DRAFT - 9 MAY 1997
MULTIMEDIA TUTORIAL SERVICES, INC.
THE UNITS AND THE SHARES INCLUDED THEREIN
OFFERED HEREBY ARE SUBJECT TO
SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY
SECURITIES PURCHASE AGREEMENT
Private Offering of 10 Units at $100,000 per Unit
(Minimum Offering $100,000, up to
Maximum Offering of $1,000,000)
DESCRIPTION OF UNITS
Each $100,000 unit being offered by MultiMedia Tutorial Services, Inc.
(the "Company") shall consist of a promissory note in the principal amount of
$100,000 bearing interest at a rate of 10% per annum and in the form attached
hereto as Exhibit A (the "Note") and a number of shares of the Company's Common
Stock, par value $.01, equal to $50,000 divided by the price per share (the
"Offering Price") of the Company's Common Stock in its next offering of equity
securities for an aggregate consideration in excess of $1,000,000 (the
"Shares"). The next offering of equity securities shall include any offering of
securities convertible into equity securities and Offering Price in such event
shall mean the price at which the securities are convertible. Investors will not
receive the Shares until the Offering Price has been definitively established
and the offering has been completed. The Shares will be entitled to the
anti-dilution protection set forth in paragraph 11(i) below.
In connection with the offer and proposed issuance of up to ten (10)
units (the "Units"), of MULTIMEDIA TUTORIAL SERVICES, INC., (the "Company"), the
undersigned prospective investor (the "Investor") and the Company hereby agree
as follows:
1. Subscription. The Investor hereby subscribes for the purchase of the
Units and agrees to purchase the number of Units set forth in Paragraph 12 of
this agreement. The Company, in its sole discretion and for any reason, may
accept or reject this purchase in whole or in part at any time not later than 10
days after the receipt of this agreement.
2. Restricted Units. Except as provided in Section 3 below, Investor
recognizes that the Units, Notes, and Shares when issued will not have been
registered for public sale under the Securities Act of 1933 (the "Securities
Act"), as amended, or the securities laws of any state and that the share
certificate will bear a "Restricted Stock" legend as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF (1) AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT, OR
(2) AN OPINION OF COMPANY COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED."
3. Registration Rights. If the Company proposes to register any of its
securities under the Securities Act of 1933 (the "Act") after the date hereof
(other than pursuant to a Form S-8, S-4 or comparable registration statement) it
will include the Shares in such registration statement unless Investor requests
in writing that the Shares be excluded therefrom. It is understood that the
Company may at any time elect not to file any such registration statement, or to
withdraw the same after the filing but prior to the effective date thereof, in
which case this right shall apply to next registration statement thereafter
filed by the Company. The Company will pay all expenses of the registration
hereunder, other than the Investors' underwriting discounts, brokerage and
attorney's fees, and transfer fees and taxes. The Investor will provide the
Company with such true and accurate information regarding himself and the Shares
as may be required for such Registration Statement by the then applicable laws
and regulations.
4. Payment of Purchase Price. The Investor shall pay for the Units by
wire transfer of funds or certified or bank check.
5. Company's Condition. The Company's obligation to issue and sell the
Note and Shares shall be subject to the satisfaction (or waiver by it) of the
following conditions precedent:
(a) Performance. The Investor shall have tendered payment
for the Units.
(b) Reservations. Each representation and warranty made
by the Investor in this agreement shall be true and
correct in all material respects as though made on
and as of the Closing Date.
(c) Legality. No change shall have occurred in any law,
rule or regulation that would prohibit the
consummation of any transaction contemplated hereby.
(d) Litigation. No action, proceeding or investigation
shall have been commenced or threatened, nor shall
any other judgment or decree have been issued or be
proposed to be issued by any court, agency or
authority to set aside, restrain, enjoin or prevent
the consummation of any transaction contemplated
hereby.
6. Representations and Warranties. The Investor makes the
representations declarations and warranties set forth in this Section with the
intent that the same may be relied upon in determining the Investor's
suitability as a purchaser of the Units. If the Investor includes or consists or
more than one person or entity, the obligations of the Investor shall be joint
and several and the representations and warranties herein contained shall be
deemed to be made by and be binding upon each such person, or entity and their
respective legal representatives, heirs, executors, administrators, successors
and assigns.
