Exhibit (10)(3) Purchase Agreement MWW and MWWLLC
PURCHASE AGREEMENT
PURCHASE AGREEMENT, ("Agreement") dated as of October 31, 2003, among Marketing
Worldwide Corporation, a Delaware corporation ("Purchaser") and the members (the
"Selling Members") of Marketing Worldwide, LLC, a limited liability company
organized under the laws of Michigan ("Target") listed on the signature page
hereof.
WHEREAS, Purchaser desires to acquire from the Selling Members 100% of the
membership interests of Target (the "Target Membership Interests") for a
purchase price equal to one times the book value of Target as of the Closing
Date (the "Purchase Price");
WHEREAS, the Selling Members desire to sell the Target Membership Interests to
Purchaser for the Purchase Price and subject to the terms and conditions of this
Agreement; and
WHEREAS, Purchaser desires to purchase the Target Membership Interests from the
Selling Members for the Purchase Price and subject to the terms and conditions
of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
Definitions
"Closing Date" means October 30, 2003 or as soon thereafter as possible.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC thereunder.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in all prior comparable
periods.
"Purchase Price" has the meaning ascribed to it in Section 2.1.
"Purchaser" has the meaning ascribed to it in the forepart of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
"Target" has the meaning ascribed to it in the forepart of this Agreement.
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ARTICLE II
CONSIDERATION AND CLOSING
2.1 Purchase and Sale. On the terms and subject to the conditions of this
Agreement,
(a) At the Closing, Purchaser shall purchase from the Selling Members, free and
clear of all Liens, all of the Target Membership Interests.
(b) The Purchase Price shall be payable at the Closing as set forth below.
(c) The Purchase Price shall consist of Nine Million Six Hundred Thousand
(9,600,000) shares of Purchaser's Common Stock. (the "Shares"). Immediately
following the Closing, Purchaser shall have 10,000,000 shares of common stock
issued and outstanding and Purchaser's board of directors shall be authorized to
issue up to an additional 90,000,000 shares of common stock and up to 10,000,000
shares of preferred stock.
2.2 Closings. The Closing will take place at the offices of Weed & Co. LLP, 0000
XxxXxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 on the Closing Date
in accordance with the terms of this Agreement, or at such other place or time
as Purchaser and the Selling Members mutually agree. At the Closing, Purchaser
shall pay to the Selling Members the Purchase Price pursuant to Section 2.1.
Simultaneously, the Selling Members shall deliver to Purchaser one or more
certificates representing the Target Membership Interests together with all
necessary instruments of transfer, in form and substance reasonably satisfactory
to Purchaser. At the Closing, there shall also be delivered to Purchaser the
opinions, certificates and other contracts, documents and instruments required
to be delivered under the terms of this Agreement, including, but not limited to
the following:
(a) The appointment of three directors, nominated by the Selling
Members, to Purchaser's board followed by the immediate
resignation of all old board members.
(b) The resignation of the executive officers of the Purchaser.
2.3 Tax Free Exchange. Purchaser and the Selling Members desire, and it is a
condition precedent to the effectiveness of this Agreement and the Closing, that
the transactions contemplated by this Agreement shall be treated as a tax free
acquisition of the Membership Interests for Voting Stock of Purchaser as
contemplated by Section 368(b) and/or Section 351 of the Internal Revenue Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLING MEMBERS
The Selling Members represent and warrant to Purchaser that the statements
contained in this Article III are true and correct as of the date of this
Agreement, and will be true and correct as of the Closing Date (as though made
then and as though such Closing Date was substituted for the date of this
Agreement throughout this Article III). The Selling Members have delivered a
Disclosure Schedule (including exhibits thereto) to Purchaser setting forth
certain information, the disclosure of which is required or appropriate in
relation to any or all of the following representations and warranties.
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3.1 Organization of Target. Target is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan. The
property and business activity of target is to act as a full service wholesale
supplier of OEM (Original Equipment Manufacturer) components to the automotive
accessory market, including supplying their products directly to large scale
installation facilities for installation by the automobile manufacturer's port
and/or dealer facilities, and elsewhere.
(a) Target is duly qualified, licensed or admitted to do business and is in good
standing in those jurisdictions in which the ownership, use or leasing of its
assets and properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary.
