EXHIBIT 10.25
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (which together with the attached
exhibits, are referred to herein as "Agreement") is entered into by and between
Marketing Worldwide Corporation, a Delaware corporation (the "Company"),
Colortek Inc., a Michigan corporation ("Colortek"), and the selling stockholders
of Colortek, Xxxxxxx X. Xxxxxxxxxx ("Xxxxxxxxxx") and Xxxxxxxxx Group, Inc., a
Kentucky corporation ("Xxxxxxxxx") (collectively, the "Colortek Shareholders")
and Xxxxxxxx X. Xxxxxxxxxx ("Xxxxx Xxxxxxxxxx").
WHEREAS, the Colortek Shareholders wish to sell and the Company desires
to purchase the Colortek Shares, as defined below, in exchange for newly issued
shares of common stock of the Company, as defined below, upon the terms and
conditions set forth in this Agreement.
WHEREAS, the Company, Colortek, the Colortek Shareholders and Xxxxx
Xxxxxxxxxx are willing to enter this Agreement based upon the representations
and warranties of each of them to the other(s), as set forth below.
WHEREAS, the parties intend for the purchase and sale of the securities
under this Agreement to be exempt from registration under the Securities Act of
1933, as amended (the "Act"), based upon the exemptions found in Section 4(1)
and 4(2) of the Act.
NOW, THEREFORE, in consideration of and in reliance on the mutual
promises and representations and warranties contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Colortek Shareholders and the Company agree as follows:
1. Definitions
1.1 "Associate" means with respect to any person, (i) any member of the
immediate family of such person, (ii) any entity of which such person, or any
member of the immediate family of such person, directly or indirectly, owns any
equity interest, (iii) any entity of which such person, or any member of the
immediate family of such person, serves as a director or executive officer, and
(iv) any entity that directly or indirectly controls, or that is directly or
indirectly controlled by or under common control with, such person or any member
of the immediate family of such person.
1.2 "Company Disclosure Documents" means the Company Financials (as
defined herein), material agreements and corporate documents, and other
information related to the Company material to its operations for the two (2)
fiscal years ending September 30, 2006, and any and all interim data or filings
through the date hereof to be provided by the Company pursuant to this
Agreement, including but not limited to the Company Financials (as defined
herein) and other information required pursuant to the provisions of the
Securities Exchange Act of 1934 (the "'34 Act") or the Securities Act of 1933,
as amended (the "'33 Act").
1.3 "Liabilities" means liabilities, obligations, or commitments of any
nature, absolute, accrued, contingent, or otherwise, known or unknown, whether
matured or unmatured.
1.4 "Colortek Shares" means one hundred percent (100%) the issued and
outstanding shares of Colortek, comprising 60,000 shares of common stock.
1.5 "Company Shares" means Four Hundred Thousand (400,000) shares of
the Company's $.001 par value common stock with a restrictive legend.
1.6 "Colortek Disclosure Documents" means the Colortek Financials as
defined herein.
1.7 "Colortek Assets" means assets (excluding the books and records of
the Colortek Shareholders), properties, leases, contracts, agreements, and
rights of Colortek of every type and description, tangible and intangible,
including without limitation, all cash on hand and in banks.
1.8 "Person" means any individual, corporation, professional
corporation, limited partnership, association, or any other legal entity through
which an individual or business might organize himself or itself.
2. Purchase and Sale of Colortek Shares
2.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, on the Closing Date, as defined in Paragraph 3.1, the Colortek
Shareholders agree to sell and transfer the Colortek Shares to the Company, and
the Company agrees to purchase the Colortek Shares for the consideration set
forth in this Agreement.
2.2 Purchase Price. In exchange for the Colortek Shares, the Company
shall issue and deliver to the Colortek Shareholders:
(A) The Company Shares. The Company Shares delivered at Closing shall
be allocated 50% to Xxxxxxxxxx, or his designees (200,000 shares) and 50% to
Xxxxxxxxx (200,000 shares).
3. Closing
3.1 Date and Place. The closing of the delivery and transfer of the
Colortek Shares (the "Closing") shall occur on a date ("Closing Date") to be
mutually agreed upon by the Colortek Shareholders and the Company after exchange
of all books, records, financial information, documents, and other materials
reasonably deemed necessary to completion of the transaction contemplated under
this Agreement.
