THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE ACT) OR TO OR
FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT
PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement (the "Agreement"), dated July
5 , 1996, is entered into by and between Management Technologies, Inc., a
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company incorporated in the state of New York (the "Company"), and RBB Bank
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AG (the "Buyer").
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The Company has offered for sale outside the United States (as that term is
defined in Regulation S ("Regulation S") under the United States Securities Act
of 1933, as amended (the "Act") to the Buyer, $ 2,000,000 of 6 3/4 %
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Convertible Notes due July 5, 1999 (the "Securities"), the total offering of
$2,000,000 of 6 3/4% Convertible Notes due July 8 , 1999, convertible into
-
common stock of the Company. Interest on the Securities will be payable
quarterly in arrears on 8 October, 8 January, 8 April and 8 July and on
conversion in common stock of the Company. The terms on which the Securities
may be converted into Common Shares (such Common Shares underlying the
Securities being referred to herein as "Shares") and the other terms of the
Securities are set forth in the Form of Convertible Note attached as Annex A.
Capitalized terms used herein and not defined herein shall have the meanings
given to them in Regulation S as the same may be amended from time to time.
The parties hereto agree as follows:
1. Purchase and Sale of Securities. Upon the basis of the representations and
--------------------------------
warranties, and subject to the terms and conditions, set forth in this
Agreement, the Company covenants and agrees to sell to the Buyer on the Closing
Date (as hereinafter defined) $ 2,000,000 of the Securities at a price of 100%
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of the original principal amount, and upon the basis of the representations and
warranties, and subject to the terms and conditions, set forth in this
Agreement, the Buyer covenants and agrees to purchase from the Company, on the
Closing Date $ 2,000,000 of the Securities of the Company at 100% of the
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original principal amount.
2. Closing Instructions to Escrow Agent. (a) The closing of the purchase and
-------------------------------------
sale of the Securities pursuant to Section 1 hereof shall take place on or
before July 5 , 1996 (the "Closing Date") after the Company has delivered to the
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offices of Baratta and Goldstein (the "Escrow Agent") located at 597 Fifth
Avenue, New York, NY 10117, Phone (212) 750 9700, Fax (212) 750 8297.
Convertible Notes (each a "Convertible Note") representing the Securities in
denominations of not less than $50,000 and registered in the names provided by
the Buyer (representing the maximum amount of Securities to be purchased by the
Buyer hereunder).
(b) The Company and the Buyer agree that they shall instruct the Escrow
Agent as follows:
(i) On the Closing Date, for each Convertible Note subscribed for and
delivered to the Escrow Agent pursuant to paragraph 2(a) above, the Escrow Agent
shall release payment of the Purchase Price for the Securities in immediately
available funds to the Company's account as provided. The Escrow Agent shall
return to the Company any Convertible Notes that the Buyer does not purchase on
the Closing Date. If the closing shall not have taken place by July 5 , 1996,
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this agreement shall terminate unless extended in writing by mutual agreement.
(ii) The Escrow Agent will make delivery of the number of Convertible
Notes set forth in clause (2a) above in accordance with the instructions of the
Buyer subject to customary settlement procedures.
3. Representations and Warranties of the Buyer: The Buyer understands and
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represents and warrants to, and agrees with the Company that:
(a) The Buyer understands that no federal or state agency has passed
on, or made any recommendation or endorsement of the Securities.
(b) The Buyer acknowledges that, in making the decision to purchase
the Securities, it has relied solely upon independent investigations made by it
and not upon any representations made by the Company with respect to the Company
or the Securities, except for the representations and warranties in this
Agreement, the Convertible Note, the Registration Rights Agreement, the Officers
Certificate and the Opinion of Counsel, attached and made a part hereof as per
Annexe D, except that the Buyer has received, reviewed and relied upon copies of
the Form 10-Q for the quarter ended January 31, 1996, the Form 10-K for the
year ended April 30, 1995, filed by the Company pursuant to the Securities
Exchange Act of 1934, as amended, and all other filings and all forms 8K up to
the current time since April 30, 1995, defined as "Exchange Act Reports".
(c) The Buyer understands that the Securities are being offered and
sold to it in reliance on specific exemptions from or non-application of the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understanding of the Buyer set forth
herein in order to determine the applicability of such exemptions and the
suitability of the Buyer to acquire the Securities.
(d) The Buyer is not a U.S. Person (as defined in Regulation S) and
is not and will not be an affiliate (as defined in the Exchange Act) of the
Company.
