Inc.
By: /s/ Paul Ekon
CEO
SERIES A 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. A-001 US$600,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES A CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series A 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
A Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,250,000.
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 Six Hundred Thousand Dollars (US $600,000) 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 A Debenture (or one or more predecessor Series A
Debentures) is registered on the records of the Company regarding registration
and transfers of the Series A Debentures (the `Debenture Register''); provided,
however, that the Company's obligation to a transferee of this Series A
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 December 20, 1995 between the Company and Torah Vachesed
Lezra Vesad (the `Subscription Agreement''). The principal of, and interest
on, this Series A 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 A
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 A Debenture on the Maturity Date, less any
amounts required by law to be deducted or withheld, to the Holder of this Series
A 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 A Debenture to the extent of the sum represented by such
check plus any amounts so deducted.
This Series A Debenture is subject to the following additional provisions:
1. The Series A Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series A
Debentures are exchangeable for an equal aggregate principal amount of
Series A 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 A 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 A 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 A Debenture, the Company and
any agent of the Company may treat the person in whose name this Series A
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 A 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 A 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 A 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) $.48.
Such conversion shall be effectuated by surrendering the Series A
Debentures to be converted (with a copy, by facsimile or courier, to
-3-
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 A Debenture evidencing such Holder's intention to
convert this Series A 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 A 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 A 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 A
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 A 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 A Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series A 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 A 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 A 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 A 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 A 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 A 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 A 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 A 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 A Debenture, by acceptance hereof, agrees that
this Series A Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series A 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 A 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 A
Debenture will not in any way be affected or impaired thereby.
12. This Series A Debenture and the agreements referred to in this Series A
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series A 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 A Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series A 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: December 20, 1995
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series A
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series A Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series A 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 A Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series A 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 $600,000 Series A Debentures
(collectively, the `Series A 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:
a) 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;
b) 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;
c) 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;
d) 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
-3-
released from any liability under this Agreement other than to the
Corporation in respect of the issuance of Excess Shares; and
e) 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: December 20, 1995
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: /s/ Barry B. Globerman By: /s/ Peter Morris
Barry B. Globerman Peter Morris
MTi
December 20, 1995
24 Southwark Street
London
SE1 1TY
United Kingdom
Telephone
+44 (0)171 357 7292
Facsimile
+44 (0) 171 357 6650
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Torah Vachesed Lezra Vesad (the `Registered Holder'') is the registered
holder of $600,000 Series A 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;
(1) the certificate or certificates representing the Debenture
to be converted duly endorsed by the Registered Holder; and
(1) 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 February
5, 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 2 Glasserstone One in the
Lezra Vesad Rd, London, amount of
N16 5QX, $600,000
England
By: Peter
Morris
President and COO
On behalf of the Board of Directors of
Management Technologies, Inc.
[Print on letterhead]
December 20, 1995
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Torah Vachesed Lezra Vesad (the `Registered Holder'') is the registered
holder of $600,000 Series A 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;
(1) the certificate or certificates representing the Debenture
to be converted duly endorsed by the Registered Holder; and
(1) 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 February
5, 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 2 Glasserstone One in the
Lezra Vesad Rd, London, amount of
N16 5QX, $600,000
England
By: Peter
Morris
President and COO
On behalf of the Board of Directors of
Management Technologies, Inc.
December 20, 1995
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Rubina Watch Co. (the `Registered Holder'') is the registered holder of
$100,000 Series A 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;
(1) the certificate or certificates representing the Debenture
to be converted duly endorsed by the Registered Holder; and
(1) 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 February
5, 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
-------
Rubina Watch 211 Hendrson One in the
Co. Rd, Singapore, amount of
159552 $100,000
By: Peter
Morris
President and COO
On behalf of the Board of Directors of
Management Technologies, Inc.
December 20, 1995
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Aron Meyer Gee (the `Registered Holder'') is the registered holder of
$400,000 Series A 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;
(1) the certificate or certificates representing the Debenture
to be converted duly endorsed by the Registered Holder; and
(1) 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 February
5, 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
-------
Aron Meyer Gee 37 Bar Ilan One in the
Street, amount of
Jerusalem $400,000
By: Peter
Morris
President and COO
On behalf of the Board of Directors of
EXHIBIT A
---------
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of December 20,
1995 (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 $600,000 for the Series A Debentures; $1,500,000 for the
Series B Debentures; $1,500,000 for the Series C Debentures; and
$1,750,000 for the Series D 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/ Solomon Sampson
By: Solomon Sampson
Title: Chairman
Address of Buyer:
PO Box 13109
Tel Aviv
SERIES A 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. A-002 US$550,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES A CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series A 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
A Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,250,000.
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 Five Hundred Fifty Thousand Dollars (US $550,000) 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 A Debenture (or one or more predecessor Series A Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series A Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series A 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
December 20, 1995 between the Company and Shulamit Pritzker (the `Subscription
Agreement'). The principal of, and interest on, this Series A 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 A 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 A
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series A 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 A Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series A Debenture is subject to the following additional provisions:
1. The Series A Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series A
Debentures are exchangeable for an equal aggregate principal amount of
Series A 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. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series A Debenture any amounts required to be
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withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. This Series A 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 A Debenture, the Company and
any agent of the Company may treat the person in whose name this Series A
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 A 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 A 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 A 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) $.48.