3.2 Capitalization. As of the date hereof, and immediately prior to the
consummation of the transactions contemplated hereby and before giving effect to
such transactions, the authorized membership interests of Target consists
___________, of which the Selling Members own 100% of the legal, economic and
beneficial interests. As of the date hereof, there are no preemptive or similar
rights to purchase or otherwise acquire membership interests in Target pursuant
to any provision of law, the Charter or Operating Agreement (in each case, as
amended and in effect on the date hereof), or any agreement to which Target is a
party. All Selling Members expressly waive any rights that would otherwise cause
a termination of the Target due to this Agreement.
3.3 Financial Statements.
(a) The Selling Members have furnished or will furnish, on or before December 1,
2003, the Purchaser with true and complete copies of the audited consolidated
balance sheets of Target as of September 30, 2003 and September 30, 2002 and the
related consolidated statements of operations, statement of changes in member's
equity and cash flows for the years then ended, together with the notes thereto,
(the "Audited Financial Statements"), setting forth in each case in comparative
form the corresponding figures for the corresponding dates and periods of the
previous fiscal year, together with reports of auditors thereon. The Audited
Financial Statements fairly present in all material respects the consolidated
financial position of Target and its Subsidiaries, if any, as of the respective
dates thereof, and the results of operations, changes in stockholder's equity
and cash flows for the periods set forth therein, all in conformity with United
States GAAP.
3.4 Disclosure. This Agreement does not, and the documents and certificates
executed by the Selling Members and/or Target or otherwise furnished by the
Selling Members and Target to Purchaser do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
4. Representations and Warranties of Purchaser
Purchaser represents and warrants to the Selling Members that:
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4.1 Organization and Authority. Purchaser 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
Purchaser. This Agreement has been duly executed and delivered by Purchaser and
constitutes the valid, binding, and enforceable obligation of Purchaser.
4.2 Ability to Carry Out Agreement. To the best of Purchaser'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 Purchaser is
a party or to which Purchaser 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 Purchaser of this
Agreement.
4.3 The Shares. The Shares to be issued pursuant to this Agreement will be
issued at Closing, free and clear of liens, claims, and encumbrances, and
Purchaser has all necessary right and power to issue the Shares to the Selling
Members as provided in this Agreement without the consent or approval of any
person, firm, corporation, or governmental authority.
4.4 Capitalization of Purchaser. The capitalization of Purchaser is, as of the
date hereof, comprised of One Hundred Ten Million (110,000,000) of which stock
One Hundred Million (100,000,000) shares of the par value of $.001 each are
common stock and of which Ten Million (10,000,000) shares of the par value of
$.001 each are preferred stock. As of the date hereof, Purchaser has 400,000
shares of common stock issued and outstanding, 50,000 shares of common stock
reserved for issuance under a Private Placement and 1,250,000 shares reserved
for issuance under warrants and stock options at prices between $.50 and $1.00
per share. 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.
4.5 Contracts. Except as disclosed pursuant to this Agreement, there are no
contracts, actual or contingent obligations, agreements, franchises, license
agreements, or other commitments between Purchaser and other third parties which
are material to the business, financial condition, or results of operation of
Purchaser, taken as a whole. For purposes of the preceding sentence, the term
"material" refers to any obligation or liability that by its terms calls for
aggregate payments of more than $25,000. At Closing, Purchaser shall have (1) a
written agreement in place with Xxxxxx Xxxxxxxx for consulting services in
substantially the same form as the Consulting Agreement dated May 1, 2003 with
Marketing WorldWide LLC and (2) a written agreement with Xxxxxxx X. Xxxx of Weed
& Co. LLP. in substantially the same form as the Letter Agreement dated July 13,
2003 with Marketing WorldWide LLC.
4.6 Securities Laws. Purchaser represents that, except as disclosed, it has no
existing or threatened liabilities, claims, lawsuits, or basis for the same with
respect to its original stock issuance to its founders, any other issuance of
stock, or any dealings with its stockholders, the public, the brokerage
community, the SEC, any state regulatory agencies, or other persons. Purchaser
represents that all reports required to be filed pursuant to the '34 Act and any
applicable U.S. state "Blue Sky" laws have been filed.
