EXHIBIT 10.25
EXCHANGE AGREEMENT
This Exchange Agreement (this "AGREEMENT") is dated as of July 11, 2008,
by and between Marketing Worldwide Corporation, a Delaware corporation (the
"COMPANY"), and Vision Opportunity Master Fund, Ltd., a holder of certain
warrants issued by the Company (the "HOLDER").
RECITALS:
WHEREAS, the Holder currently holds the specific classes and number of
warrants listed on EXHIBIT A (collectively, the "WARRANTS") to purchase shares
of the Company's common stock, par value $0.001 per share (the "COMMON STOCK"),
issued by the Company to the Holder pursuant to a Series A Convertible Preferred
Stock Purchase Agreement of the Company dated as of April 23, 2007 (the
"PURCHASE AGREEMENT"). Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Purchase Agreement.
WHEREAS, subject to the terms and conditions set forth herein, the Company
and the Holder desire to cancel and terminate the Warrants in full and exchange
the Warrants for shares of the Company's newly issued Series B Convertible
Preferred Stock, par value $0.001 per share (the "SERIES B PREFERRED STOCK"), at
the exchange rate set forth on EXHIBIT A.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby agreed and acknowledged, the parties hereto
hereby agree as follows:
AGREEMENT:
1. CANCELLATION OF THE WARRANTS; EXCHANGE OF WARRANTS FOR SERIES B
PREFERRED STOCK.
(a) In consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Holder and the Company agree to the cancellation of the Warrants and the
exchange of the Warrants into newly issued shares of Series B Preferred Stock in
the amounts set forth on EXHIBIT A attached hereto.
(b) The closing under this Agreement (the "CLOSING") shall take
place at the offices of Sadis & Xxxxxxxx LLP, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, XX 00000 upon the satisfaction or waiver of each of the conditions set
forth in Sections 4 and 5 hereof (the "CLOSING DATE"). At the Closing, the
Company shall issue to the Holder the shares of Series B Preferred Stock and the
Holder shall deliver to the Company for cancellation the Warrants.
(c) The designation, rights, preferences and other terms and
provisions of the Series B Preferred Stock are set forth in the Certificate of
Designation of the Relative Rights and Preferences of the Series B Convertible
Preferred Stock attached hereto as EXHIBIT B (the "CERTIFICATE OF DESIGNATION").
(d) The shares of Series B Preferred Stock issuable upon the
exchange of the Warrants and the shares of Common Stock issuable upon conversion
of the Series B Preferred Stock are sometimes collectively referred to herein as
the "SECURITIES".
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2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE HOLDER. The Holder
hereby makes the following representations and warranties to the Company, and
covenants for the benefit of the Company:
(a) The Holder is a corporation, limited liability company or
partnership duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization.
(b) This Agreement has been duly authorized, validly executed and
delivered by the Holder and is a valid and binding agreement and obligation of
the Holder enforceable against the Holder in accordance with its terms, subject
to limitations on enforcement by general principles of equity and by bankruptcy
or other laws affecting the enforcement of creditors' rights generally, and the
Holder has full power and authority to execute and deliver the Agreement and the
other agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.
(c) The Holder understands that the Securities are being offered and
sold to it in reliance on specific provisions of Federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Holder set forth herein for purposes of qualifying for exemptions from
registration under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and applicable state securities laws. The Holder understands that no
United States federal or state agency or any government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
(d) The Holder is an "accredited investor" (as defined in Rule 501
of Regulation D), and the Holder has such experience in business and financial
matters that it is capable of evaluating the merits and risks of an investment
in the Securities. The Holder is not required to be registered as a
broker-dealer under Section 15 of the Securities Exchange Act of 1934, as
amended, and the Holder is not a broker-dealer. The Holder acknowledges that an
investment in the Securities is speculative and involves a high degree of risk.
(e) The Holder is acquiring the Securities solely for its own
account and not with a view to or for sale in connection with distribution. The
Holder does not have a present intention to effect any distribution of any of
the Securities to or through any person or entity; PROVIDED, HOWEVER, that by
making the representations herein, the Holder does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with Federal and state
securities laws applicable to such disposition. The Holder acknowledges that it
(i) has such knowledge and experience in financial and business matters such
that the Holder is capable of evaluating the merits and risks of the Holder's
investment in the Company, (ii) is able to bear the financial risks associated
with an investment in the Securities and (iii) has been given full access to
such records of the Company and its subsidiaries and to the officers of the
Company and the subsidiaries as it has deemed necessary or appropriate to
conduct its due diligence investigation.