Such conversion shall be effectuated by surrendering the Series A
Debentures to be converted (with a copy, by facsimile or 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
-3-
of this Series A Debenture evidencing such Holder's intention to
convert this Series A 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 A 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 A 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 A
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 A Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
forwarding of such check shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability for
-4-
principal and interest on this Series A Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series A 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 A 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 A Debenture.
8. If one or more of the following described ``vents of Default'' shall
occur:
a) The Company shall default in the payment of principal or interest on
this Series A Debenture; or
b) Any of the representations or warranties made by the Company herein,
in the Subscription Agreement, or in any certificate or financial or
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
-5-
this Series A 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 A Debenture and such
failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for
its dissolution; or (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a substantial part of
its property or business; or
e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after such
appointment; or
f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of
the whole or any substantial portion of the properties or assets of
the Company and shall not be dismissed within thirty (30) days
thereafter; or
g) Any money judgment, writ or warrant of attachment, or similar process
in excess of One Hundred Thousand ($100,000) Dollars in the aggregate
shall be entered or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated, unbonded or
-6-
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 A 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 A Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any
-7-
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 A Debenture, by acceptance hereof, agrees that
this Series A Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series A 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 A 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 A
Debenture will not in any way be affected or impaired thereby.
12. This Series A Debenture and the agreements referred to in this Series A
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series A Debenture nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.
13. This Debenture is one of a series of Company's Series A Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
-8-
14. This Series A 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: December 19, 1995
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series A
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series A Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series A 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 A Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
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* This original Series A 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 $550,000 Series A Debentures
(collectively, the `Series A 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:
a) 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;
b) 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;
c) 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;
d) 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
-3-
released from any liability under this Agreement other than to the
Corporation in respect of the issuance of Excess Shares; and
e) 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: December 20, 1995
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: /s/ Barry B. Globerman By: /s/ Peter Morris
Barry B. Globerman Peter Morris
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 ``orporation'') and the undersigned
(the ``older'') have requested that you (the ``Escrow Agent'') act as their
agent in respect of the conversion of $600,000 Series A Debentures
(collectively, the `Series A 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 ``esolution and Agreement'').
-5-
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 ``ransfer 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 ``''. 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 ``ifference
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
``eposit 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
-6-
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.
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;
(1) 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;
(1) 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
-7-
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;
(1) 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
liability under this Agreement other than to the Corporation in respect of the
issuance of Excess Shares; and
(1) 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:
Very truly yours,
WITNESS:
-8-
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
By:
----------------------------------------------
By:
------------------------------
Peter Morris
President & COO
ESCROW AGREEMENT
----------------
Barry B. Globerman, Esq.
110 E. 59th Street
New York, N.Y.
U.S.A. 10022
Gentlemen:
-9-
MANAGEMENT TECHNOLOGIES, INC., a corporation organized under the
Business Corporation Law of New York (the `Corporation'') and the undersigned
(the ``older'') have requested that you (the ``Escrow Agent'') act as their
agent in respect of the conversion of $100,000 Series A Debentures
(collectively, the `Series A 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 ``esolution 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 ``''. 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
-10-
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
``eposit 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.
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
-11-
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;
(1) 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;
(1) 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;
(1) 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
liability under this Agreement other than to the Corporation in respect of the
issuance of Excess Shares; and
(1) 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.
-12-
This Agreement shall be governed by the substantive laws of the State
of New York.
Dated:
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
By:
----------------------------------------------
By:
------------------------------
Peter Morris
President & COO
ESCROW AGREEMENT
----------------
-13-
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 ``orporation'') 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 A Debentures
(collectively, the `Series A 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 ``esolution 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 ``ransfer 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
-14-
copy of which is attached to this Escrow Agreement as Schedule ``''. 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 ``ifference
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
``eposit 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
-15-
result other than the calculation upon which issue the Difference Certificate is
based.
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;
(1) 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;
(1) 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;
(1) 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
-16-
liability under this Agreement other than to the Corporation in respect of the
issuance of Excess Shares; and
(1) 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:
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-17-
By:
----------------------------------------------
By:
------------------------------
Peter Morris
President & COO
MTi
December 20, 1995
24 Southwark Street
London
SE1 1TY
United Kingdom
Telephone
+44 (0)171 357 7292
Facsimile
+44 (0) 171 357 6650
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
$550,000 Series A 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;
(1) the certificate or certificates representing the Debenture
to be converted duly endorsed by the Registered Holder; and
(1) 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 February
5, 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 Dov One in the
Pritzker Sadan, Pisgat amount of
Zev Mizrach, $550,000
Jerusalem,
Israel
/s/ Peter Morris
By: Peter Morris
President & COO
On behalf of the Board of Directors of
Management Technologies, Inc.