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4.7 Corporate Records. Copies of all corporate books and records, including, but
not limited to, any other documents and records of Purchaser relating to the
proceeding of its shareholders and directors will be provided to the Selling
Members prior to Closing. All such records and documents are and will be
complete, true, and correct.
4.8 Approvals. Except as otherwise provided in this Agreement, no authorization,
consent, or approval of, or registration or filing with, any governmental
authority or any other person is required to be obtained or made by Purchaser in
connection with the execution, delivery, or performance of this Agreement.
4.9 Full Disclosure. The information concerning Purchaser, set forth in this
Agreement, and in Purchaser Disclosure Documents, is, to the best of Purchaser's
knowledge and belief, complete and accurate in all material respects and does
not contain any untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the circumstances under
which they were made, not misleading.
4.10 Date of Representations and Warranties. Each of the representations and
warranties of Purchaser set forth in this Agreement is true and correct at and
as of the Closing Date, with the same force and effect as though made at and as
of the Closing Date, except for changes permitted or contemplated by this
Agreement. Without limiting the generality of the foregoing, Company represents
and warrants that as of the Closing Date, its payables will be $100 or less.
5. Conditions Precedent to Obligations of the Selling Members
All obligations of the Selling Members under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
5.1 Representations and Warranties. The representations and warranties by
Purchaser set forth in this Agreement shall be true and correct at and as of the
Closing Date, with the same force and effect as though made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.
Purchaser shall deliver on the Closing Date a certificate to this effect,
referred to as Purchaser Certificate of Representations and Warranties.
5.2 No Breach or Default. Purchaser shall have performed and complied with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by it prior to or at the Closing.
5.3 Action to Pay Purchase Price. Purchaser shall have taken all corporate and
other action necessary to issue and deliver the shares representing the Purchase
Price to the Selling Members pursuant to this Agreement at Closing.
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5.4 Company Disclosure Documents. Before Closing, Purchaser will have delivered
to the Selling Members, or caused the delivery of, Purchaser's Disclosure
Documents.
5.5 Approval of Other Instruments and Documents by the Selling Members. All
instruments and documents delivered to the Selling Members pursuant to the
provisions of this Agreement shall be reasonably satisfactory to their legal
counsel.
5.6 Opinion of Counsel. Purchaser shall have delivered to the Selling Members an
opinion of counsel dated the Closing Date to the effect that:
(A) Purchaser is duly organized, validly existing, and in good standing under
the laws of the United States, State of Delaware.
(B) Purchaser has the corporate power to conduct business and, specifically, to
carry on its business as now being conducted and is duly qualified to do
business in the United States, State of Delaware.
(C) All corporate actions and director approvals have been properly obtained and
completed by Purchaser, to the extent, if any, that they are necessary, for all
actions required under this Agreement prior to Closing.
(D) This Agreement has been duly authorized, executed, and delivered by
Purchaser and is a valid and binding obligation of Purchaser and, in this
regard, Purchaser shall provide the Selling Members at Closing with a copy of
the resolution or resolutions of the Board of Directors of Purchaser, approving
and authorizing the issuance by Purchaser of the shares upon the terms and
conditions herein set forth.
6. Conditions Precedent to Obligations of Purchaser
All obligations of Purchaser under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
6.1 Representations and Warranties. The representations and warranties executed
by and on behalf the Selling Members set forth in this Agreement shall be true
and correct at and as of the Closing Date, with the same force and effect as
though made at and as of the Closing Date, except for changes permitted or
contemplated by this Agreement. The Selling Members shall cause to be delivered
on the Closing Date the certificate to this effect, referred to in this
Agreement as the Certificate of Representations and Warranties executed by each
Selling Member.
6.2 Action to Transfer the Target Membership Interests. The Selling Members
shall have taken all action necessary to transfer the Target Membership
Interests to Purchaser pursuant to this Agreement. In this regard, the
conveyance(s) of the Target Membership Interests shall contain such good and
sufficient stock powers, and other good and sufficient instruments of sale,
conveyance, transfer, and assignment, in form and substance reasonably
satisfactory to Purchaser's counsel and with all requisite documentary stamps,
if any, affixed, as shall be required or as may be appropriate in order
effectively to vest in Purchaser's good, indefeasible, and marketable title to
the Target Membership Interests free and clear of all liens, mortgages,
conditional sales, and other title retention agreements, pledges, assessments,
covenants, restrictions, reservations, easements, and all other encumbrances of
every nature.