(e) No offer of the Securities was made to the Buyer while the Buyer
was present in the United States.
(f) At the time the buy order for the Securities was originated the
Buyer was located outside the United States and is outside the United States on
the date of the execution and delivery of this agreement and on the Closing
Date.
(g) The Buyer is aware that the Securities have not been and will not
be registered under the Act (except as may be required under the Registration
Rights Agreement) and may only be offered or sold pursuant to registration under
the Act or an available exemption therefrom.
(h) The Buyer (i) will not, during the period commencing on the
Closing Date and ending 40 days after the Closing Date (the "Restricted
Period"), offer or sell the Securities in the United States, to a U.S. Person or
for the account or benefit of a U.S. Person or other than in accordance with
Rule 903 or 904 and all other sections, as applicable, of Regulation S, and (ii)
will, after the expiration of the Restricted Period, offer, sell, pledge or
otherwise transfer the Securities only pursuant to registration under the Act or
an available exemption therefrom and, in any case, in accordance with applicable
federal and state securities laws.
(i) The Buyer and its affiliates have complied, and will comply, with
the offering restrictions, and any other requirements, of Regulation S.
(j) The transactions contemplated by this Agreement (i) have not been
pre-arranged by the Buyer with a purchaser located in the United States which is
a U.S. Person, and (ii) are not part of a plan or scheme by the Buyer to evade
the registration provisions of the Act.
(k) The Buyer will be purchasing the Securities for its account for
the purpose of investment and not (i) with a view to, or for sale in connection
with, any distribution thereof or (ii) for the account or on behalf of any U.S.
Person.
(l) Neither the Buyer nor any of its affiliates has entered, has the
intention of entering, or will during the Restricted Period enter into, with any
U.S. Person, any put option, short position or other similar instrument or
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position with respect to the Securities or securities into which the Securities
are convertible.
4. Registration Rights On or prior to the Closing Date, the Company and Buyer
-------------------
agree to execute a Registration Rights Agreement in the form substantially set
out in Annex C attached hereto.
5. Conversion of Securities The Securities may be converted into the Shares,
------------------------
as herein defined, at the option of the holder thereof under the terms set forth
in the Form of Convertible Note, attached hereto as Annex A.
6. Representations and Warranties of the Company. The Company represents and
---------------------------------------------
warrants to, and agrees with, the Buyer that:
(a) The Company has been duly incorporated and is validly existing as
a Corporation in good standing under the laws of New York.
(b) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity;
and the Company has full corporate power and authority necessary to enter into
this Agreement and to perform its obligations thereunder.
(c) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company
or any of its affiliates is required for execution of this Agreement, including,
without limitation, the issuance and sale of the Securities, or the performance
of its obligations hereunder.
(d) Except as disclosed to the Buyer or its representatives in
writing, neither the sale of Securities pursuant to, nor the performance of its
obligations under this Agreement by the Company will (i) violate , conflict
with, result in a breach of, or constitute a default (or an event which with the
giving of notice or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the articles of incorporation, charter or bye-
laws of the Company or any of its affiliates, (B) any decree, judgment, order,
law, treaty, rule, regulation or determination applicable to the Company or any
of its affiliates or any court, governmental agency or body, or arbitrator
having jurisdiction over the Company or any of its affiliates or over the
properties or assets of the Company or any of its affiliates, (C) the terms of
any bond, debenture, note or any other evidence of indebtedness, or any
agreement, stock option or other similar plan, indenture, lease, mortgage, deed
of trust or other instrument to which the Company or any of its affiliates is a
party, by which the Company or any of its affiliates is bound, or to which any
of the properties of the Company or any of its affiliates is subject, or (D) the
terms of any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company or any of its affiliates is a party to; or (ii)
result in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its affiliates.
(e) The Company has an authorized capitalization consisting of
200,000,000 shares of Common Stock, par value $.01 per share, and nil shares of
Preferred Stock, par value $ NIL per share ("Preferred Stock"). The Company
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has issued and outstanding 28869631 shares of Common Stock and nil
- ----------
shares of Preferred Stock on the date hereof. All of the issued shares of
capital stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable; prior to the Closing Date, the authorized
capitalization shall include the Securities, and upon issuance, the Shares. The
shares of Common Stock issuable upon conversion of the Securities, when issued
and delivered in accordance with the terms of the Securities, will be duly and
validly issued, fully paid and non-assessable. The issuance of the Shares will
not be in violation of any preemptive or similar rights of the holders of any
securities of the Company. The Securities (i) are free and clear of any
security interests, liens, claims or other encumbrances, (ii) have been duly and
validly authorized and on the Closing Date will be duly and validly issued,
fully paid and non assessable, (iii) will not have been, individually and
collectively, issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company, (iv) will not subject
the holders thereof to personal liability by reason of being such holders, and
(v) the Shares underlying the Securities are quoted on, and will be, following
the completion of the Restricted Period (if sold in accordance with the
provisions of this Agreement and Regulation S as then in effect), eligible for
trading on, the National Association of Securities Dealers Inc. Small
Capitalization Market ("Nasdaq").