EXHIBIT A
---------
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of December 20,
1995 (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 $550,000 for the Series A Debentures; $1,500,000 for the
Series B Debentures; $1,500,000 for the Series C Debentures; and
$1,750,000 for the Series D 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/ Shulamit Pritzker
By: Shulamit Pritzker
Title:
----------------------------------
Address of Buyer:
Pisgat Zevi North
Jerusalem
SERIES A 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. A-004 US$400,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES A CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series A 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
A Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,250,000.
FOR VALUE RECEIVED, the Company promises to pay to Aron Meyer Gee, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Four Hundred 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 A Debenture (or one or more predecessor Series A Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series A Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series A 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
December 22, 1995 between the Company and Aron Meyer Gee (the `Subscription
Agreement'). The principal of, and interest on, this Series A 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 A 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 A
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series A 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 A Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series A Debenture is subject to the following additional provisions:
1. The Series A Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series A
Debentures are exchangeable for an equal aggregate principal amount of
Series A 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. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series A Debenture any amounts required to be
-2-
withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. This Series A 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 A Debenture, the Company and
any agent of the Company may treat the person in whose name this Series A
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 A 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 A 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 A 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) $.48.
Such conversion shall be effectuated by surrendering the Series A
Debentures to be converted (with a copy, by facsimile or 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
-3-
of this Series A Debenture evidencing such Holder's intention to
convert this Series A 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 A 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 A 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 A
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 A Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
forwarding of such check shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability for
-4-
principal and interest on this Series A Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series A 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 A 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 A Debenture.
8. If one or more of the following described ``vents of Default'' shall
occur:
a) The Company shall default in the payment of principal or interest on
this Series A Debenture; or
b) Any of the representations or warranties made by the Company herein,
in the Subscription Agreement, or in any certificate or financial or
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
-5-
this Series A 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 A Debenture and such
failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for
its dissolution; or (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a substantial part of
its property or business; or
e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after such
appointment; or
f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of
the whole or any substantial portion of the properties or assets of
the Company and shall not be dismissed within thirty (30) days
thereafter; or
g) Any money judgment, writ or warrant of attachment, or similar process
in excess of One Hundred Thousand ($100,000) Dollars in the aggregate
shall be entered or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated, unbonded or
-6-
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 A 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 A Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any
-7-
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 A Debenture, by acceptance hereof, agrees that
this Series A Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series A 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 A 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 A
Debenture will not in any way be affected or impaired thereby.
12. This Series A Debenture and the agreements referred to in this Series A
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series A Debenture nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.
13. This Debenture is one of a series of Company's Series A Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
-8-
14. This Series A 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: December 22, 1995
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series A
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series A Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series A 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 A Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series A 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 A Debentures
(collectively, the `Series A 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;
(1) 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;
(1) 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;
(1) 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
liability under this Agreement other than to the Corporation in respect of the
issuance of Excess Shares; and
-3-
(1) 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:
December 22, 1995
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
By:/s/ Barry B. Globerman
----------------------
By:/s/ Peter Morris
-4-
Peter Morris
President & COO
MTi
December 20, 1995
24 Southwark Street
London
SE1 1TY
United Kingdom
Telephone
+44 (0)171 357 7292
Facsimile
+44 (0) 171 357 6650
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Aron Meyer Gee (the `Registered Holder'') is the registered holder of
$400,000 Series A 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;
(1) the certificate or certificates representing the Debenture
to be converted duly endorsed by the Registered Holder; and
(1) 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 February
5, 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
-------
Aron Meyer Gee 37 Bar Ilan One in the
Street, amount of
Jerusalem $400,000
/s/ Peter Morris
By: Peter
Morris
President and COO
On behalf of the Board of Directors of
Management Technologies, Inc.
EXHIBIT A
---------
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of December 22,
1995 (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 A Debentures; $1,500,000 for the
Series B Debentures; $1,500,000 for the Series C Debentures; and
$1,750,000 for the Series D 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/ Aron Meyer Gee
By: Aron Meyer Gee
Title:
-----------------------------------
Address of Buyer:
37 Bar Ilan Street
Jerusalem
SERIES A 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. A-006 US$200,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES A CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series A 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
A Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,250,000.
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 Two Hundred Thousand Dollars (US $200,000) 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 A Debenture (or one or more predecessor Series A Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series A Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series A 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
December 29, 1995 between the Company and the Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series A 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 A 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 A
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series A 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 A Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series A Debenture is subject to the following additional provisions:
I. The Series A Debentures are issuable in denominations of Fifty
Thousand Dollars (US$50,000) and integral multiples thereof. The Series A
Debentures are exchangeable for an equal aggregate principal amount of Series A
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.
I. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Series A Debenture any amounts required to
-2-
be withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
I. This Series A 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 A Debenture, the Company and any agent
of the Company may treat the person in whose name this Series A 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 A Debenture be overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.
I. (a) The Holder of this Series A 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 A Debenture and accrued interest
into shares of common stock, $0.01 par value per share, of the Company (the
``ommon 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 ``arket 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) $.48. Such conversion shall
be effectuated by surrendering the Series A Debentures to be converted (with a
copy, by facsimile or 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 A Debenture evidencing such Holder's
intention to convert this Series A 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
-3-
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 A 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 A
Debenture is received by the Company within five (5) business days thereafter.