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In addition to the conveyance and delivery of the Target Membership Interests,
the Selling Members shall have taken all action necessary to deliver all of
Target's corporate books and records, including but not limited to its files,
documents, papers, agreements, formulas, books of account, and records
pertaining to its business, and evidence of compliance with applicable
securities laws, if required and requested by Purchaser's counsel.
6.3 Target's Financials. Before Closing, the Selling Members will have delivered
the Audited Financial Statements to Purchaser.
6.4 Opinions, Affidavits and Declarations of the Selling Members. The Selling
Members or Target shall have delivered to Purchaser an opinion of qualified
legal counsel reasonably satisfactory to Purchaser, and its counsel and
auditors, dated as at the Closing Date, that:
(A) Target is duly organized, validly existing, and in good standing under the
laws of the State of Michigan.
(B) Target has the corporate power to carry on its business as now being
conducted and is duly qualified to do business in any other jurisdiction where
required or where the non-qualification to do business would have a material
adverse affect on the value of its business.
(C) All action and approvals required in connection to the transfer of the
Target Membership Interests to Purchaser have been properly taken, completed or
obtained by the Selling Members and/or Target, to the extent, if any, that they
are necessary.
7. Covenants and Agreements of the Selling Members
Up to and including the Closing Date, the Selling Members covenant that:
7.1 Access and Information. After the execution of this Agreement, the Selling
Members will permit Purchaser to have reasonable access to all information
necessary to verify the representations and warranties made herein. After the
Closing, the Selling Members will continue to permit Purchaser access to such
additional documentation and information as is reasonably necessary to
completion of the transactions contemplated under this Agreement.
7.2 Conduct of Business as Usual. Up until the Closing Date, the Selling Members
shall insure that Target's operations shall be conducted only in the usual and
ordinary course, and that no change will be made to such operations that might
adversely affect the value of the Target Membership Interests to be transferred
to Purchaser.
7.3 Best Efforts. The Selling Members shall use their best efforts to fulfill
all conditions of the Closing including the timely solicitation of affirmative
consent of all third parties necessary to effect a Closing under this Agreement.
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7.4 Tax Opinion. The Selling Members shall consult with tax advisors, tax
lawyers and accountants of their own choosing to satisfy themselves concerning
the tax fee character of the transactions contemplated by this Agreement. The
Selling Members acknowledge that tax consequences, if any, of this Agreement
shall be the responsibility of the party incurring the same.
8. Covenants and Agreements of Purchaser
Up to and including the Closing Date, Purchaser covenants that:
8.1 Maintenance of Capital Structure. Up until the Closing Date, or termination
hereof, whichever is the earlier, except as disclosed herein or required under
the terms of this Agreement, no change shall be made in the Articles of
Incorporation or Bylaws of Purchaser, or the authorized capital stock of
Purchaser.
8.2 Avoidance of Distributions. Up until the Closing Date, Purchaser shall not
declare any dividends, make any payments or distributions to its stockholders or
purchase for cash or redeem any of its shares of capital stock.
8.3 Conduct of Business as Usual. Up until the Closing Date, Purchaser shall
conduct its operations only in the usual and ordinary course, and that no change
will be made to such operations that might adversely affect the value of
Purchaser.
8.4 Access and Information. After the execution of this Agreement, Purchaser
will permit the Selling Members to have reasonable access to all information
necessary to verify the representations and warranties of Purchaser. After the
Closing, Purchaser will continue to permit the Selling Members access to such
additional documentation and information regarding Purchaser as is reasonably
necessary to completion of the transactions contemplated under this Agreement.
8.5 Best Efforts. Purchaser shall use its best efforts to fulfill or obtain the
fulfillment of all conditions of the Closing, including the timely solicitation
of affirmative consent of all third parties necessary to effect a Closing under
this Agreement.
9. Termination
9.1 Termination Without Cause. This Agreement may be terminated at any time
prior to the Closing Date without cost or penalty to either party by mutual
consent of the Selling Members and Purchaser.
