EXHIBIT A
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FORM OF SERIES Z 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. US
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$
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MANAGEMENT TECHNOLOGIES, INC.
9% SERIES Z CONVERTIBLE DEBENTURES DUE AUGUST 31, 1997
THIS DEBENTURE is one of a duly authorized issue of Series Z 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 Z
Convertible Debenture Due August 31, 1997, in an aggregate principal amount of
$3,300,000.
FOR VALUE RECEIVED, the Company promises to pay to
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the registered holder hereof and its successors and assigns (the "Holder"), the
principal sum of Dollars (US $ ) on August 31,
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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 Z Debenture (or one or more predecessor Series Z Debentures) is
registered on the records of the Company regarding registration and transfers of
the Series Z Debentures (the "Debenture Register"); provided, however, that the
Company's obligation to a transferee of this Series Z 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
between the Company and
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(the "Subscription Agreement"). The principal of, and interest on, this Series
Z 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 Z 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 Z Debenture on the Maturity Date, less any amounts required by law
to be deducted or withheld, to the Holder of this Series Z 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 Z
Debenture to the extent of the sum represented by such check plus any amounts so
deducted.
This Series Z Debenture is subject to the following additional provisions:
I. The Series Z Debentures are issuable in denominations of Fifty
Thousand Dollars (US$50,000) and integral multiples thereof. The Series Z
Debentures are exchangeable for an equal aggregate principal amount of Series Z
Debentures of different authorized denominations, as requested by the Holders
surrendering the same. No service charge will be made for such registration or
transfer or exchange.
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I. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Series Z 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.
I. This Series Z 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 Z Debenture, the Company and any agent
of the Company may treat the person in whose name this Series Z 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 Z 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 Z 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 Z 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 of Common Stock equal to
the Market Price (as defined below) of the Company's Common Stock. For purposes
of this Section 4(a), the "Market Price" shall be the lower of (i) 70% of the
average closing bid price of the Common Stock for the five (5) business days
immediately preceding the conversion date, or (ii) 85% of the average closing
bid price of the Common Stock for the five (5) business days immediately
preceding the subscription date by the subscriber. Such conversion shall be
effectuated by surrendering the Series Z Debentures to be converted to the
Company with the form of conversion notice attached hereto as Exhibit I,
executed by the Holder of this Series Z Debenture evidencing such Holder's
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intention to convert this Series Z 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 Z Debenture, with the
conversion notice duly executed, to the Company or, if earlier, the date set
forth in such notice of conversion if the Series Z 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) 843-7416.
(b) Notwithstanding the provisions of paragraph 4(a) hereof, the
Company is entitled, at it option, to redeem part or all of the Series Z
Debentures on the Maturity Date 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 Z 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 Z
Debenture to the extent of the sum represented by such wire or check plus any
amount so deducted.
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I. No provision of this Series Z 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 Z Debenture at the time, place, and
rate, and in the coin currency, herein prescribed.
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 Z 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 Z 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 Z
Debenture or the Subscription Agreement shall be false or
misleading in any material respect at the time made; or
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(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 Z
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
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(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 Z 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 Z 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
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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 Z Debenture, by acceptance hereof, agrees
that this Series Z Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Series Z 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 Z 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 Z Debenture will not
in any way be affected or impaired thereby.
12. This Series Z Debenture and the agreements referred to in this Series
Z Debenture constitute the full and entire understanding and agreement between
the Company and the Holder with respect to the subject hereof. Neither this
Series Z 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 Z Debentures and
all Debentures of this issue rank equally and ratably without priority over one
another.
14. This Series Z Debenture shall be governed by and construed in
accordance with the laws of the State of New York.
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15. As set forth herein, the Company shall use all reasonable efforts to
issue and deliver, within three business days after the Holder has fulfilled all
conditions and submitted all necessary documents duly executed and in proper
form required for conversion (the "Deadline"), to the Holder or any part
receiving a Debenture by transfer from the Holder (together, a "Holder"), at the
address of the Holder on the books of the Company, a certificate or certificates
for the number of Shares of Common Stock to which the Holder shall be entitled.
The Company understands that a delay in the issuance of the Shares of Common
Stock beyond the Deadline could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Company agrees to pay liquidated
damages to the Holder for late issuance of Shares upon conversion in accordance
with the following schedule (where "No. Business Days Late" is defined as the
number of business days beyond seven (7) business days from the date of receipt
by the Company of a Notice of Conversion and the transfer agent of all necessary
documentation duly executed and in proper form required for conversion,
including the original Debenture to be converted, all in accordance with the
Debenture, Subscription Agreement and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
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1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
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10 $5,000 + $1,000 each
Business Day Late beyond 10 days
The Company shall pay the Holder any liquidated damages incurred under this
Section by check upon the earlier to occur of (i) issuance of the Shares to the
Holder or (ii) each monthly anniversary of the receipt of the Company of such
Holder's Notice of Conversion. Nothing herein shall limit the Holder's right to
pursue actual damages for the Company's failure to issue and deliver shares of
Common Stock to the Subscriber in accordance with the terms of the Debenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated:
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MANAGEMENT TECHNOLOGIES, INC.
By:
Title:
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EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Series Z
Debenture)
The undersigned hereby irrevocably elects to convert $ of the
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above Series Z Debenture No. into Shares of Common Stock of Management
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Technologies, Inc. (the "Company") according to the conditions set forth in such
Series Z 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 Z Debenture on behalf of any U.S. Person.
Date of Conversion*
Applicable Conversion Price
Signature
[Name]
Address:
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* This original Series Z Debenture and Notice of Conversion must be received by
the Company by the fifth business date following the Date of Conversion.
PATH: office/mngmnt/eZhibit.