(a) No Regulatory Review. The Investor is aware that this
is a limited private offering and that no federal,
state or other agency has made any finding or
determination as to the fairness of the investment
nor made any recommendation or endorsement of the
Units.
(b) Ability to Evaluate. The Investor, by reason of the
Investor's knowledge and experience in financial and
business matters, is capable of evaluating the risks
and merits of an investment in the Units.
(c) Investment Intent. The Investor acknowledges that the
purchase of the Units hereunder is being made for the
Investor's own account, for investment purposes
MultiMedia Media Tutorial, Inc. Page 3.
Securities Purchase Agreement
only and not with the present intention of
distributing or reselling the Units, the Note or
Shares in whole or in part. The Investor further
understands that the Units are not being sold to the
Investor in a transaction registered under the
Securities Act of 1933, as amended (the "Act"), or
any other state securities laws. As a result, the
Investor understands that there will be restrictions
on the transfer and sale of the Units and the
Securities represented thereby. The Investor further
understands that the Company will file a Registration
Statement on Form S-3 or other such form as may be
required with the SEC, with respect to the Shares
included in the Units. The Investor hereby agrees not
to sell or otherwise transfer the Shares until the
Investor has received notice from the Company that
the Registration Statement has been declared
effective. Investor hereby agrees that any exercise
of the registration rights granted hereby or sale of
the Shares pursuant to such registration shall be
made only in a manner consistent with the
representations and warranties made by Investor to
the Company hereunder. Investor understands that the
SEC may in its discretion comment on certain aspects
of the Registration Statement and the transaction and
that such comments may cause delay in the
Registration Statement becoming effective. The
Company shall have no liability to Investor on
account of any such delay initiated by the SEC.
(d) Investment Information. The Investor has received and
reviewed pertinent information regarding the Company,
including the most recent SEC Forms 10-KSB and 10-QSB
prior to the execution of this Agreement and is
capable of understanding and evaluating the
information contained therein. Investor has had the
opportunity to make inquiries regarding the Company's
affairs and has received satisfactory responses
thereto. Specifically, the Investor is fully aware of
the risks relating to the business of the Company and
purchase of the Units, which include, but are not
limited to, the facts that the Company has a limited
history of operations, and that such operations have
been unprofitable as of February 28, 1997. The
Investor will rely solely upon its independent
investigation and analysis in making the decision to
purchase the Units. In particular, and without
limiting the generality of the foregoing, the
Investor has not relied on, and the Investor's
decision to subscribe for Units has not been
influenced by: (I) newspaper, magazine or other media
articles or reports related to the Company or its
business; (ii) promotional literature or other
materials used by the Company for sales or marketing
purposes, or (iii) any other written or oral
statement of the Company, X.X. Xxxxx & Associates, X.
X. Xxxxx & Company, Private Investors Equity Group,
Target Capital, their representatives, officers,
employees, or any other persons purporting to
represent the Company. The Investor has had the
opportunity to discuss all aspects of this
transaction with management of the Company, has made
or has had the opportunity to make such inspection of
the books and records of the Company as the Investor
has deemed necessary in connection with this
investment, and any questions asked have been
answered to the satisfaction of the Investor.
(e) Short and Other Positions. The Investor represents
that it does not maintain a short position in any
securities of the Company at the time of execution
hereof,
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Securities Purchase Agreement
and represents that it will not "short sell" the
Common Stock during the period when holders own the
Units, Notes, or Shares. Investor will not acquire
any interest in the Common Stock of the Company until
such time as the Company shall advise the Investor
that public disclosure has been made of any
confidential information which Investor may have
received from the Company in connection with this
offering.
(f) Confidentiality. The Investor understands that this
offering is confidential. The Investor will not
distribute information on this offering to anyone
other than such legal or financial advisors as the
Investor has deemed necessary for purposes of
evaluating an investment in the Units.