3.2 Transactions and Document Exchange at Closing. At the Closing, the
following transactions shall occur and documents shall be exchanged, all of
which shall be deemed to occur simultaneously:
(A) By Colortek and the Colortek Shareholders. Colortek and the
Colortek Shareholders will deliver, or cause to be delivered, to the Company:
(1) The documents necessary to transfer the Colortek Shares to the
Company pursuant to this Agreement, in proper form and substance reasonably
acceptable to the Company, including the Assignments of Shares Separate from
Certificates shall be in the form set forth in Schedule 3.2(A)(1);
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(2) Such other documents, instruments, and/or certificates, if any, as
are required to be delivered pursuant to the provisions of this Agreement, or
which are reasonably determined by the parties to be required to effectuate the
transactions contemplated in this Agreement, or as otherwise may be reasonably
requested by the Company to further the intent of this Agreement;
(3) The Colortek Shareholders shall also deliver or cause to be
delivered all books and records of Colortek to the extent available and
necessary to perform an audit of its book as of its most recent year end and all
interim periods prior to the Closing Date in accordance with Regulation S-X. The
books and records shall present fairly the financial condition and results of
operations of Colortek since August 30, 2005, in accordance with generally
accepted accounting principles applied on a basis consistent with prior
accounting periods.
(B) By the Company. The Company will deliver, or cause the following to
be delivered, to the Colortek Shareholders:
(1) Stock certificate(s) in the name of the Colortek Shareholders
aggregating 400,000 shares.
(2) Such other documents, instruments, and/or certificates, if any, as
are required to be delivered pursuant to the provisions of this Agreement, or
which are reasonably determined by the parties to be required to effectuate the
transactions contemplated in this Agreement, or as otherwise may be reasonably
requested by the Colortek Shareholders in furtherance of the intent of this
Agreement.
(C) By Colortek and Xxxxxxxxx. Colortek and Xxxxxxxxx will execute and
deliver to each other, or cause the following to be executed and delivered to
each other:
(1) The Closing Agreement in the form set forth in Schedule 3.2(C)(1).
(2) Such other documents, instruments, and/or certificates, if any, as
are required to be delivered pursuant to the provisions of this Agreement, or
which are reasonably determined by the parties to be required to effectuate the
transactions contemplated in this Agreement, or as otherwise may be reasonably
requested by Colortek or Xxxxxxxxx in furtherance of the intent of this
Agreement.
3.3 Post-Closing Documents. From time to time after the Closing, upon
the reasonable request of any party, the party to whom the request is made shall
deliver such other and further documents, instruments, and/or certificates as
may be necessary to more fully vest in the requesting party the consideration
provided for in this Agreement or to enable the requesting party to obtain the
rights and benefits contemplated by this Agreement, including but not limited to
delivery of records of all books and records of Colortek since inception .
4. Representations, Warranties and Covenants of the Company
The Company represents and warrants to the Colortek Shareholders and to
Xxxxx Xxxxxxxxxx that:
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4.1 Organization and Authority. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the corporate power and authority to carry on its business as
now being conducted. The execution and delivery of this Agreement and the
consummation of the transactions contemplated in this Agreement have been, or
will be prior to closing, duly authorized by all requisite corporate actions on
the part of the Company. This Agreement has been duly executed and delivered by
the Company and constitutes the valid, binding and enforceable obligation of the
Company.
4.2 Ability to Carry Out Agreement. To the best of the Company's
knowledge and belief, the execution and performance of this Agreement will not
violate, or result in a breach of, or constitute a default in, any provisions of
applicable law, any agreement, instrument, judgment, order or decree to which
the Company is a party or to which the Company is subject. No consents of any
persons under any contract or agreement required to be disclosed pursuant to
this Agreement are required for the execution, delivery and performance by the
Company of this Agreement.
4.3 Capitalization of the Company. The capitalization of the Company
is, as of the date hereof, comprised of One Hundred Million (100,000,000) shares
of authorized $.001 par value common stock of which Eleven Million Three Hundred
Sixty Three Thousand Eighty (11,363,080) shares are issued and outstanding, and
Ten Million (10,000,000) shares of $.001 par value preferred stock of which
Three Million Five Hundred Thousand (3,500,000) shares of Series A Convertible
Preferred Stock are issued and outstanding. All issued and outstanding shares
are legally issued, fully paid, and non-assessable, and are not issued in
violation of the preemptive or other right of any person.