9.2 Termination with Cause
This Agreement may be terminated, with the terminating party to be reimbursed by
the other party of all expenses and costs related to this Agreement, if:
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(A) Breach or Noncompliance by the Selling Members. The Selling Members shall
fail to comply in any material aspect with any of their representations,
warranties, or obligations under this Agreement, or if any of the
representations or warranties made by the Selling Members under this Agreement
shall be inaccurate in any material respect and is not cured within ten (10)
business days of notice of such breach.
(B) Breach or Noncompliance by Purchaser. Purchaser shall fail to comply in any
material aspect with any of its representations, warranties, or obligations
under this Agreement, or if any of the representations or warranties made by
Purchaser under this Agreement shall be inaccurate in any material respect and
is not cured within ten (10) business days of notice of such breach.
10. Securities Registration; Disclosure
10.1 Private Transaction. The Selling Members understand that the shares issued
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 Regulation D and
Section 4(2) of the '33 Act.
10.2 Access to Information. The Selling Members represents that, by virtue of
their economic bargaining power or otherwise, they have had access to or has
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 shares issued pursuant to this Agreement have
been necessary, and that they have had the opportunity to ask questions of and
receive answers from Purchaser's officers and directors, or any party acting on
their behalf, concerning the business of Purchaser and that they have had the
opportunity to obtain any additional information, to the extent that Purchaser
possesses such information or can acquire it without unreasonable expense or
effort, necessary to verify the accuracy of information obtained or furnished by
Purchaser.
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 three (3) years from the Closing Date. The Selling Members and Purchaser are
executing and carrying out the provisions of this Agreement in reliance on the
representations, warranties, and covenants and agreements contained in this
Agreement or at the Closing of the transactions herein provided for including
any investigation upon which they might have made or any representations,
warranty, agreement, promise, or information, written or oral, made by the other
party or any other person other than as specifically set forth herein.
11.2 Costs and Expenses. Subject to paragraph 9 herein, all costs and expenses
in the proposed sale and transfer described in this Agreement shall be borne by
the Selling Members and Purchaser in the following manner:
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(A) Attorneys Fees and Costs. Each party has been represented by its own
attorney(s) in this transaction, shall pay the fees of its own attorney(s),
except as may be expressly set forth herein to the contrary.
(B) Costs of Closing. Each party shall bear its reasonable share of all other
Closing costs and expenses arising from this Agreement.
11.3 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.
11.4 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.
11.5 Headings. The paragraph and subparagraph headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.6 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.
11.7 Governing Law. This Agreement shall be governed by the laws of the United
States, State of Delaware.
11.8 Binding Effect. This Agreement shall be binding upon the parties hereto and
inure to the benefit of the parties, their respective heirs, administrators,
executors, successors, and assigns.
11.9 Entire Agreement. This Agreement contains the entire agreement between the
parties hereto and supersedes any and all prior agreements, arrangements, or
understandings between the parties relating to the subject matter of this
Agreement. No oral understandings, statements, promises, or inducements contrary
to the terms of this Agreement exist. No representations, warranties, covenants,
or conditions, express or implied, other than as set forth herein, have been
made by any party.
11.10 Severability. If any part of this Agreement is deemed to be unenforceable
the balance of the Agreement shall remain in full force and effect.
11.11 Amendment. This Agreement may be amended only by a written instrument
executed by the parties or their respective successors or assigns.
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11.12 Facsimile Counterparts. A facsimile, telecopy or other reproduction of
this Agreement may be executed by one or more parties hereto and such executed
copy may be delivered by facsimile of similar instantaneous electronic
transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this Agreement as well as any facsimile,
telecopy or other reproduction hereof.
11.13 Time is of the Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
"Purchaser"
Marketing Worldwide Corporation
By: /s/ Xxxxxxx X. Xxxx
--------------------
Name: Xxxxxxx X. Xxxx
Title: President
"The Selling Members"
Marketing WorldWide, LLC
By: /s/ Xxxxxxx Winzkowski
-----------------------
Name: Xxxxxxx Winzkowski
Title: Managing Member
By: /s/ Xxxxx X. Xxxxxx
--------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Member
By: /s/ Xxxx Xxxxx
---------------
Name: Xxxx Xxxxx
Title: Managing Member
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