(f) The Company is a Reporting Issuer (as defined in Regulation S)
and as such has fulfilled its reporting obligations under the Exchange Act, to
the extent set forth in such definition. The Company's stock is duly listed on
the Nasdaq and the Company has received no notice, oral or written, with respect
to its continued eligibility for such listing. The Company hereby agrees,
promptly following the Closing of the transactions contemplated by this
Agreement, to take such action to cause the Underlying Stock to be listed on
Nasdaq upon expiration of the Restricted Period. The Company further agrees, if
the Company applies to have the Common Stock traded on any other principal stock
exchange or market, it will include in such application the Shares and will take
such other action as is necessary or desirable to cause the Shares to be listed
on such other exchange or market upon expiration of the Restricted Period.
(g) The Exchange Act Reports are the only filings made by the Company
since April 30, 1995 pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act. The Company will cause its Common Stock to continue to be
registered under Section 12(g) or 12(b) of the Securities Exchange Act of 1934,
will comply in all respects with its reporting and filing obligations under said
Act, and will not take any action or file any document (whether or not permitted
by said Act or the rules thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting and filing obligations under said Act.
The Company will take all action necessary to continue the listing and trading
of its Common Stock on Nasdaq and will comply in all respects with the Company's
reporting, filing and other obligations under the bye-laws or rules of the NASD
and Nasdaq.
(h) The Company has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company
does not have any subsidiaries except as listed in Annex E hereto. The Company
and each such subsidiary, if any, is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary other than those in which the failure so to qualify would not have a
Material Adverse Effect. "Material Adverse Effect" means any adverse effect on
the business, operations, properties, prospects, or financial condition of the
entity with respect to which such term is used and which is material to such
entity.
(i) The Company had furnished or made available to the Buyer true and
correct copies of the Company's Certificate of Incorporation as in effect on the
date hereof (the "Certificate of Incorporation"), and the Company's Bye-Laws, as
in effect on the date hereof (the "Bye-Laws").
(j) The Company has delivered or made available to the Buyer true and
complete copies of the Exchange Act Reports (including, without limitation,
proxy information and solicitation materials). The Company has not provided to
the Buyer any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed. As of their respective dates, the Exchange Act Reports
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such Exchange Act
Reports, and none of the Exchange Act Reports contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Exchange Act Reports comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(k) Except as set forth in the financial statements and other
documents filed by the Company under the Exchange Act, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to April 30, 1995 and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
such financial statements, which individually or in the aggregate, are not
material to the financial condition or operating results of the Company. The
Company has not provided to any Buyer any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by the
Company but which has not been so disclosed.
(l) Since April 30, 1995 there has been no material adverse change
and no material adverse development in the business, properties, operations,
financial condition, results of operations or prospects of the Company, except
as disclosed in accordance with the Exchange Act.
(m) There is no material action, suit, proceeding, inquiry or to the
knowledge of the Company or any of its subsidiaries, investigation before or by
any court, public board, government agency, self-regulatory organization or body
pending or to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company or any of its subsidiaries, except
as disclosed in the SEC documents.
(n) Neither the Company, nor any or its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of the Securities under the Act.
(o) The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, finder's fees or similar payments
by the Buyer relating to this Agreement of the transactions contemplated hereby.
(p) As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, free of preemptive
rights, shares of Common Stock for the purpose of enabling the Company to
satisfy any obligation to issue shares of its Common Stock upon conversion of
the Securities; provided, however, that the number of shares so reserved shall
at all times be at least 10,000,000 . The number of shares so
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reserved may be reduced by the number of shares actually delivered pursuant to
the conversion of the Securities (provided that in no event shall the number of
shares so reserved be less than the number required to satisfy the remaining
conversion rights on the unconverted Securities) and the number of shares so
reserved shall be increased to reflect stock splits and stock dividends and
distributions.