Notice of Conversion may be delivered to the Company by telecopier to 1 212 557
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 A
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 A Debentures pursuant to the calculations in paragraph
4(a) or to require the Holder to convert pursuant to paragraph 4(a) hereof.
Such payment shall include accrued interest to such date, and shall be less any
amounts required by law to be deducted or withheld. Such payment shall be made
by delivering immediately available funds in United States Dollars by wire
transfer to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder appearing
on the Debenture Register. The wiring of such funds or the forwarding of such
check shall constitute a payment of principal and interest hereunder and shall
satisfy and discharge the liability for principal and interest on this Series A
Debenture to the extent of the sum represented by such wire or check plus any
amount so deducted.
I. No provision of this Series A 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 A Debenture at the time, place, and
rate, and in the coin currency, herein prescribed.
-4-
I. The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Series A Debenture.
8. If one or more of the following described ``vents of Default'' shall
occur:
(a) The Company shall default in the payment of principal
or interest on this Series A Debenture; or
(b) Any of the representations or warranties made by the
Company herein, in the Subscription Agreement, or in any
certificate or financial or other written statements heretofore
or hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Series A
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 A
-5-
Debenture and such failure shall continue uncured for a period of
seven (7) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in
writing its liability to pay its debts generally as they mature;
(3) make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent to
the appointment of a trustee, liquidator or receiver for its or
for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be
appointed for the Company or for a substantial part of its
property or business without its consent and shall not be
discharged within thirty (30) days after such appointment; or
(f) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall
assume custody or control of the whole or any substantial portion
of the properties or assets of the Company and shall not be
dismissed within thirty (30) days thereafter; or
(g) Any money judgment, writ or warrant of attachment, or
similar process in excess of One Hundred Thousand ($100,000)
Dollars in the aggregate shall be entered or filed against the
Company or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of fifteen
(15) days or in any event later than five (5) days prior to the
date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy
-6-
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 A 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 A Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
-7-
10. The Holder of this Series A Debenture, by acceptance hereof, agrees
that this Series A Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series A 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 A 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 A Debenture will not
in any way be affected or impaired thereby.
12. This Series A Debenture and the agreements referred to in this Series
A Debenture constitute the full and entire understanding and agreement between
the Company and the Holder with respect to the subject hereof. Neither this
Series A Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and the
Holder.
13. This Debenture is one of a series of Company's Series A Debentures and
all Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series A 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.
-8-
Dated: 29 December, 1995
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President & COO
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series A
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series A Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the `Company'') according to the conditions set forth in
such Series A 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 A Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series A 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 $200,000 Series A Debentures
(collectively, the `Series A 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:
a) 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;
b) 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;
c) 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;
d) 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
-3-
released from any liability under this Agreement other than to the
Corporation in respect of the issuance of Excess Shares; and
e) 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: December 29, 1995
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: /s/ Barry B. Globerman By: /s/ Peter Morris
Barry B. Globerman Peter Morris
December 29, 1995
American Stock Transfer
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Dovasar S.A. (the `Registered Holder'') is the registered holder of
$200,000 Series A 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;
(1) the certificate or certificates representing the Debenture
to be converted duly endorsed by the Registered Holder; and
(1) 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 February
5, 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
P.O. Box 2218 amount of
8040 Zurich $200,000
Switzerland
/s/ Peter Morris
By: Peter Morris
President and COO
On behalf of the Board of Directors of
Management Technologies, Inc.
EXHIBIT A
---------
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of December 29,
1995 (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 $200,000 for the Series A Debentures; $1,500,000 for the
Series B Debentures; $1,500,000 for the Series C Debentures; and
$1,750,000 for the Series D 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
Dovasar S.A.
By:
----------------------------------------
Title:
---------------------------------------
Address of Buyer:
c/o Gonda
P.O. Box 2218
8040 Zurich
SERIES A 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. A-005 US$100,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES A CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series A 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
A Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,250,000.
FOR VALUE RECEIVED, the Company promises to pay to Chava Fischman, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of One Hundred Thousand Dollars (US $100,000) 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 A Debenture (or one or more predecessor Series A Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series A Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series A 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
December 22, 1995 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series A 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 A 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 A
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series A 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 A Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series A Debenture is subject to the following additional provisions:
1. The Series A Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series A
Debentures are exchangeable for an equal aggregate principal amount of
Series A 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. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series A Debenture any amounts required to be
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withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. This Series A 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 A Debenture, the Company and
any agent of the Company may treat the person in whose name this Series A
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 A 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 A 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 A 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) $.48.
Such conversion shall be effectuated by surrendering the Series A
Debentures to be converted (with a copy, by facsimile or 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
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of this Series A Debenture evidencing such Holder's intention to
convert this Series A 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 A 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 A 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 A
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 A Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
forwarding of such check shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability for
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principal and interest on this Series A Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series A 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 A 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 A Debenture.