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(f) The offer and sale of the Securities is intended to be exempt
from registration under the Securities Act, by virtue of Section 4(2) thereof.
The Holder understands that the Securities purchased hereunder have not been,
and may never be, registered under the Securities Act and that none of the
Securities can be sold or transferred unless they are first registered under the
Securities Act and such state and other securities laws as may be applicable or
the Company receives an opinion of counsel reasonably acceptable to the Company
that an exemption from registration under the Securities Act is available (and
then the Securities may be sold or transferred only in compliance with such
exemption and all applicable state and other securities laws). The Holder
acknowledges that it is familiar with Rule 144 of the rules and regulations of
the Commission, as amended, promulgated pursuant to the Securities Act ("RULE
144"), and that the Holder has been advised that Rule 144 permits resales only
under certain circumstances. The Holder understands that to the extent that Rule
144 is not available, the Holder will be unable to sell any Securities without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.
(g) The Holder has not employed any broker or finder or incurred any
liability for any brokerage or investment banking fees, commissions, finders'
structuring fees, financial advisory fees or other similar fees in connection
with any of the transactions contemplated by this Agreement.
(h) The Holder acknowledges that the Securities were not offered to
the Holder by means of any form of general or public solicitation or general
advertising, or publicly disseminated advertisements or sales literature,
including (i) any advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media, or broadcast over
television or radio, or (ii) any seminar or meeting to which the Holder was
invited by any of the foregoing means of communications. The Holder, in making
the decision to purchase the Securities, has relied upon independent
investigation made by it and the representations, warranties and agreements set
forth in this Agreement and the other transaction documents and has not relied
on any information or representations made by third parties.
(i) The Holder acknowledges ownership of 3,500,000 shares of the
Company's Series A Preferred Stock and hereby waives any dilution protection or
full ratchet adjustment protection provided by the Certificate of Designation of
the Relative Rights and Preferences of the Series A Convertible Preferred Stock
of the Company, that might be triggered by this Exchange Agreement and/or any
Amendments to the Series J Warrant and Series F Warrant or through the exercise
of the Series J Warrant and Series F Warrant, as amended.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
represents and warrants to the Holder, and covenants for the benefit of the
Holder, as follows:
(a) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure to
register or qualify would not have a Material Adverse Effect. For purposes of
this Agreement, "MATERIAL ADVERSE EFFECT" shall mean any effect on the business,
results of operations, prospects, assets or financial condition of the Company
that is material and adverse to the Company and its subsidiaries and affiliates,
taken as a whole and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company from
entering into and performing any of its obligations under this Agreement in any
material respect.
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(b) The Securities have been duly authorized by all necessary
corporate action and, when paid for or issued in accordance with the terms
hereof, the Securities shall be validly issued and outstanding, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights of refusal
of any kind.
(c) This Agreement has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding agreement and
obligation of the Company enforceable against the Company in accordance with its
terms, subject to limitations on enforcement by general principles of equity and
by bankruptcy or other laws affecting the enforcement of creditors' rights
generally, and the Company has full power and authority to execute and deliver
the Agreement and the other agreements and documents contemplated hereby and to
perform its obligations hereunder and thereunder.
(d) The execution and delivery of the Agreement and the consummation
of the transactions contemplated by this Agreement by the Company, will not (i)
conflict with or result in a breach of or a default under any of the terms or
provisions of: (A) the Company's certificate of incorporation or by-laws, or (B)
of any provision of any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which it or any of its
properties or assets is bound, (ii) result in a violation of any provision of
any law, statute, rule, regulation, or any existing applicable decree, judgment
or order by any court, Federal or state regulatory body, administrative agency,
or other governmental body having jurisdiction over the Company, or any of its
properties or assets or (iii) result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of their
property or any of them is subject, except in the case of clauses (i)(B), (ii)
or (iii) for any such conflicts, breaches, or defaults or any liens, charges, or
encumbrances which would not have a Material Adverse Effect.