(q) The Company will take all steps necessary to preserve and
continue the corporate existence of the Company.
(r) No legend has been or shall be placed on the Securities or share
certificates representing the Securities or Shares and no note or stock transfer
instructions have been or shall be given to the Company's transfer agent with
respect thereto other than as set forth in Section 10.
(s) Based upon the truth and accuracy of the representations and
warranties made by the Buyer, the sale of the Securities pursuant to this
Agreement will be made in accordance with the provisions and requirements of
Regulation S and applicable state law.
(t) No offer to sell the Securities was made by the Company to any
person in the United States.
(u) None of the Company, any affiliate of the Company, or any person
acting on behalf of the Company or any such affiliate has engaged, or will
engage, in any Directed Selling Efforts as that term is defined in Regulation S
with respect to the Securities nor any general solicitation of the Securities.
(v) The transactions contemplated by this Agreement (i) have not been
pre-arranged with a purchaser who is in the United States or is a U.S. Person,
and (ii) are not part of a plan or scheme to evade the registration provisions
of the Act.
(w) The Company undertakes and agrees to make all necessary filings
in connection with this offering as required by the laws and regulations of all
appropriate jurisdictions and securities exchanges in the United States of
America.
(x) Each party shall indemnify the other against any loss, cost or
damages (including reasonable attorney's fees and expenses) incurred as a result
of such parties' breach of any representation, warranty, covenant or agreement
in this Agreement.
7. Offering Materials. All offering materials and documents used in
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connection with offers and sales of the Securities prior to the expiration of
the Restricted Period referred to in section 3(h) hereof shall include
statements to the effect that the Securities have not been registered under the
1933 Act and that the Buyer, may not directly or indirectly offer or sell the
Securities in the United States or to a U.S. Persons (other than distributors)
unless the Securities are registered under the 1933 Act, or an exemption from
the registration requirements of the 1933 Act is available. Such statements
shall appear (1) on the cover of any prospectus or offering circular used in
connection with the offer or sale of the Securities (2) in the underwriting
section of any prospectus or offering circular used in connection with the offer
or sale of the Securities, and (3) in any advertisement made or issued by
Seller, Buyer, any other distributor, any of their respective affiliates, or any
person acting on behalf of any of the foregoing. Seller represents that all
offering materials and documents used in connection with the offers and sales of
the Securities prior to the Closing of the transactions contemplated herein have
complied with the foregoing.
8. Covenants of the Company. (a) The Company agrees that during the period
---------------------------
beginning on the date hereof and ending 90 days following the Closing Date, the
Company will not, without the prior written consent of a "majority-in-interest"
of the Buyers, negotiate or contract with any party to obtain additional equity
financing (including debt financing with an equity component) in any form (the
"Future Offerings"). In addition, the Company will not conduct any Future
Offerings during the period beginning on the 90th day following the date hereof
and ending 90 days following the Closing Date unless it shall have first
delivered to the Buyers at least ten (10) business days prior to the closing of
such Future Offering, written notice describing the proposed Future Offering,
including the terms and conditions thereof, and providing the Buyers an option
during such ten (10) day period to purchase all or any portion of their "pro-
rata" share of the securities being offered in the Future Offerings on the same
terms as contemplated by such Future Offering (the limitations referred to in
this and the immediately preceding sentence are collectively referred to as the
"Capital Raising Limitation"). The Capital Raising Limitation shall not apply
to any transaction involving the Company's commercial banking arrangements or
issuances of securities in connection with a merger, consolidation or sale of
assets, or in connection with any strategic partnership or joint venture (the
primary purpose of which is not to raise equity capital), or in connection with
the disposition or acquisition of a business, product or license by the Company
(so long as the securities so issued are "restricted securities" within the
meaning of Rule 144 under the 1933 Act and do not carry registration or piggy
back rights for at least 360 days from the date of this Agreement) or exercise
of options by employees, consultants or directors. The terms (i) "majority-in-
interest" means Buyers holding more than 50% of the Common Stock underlying the
Securities (treating the Securities on an as converted basis) and (ii) "pro-rata
share" means the principal amount of the Securities initially purchased divided
by the aggregate principal amount of all Securities sold hereunder.
(b) The parties shall use their best efforts timely to satisfy each of the
conditions described in Section 9 of this Agreement.
(c) So long as the Buyers beneficially own any of the Securities, the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination.