8. If one or more of the following described ``vents of Default'' shall
occur:
a) The Company shall default in the payment of principal or interest on
this Series A Debenture; or
b) Any of the representations or warranties made by the Company herein,
in the Subscription Agreement, or in any certificate or financial or
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
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this Series A 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 A Debenture and such
failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for
its dissolution; or (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a substantial part of
its property or business; or
e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after such
appointment; or
f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of
the whole or any substantial portion of the properties or assets of
the Company and shall not be dismissed within thirty (30) days
thereafter; or
g) Any money judgment, writ or warrant of attachment, or similar process
in excess of One Hundred Thousand ($100,000) Dollars in the aggregate
shall be entered or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated, unbonded or
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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 A 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 A Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any
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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 A Debenture, by acceptance hereof, agrees that
this Series A Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series A 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 A 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 A
Debenture will not in any way be affected or impaired thereby.
12. This Series A Debenture and the agreements referred to in this Series A
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series A Debenture nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.
13. This Debenture is one of a series of Company's Series A Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
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14. This Series A 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: December 29, 1995
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
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EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series A
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series A Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series A 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 A Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
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* This original Series A 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 $100,000 Series A Debentures
(collectively, the `Series A 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.
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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:
a) 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;
b) 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;
c) 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;
d) 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
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released from any liability under this Agreement other than to the
Corporation in respect of the issuance of Excess Shares; and
e) 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: December 29, 1995
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
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By: /s/ Barry B. Globerman By: /s/ Peter Morris
Barry B. Globerman Peter Morris
December 29, 1995
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Chava Fischman(the `Registered Holder'') is the registered holder of
$100,000 Series A 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;
(1) the certificate or certificates representing the Debenture
to be converted duly endorsed by the Registered Holder; and
(1) 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 February
5, 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
-------
Chava Fischman Hony Hamagel One in the
7 amount of
Jerusalem $100,000
Israel
/s/ Peter Morris
By: Peter Morris
President and COO
On behalf of the Board of Directors of
Management Technologies, Inc.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of December 29,
1995 (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 $100,000 for the Series A Debentures; $1,500,000 for the
Series B Debentures; $1,500,000 for the Series C Debentures; and
$1,750,000 for the Series D 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/
By:
Title:
---------------------------------------
Address of Buyer:
Hony Hamagel 7
Jerusalem Israel
SERIES B 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. B-001 US$300,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES B CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series B 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
B Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,500,000.
FOR VALUE RECEIVED, the Company promises to pay to Henry Zieleniec, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Three Hundred Thousand Dollars (US $300,000) 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 B Debenture (or one or more predecessor Series B Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series B Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series B 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
January 25, 1996 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series B 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 B 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 B
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series B 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 B Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series B Debenture is subject to the following additional provisions:
1. The Series B Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series B
Debentures are exchangeable for an equal aggregate principal amount of
Series B 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. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series B Debenture any amounts required to be
-2-
withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. This Series B 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 B Debenture, the Company and
any agent of the Company may treat the person in whose name this Series B
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 B 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 B 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 B 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) $.53.
Such conversion shall be effectuated by surrendering the Series B
Debentures to be converted (with a copy, by facsimile or 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
-3-
of this Series B Debenture evidencing such Holder's intention to
convert this Series B 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 B 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 B 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 B
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 B Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
forwarding of such check shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability for
-4-
principal and interest on this Series B Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series B 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 B 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 B Debenture.
8. If one or more of the following described ``vents of Default'' shall
occur:
a) The Company shall default in the payment of principal or interest on
this Series B Debenture; or
b) Any of the representations or warranties made by the Company herein,
in the Subscription Agreement, or in any certificate or financial or
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
-5-
this Series B 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 B Debenture and such
failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for
its dissolution; or (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a substantial part of
its property or business; or
e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after such
appointment; or
f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of
the whole or any substantial portion of the properties or assets of
the Company and shall not be dismissed within thirty (30) days
thereafter; or
g) Any money judgment, writ or warrant of attachment, or similar process
in excess of One Hundred Thousand ($100,000) Dollars in the aggregate
shall be entered or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated, unbonded or
-6-
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 B 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 B Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any
-7-
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 B Debenture, by acceptance hereof, agrees that
this Series B Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series B 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 B 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 B
Debenture will not in any way be affected or impaired thereby.
12. This Series B Debenture and the agreements referred to in this Series B
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series B Debenture nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.
13. This Debenture is one of a series of Company's Series B Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
-8-
14. This Series B 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: January 25, 1996
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series B
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series B Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series B 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 B Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series B 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 $300,000 Series B Debentures
(collectively, the `Series B 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: January 25, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By: /s/ Peter Morris
------------------------------
Peter Morris
President & COO
Mti Abraxsys Systems, Inc. MTi
January 25, 1996
630 Third Avenue
American Stock Transfer And Trust Company 15th Floor
40 Wall Street New York
New York, New York 10005 NY 10017
USA
Gentlemen: Telephone:
+1 (212) 983 5620
TREASURY ORDER
Facsimile:
WHEREAS: +1 (212) 557 6967
A. Henry Zielleniec (the `Registered Holder'') is the registered holder of
$300,000 Series B 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 March 11,
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
-------
Henry 413 Lytton One in the
Zieleniec Blvd. Toronto, amount of
Ont. Canada $300,000
M5n 1S3
/s/ Peter
Morris
By: Peter
Morris
President & Chief Operating Officer
On behalf of the Board of Directors of
Management Technologies, Inc.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of January 25,
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 $300,000 for the Series B 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/ Henry Zieleniec
By: Henry Zieleniec
Title:
---------------------------------------
Address of Buyer:
413 Lytton Blvd.
Toronto, Ont.