4.4 Financial Information. The Company has provided to the Colortek
Shareholders and to Xxxxx Xxxxxxxxxx, or will provide prior to Closing, copies
of its Annual Report on Form 10-KSB for the year ending September 30, 2006,
interim reports on Form 10-QSB for the periods ended December 31, 2006 and March
31, 2007 and all current reports on Form 8-K since September 30, 2006. The
reports and all other information included in such reports shall be referred to
as the "Company Financials". The availability of the Company Financials on the
website maintained by the United States Securities and Exchange Commission at
xxx.xxx.xxx shall constitute delivery for the purpose of this Agreement. The
Company has no obligations or liabilities (whether accrued, absolute,
contingent, liquidated or otherwise, including without limitation any tax
liabilities due or to become due) which are not disclosed and adequately
provided for in the Company Financials, excepting current liabilities incurred
and obligations under agreements entered into in the usual and ordinary course
of business since the date of the Company Financials, none of which
(individually or in the aggregate) are material except as expressly indicated in
the Company Financials. The Company will use its best efforts to cause Colortek
to pay its Liabilities after the Closing in a timely manner.
4.5 Opportunity to Ask Questions. The Company and its representatives
have been afforded an opportunity to ask questions of, and receive answers from,
Colortek and the Colortek Shareholders regarding Colortek, and to obtain
information to evaluate the risks and merits of the investment. All of the
Company's questions have been answered to the full satisfaction of the Company
and each representative of the Company.
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4.6 Document and Property Review. The Company confirms that all
documents, records and books pertaining to its proposed investment in the
Colortek Shares have been made available to the Company, and the Company and its
professional advisors have reviewed them, including, but not limited to the
Colortek Disclosure Documents, Colortek's Articles of Incorporation, By-Laws,
organizational resolutions, annual and periodic shareholders and directors
resolutions and meeting minutes, tax returns, bank records, financial
statements, correspondence, contracts and agreements with third parties.
Representatives of the Company have spent extensive time in the office and at
the facilities of the Colortek and have an intimate familiarity with the day to
operations of Colortek's business and the condition of all of Colortek's
equipment, business systems and accounting and bookkeeping methods and records.
4.7 Investment Intent. The Company is purchasing the Colortek Shares
for investment and not with a view to resale and/or redistribution in a manner
which would require registration under the Securities Act of 1933 or any state
securities law; the Company does not now have any reason to anticipate any
change in circumstances which would cause the Company to dispose of the Colortek
Shares and the Company can afford to bear the economic risk of the investment in
the Colortek Shares for an indefinite period of time.
4.8 No Securities Registration. The Company and each individual
constituting the Company is aware that the Colortek Shares have not been
registered and have not been reviewed, appraised, approved, or disapproved under
the Securities Act of 1933 or under any Federal or state securities laws and he
has no right to require such registration under the Securities Act of 1933 (the
"Act") or any Federal or state securities laws; that there is no public market
for the Colortek Shares and that it may not be possible to readily liquidate or
transfer the investment.
4.9 Accredited Investor Status. The Company is an "Accredited
Investor," as defined in Rule 506 promulgated under the Securities Act of 1933,
with which definition the Company is familiar.
5. Representations and Warranties of the Colortek Shareholders
The Colortek Shareholders represent and warrant to the Company that:
5.1 Organization and Authority. To the best of their knowledge,
information, and belief formed after reasonable inquiry, Colortek is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan, with the power and authority to carry on its business
as now being conducted.
5.2 Ability to Carry out Agreement. To the best of the Colortek
Shareholders' knowledge and belief formed after reasonable inquiry, the
execution and performance of this Agreement will not violate, or result in a
breach of, or constitute a default in, any provisions of applicable law, any
agreement, instrument, judgment, order or decree to which Colortek is a party or
to which Colortek is subject, other than such violations, breaches, or defaults
which, singly or in the aggregate, do not have a material adverse effect on its
business as a whole or on the enforceability or validity of this Agreement. No
consents of any persons under any contract or agreement required to be disclosed
or disclosed pursuant to this Agreement are required for the execution, delivery
and performance by the Colortek Shareholders of this Agreement.