(d) The Company agrees to send the following reports to each Buyer until
such Buyer transfers, assigns, or sells all of the Securities: (i) within ten
(10) days after the filing with the SEC, a copy of its Annual Report on Form 10-
K, its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; and
(ii) within one (1) day after release, copies of all press releases issued by
the Company or any of its subsidiaries.
(e) The Company shall at all times have authorized, and reserved for the
purpose of issuance, a sufficient number of shares of Common Stock to provide
for the full conversion of the outstanding Securities and issuance of the
Conversion Shares in connection therewith (based on the Conversion Price of the
Securities in effect from time to time). In that regard, on the Closing Date,
the Company shall have at least 10,000,000 shares reserved for issuance upon
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conversion of the Securities (subject to adjustment in order to comply with the
immediately preceding sentence); provided that the Company shall not reduce the
number of shares of Common Stock reserved for issuance upon conversion of the
Securities without the consent of a majority-in-interest of the Buyers, which
consent will not be unreasonably withheld.
(f) So long as the Buyer beneficially owns any Securities, the Company
shall maintain its corporate existence, except in the event of a merger,
consolidation or sale of all or substantially all of the Company's assets, as
long as the surviving or successor entity in such transaction (i) assumes the
Company's obligations hereunder and under the agreements and instruments entered
into in connection herewith and (ii) is a publicly traded corporation whose
Common Stock is listed for trading on the AMEX, the NYSE or the NASDAQ.
(g) The Company and the Buyers agree that the Closing Date shall be deemed
to be a conclusion of the offering of the Securities contemplated hereby. The
Company acknowledges and agrees that, for purposes of clarifying and specifying
the applicable Restricted Period under Regulation S, the Buyers intend to
observe as the Restricted Period (as defined in Regulation S) for the
Securities, the period of 40 days commencing on the Closing Date and ending 40
days thereafter.
(h) The Conversion Shares and the certificates evidencing the same shall
at all times be free of legends (except as provided in Section 11 below), "stock
transfer restriction." or other restrictions, except for covenants of the Buyers
expressly set forth in this Agreement.
9. Conditions Precedent to the Buyers' Obligation. The obligations of the
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Buyer hereunder are subject to the performance by the Company of its obligations
hereunder and to the satisfaction of the following additional conditions
precedent:
(a) The Buyer shall receive, on the Closing Date, an opinion of
independent counsel to the Company, dated the Closing Date, confirming the
representations made by the Company in Sections 6(a) through and including 6(f),
6(h) and 6(m) hereof, and such other matters as Buyer reasonably requests. The
form of such opinion shall be as set forth in Annex D hereof.
(b) Delivery of the notes representing the Securities with
restrictive legend to the Escrow Agent as set forth herein.
(c) The Company shall have delivered to the Buyer a certificate in
form and substance reasonably satisfactory to the Buyer, executed by an
executive officer of the Company, to the effect that all the conditions to the
Closing shall have been satisfied and the representations and warranties of the
Company herein are true and correct as of the date when made and as of the
Closing Date, and certifying as to the Company's Certificate of Incorporation,
Bye-Laws, resolutions authorizing transaction, and incumbency of Company
officers.
(d) The Company and the Buyer shall have entered into the
Registration Rights Agreement contemplated by Section 4.
10. Legends. (a) The certificates representing the Securities and the Shares
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issued during the Restricted Period, shall bear the following legend (the
"Legend"):
"The securities represented hereby have been issued pursuant to Regulation
S promulgated under the Securities Act of 1933, as amended (the "1933
Act"), and have not been registered under the 1933 Act. Such securities
may not be transferred, offered or sold prior to the end of the forty (40)
day period (the "Restricted Period") commencing on July 5 , 1996 unless
---
such transfer, offer or sale is made in an "offshore transaction" and not
to or for the account of or benefit of a "U.S. Person" (as such terms are
defined in Regulation S) and is otherwise in accordance with the
requirements of Regulation S. Following expiration of the Restricted
Period, the securities represented hereby may not be offered, sold or
otherwise transferred in the United States or to a U.S. Person unless the
securities are registered under the 1933 Act and applicable state
securities laws, or such offers, sales and transfers are made pursuant to
an available exemption from the registration requirements of those laws."