SERIES B 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. B-002 US$100,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES B CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series B 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
B Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,500,000.
FOR VALUE RECEIVED, the Company promises to pay to Raphael Lapidus, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of One Hundred Thousand Dollars (US $100,000) 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 B Debenture (or one or more predecessor Series B Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series B Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series B 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
January 29, 1996 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series B 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 B 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 B
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series B 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 B Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series B Debenture is subject to the following additional provisions:
1. The Series B Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series B
Debentures are exchangeable for an equal aggregate principal amount of
Series B 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. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series B Debenture any amounts required to be
-2-
withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. This Series B 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 B Debenture, the Company and
any agent of the Company may treat the person in whose name this Series B
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 B 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 B 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 B 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) $.53.
Such conversion shall be effectuated by surrendering the Series B
Debentures to be converted (with a copy, by facsimile or 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
-3-
of this Series B Debenture evidencing such Holder's intention to
convert this Series B 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 B 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 B 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 B
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 B Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
forwarding of such check shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability for
-4-
principal and interest on this Series B Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series B 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 B 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 B Debenture.
8. If one or more of the following described ``vents of Default'' shall
occur:
a) The Company shall default in the payment of principal or interest on
this Series B Debenture; or
b) Any of the representations or warranties made by the Company herein,
in the Subscription Agreement, or in any certificate or financial or
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
-5-
this Series B 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 B Debenture and such
failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for
its dissolution; or (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a substantial part of
its property or business; or
e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after such
appointment; or
f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of
the whole or any substantial portion of the properties or assets of
the Company and shall not be dismissed within thirty (30) days
thereafter; or
g) Any money judgment, writ or warrant of attachment, or similar process
in excess of One Hundred Thousand ($100,000) Dollars in the aggregate
shall be entered or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated, unbonded or
-6-
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 B 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 B Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any
-7-
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 B Debenture, by acceptance hereof, agrees that
this Series B Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series B 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 B 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 B
Debenture will not in any way be affected or impaired thereby.
12. This Series B Debenture and the agreements referred to in this Series B
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series B Debenture nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.
13. This Debenture is one of a series of Company's Series B Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
-8-
14. This Series B 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: January 29, 1996
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series B
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series B Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series B 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 B Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series B 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 $100,000 Series B Debentures
(collectively, the `Series B 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: January 29, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By: /s/ Peter Morris
------------------------------
Peter Morris
President & COO
MTi
24 Southwark Street
London
SE1 1TY
United Kingdom
Telephone
+44 (0)171 357 7292
Facsimile
+44 (0) 171 357 6650
January 29, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Raphael Lapidus (the `Registered Holder'') is the registered holder of
$100,000 Series B 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 March 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
-------
Raphael Vermonte 2861 One in the
Lapidus 1213 BA amount of
Argentina $100,000
/s/ Peter
Morris
By: Peter
Morris
President & Chief Operating Officer
On behalf of the Board of Directors of
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of January 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 $100,000 for the Series B 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/ Raphael Lapidus
By: Raphael Lapidus
Title:
---------------------------------------
Address of Buyer:
Vermonte 2861
1213 BA Argentina
SERIES B 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. B-003 US$100,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES B CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series B 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
B Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,500,000.
FOR VALUE RECEIVED, the Company promises to pay to Miriam Herzel, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of One Hundred Thousand Dollars (US $100,000) 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 B Debenture (or one or more predecessor Series B Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series B Debentures (the `Debenture Register''); provided, however, that
the Company's obligation to a transferee of this Series B 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
January 29, 1996 between the Company and Holder (the `Subscription
Agreement'). The principal of, and interest on, this Series B 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 B 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 B
Debenture on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Series B 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 B Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
This Series B Debenture is subject to the following additional provisions:
1. The Series B Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series B
Debentures are exchangeable for an equal aggregate principal amount of
Series B 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. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series B Debenture any amounts required to be
-2-
withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. This Series B 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 B Debenture, the Company and
any agent of the Company may treat the person in whose name this Series B
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 B 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 B 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 B 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) $.53.
Such conversion shall be effectuated by surrendering the Series B
Debentures to be converted (with a copy, by facsimile or 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
-3-
of this Series B Debenture evidencing such Holder's intention to
convert this Series B 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 B 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 B 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 B
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 B Debentures pursuant to
the calculations in paragraph 4(a) or to require the Holder to convert
pursuant to paragraph 4(a) hereof. Such payment shall include accrued
interest to such date, and shall be less any amounts required by law
to be deducted or withheld. Such payment shall be made by delivering
immediately available funds in United States Dollars by wire transfer
to the Holder, or if no wiring instructions have been provided to the
company, by cashier's or certified check to the last address of Holder
appearing on the Debenture Register. The wiring of such funds or the
forwarding of such check shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability for
-4-
principal and interest on this Series B Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series B 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 B 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 B Debenture.