(e) The delivery and issuance of the Securities in accordance with
the terms of and in reliance on the accuracy of the Holder's representations and
warranties set forth in this Agreement will be exempt from the registration
requirements of the Securities Act.
(f) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required in connection with the valid execution and delivery of this
Agreement or the offer, sale or issuance of the Securities or the consummation
of any other transaction contemplated by this Agreement (other than any filings
which may be required to be made by the Company with the Secretary of State of
Delaware or the Securities and Exchange Commission (the "COMMISSION") or
pursuant to any state or "blue sky" securities laws subsequent to the Closing).
(g) There is no action, suit, claim, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company
which questions the validity of this Agreement or the transactions contemplated
hereby or any action taken or to be taken pursuant thereto. There is no action,
suit, claim, investigation or proceeding pending or, to the knowledge of the
Company, threatened, against or involving the Company or any subsidiary, or any
of their respective properties or assets which, if adversely determined, is
reasonably likely to result in a Material Adverse Effect.
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(h) The Company has complied and will comply with all applicable
federal and state securities laws in connection with the offer, issuance and
delivery of the Securities hereunder. Neither the Company nor anyone acting on
its behalf, directly or indirectly, has or will sell, offer to sell or solicit
offers to buy any of the Securities, or similar securities to, or solicit offers
with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person, or has taken or will take any
action so as to bring the issuance and sale of any of the Securities under the
registration provisions of the Securities Act and applicable state securities
laws. Neither the Company nor any of its affiliates, nor any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of any of the Securities.
(i) The Company has not employed any broker or finder or incurred
any liability for any brokerage or investment banking fees, commissions,
finders' structuring fees, financial advisory fees or other similar fees in
connection with any of the transactions contemplated by this Agreement.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE THE
SERIES B PREFERRED STOCK. The obligation hereunder of the Company to issue and
deliver the Series B Preferred Stock to the Holder is subject to the
satisfaction or waiver, at or before the Closing Date, of each of the conditions
set forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) The Holder shall have executed and delivered this Agreement.
(b) The Warrants shall have been delivered to the Company for
cancellation.
(c) The representations and warranties of the Holder shall be true
and correct in all respects as of the date when made and as of the Closing Date
as though made at that time, except for representations and warranties that are
expressly made as of a particular date, which shall be true and correct in all
respects as of such date.
5. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE HOLDER TO ACCEPT THE
SERIES B PREFERRED STOCK. The obligation hereunder of the Holder to accept the
Series B Preferred Stock is subject to the satisfaction or waiver, at or before
the Closing Date, of each of the conditions set forth below. These conditions
are for the Holder's sole benefit and may be waived by the Holder at any time in
its sole discretion.
(a) The Company shall have executed and delivered this Agreement.
(b) Each of the representations and warranties of the Company shall
be true and correct in all respects as of the date when made and as of the
Closing Date as though made at that time, except for representations and
warranties that speak as of a particular date, which shall be true and correct
in all respects as of such date.
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(c) No statute, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement at or
prior to the Closing Date.
(d) No action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, shall be pending against or
affecting the Company, or any of its properties, which questions the validity of
the Agreement or the transactions contemplated thereby or any action taken or to
be taken pursuant thereto. As of the Closing Date, no action, suit, claim or
proceeding before or by any court or governmental agency or body, domestic or
foreign, shall be pending against or affecting the Company, or any of its
properties, which, if adversely determined, is reasonably likely to result in a
Material Adverse Effect.
(e) The certificates representing the shares of Series B Preferred
Stock shall have been duly executed and delivered to the Holder.
(f) The Certificate of Designation shall have been filed with the
Delaware Secretary of State.
(g) The Company shall have delivered on the Closing Date to the
Holder (i) a certified copy of the resolutions of the board of directors of the
Company authorizing the transactions contemplated by this Agreement and (ii) a
certified copy of the Certificate of Designation evidencing its acceptance with
the Delaware Secretary of State.
(h) At the Closing, the Holder shall have received an opinion of
counsel to the Company, dated the date of the Closing, in the form of EXHIBIT C
hereto.