(b) Following the expiration of the Restricted Period, the Company
will remove or will promptly instruct its transfer agent to remove the Legend
from the Securities and, if applicable, from the Shares issued during the
Restricted Period (and will instruct its transfer agent to issue without the
Legend, the Shares issuable upon any conversion or exercise occurring after the
Restricted Period), if the Buyer holding such Securities or any other person in
whose name such certificates have been or are to be issued shall have delivered
a certificate (a "Removal Certificate") to the Company to the following effect:
"The undersigned acknowledges that the securities to which this certificate
relates have not been registered under Securities Act of 1933, as amended
(the "1933 Act") and that offers, sales or other transfer of such
securities must be made in compliance with Regulation S promulgated under
the 1933 Act, pursuant to an effective registration statement under the
1933 Act or pursuant to an available exemption from registration, and the
undersigned certifies that the undersigned has not made, nor will the
undersigned make or cause to be made, any offer, sale or other transfer of
such securities, in violation of the 1933 Act, other applicable securities
laws or the rules and regulations of the Securities and Exchange
Commission."
(c) Upon the submission, at any time after the expiration of the
Restricted Period, by a Buyer of a written request for legend removal for the
purpose of a bona fide pledge or deposit of the Securities with a margin
account, together with the certificates for which the legend removal is being
requested, the Company will reissue or will promptly instruct its transfer agent
to reissue the certificates representing the Securities to be so pledged or
deposited without the Legend, and no Removal Certificate shall be required to be
delivered in connection therewith.
(d) Notwithstanding the provisions of this Section 11, if with
respect to the Company's receipt of a Removal Certificate from any person, prior
to any removal of the Legend, there shall have been after the date hereof any
amendment to the 1933 Act or Regulation S or any no action letter or
interpretative release shall have been promulgated by the Securities and
Exchange Commission after the date hereof which explicitly disallows the removal
of the Legend under the circumstances in which the request that it be removed is
being made, then the Company shall have no obligation to remove or to instruct
its transfer agent to remove the Legend, unless the Company shall have received
from the person requesting such removal a written letter of counsel to such
person reasonably acceptable to the Company and its counsel confirming that the
Legend may be so removed or share certificates may be so issued without the
Legend without violation of the 1933 Act. If the person requesting a removal of
the Legend is unable to supply the legal opinion referred to above then the
Company shall, upon demand of such person, be obligated to register the Common
Stock for resale pursuant to the terms of the Registration Rights Agreement.
11. Transfer Agent Instructions. The Company's transfer agent (the "Transfer
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Agent") will be instructed to reserve for issuance such number of shares of the
Company's Common Stock as would be issuable if the Convertible Notes were
converted on the Closing Date and such additional number of shares as, from time
to time, shall be necessary to provide for the issuance of Shares upon the
conversion of the Convertible Notes. Additionally, the Company shall deliver to
its transfer agent at closing irrevocable instructions substantially in the form
set forth in Annex B attached hereto, pursuant to which the transfer agent shall
be instructed to issue upon conversion the number of shares provided for in the
Convertible Note being converted on the terms provided for therein without
restrictive legend, registered in the names provided by the Holders. The
Company warrants and covenants that no instructions restricting the
transferability of the Securities and the Shares other than the instructions in
the immediately preceding sentence and instructions for a "stop transfer"
instruction until the end of the Restricted Period have been given, or shall be
given, to the Transfer Agent, and that the Securities and the Shares shall
otherwise be freely transferable on the books and records of the Company.
Nothing in this section, however, shall affect in any way the obligations and
agreement of the Buyer to comply with all applicable federal, state and foreign
securities laws upon resale of the Securities.
12. Miscellaneous. (a) This Agreement may be executed in one or more
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counterparts and it is not necessary that signatures of all parties appear on
the same counterpart, but such counterparts together shall constitute but one
and the same agreement.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the state of New York.
(c) This agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective successors, and no other person shall
have any right or obligation hereunder. This Agreement shall not be assignable
by either party without the prior written consent of the other, and any
assignment in violation hereof shall be void. Notwithstanding the foregoing,
the Buyer may assign its rights in this Agreement to, and the provisions of this
Agreement shall inure to the benefit of, and be enforceable by, any transferee
of any of the Securities or Shares.
(d) This Agreement together with the Note and the Registration
Rights Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersede all prior oral or written proposals or
agreements related thereto. This Agreement may not be amended or any provision
hereof waived, in whole or in part, except by a written amendment signed by both
of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year above written.
BY: MANAGEMENT TECHNOLOGIES, INC.
/s/ Peter Morris /s/ Paul Ekon
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Name: Peter Morris Name: Paul Ekon
Title. President and Chief Operating Officer Title C.E.O.
BY: RBB BANK AG
/s/ Herbert Strauss
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Name: Herbert Strauss