8. If one or more of the following described ``vents of Default'' shall
occur:
a) The Company shall default in the payment of principal or interest on
this Series B Debenture; or
b) Any of the representations or warranties made by the Company herein,
in the Subscription Agreement, or in any certificate or financial or
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery of
-5-
this Series B 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 B Debenture and such
failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for
its dissolution; or (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a substantial part of
its property or business; or
e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after such
appointment; or
f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of
the whole or any substantial portion of the properties or assets of
the Company and shall not be dismissed within thirty (30) days
thereafter; or
g) Any money judgment, writ or warrant of attachment, or similar process
in excess of One Hundred Thousand ($100,000) Dollars in the aggregate
shall be entered or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated, unbonded or
-6-
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 B 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 B Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any
-7-
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 B Debenture, by acceptance hereof, agrees that
this Series B Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series B 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 B 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 B
Debenture will not in any way be affected or impaired thereby.
12. This Series B Debenture and the agreements referred to in this Series B
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series B Debenture nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.
13. This Debenture is one of a series of Company's Series B Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
-8-
14. This Series B 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: January 29, 1996
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series B
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series B Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series B 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 B Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series B 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 $100,000 Series B Debentures
(collectively, the `Series B 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: January 29, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By: /s/ Peter Morris
------------------------------
Peter Morris
President & COO
MTi
24 Southwark Street
London
SE1 1TY
United Kingdom
Telephone
+44 (0)171 357 7292
Facsimile
+44 (0) 171 357 6650
January 29, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Miriam Herzel (the `Registered Holder'') is the registered holder of
$100,000 Series B 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 March 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
-------
Miriam Herzel 8 Yoel St Bwei One in the
Baral Israel amount of
$100,000
/s/ Peter
Morris
By: Peter
Morris
President & Chief Operating Officer
On behalf of the Board of Directors of
Management Technologies, Inc.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of January 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 $100,000 for the Series B 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/ Miriam Herzel
By: Miriam Herzel
Title:
---------------------------------------
Address of Buyer:
8 Yoel Street
Bwel Barbel
SERIES B 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. B-004
US$400,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES B CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series B 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 B Convertible Debenture Due December 31, 1997, in an aggregate
principal amount of $1,500,000.
FOR VALUE RECEIVED, the Company promises to pay to Yoseph Yud, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Four Hundred 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 B Debenture (or one or more predecessor Series B
Debentures) is registered on the records of the Company regarding registration
and transfers of the Series B Debentures (the `Debenture Register'');
provided, however, that the Company's obligation to a transferee of this
Series B 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 January 29, 1996 between the Company and
Holder (the `Subscription Agreement'). The principal of, and interest on,
this Series B 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 B
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 B Debenture on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the
Holder of this Series B 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 B Debenture to the
extent of the sum represented by such check plus any amounts so deducted.
This Series B Debenture is subject to the following additional
provisions:
1. The Series B Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series B
Debentures are exchangeable for an equal aggregate principal amount of
Series B 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. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Series B Debenture any amounts required to be -
2-
withheld under the applicable provisions of the United States income tax
or other applicable laws at the time of such payments.
3. This Series B 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 B Debenture, the
Company and any agent of the Company may treat the person in whose name
this Series B 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 B
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 B 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 B 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)
$.53. Such conversion shall be effectuated by surrendering the
Series B Debentures to be converted (with a copy, by facsimile or
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
-3-
of this Series B Debenture evidencing such Holder's intention to
convert this Series B 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
B 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 B 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 B
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 B Debentures
pursuant to the calculations in paragraph 4(a) or to require the
Holder to convert pursuant to paragraph 4(a) hereof. Such payment
shall include accrued interest to such date, and shall be less any
amounts required by law to be deducted or withheld. Such payment
shall be made by delivering immediately available funds in United
States Dollars by wire transfer to the Holder, or if no wiring
instructions have been provided to the company, by cashier's or
certified check to the last address of Holder appearing on the
Debenture Register. The wiring of such funds or the forwarding of
such check shall constitute a payment of principal and interest
hereunder and shall satisfy and discharge the liability for
-4-
principal and interest on this Series B Debenture to the extent of
the sum represented by such wire or check plus any amount so
deducted.
5. No provision of this Series B 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 B 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 B Debenture.
8. If one or more of the following described ``vents of Default'' shall
occur:
a) The Company shall default in the payment of principal or interest on
this Series B Debenture; or
b) Any of the representations or warranties made by the Company herein,
in the Subscription Agreement, or in any certificate or financial or
other written statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the execution and delivery
of
-5-
this Series B 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 B Debenture and such
failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for
its dissolution; or (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a substantial part of
its property or business; or
e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after
such appointment; or
f) Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or
assets of the Company and shall not be dismissed within thirty (30)
days thereafter; or
g) Any money judgment, writ or warrant of attachment, or similar
process in excess of One Hundred Thousand ($100,000) Dollars in the
aggregate shall be entered or filed against the Company or any of
its properties or other assets and shall remain unpaid, unvacated,
unbonded or
-6-
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 B 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 B Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder,
officer or director, as such, past, present or future, of the Company or
any
-7-
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 B Debenture, by acceptance hereof, agrees that
this Series B Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series B
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 B 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 B Debenture will not in any way be affected or impaired thereby.