(i) The Company shall have received executed written consents and
waivers from its security holders, if required, consenting to the transactions
contemplated by this Agreement and waiving any price protection such
securityholders may be entitled to as a result of the issuance of the
Securities.
(j) No Material Adverse Effect shall have occurred at or before the
Closing Date.
6. FEES AND EXPENSES. Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, PROVIDED, HOWEVER, that
the Company shall pay all reasonable attorneys' fees and expenses incurred by
the Holder in connection with the preparation, negotiation, execution and
delivery of this Agreement and the Certificate of Designation.
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7. COMPANY INDEMNIFICATION. The Company hereby agrees to indemnify and
hold harmless the Holder and its respective officers, directors, shareholders,
employees, agents, affiliates and attorneys against any and all losses, claims,
damages, liabilities and reasonable expenses (collectively "CLAIMS") incurred by
each such person in connection with defending or investigating any such Claims,
whether or not resulting in any liability to such person, to which any such
indemnified party may become subject, insofar as such Claims arise out of or are
based upon any breach of any representation or warranty or agreement made by the
Company in this Agreement or the Certificate of Designation.
8. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New York
without giving effect to the rules governing the conflicts of laws. Each of the
parties consents to the exclusive jurisdiction of the Federal courts whose
districts encompass any part of the County of New York located in the City of
New York in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on FORUM NON CONVENIENS, to the bringing of any such proceeding
in such jurisdictions. Each party waives its right to a trial by jury. Each
party to this Agreement irrevocably consents to the service of process in any
such proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to such party at its address set forth herein. Nothing
herein shall affect the right of any party to serve process in any other manner
permitted by law.
9. NOTICES. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, express overnight courier,
registered first class mail, or telecopier (provided that any notice sent by
telecopier shall be confirmed by other means pursuant to this Section 9),
initially to the address set forth below, and thereafter at such other address,
notice of which is given in accordance with the provisions of this Section.
(a) if to the Company:
Marketing Worldwide Corporation
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to:
Weed & Co. LLP
0000 Xxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
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(b) if to a Holder:
To the applicable address set forth on the signature page
hereto
with a copy to:
Sadis & Xxxxxxxx LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when receipt is
acknowledged, if telecopied; or when actually received or refused if sent by
other means.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersedes all prior and/or contemporaneous oral or written proposals or
agreements relating thereto all of which are merged herein. This Agreement may
not be amended or any provision hereof waived in whole or in part, except by a
written amendment signed by both of the parties.
11. COUNTERPARTS. This Agreement may be executed by facsimile signature
and in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
MARKETING WORLDWIDE CORPORATION
By:
------------------------------------
Name:
Title:
VISION OPPORTUNITY MASTER FUND, LTD.
By:
------------------------------------
Name:
Title:
Vision Opportunity Master Fund, Ltd.
00 X 00xx Xx., 0xx Xxxxx
Xxx Xxxx, XX 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Antti Uusiheimala
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EXHIBIT A
Cancelled Security Issued Security Exchange Rate
--------------------------- -------------------------- --------------------
3,500,000 SERIES A WARRANTS 204,815 SHARES OF SERIES B
$0.70 STRIKE PRICE PREFERRED STOCK .0585185
EXPIRING 4/23/2012
--------------------------- -------------------------- --------------------
3,500,000 SERIES B WARRANTS 173,704 SHARES OF SERIES B
$0.85 STRIKE PRICE PREFERRED STOCK .0496296
EXPIRING 4/23/2012
--------------------------- -------------------------- --------------------
3,500,000 SERIES C WARRANTS 101,111 SHARES OF SERIES B
$1.20 STRIKE PRICE PREFERRED STOCK .0288889
EXPIRING 4/23/2012
--------------------------- -------------------------- --------------------
2,500,000 SERIES D WARRANTS 146,296 SHARES OF SERIES B
$0.70 STRIKE PRICE PREFERRED STOCK .0585185
EXPIRING 6/23/2012
--------------------------- -------------------------- --------------------
2,500,000 SERIES E WARRANTS 124,074 SHARES OF SERIES B
$0.85 STRIKE PRICE PREFERRED STOCK .0496296
EXPIRING 6/23/2012
--------------------------- -------------------------- --------------------
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