(g) Authorization and Formation of Investor. The
Investor, if a corporation, partnership, trust or
other form of business entity, is authorized and
otherwise duly qualified to purchase and hold the
Units and underlying stock and such entity has not
been formed for the specific purposes of acquiring
Units in this offering. If the Investor is one of the
aforementioned entities, it hereby agrees that upon
request of the Company it will supply the Company
with any additional written information that may be
requested by the Company.
(h) Accredited Investor Status. The Investor is an
"accredited investor" as such term is defined in Rule
501(a) of Regulation D under the Act and within the
meaning of similar regulations under state securities
laws for the reasons indicated in the "Investor
Acknowledgments" accompanying this Agreement. If the
Investor is an individual, he or she is of majority
age and his or her marital status is as indicated in
the "Investor Acknowledgments." If the Investor is an
entity, the person executing this Securities Purchase
Agreement on behalf of the Investor is of majority
age. Investor has not relied upon the advice of a
"Purchaser Representative" (as defined in Regulation
D) in evaluating the risks and merits of this
investment.
(i) Restriction on Resale of Shares. Notwithstanding the
effectiveness of the Registration Statement, the
Investor shall not sell the Shares without the prior
written consent of the Company and of any underwriter
of any public offering of the Company's securities
during the restricted periods set forth in this
paragraph 6(i). This restriction shall apply to
one-half of the Shares for six months from the date
of the offering in which the Offering Price is
determined and for one-half of the Shares until the
first anniversary of the date of such offering. The
Investor further agrees that such periods may be
extended to the extent mandated by the Securities and
Exchange Commission or the Nasdaq Stock Market, Inc.
in connection with any public offering of the
Company's securities filed prior to the first
anniversary of the date hereof.
7. Reliance on Representations and Warranties: Indemnity. The Investor
understands that the Company will rely on the representations and warranties of
the Investor herein in determining whether a sale of the Units and underlying
securities to the Investor is in compliance with federal and applicable state
securities laws. The Investor hereby agrees to indemnify the Company and its
affiliates, and holds the
MultiMedia Media Tutorial, Inc. Page 5.
Securities Purchase Agreement
Company and its affiliates and agents harmless from and against any and all
liability, damage, cost or expense (including reasonable attorneys' fees)
incurred on account of or arising out of: (a) any inaccuracy in the Investor's
declarations, representations and warranties set forth in this Subscription
Agreement; (b) the disposition of any Shares which the Investor will receive,
contrary to the Investor's declarations, representations and warranties in this
Subscription Agreement; (c) any lawsuit or proceeding based upon a claim that
said declarations, representations or warranties were inaccurate or misleading
or otherwise cause for obtaining damages or redress from the Company or any of
its affiliates or the disposition of all or any part of the Investor's Units or
underlying securities and (d) the Investor's failure to fulfill any or all of
the Investor's obligations herein.
8. Updating Information. All of the information set forth herein with
respect to the Investors, including, without limitation, all of the
representations and warranties set forth in Paragraph 6 of this agreement, is
correct and complete as of the date hereof and, if there should be any material
change in such information prior to the acceptance of this subscription by the
Company, the Investor will immediately furnish the revised or corrected
information to the Company.
9. Notices. Any notice or other communications required or permitted
hereunder shall be sufficiently given if in writing and sent by registered or
certified mail, postage prepaid, return receipt requested, if to the Company at
the address set forth on the first page of this Subscription Agreement, and to
Investor, at the address set forth in Paragraph 12 of this Subscription
Agreement, or, to such other address as either the Company or the Investor shall
designate to the other by notice in writing in accordance with Paragraph 9.
10. Governing Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of New York.
11. Representations and Warranties of the Company. The Company
represents and warrants to Investor as follows:
(a) The Company has legal capacity, power and authority
to enter into and perform this Agreement and to
consummate the transaction contemplated herein.
(b) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal,
valid and binding obligation of the Company,
enforceable against the Company in accordance with
its terms.
(c) 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 Company and Company's properties,
will not conflict with, constitute a default under,
or result in the breach of any contract agreement or
other instrument to which the Company is a party or
is otherwise bound and no consent, authorization or
order of, or filing or registration with, any court
or governmental agency is required for the execution,
delivery and performance of this agreement.
(d) There is no litigation or proceeding or, to the best
of the Company's knowledge, threatened, against the
Company which would affect the validity or
performance
MultiMedia Media Tutorial, Inc. Page 6.