12. This Series B Debenture and the agreements referred to in this Series B
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series B Debenture nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument
signed by the Company and the Holder.
13. This Debenture is one of a series of Company's Series B Debentures and
all Debentures of this issue rank equally and ratably without priority
over one another.
-8-
14. This Series B 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: January 29, 1996
MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series B
Debenture)
The undersigned hereby irrevocably elects to convert $ of
the --------------
above Series B Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series B 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 B Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series B 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 B Debentures
(collectively, the `Series B 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: January 29, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By:/s/ Peter Morris
------------------------------
Peter Morris
President & COO
January 29, 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 $400,000
Series B 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 March 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
-------
Yosef Yud Malche Israel One in the
2 Jerusalem amount of
Israel $400,000
/s/ Peter
Morris
By: Peter
Morris
President & Chief Operating Officer
On behalf of the Board of Directors of
Management Technologies, Inc.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of January 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 $400,000 for the Series B 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/ Yosef Yud
By: Yosef Yud
Title:
---------------------------------------
Address of Buyer:
Malche Israel 2
Jerusalem
Israel
-------
SERIES B 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. B-005
US$450,000
MANAGEMENT TECHNOLOGIES, INC.
9% SERIES B CONVERTIBLE DEBENTURES DUE DECEMBER 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series B 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
B Convertible Debenture Due December 31, 1997, in an aggregate principal amount
of $1,500,000.
FOR VALUE RECEIVED, the Company promises to pay to Menachem M. Begun, the
registered holder hereof and its successors and assigns (the `Holder''), the
principal sum of Four Hundred and Fifty Thousand Dollars (US$450,000) 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 B Debenture (or one or more predecessor Series B
Debentures) is registered on the records of the Company regarding registration
and transfers of the Series B Debentures (the `Debenture Register''); provided,
however, that the Company's obligation to a transferee of this Series B
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 January 29, 1996 between the Company and Holder (the
`Subscription Agreement''). The principal of, and interest on, this Series B
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 B 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 B Debenture on the Maturity Date, less any amounts required by law
to be deducted or withheld, to the Holder of this Series B 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 B
Debenture to the extent of the sum represented by such check plus any amounts so
deducted.
This Series B Debenture is subject to the following additional provisions:
1. The Series B Debentures are issuable in denominations of Fifty Thousand
Dollars (US$50,000) and integral multiples thereof. The Series B
Debentures are exchangeable for an equal aggregate principal amount of
Series B 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 B 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 B 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 B Debenture, the Company and
any agent of the Company may treat the person in whose name this Series B
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 B 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 B 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 B 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)
$0.53. Such conversion shall be effectuated by surrendering the
Series B 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 B Debenture evidencing such Holder's
intention to convert this Series B 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 B
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 B 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 B
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 B 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 B Debenture to the extent of the
sum represented by such wire or check plus any amount so deducted.
5. No provision of this Series B 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 B 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 B 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 B 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 B 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 B 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 B 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 B 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 B Debenture, by acceptance hereof, agrees that
this Series B Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series B 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 B 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 B
Debenture will not in any way be affected or impaired thereby.
12. This Series B Debenture and the agreements referred to in this Series B
Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof.
Neither this Series B 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 B Debentures and all
Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series B 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: January 30, 1996 MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris
By: Peter Morris
Title: President and Chief Operating Officer
-9-
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series B
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
--------------
above Series B Debenture No. into Shares of Common Stock of Management
---
Technologies, Inc. (the ``ompany'') according to the conditions set forth in
such Series B 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 B Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
-10-
* This original Series B 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 $450,000 Series B Debentures
(collectively, the `Series B 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: January 30, 1996
Very truly yours,
WITNESS:
AGREED & ACCEPTED: AGREED & ACCEPTED:
BARRY B. GLOBERMAN MANAGEMENT TECHNOLOGIES, INC.
-4-
By: By /s/ Peter Morris
------------------------------
Peter Morris
President & COO
MTi
24 Southwark Street
London
SE1 1TY
United Kingdom
Telephone
+44 (0)171 357 7292
Facsimile
+44 (0) 171 357 6650
January 30, 1996
American Stock Transfer And Trust Company
40 Wall Street
New York, New York 10005
Gentlemen:
TREASURY ORDER
WHEREAS:
A. Menachem M. Begun (the `Registered Holder'') is the registered holder of
$450,000 Series B 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 March 15,
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
-------
Menachem M. Alameda France One in the
Begun 760/61 Sao amount of
Paulo, SP $450,000
Brazil
/s/ Peter
Morris
By: Peter
Morris
President & Chief Operating Officer
On behalf of the Board of Directors of
Management Technologies, Inc.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of January 30,
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 $450,000 for the Series B 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 B, C and D Debentures. In the event the Buyers
decide not to purchase the Series B 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 B 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/ Peter Morris
By: Peter Morris
Title: President & COO
Official Signatory of Buyer:
---------------------------
/s/ Menachem M. Begun
By: Menachem M. Begun
Title:
---------------------------------------
Address of Buyer:
Alameda France 760/61
Sao Paulo, SP
Brazil