5.3 Capitalization of Colortek. As of the date of execution of this
Agreement, the capitalization of Colortek is comprised of one class of capital
stock consisting of Sixty (60,000) shares of common stock, of which 60,000
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shares were issued and are presently outstanding and held, of record, by the
Colortek Shareholders. All of the issued and outstanding shares are duly
authorized, validly issued, fully paid, and have been offered, issued, sold, and
delivered by Colortek in material compliance with all applicable federal and
state securities laws.
5.4. Corporate Records. Copies of all other corporate books and
records, including but not limited to stock transfer ledgers, and any other
documents and records of Colortek will be provided to the Company at Closing.
Attached hereto as Schedule 5.4 are true and correct copies of the Articles of
Incorporation, as amended, of Colortek, Inc., the Bylaws of Colortek, Inc., and
the Corporate Minute Book of Colortek, Inc.
6. Representations and Warranties of Colortek. Colortek represents and
warrants, to the best of Colortek's knowledge, information and belief formed
after reasonable inquiry, that Colortek has provided to the Company, or will
provide prior to Closing, financial statements of Colortek for all fiscal years
ended since the inception of Colortek and reports for such interim periods
ending since the latest fiscal year ended, and such other documents and
information relating to Colortek's current financial condition including but not
limited to its purchase, operation and disposition, if any, of any assets and
liabilities. Such financial statements and other financial information shall be
referred to as the "Colortek Financials". Attached hereto as Schedule 6 is a
true and correct copy of the Colortek Financials, which reflect all assets and
liabilities, including any contingent liabilities of Colortek.
7. Representations and Warranties of Xxxxxxxxx. Xxxxxxxxx represents
and warrants to Colortek, to the Company, to Xxxxxxxxxx and to Xxxxx Xxxxxxxxxx
that:
7.1 Ability to Carry out Agreement. To the best of Xxxxxxxxx'x
knowledge and belief formed after reasonable inquiry, the execution and
performance of this Agreement will not violate, or result in a breach of, or
constitute a default in, any provisions of applicable law, any agreement,
instrument, judgment, order or decree to which Xxxxxxxxx is a party or to which
Xxxxxxxxx is subject, other than such violations, breaches, or defaults which,
singly or in the aggregate, do not have a material adverse effect on its
business as a whole or on the enforceability or validity of this Agreement. No
consents of any persons under any contract or agreement required to be disclosed
or disclosed pursuant to this Agreement are required for the execution,
delivery, and performance by Xxxxxxxxx of this Agreement.
7.2 Debt for Equity Exchange Agreement and Historical Debt Obligation
Release. Colortek, Xxxxxxxxxx and Xxxxx Xxxxxxxxxx are no longer liable to
Xxxxxxxxx for any claims based on or arising out of that certain $757,000
obligation (the "Historical Debt Obligation"); provided, however, that Colortek
shall remain obligated to Xxxxxxxxx under the Supply Agreement referenced in
Section 7.3 below. Xxxxxxxxx voluntarily converted the Historical Debt
Obligation into 50% of the outstanding Colortek Shares and agreed to file a
Release of Lien on the Historical Debt Obligation pursuant to a Debt for Equity
Exchange Agreement dated as of March 15, 2007, a true and correct copy of which
is set forth as an Exhibit to the Closing Agreement between Colortek and
Xxxxxxxxx that appears in Schedule 3.2(C)(1). Xxxxxxxxx has not released any
other claims against Colortek, save and except the Historical Debt Obligation.
Xxxxxxxxx expects to be paid in the ordinary course of business as an ongoing
supplier to Colortek., and, for example, it is understood that the Historical
Debt Obligation shall not include the current liabilities set forth on the April
30, 2007 Statement from Xxxxxxxxx to Colortek and liabilities relating to any
Colortek purchases from Xxxxxxxxx during the month of May, 2007. Attached hereto
in Schedule 7.2 is a true and correct copy the Xxxxxxxxx Release of Lien on the
Historical Debt Obligation.
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7.3. Supply Agreement. The terms and conditions of the Supply Agreement
described in the attached Schedule 7.3 accurately reflect the supply agreement
between Colortek and Xxxxxxxxx, and Xxxxxxxxx shall execute and deliver such
additional documentation to Colortek as Colortek may require to evidence such
Agreement. 2 Company and Colortek Indemnification.
8. The Company and Colortek will indemnify, defend and hold harmless
Xxxxxxx Xxxxxxxxxx and Xxxxx Xxxxxxxxxx (the "Indemnitees") from and shall
reimburse the Indemnitees for any and all actions, claims, losses, demands,
damages (including incidental and consequential damages), suits, obligations,
liabilities, costs (including costs of settlement), expenses (including
attorneys' fees), charges and Liabilities, whether foreseen or unforeseen, fixed
or contingent, known or unknown, which the Indemnitees may incur or which may be
imposed upon the Indemnitees as a consequence of or which relates in any way to
(a) the breach by the Company of any representation, warranty or covenant of
this Agreement,
9. Employment Agreements. At the Closing, Colortek shall enter into
Employment Agreements with Xxxxxxxxxx and Xxxxx Xxxxxxxxxx that specify the
terms and conditions of the employment relationship between Colortek and
Xxxxxxxxxx and between Colortek and Xxxxx Xxxxxxxxxx, which Employment
Agreements shall be in the forms attached hereto in Schedule 9 and hereby made a
part hereof. As partial consideration for entering the Employment Agreements,
Xxxxxxx Xxxxxxxxxx and Xxxxx Xxxxxxxxxx hereby fully release the Company and the
Company hereby fully releases Xxxxxxxxxx and Xxxxx Xxxxxxxxxx, from any and all
claims, known or unknown, arising prior to the date of this Agreement.
10. Securities Registration; Disclosure
The Colortek Shareholders understand that the securities issued by the
Company pursuant to this Agreement, have not been nor will they be registered
under the Securities Act of 1933 as amended ("'33 Act"), but are issued pursuant
to exemptions from registration including but not limited to Section 4(2) of the
'33 Act, and the Company's reliance on such exemptions in issuing the securities
is predicated in part on the representations of the Colortek Shareholders.
Each of the Colortek Shareholders represents that, by virtue of their
respective economic bargaining power or otherwise, he/she has had access to or
have been furnished with, prior to or concurrently with Closing, the same kind
of information that would be available in a registration statement under the '33
Act should registration of the securities issued pursuant to this Agreement have
been necessary, and that they have had the opportunity to ask questions of and
receive answers from the Company's officers and directors, or any party acting
on their behalf, concerning the business of the Company and that they have had
the opportunity to obtain any additional information, to the extent that the
Company possesses such information or can acquire it without unreasonable
expense or effort, necessary to verify the accuracy of information obtained or
furnished by the Company.
The Colortek Shareholders understand the Company Shares shall contain a
Rule 144 legend in substantially the form set forth below.
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND ARE "RESTRICTED
SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
11. Miscellaneous Provisions
11.1 Survival of Representations and Warranties. All representations,
warranties, and covenants made by any party in this Agreement shall survive the
Closing hereunder and the consummation of the transactions contemplated hereby
for one (1) year from the Closing Date.
11.2 Further Assurances. At any time and from time to time, after the
effective date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of this Agreement.
11.3 Waiver. Any failure of any party to this Agreement to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed. The failure of any party
to this Agreement to enforce at any time any of the provisions of this Agreement
shall in no way be construed to be a waiver of any such provision or a waiver of
the right of such party thereafter to enforce each and every such provision. No
waiver of any breach of or non-compliance with this Agreement shall be held to
be a waiver of any other or subsequent breach or non-compliance.
11.4 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.5 Governing Law. This Agreement shall be governed by the laws of the
United States, State of Michigan.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
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"Company"
MARKETING WORLDWIDE CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
"Colortek"
COLORTEK, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
"Colortek Shareholders"
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------
XXXXXXX X. XXXXXXXXXX
Owner of 30,000 Colortek shares
XXXXXXXXX GROUP, INC.
By: /s/ X.X. Xxxxx
---------------------------------
Name: X.X. Xxxxx, CEO
Owner of 30,000 Colortek shares
"Xxxxx Xxxxxxxxxx"
/s/ Xxxxxxxx X. Xxxxxxxxxx
-------------------------------------
XXXXXXXX X. XXXXXXXXXX
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