Securities Purchase Agreement
of this agreement.
(e) Upon consummation of the transaction contemplated
hereby, the Investor will own the Units free and
clear of all liens, claims charges and other
encumbrances and the delivery of the Shares to
Investor pursuant to this agreement will transfer
legal and valid title thereto, free and clear of all
liens, claims, charges and other encumbrances.
(f) The Company will pay all transfer fees and expenses.
(g) The Shares when issued and delivered will be duly and
validly authorized and issued fully paid and
nonassessable and will not subject the holders
thereof to personal liability by reason of being such
holders. There are no preemptive rights of any
shareholder of the Company.
(h) The Company hereby agrees to indemnify and hold
harmless the Investor from and against any liability,
damage, cost or expense incurred as a result of
breach by the Company of any representation, warranty
or covenant of the Company hereunder.
(i) In the event of the issuance by the Company prior to
the end of the one-year period of restriction on
resale of the Shares set forth in paragraph 6(i) of
Common Stock for a value less than the Offering Price
(the "Reduced Offering Price"), the Company will
issue to the Investor sufficient additional shares of
Common Stock to equal, together with the Shares
already issued to the Investor, the number of shares
of Common Stock which would have been issuable to the
Investor had the Offering Price hereunder been the
Reduced Offering Price. For example, if the Investor
purchased one Unit hereunder and the Offering Price
was $5.00 per share, the Investor would have received
10,000 Shares. If the Reduced Offering Price is $4.00
per share, then the Investor shall be issued 2,500
additional Shares since at the Reduced Offering Price
the Investor would have been entitled to receive
12,500 shares. The provisions of paragraph 3 shall
apply to any additional Shares issued pursuant to
this paragraph 11(i).
MultiMedia Media Tutorial, Inc. Page 7.
Securities Purchase Agreement
Print or Type Name of Investor:
12. Signatures. The Investor declares under penalty of perjury that the
statements, representations and warranties contained herein and in the following
Investor Acknowledgments are true, correct and complete and that this Securities
Purchase Agreement was executed at:
(City and State) (City and State)
Number of Units @ $100,000 per Unit
---------------------------
Total Purchase Price $
---------------------
Funds Should be Wired in Accordance with Section 4 of this Agreement.
Exact Name(s) in which Ownership of the Shares is to be Registered:
Address:
---------------------------------------------------------------
City, State Zip Code:
--------------------------------------------------
Phone Number: Fax Number:
------------------------------ ----------------
Investor Joint Investor (if necessary)
-----------------------------------------------------------------------
(Print Name) (Print Name)
(Signature) (Signature)
(Title) (Title)
Date: Date:
------------------------- -----------------------
Tax I.D. #
-------------------
RECEIVED AND ACCEPTED for MultiMedia Tutorial Services, Inc.:
By: Amount: $
----------------------------- ---------------
Name: Number of Units:
--------------------------- -----------
Title: Date:
-------------------------- -------------------
MultiMedia Media Tutorial, Inc. Page 8.
Securities Purchase Agreement
Exhibit A
$100,000
PROMISSORY NOTE
(the "Note")
Brooklyn, New York May ___, 1997
MULTIMEDIA TUTORIAL SERVICES, INC., a Delaware corporation (hereinafter
called the "Corporation"), for value received, hereby promises to pay to the
order of ________________ (hereinafter the "Holder") the principal sum of
$100,000 on or before six months from the date hereof, together with interest
accruing at the rate of 10% per annum and payable at maturity or, if earlier,
out of the proceeds of any equity sales by the Corporation before any other
indebtedness of the Corporation is repaid. In the event that such proceeds of
equity sales are insufficient to make repayment in full, such repayment shall be
applied pro rata among all Notes issued pursuant to Securities Purchase
Agreements substantially identical to the Agreement to which this form of
Promissory Note is an exhibit. Principal and interest shall be payable at the
address of the Holder set forth in the Securities Purchase Agreement of even
date herewith.
1. An "event of default" with respect to this Note shall exist if any of
the following shall occur:
(a) The Corporation shall breach or fail to comply with any provision
of this Note and, except with respect of repayment, such breach or
failure shall continue for sixty (60) days.
(b) A receiver, liquidator or trustee of the Corporation or of a
substantial part of its properties shall be appointed by court order
and such order shall remain in effect for more than forty-five (45)
days; or the Corporation shall be adjudicated bankrupt or insolvent; or
a substantial part of the property of the Corporation shall be
sequestered by court order and such order shall remain in effect for
more than forty-five (45) days; or a petition to reorganize the
Corporation under any bankruptcy, reorganization or insolvency law
shall be filed against the Corporation and shall not be dismissed
within forty-five (45) days after such filing.
(c) The Corporation shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any bankruptcy,
reorganization or insolvency law, or shall consent to the filing of any
petition against it under any such law.
(d) The Corporation shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally
as they become due, or consent to the appointment of a receiver,
trustee or liquidator of the Corporation, or all or any substantial
part of its properties.
(e) The Corporation shall be in default of any other debt which is
senior to this Note.
(f) The Corporation shall promptly notify the Holder of any event of
default of which the Corporation has knowledge.
2. (a) If an event of default shall occur, the Holder may, in addition to
such Xxxxxx's other remedies, by written notice to the Corporation,
declare the principal amount of this Note, together with all interest
accrued thereon, to be due and payable immediately.
MultiMedia Media Tutorial, Inc. Page 9.
Securities Purchase Agreement
(b) Alternatively, if an event of default shall occur, Holder shall
have the option upon written notice to the Corporation, to convert the
amount then outstanding under this Note into shares of Common Stock of
the Corporation at a rate of $0.125 per share (the "Stock"). Any such
conversion shall satisfy in full the Corporation's obligations under
this Note. The Corporation shall prepare and file a registration
statement and such other documents, including a prospectus, as may be
necessary in the opinion of counsel to the Corporation, in order to
comply with the provisions of the Securities Act of 1933, so as to
permit a public offering and sale of the Stock by the Holder. The
Corporation shall be responsible for all expenses of the registration
other than underwriter or broker fees or discounts and Holder's legal
fees. The Corporation shall file such registration statement within
thirty (30) days of the issuance of the Stock or, if such issuance
occurs within two (2) months (either before or after) of the
Corporation's fiscal year end, such registration statement shall be
filed within sixty (60) days of the filing of the Corporation's 10-K
annual report for such fiscal year. Holder will provide the Corporation
with such true and accurate information regarding himself and the Stock
as may be required for such registration statement by the then
applicable laws and regulations.
3. Miscellaneous.
(a) All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
telegram, recognized overnight mail carrier, telex or other standard
form of telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to the address set forth in the Holder's Securities Purchase
Agreement of even date herewith or to such address as such Holder shall
furnish to the Corporation in accordance with this Section, or (b) if
to the Corporation, to it at its headquarters office, or to such other
address as the Corporation shall furnish to the holder in accordance
with this Section.
(b) THIS NOTE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF NEW YORK APPLICABLE TO AGREEMENTS MADE TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.
(c) The Corporation waives protest, notice of protest, presentment,
dishonor, notice of dishonor and demand.
(d) If any provision of this Note shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof, but this Note shall be construed as
if such invalid or unenforceable provision had never been contained
herein.
(e) The waiver of any event of default or the failure of the Holder to
exercise any right or remedy to which it may be entitled shall not be
deemed a waiver of any subsequent event of default or of the Holder's
right to exercise that or any other right or remedy to which the Holder
is entitled.
(f) The Holder of this Note shall be entitled to recover his legal and
other costs of collecting on this Note, and such costs shall be deemed
added to the principal amount of this Note.
(g) In addition to all other remedies to which the Holder may be
entitled hereunder, Holder shall
MultiMedia Media Tutorial, Inc. Page 10.
Securities Purchase Agreement
also be entitled to decrees of specific performance without posting
bond or other security.
(h) This Note may not be transferred without the prior written consent
of the Corporation except if an event of default has occurred.
IN WITNESS WHEREOF, the Corporation has caused this Note to be duly
executed on the date first written above.
MULTIMEDIA TUTORIAL SERVICES, INC.
By:_______________________________
Title:
