STOCK PURCHASE AGREEMENT
By and between
International Mercantile Corporation
and
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
This Stock Purchase Agreement (the "Agreement") is effective
this 6th day of September, 1999, by and between International
Mercantile Corporation, a Missouri corporation (the "Buyer"), Red
River Trading Company, Inc., a Maryland corporation (the "Seller"),
and ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware corporation
("Micromatix" or the "Company." International Mercantile
Corporation is a publicly-traded corporation (symbol OTCBB: IMTL).
WHEREAS, Seller owns, free and clear of all adverse claims,
all of the issued and outstanding capital shares of Micromatix; and
WHEREAS, Seller desires to sell, and Buyer desires to
purchase, all of the issued and outstanding capital shares of
Micromatix in a tax-free reorganization, for the consideration and
upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the
provisions and the respective agreements hereinafter set forth, the
parties hereto hereby agree as follows:
1. Purchase and Sale of Stock.
1.1 Agreement to Purchase and Sell. Upon the terms and
subject to the conditions set forth in this Agreement and in
reliance upon the representations, warranties, covenants, and
agreements contained herein, on the Closing Date (as hereinafter
defined), Seller shall sell, grant, convey, assign, transfer, and
deliver to Buyer, and Buyer shall purchase and acquire from Seller,
all of the issued and outstanding shares of capital stock of the
Company (collectively, the "Micromatix Shares"). The exact number
of Micromatix Shares to be sold by Seller hereunder is as follows:
100 shares of common stock, $.01 par value.
1.2 Purchase Price. At Closing (as hereinafter defined), the
Company will be purchased by Buyer and held as a wholly-owned
subsidiary. The Buyer and Seller agree that the aggregate Purchase
Price is the sum of one million three hundred seventy-five thousand
Dollars ($1,375,000.00) U.S. (the "Purchase Price").
1.3 Terms of Payment. The Purchase price will be paid by
the buyer as follows:
1.3.1 The Purchase Price will be paid by the Buyer
through the delivery of one million (1,000,000)
shares of Class B common stock of International
Mercantile Corporation (the "IMTL Stock"), at a
deemed price of U.S. $1.00 per share and one
million five hundred thousand (1,500,000) shares of
Class A common stock of International Mercantile
Corporation, at a present market value of twenty-
five cents ($0.25) U. S. per share (collectively,
the IMTL stock).
1.3.2 All of the issued and outstanding Micromatix Shares
shall be exchanged for the IMTL Stock. As a class,
the International Mercantile Corporation Class B
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EX-10.1
common stock, including without limitation the IMTL
Stock, carries a voting preference of 51 votes per
share, but has no other preference rights or
obligations, including those with respect to
payment of dividends, conversion, redemption, and
liquidation value, over and above the rights and
obligations afforded the International Mercantile
Corporation Class A common shareholders.
1.3.3 Upon the expiration of Buyer's Put Option as
defined hereinbelow, Seller shall have the option
to purchase, for the aggregate sum of one dollar
($1.00) U. S., thirty percent (30.0%) of the IMTL
Class B common shares then held by FSR, consisting
of three hundred thousand (300,000) IMTL Class B
common shares as of the date of Closing, subject to
adjustment for stock splits or other share
issuances subsequent to Closing.
1.4 Post Closing Adjustments to Purchase Price. Not
Applicable.
1.5 Buyer's Put Option on Micromatix Shares.
1.5.1 If, in Buyer's sole and exclusive opinion,
within 12 months of the Date of Closing, and given the
financial resources that (a) Buyer has committed to provide
the Company in accordance with this Agreement; and (b) the
Company has committed to raise on its own, the Company has
materially failed to implement its business plan (attached as
Exhibit 1.5 hereto), including without limitation failure to
achieve such performance benchmarks as assets, stockholder's
equity, revenues, earnings, market capitalization, and/or
stock price, then, at Buyer's sole and exclusive option, and
upon Buyer's written notice to Seller, Buyer may put all of
Buyer's Micromatix Shares back from Seller, and Seller shall,
within 10 days of receipt of such notice, return to Buyer all
of the IMTL Shares received by Seller pursuant to this
Agreement.
1.5.2 In the event that Buyer elects to exercise its
put option (the "Buyer's Put Option"), then the fair value of
any and all assets invested into the Company by the Buyer or
by third-parties secured by the Buyer's efforts, shall be
evidenced by a promissory note (the "Promissory Note") payable
from the Company to the Buyer. The Promissory Note shall bear
interest at the Wall Street Journal prime rate of interest
plus one percent (1.0%), fixed as of the last business day
prior to Buyer's notice to Seller of Buyer's intention to
exercise its put option. The Promissory Note shall be and
guaranteed by the Seller and secured by all of the capital
stock and assets of the Company, and both Seller and the
Company hereby grant to Buyer a security interest in such
capital stock and assets. The Promissory Note shall be fully
amortized and payable in 24 equal monthly installments
beginning 30 day's from the date of Buyer's notice to Seller.
Buyer agrees to subordinate to the note to the any bona fide
debt financing secured by the Company subsequent to the
exercise of the Buyer's Put Option. All non-cash assets
invested into the Company shall be returned to the Buyer or
Buyer's designee concurrently with the execution of the
Promissory Note and the exercise of Buyer's Put Option. Until
the expiration of Buyer's Put Option, all assets invested in
the Company (whether cash or other assets) shall be itemized
by Buyer to Seller from time-to time and shall be subject to
seller's approval prior to investment.
1.5.3 If, within 12 months of Closing, in Buyer's
sole and exclusive opinion, the Company has materially
satisfied its performance obligations with respect to
implementing the business plan, then Buyer's Put Option shall
expire unexercised.
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EX-10.1
1.6 Seller's Put Option on IMTL Stock.
1.6.1 If Buyer fails to invest, or cause to be
invested, an additional $350,000 in equity into the Company on
or before November 30, 1999, then Seller shall have the
unilateral right to put all of Seller's IMTL Stock back to
Buyer, and Buyer shall, within 10 days of receipt of such
notice, return to Seller all of the Micromatix Shares received
by Buyer pursuant to this Agreement.
1.6.2 In the event that Seller elects to exercise its
put option (the "Seller's Put Option"), then the fair value of
any and all assets invested into the Company by the Buyer or
by third-parties secured by the Buyer's efforts, shall be
evidenced by a promissory note in accordance with the same
terms and conditions stated in Section 1.5.2. All non-cash
assets shall be returned to Buyer or Buyer's designee in
accordance with the terms of Section 1.5.2.
1.6.3 If Buyer has invested, or caused to be
invested, an additional $350,000 into the Company on or before
November 30, 1999, then Seller's Put Option shall expire
unexercised.
1.7 Closing. The closing of the purchase and sale of the
Micromatix Shares provided herein (the "Closing") will be at the
offices of the Buyer at 10:00 a.m., local time, on September 2,
1999, or at such other place or at such other date and time as
Seller and Buyer may mutually agree. Such date and time of Closing
is herein referred to as the "Closing Date".
1.8 Company Acquisitions Prior and Subsequent to Closing.
Not Applicable.
1.9 Additional Terms and Conditions.
1.9.1 Subsequent to Closing, but prior to the
expiration of Buyer's Put Option as described in Section 1.5
herein, Seller agrees that
(a) any merger, consolidation, reorganization,
dissolution, liquidation, winding up, or sale of all or
substantially all of the Company's assets shall require
the approval of Buyer's board of directors; and
(b) Seller shall not sell, encumber, liquidate, or
otherwise dispose of the IMTL Shares without the approval
of the Buyer's board of directors.
(c) The rights of approval granted in this section
1.8.1 shall expire with the expiration of Buyer's Put
Option as described in Section 1.5 herein.
1.9.2 As soon as possible, but in no event later than
60 days subsequent to Closing, Buyer shall conduct its annual
stockholder and board of director's meeting. At such meeting,
Seller agrees to vote to support resolutions calling for the
following:
(a) the 2 to 1 reverse split of the International
Mercantile Corporation Class B common stock, such that
subsequent to such split there shall be only one million
(1,000,000) shares of Class B common stock issued and
3
EX-10.1
outstanding;
(b) the payment of a stock dividend to the Buyer's
shareholders consisting of the 11,000 issued and
outstanding common shares of University Mortgage, Inc.
("UMI") owned by Buyer as of the date of such dividend
declaration;
(c) The issuance to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of one
million five hundred thousand (1,500,000) shares or, at
the election of the board of directors, options for
shares of International Mercantile Corporation Class A
common stock in consideration for services rendered as
chairman of the corporation;
(d) the creation by Buyer of an employee stock
ownership plan and/or employee stock option plan to
facilitate the hiring and retention of key employees;
(e) the execution of an irrevocable investment
agreement with ▇▇▇▇▇▇ Institutional Finance providing for
the sale of five million dollars ($5,000,000) of
International Mercantile Corporation Class A common
stock;
(f) the ratification of all actions taken by the
Buyer's officers and directors since September 1998
through the date of Closing.
(g) The change of International Mercantile
Corporation's name to ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., or
a derivative thereof.
(h) The redomestication of International
Mercantile Corporation to the State of Delaware.
1.9.3 At Closing, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇
shall be elected to the Buyer's board to directors to fill
vacancies created by the resignations of ▇▇ ▇▇▇▇▇ and ▇▇▇▇ De
Ronde. Until the sooner of the expiration of Buyer's Put
Option, or the resignation of one or more of the following
named individuals, the board of directors of International
Mercantile Corporation shall consist of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(Chairman), ▇▇▇ ▇▇▇▇▇ (Chairman Emeritus), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, unless
otherwise approved by the unanimous consent of the holders of
International Mercantile Corporation Class B common stock; and
1.9.4 At Closing, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be elected to
serve as President/CEO of Buyer, filling the vacancy caused by
the resignation of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ shall be
elected to serve as Vice President and Chief Operating
Officer, a newly created position. Within five business days
subsequent to Closing, the company shall enter into mutually
agreeable employment contracts with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
1.9.5 At Closing, unless otherwise agreed between the
parties, Buyer shall invest, or cause to be invested, $150,000
into the Company as equity capital.
1.9.6 As soon as possible after Closing, but in no
event later than December 31, 1999, unless otherwise agreed
between the parties, Buyer shall invest, or cause to be
invested, an additional $350,000 in equity into the Company
4
EX-10.1
2. Representations and Warranties of Seller.
Each Seller, as to itself only, represents and warrants to
Buyer as follows:
2.1 Subsidiaries; Existence; Good Standing; Corporate
Authority; Compliance With Law.
2.1.1 The Company has no subsidiaries.
2.1.2 The Company is a private corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite
corporate power and authority to own its properties and carry
on its business as now conducted. The Company is not in
default with respect to any order of any court, governmental
authority, or arbitration board or tribunal to which the
Company is a party or is subject, and the Company is not in
violation of any laws, ordinances, governmental rules, or
regulations to which it is subject. The Company has obtained
all licenses, permits, and other authorizations and has taken
all actions required by applicable laws or governmental
regulations in connection with its business as now conducted.
2.2 Validity and Effect of Agreements. This Agreement
constitutes, and all agreements and documents contemplated hereby
when executed and delivered pursuant hereto for value received will
constitute, the valid and legally binding obligations of Seller
enforceable in accordance with their terms, and the Buyer hereby is
granted the right of specific performance. The execution and
delivery of this Agreement does not and the consummation of the
transactions contemplated hereby will not (a) require the consent
of any third party (except as set forth in Section 5.1 of this
Agreement), (b) result in the breach of any term or provision of,
or constitute a default under, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice
or the lapse of time or both) any obligation under, or result in
the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any part of the property of the
Company pursuant to any provision of, any order, judgment,
arbitration award, injunction, decree, indenture, mortgage, lease,
license, lien, or other agreement or instrument to which Seller or
the company is a party or by which any of them is bound, or violate
or conflict with any provision of the Bylaws or Articles/
Certificate of Incorporation of the Company as amended to the date
of this Agreement.
2.3 Capitalization. The Company has the following capital
structures:
Authorized Capital Issued Capital
------------------ --------------
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated 1,000 Common Shares 100 Common Shares
No shares other than listed herein will be presently issued and
outstanding as of the Closing Date. Except for rights granted
pursuant to this Agreement and as described in Schedule 2.3.3
attached hereto, there are no outstanding rights, warrants,
options, subscriptions, agreements or commitments giving anyone any
right to require the Company to sell or issue, or the Seller to
sell, any capital stock or other securities.
2.4 Records. The corporate minute books of the Company to be
delivered to Buyer at the Closing shall contain true and complete
copies of the Articles of Incorporation, as amended to the Closing
Date, bylaws, as amended to the Closing Date, and the minutes of
5
EX-10.1
all meetings of directors and shareholders and certificates
reflecting all actions taken by the directors or shareholders
without a meeting, from the date of incorporation of the Company to
the Closing Date.
2.5 Officers and Directors; Bank Accounts; Powers of
Attorney; Insurance. The officers and directors of the Company are
as set forth in Schedule 2.5. Schedule 2.5 also sets forth (a) the
name of each bank, savings institution or other person with which
the Company has an account or safe deposit box and the names and
identifications of all persons authorized to draw thereon or have
access thereto, (b) the names of all persons, if any, holding
powers of attorney from the Company and a summary statement of the
terms thereof, and (c) a list of all insurance policies owned by
the Company (other than those required to be listed in Schedule
2.14 hereof), together with a brief statement of the coverage
thereof.
2.6 Financial Statements. Seller has furnished to Buyer (a)
an unaudited balance sheet of the Company as of September 2, 1999
(the "Unaudited Balance Sheet"), and (b) an unaudited income
statement of the Company for the eight months ending August 31,
1999 (the "Unaudited Income Statement "). The Unaudited Balance
Sheet and Unaudited Income Statement referred to above are
hereinafter collectively referred to as the "Financial Statements".
The Financial Statements fully and fairly set forth the financial
condition of the Company as of the dates indicated, and the results
of its operations for the periods indicated, in accordance with
generally accepted accounting principles consistently applied,
except as otherwise stated therein and in the related reports of
independent accountants and other data, copies of which are
attached hereto as Exhibit 2.6.
2.7 Undisclosed Liabilities. The Company has no liabilities
or obligations whatsoever, either accrued, absolute, contingent, or
otherwise, which are not reflected or provided for in the Financial
Statements except (a) those arising after the date of the Unaudited
Balance Sheet which are in the ordinary course of business, in each
case in normal amounts and none of which is materially adverse, and
(b) as and to the extent specifically described in the Schedules
hereto.
2.8 Absence of Certain Changes or Events Since the Date of
the Unaudited Balance Sheet. Since the date of the Unaudited
Balance Sheet, the Company has not, with the exception of those
items enumerated on Schedule 2.8 which is attached hereto and made
a part hereof:
2.8.1 incurred any obligation or liability (fixed or
contingent), except normal trade or business obligations
incurred in the ordinary course of business and consistent
with past practice, none of which is materially adverse, and
except in connection with this Agreement and the transactions
contemplated hereby;
2.8.2 discharged or satisfied any lien, security
interest or encumbrance or paid any obligation or liability
(fixed or contingent), other than in the ordinary course of
business and consistent with past practice;
2.8.3 mortgaged, pledged or subjected to any lien,
security interest or other encumbrance any of its assets or
properties (other than mechanic's, materialman's, and similar
statutory liens arising in the ordinary course of business and
purchase money security interests arising as a matter of law
between the date of delivery and payment);
6
EX-10.1
2.8.4 transferred, leased or otherwise disposed of any
of its assets or properties except for a fair consideration in
the ordinary course of business and consistent with past
practice or, except in the ordinary course of business and
consistent with past practice, acquired any assets or
properties;
2.8.5 canceled or compromised any debt or claim, except
in the ordinary course of business and consistent with past
practice;
2.8.6 waived or released any rights of material value;
2.8.7 transferred or granted any rights under any
concessions, leases, licenses, agreements, patents,
inventions, trademarks, trade names, service marks or
copyrights or with respect to any know-how;
2.8.8 made or granted any wage or salary increase
applicable to any group or classification of employees
generally entered into any employment contract with, or made
any loan to, or entered into any material transaction of any
other nature with any officer or employee of the Company;
2.8.9 entered into any transaction, contract or
commitment, except in the ordinary course of business;
2.8.10 suffered any casualty loss or damage (whether or
not such loss or damage shall have been covered by insurance)
which affects in any material respect its ability to conduct
business; or
2.8.11 declared any dividends or bonuses, or authorized
or affected any amendment or restatement of the Article of
Incorporation or bylaws of the Company or taken any steps
looking toward the dissolution or liquidation of the Company.
Between the date of this Agreement and the Closing hereunder,
the Company will not, without the prior written consent of
Buyer, do any of the things listed in Sections 2.8.1 through
2.8.11 above.
2.9 Taxes. The Company (a) has duly and timely filed or
caused to be filed all federal, state, local, and foreign tax
returns (including, without limitation, consolidated and/or
combined tax returns) required to be filed by it prior to the date
of this Agreement which relate to the Company or with respect to
which the Company or the Assets or properties of the Company are
liable or otherwise in any way subject, (b) has paid or fully
accrued for all taxes shown to be due and payable on such returns
(which taxes are all the taxes due and payable under the laws and
regulations pursuant to which such returns were filed), and (c) has
properly accrued for all such taxes accrued in respect of the
Company or the assets and properties of the Company for periods
subsequent to the periods covered by such returns. No deficiency in
payment of taxes for any period has been asserted by any taxing
body and remains unsettled at the date of this Agreement. Copies of
all federal, state, local, and foreign tax returns of the Company
have been made available for inspection by Buyer.
2.10 Title To Micromatix Shares. The Micromatix Shares are
duly authorized, validly issued, fully paid and nonassessable and
are owned by Seller free and clear of all liens, encumbrances,
charges, assessments and adverse claims. The Micromatix Shares are
subject to no restrictions with respect to transferability to Buyer
in accordance with the terms of this Agreement. Upon transfer of
7
EX-10.1
the Micromatix Shares by Seller, Buyer will, as a result, receive
good and marketable title to all 100 percent of the Micromatix
Shares, free and clear of all security interests, liens,
encumbrances, charges, assessments, restrictions, and adverse
claims.
2.11 Title to Property and Assets. The Company has good and
marketable title to all of the properties and assets used by it in
the conduct of its business (including, without limitation, the
properties and assets reflected in the Balance Sheets except any
thereof since disposed of for value in the ordinary course of
business) and none of such properties or assets is, except as
disclosed in said Balance Sheets or the Schedules hereto, subject
to a contract of sale not in the ordinary course of business, or
subject to security interests, mortgages, encumbrances, liens, or
charges of any kind or character.
2.12 Condition of Personal Property. All tangible personal
property, equipment, fixtures and inventories included within the
assets of the Company or required to be used in the ordinary course
of business are in good, merchantable, or in reasonable repairable
condition and are suitable for the purposes for which they are
used. No value in excess of applicable reserves has been given to
any inventory with respect to obsolete or discontinued products.
All of the inventories and equipment, including equipment leased to
others, are well maintained and in good operating condition.
2.13 Real Estate. Schedule 2.13 contains a list of all real
property owned by the Company or in which the Company has a
leasehold or other interest and of any lien, charge, or encumbrance
thereupon. Such Schedule also contains a substantially accurate
description identifying all such real property and the significant
rental terms (including rents, termination dates, and renewal
conditions). The improvements upon such properties and use thereof
by the Company conforms to all applicable lease restrictions,
zoning, and other local ordinances. To the best of Seller's
knowledge, the Company's real property (the "Property") does not
contain any hazardous substance; the Seller has not conducted or
authorized the generation, transportation, storage, treatment or
disposal at the Property of any hazardous substance; that the
Seller has not received any notice of and has no knowledge that any
government authority or any employee or agent thereof, or any
private citizen, has determined, or threatens to determine, or made
any claim in any form, that there is a presence, release, threat of
release, placement on or in the Property, or the generation,
transportation, storage, treatment or disposal at the Property, of
any hazardous substance. For purposes of this paragraph,
"hazardous substance" means any matter giving rise to liability
under any local, state or federal law, ordinance or regulation or
any common law theory based on nuisance or strict liability; does
not contain unacceptable levels of natural asbestos; has not been
used as a grave site, fill or borrow area; does not contain
underground storage tanks on the Property;
2.14 List of Contracts and Other Data. Schedule 2.14 sets for
the following:
2.14.1 all collective bargaining agreements, employment
and consulting agreements, executive compensation plans, bonus
plans, profit-sharing plans, deferred compensation agreements,
employee pension or retirement plans, employee stock purchase
and stock option plans, group life insurance, hospitalization
insurance or other plans or arrangements providing for
benefits to employees of the Company.
8
EX-10.1
2.14.2 all contracts, understandings, and commitments,
(including, without limitation, mortgages, indentures, and
loan agreements) to which the Company is a party, or to which
it or any of its assets or properties are subject and which
are not specifically referred to herein.
2.14.3 the names and current annual compensation rates
of all employees of the Company; and
True and complete copies of all documents and complete
descriptions of all oral understandings, if any, referred to in
Schedules 2.13 and 2.14 have been provided or made available to
Buyer and its counsel.
2.15 No Breach or Default. The Company is not in default
under any contract to which it is a party or by which it is bound,
nor has any event occurred which, after the giving of notice or the
passage of time or both, would constitute a default under any such
contract. Seller have no reason to believe that the parties to such
contracts will not fulfill their obligations under such contracts
in all material respects or are threatened with insolvency.
2.16 Litigation. Except as set forth in Schedule 2.16, there
are no actions, suits or proceedings with respect to the Company
involving claims by or against Seller or the Company which are
pending or threatened against Seller or the Company, at law or in
equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency, or
instrumentality. No basis for any action, suit, or proceeding
exists, and there are no orders, judgments, injunctions, or decrees
of any court or governmental agency with respect to which Seller or
the company has been named or to which Seller or the Company is a
party, which apply, in whole or in part, to the business of the
Company, or to any of the assets or properties of the Company or
the Micromatix Shares or which would result in any material adverse
change in the business or prospects of the Company.
2.17 No Brokers. Neither Seller nor the Company has entered
into any contract, arrangement or understanding with any person or
firm which may result in the obligation of Buyer or the Company to
pay any finder's fees, brokerage or agent's commissions, or other
like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated
hereby, and neither Seller nor the Company is aware of any claim or
basis for any claim for payment of any finder's fees, brokerage or
agent's commissions, or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
2.18 Investment Representation. The Seller represents that it
understands that (a) the Micromatix Shares being acquired by Buyer
pursuant to this Agreement have not been registered under the
Securities Act of 1933, as amended, and are being issued in
reliance upon an exemption afforded by Section 4(2) thereof for a
transaction by an issuer not involving any public offering, (b)
such Micromatix Shares must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities
Act of 1933, as amended, or is exempt from such registration, (c)
such Micromatix Shares will bear a legend to such effect, and (d)
Seller will make a notation on its transfer books to such effect.
Each Buyer further represents that (i) such Micromatix Shares are
being acquired for investment and without any present view toward
distribution thereof to any other person, (ii) it will not sell or
otherwise dispose of such Micromatix Shares except in compliance
with the registration requirements or exemption provisions under
the Securities Act of 1933, as amended, the rules and regulations
thereunder, and as otherwise set forth by the Securities and
9
EX-10.1
Exchange Commission, (iii) it has knowledge and experience in
financial and business matters and that he is capable of evaluating
the risks and merits of an investment in Micromatix Shares, (iv) it
has consulted with counsel to the extent deemed necessary, as to
all matters covered by this Agreement and has not relied upon
Seller for any explanation of the application of the various
federal or state securities laws with regard to the acquisition of
such Micromatix Shares, (v) it has investigated and is familiar
with the affairs, financial condition, and prospects of the
Company, and has been given sufficient access to and has acquired
sufficient information about the Company to reach an informed and
knowledgeable decision to acquire such Micromatix Shares, and (vi)
it is able to bear the economic risks of such an investment.
2.19 Independent Legal Advice. The Company and the Seller
have sought and will continue to seek independent legal advice in
this transaction.
2.20 No Misrepresentations or Omissions. No representation or
warranty by Seller in this Article 2 or in any other Article or
Section of this Agreement, or in any certificate or other document
furnished or to be furnished by Seller pursuant hereto, contains or
will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to provide
Buyer with accurate information as to the Company.
3. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
3.1 Existence; Good Standing; Corporate Authority; Compliance
with Law. Buyer is a publicly-traded corporation. Buyer is duly
incorporated, validly existing, and in good standing under the laws
of the State of Missouri. Buyer is duly licensed or qualified to
do business as a foreign corporation and is in good standing under
the laws of all other jurisdictions in which the character of the
properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary.
Buyer has all requisite corporate power and authority to own its
properties and carry on its business as now conducted. Buyer is not
in default with respect to any order of any court, governmental
authority, or arbitration board or tribunal to which Buyer is a
party or is subject, and Buyer is not in violation of any laws,
ordinances, governmental rules or regulations to which it is
subject. Buyer has obtained all licenses, permits, or other
authorizations and has taken all actions required by applicable
laws or governmental regulations in connection with its business as
now conducted.
3.2 Authorization; Validity and Effect of Agreements. The
execution and delivery of this Agreement and all agreements and
documents contemplated hereby by Buyer, and the consummation by it
of the transactions contemplated hereby, have been duly authorized
by all requisite corporate action. This Agreement constitutes, and
all agreements and documents contemplated hereby when executed and
delivered pursuant hereto for value received will constitute, the
valid and legally binding obligations of Buyer enforceable in
accordance with their terms. The execution and delivery of this
Agreement does not and the consummation of the transactions
contemplated hereby will not (a) require the consent of any third
party (except as set forth in Section 5.2 of this Agreement), (b)
result in the breach of any term or provision of, or constitute a
default under, or result in the acceleration of, or entitle any
party to accelerate (whether after the giving of notice or the
lapse of time or both) any obligation under, or result in the
creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any part of the property of the
Company pursuant to any provision of, any order, judgment,
arbitration award, injunction, decree, indenture, mortgage, lease,
10
EX-10.1
license, lien, or other agreement or instrument to which Buyer is a
party or by which it is bound, and (c) violate or conflict with any
provision of the bylaws or Articles of Incorporation of Buyer as
amended to the date of this Agreement.
4. Other Covenants and Agreements.
4.1 Indemnification by Seller. Upon the terms and subject to
the conditions set forth in Section 4.1, Seller agrees to indemnify
and hold Buyer harmless from and against, and will reimburse Buyer
on demand for, any payment, loss, cost, or expense (including
reasonable attorney's fees and reasonable costs of investigation
incurred in defending against any such payment, loss, cost, or
expense, or claim therefor) made or incurred by Buyer at any time
after the Closing Date in respect of:
4.1.1 any and all losses, damage, costs or deficiencies
directly or indirectly resulting from any misrepresentation,
breach of warranty or non-fulfillment of any covenant on the
part of such Seller under this Agreement or from any
misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished to Buyer hereunder;
and
4.1.2 any and all actions, suits, proceedings, demands,
assessments, judgements, costs and legal and other expenses
incidental to the foregoing, and Buyer is hereby authorized,
at its option, to settle such claims and make any payment in
relation thereto as may be reasonable in the circumstances.
4.2 Indemnification by Buyer. Upon the terms and subject to
the conditions set forth in Section 4.2, Buyer agrees to indemnify
and hold Seller harmless from and against, and will reimburse
Seller on demand for, any payment, loss, cost, or expense
(including reasonable attorney's fees and reasonable costs of
investigation incurred in defending against any such payment, loss,
cost, or expense, or claim therefor) made or incurred by Seller at
any time after the Closing Date in respect of:
4.2.1 any and all losses, damage, costs or deficiencies
directly or indirectly resulting from any misrepresentation,
breach of warranty or non-fulfillment of any covenant on the
part of such Seller under this Agreement or from any
misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished to Seller hereunder;
and
4.2.2 any and all actions, suits, proceedings, demands,
assessments, judgements, costs and legal and other expenses
incidental to the foregoing, and Seller is hereby authorized,
at its option, to settle such claims and make any payment in
relation thereto as may be reasonable in the circumstances.
4.3 Tax Indemnity. Upon the terms and subject to the
conditions set forth in Section 4.3, Seller agrees to indemnify and
hold Buyer and the Company harmless against, and will reimburse
Buyer (or the Company if Buyer so requests) on demand for:
4.3.1 any and all tax deficiencies in respect of
federal, state, local, and foreign sales, use, income, or
franchise tax or taxes based on or measured by income,
including any interest or penalties thereon and legal fees and
expenses incurred by Buyer and the Company with respect to the
taxable year ended December 31, 1998, and all prior taxable
years; and
11
EX-10.1
4.3.2 any and all such taxes, interest, penalties, and
legal fees and expenses in respect of the period from January
1, 1999 up to and including the Closing Date, but only to the
extent that such deficiencies, taxes, interest, penalties, and
legal fees and expenses exceed, in the aggregate, the amount
of the aggregate reserves for such taxes, if any, shown as
liabilities on the Unaudited Balance Sheet.
The indemnity provided for in this Section 4.3 shall be
independent of and in addition to any other indemnity provision of
this Agreement and, anything in this Agreement to the contrary
notwithstanding, shall survive until the expiration of the
applicable statutes of limitation for the taxes referred to herein.
5. Conditions of Closing.
5.1 Buyer's Conditions of Closing. The obligation of Buyer
to purchase and pay for the Micromatix Shares shall be subject to
and conditioned upon the satisfaction at the Closing of each of the
following conditions:
5.1.1 All representations and warranties of Seller
contained in this Agreement and the Schedules hereto shall be
true and correct at and as of the Closing Date, Seller shall
have performed all agreements and covenants and satisfied all
conditions on their part to be performed or satisfied by the
Closing Date pursuant to the terms of this Agreement, and
Buyer shall have received a certificate of the Seller dated
the Closing Date to such effect.
5.1.2 There shall have been no material adverse change
since the date of the Unaudited Balance Sheet in the financial
condition, business or affairs of the Company or any
affiliate, and the Company or any affiliate shall not have
suffered any material loss (whether or not insured) by reason
of physical damage caused by fire, earthquake, accident, or
other calamity which substantially affects the value of its
assets, properties or business, and Buyer shall have received
a certificate of the Seller dated the Closing Date to such
effect.
5.1.3 Seller shall have delivered to Buyer a Certificate
of the Secretary of State (or other authorized officer) of the
Company's and each Affiliate's respective jurisdiction of
incorporation certifying as of a date reasonably close to the
Closing Date that the Company or such Affiliate, as the case
may be, has filed all required reports, paid all required fees
and taxes, and is, as of such date, in good standing and
authorized to transact business as a domestic corporation.
5.1.4 Seller shall have delivered to Buyer certificates
and other instruments representing all of the Micromatix
Shares, duly endorsed for transfer or accompanied by
appropriate stock powers (in either case executed in blank or
in favor of Buyer with the execution thereof guaranteed by a
bank or trust company), together with all other documents
necessary or appropriate to validly transfer the Micromatix
Shares to Buyer free and clear of all security interests,
liens, encumbrances, and adverse claims.
5.1.5 Neither any investigation of the Company by Buyer,
nor the Schedules attached hereto or any supplement thereto
nor any other document delivered to Buyer as contemplated by
this Agreement, shall have revealed any facts or circumstances
12
EX-10.1
which, in the sole and exclusive judgment of Buyer and
regardless of the cause thereof, reflect in an adverse way on
the Company or its financial condition, assets, liabilities
(absolute, accrued, contingent, or otherwise), reserves,
business, operations, or prospects.
5.1.6 No suit, action, investigation, inquiry, or other
proceeding by any governmental body or other person or legal
or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the
transactions contemplated hereby.
5.1.7 As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order, or any order
of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of
them not be consummated as so provided or imposing any
conditions on the consummation of the transactions
contemplated hereby, which is unduly burdensome on Buyer.
5.2 Seller's Conditions of Closing. The obligation of Seller
to sell the Micromatix Shares shall be subject to and conditioned
upon the satisfaction at the Closing of each of the following
conditions:
5.2.1 All representations and warranties of Buyer
contained in this Agreement shall be true and correct at and
as of the Closing Date and Buyer shall have performed all
agreements and covenants and satisfied all conditions on its
part to be performed or satisfied by the Closing Date pursuant
to the terms of this Agreement; and Seller shall have received
a certificate of Buyer dated the Closing Date to such effect.
5.2.2 Buyer shall have effected payment of the Purchase
Price in accordance with this Agreement.
5.2.3 Buyer shall have delivered to Seller certificates
representing the IMTL Stock to be issued pursuant to Section
1.3 of this Agreement.
5.2.4 Buyer shall have delivered to Seller a certificate
of its corporate secretary certifying:
(a) Resolutions of its Board of Directors
authorizing execution of this Agreement and the
execution, performance, and delivery of all agreements,
documents, and transactions contemplated hereby; and
(b) The incumbency of its officers executing this
Agreement and all agreements and documents contemplated
hereby.
5.2.5 As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order, or any order
of any nature issued by court of competent jurisdiction
directing that the transactions provided for herein or any of
them not be consummated as so provided or imposing any
conditions on the consummation of the transactions
contemplated hereby, which is unduly burdensome on Seller.
13
EX-10.1
6. Termination and Abandonment; Arbitration.
6.1 Methods of Termination. The transactions contemplated
herein may be terminated and/or abandoned at any time before or
after approval thereof by Seller and Buyer, in accordance with the
following:
6.1.1 not later than Closing, by mutual consent of Buyer
and Seller;
6.1.2 not later than Closing, by Buyer if any of the
conditions provided for in Section 5.1 hereof shall not have
been met or waived in writing by Buyer prior to such date.
6.2 Procedure Upon Termination. In the event of termination
and/or abandonment by Buyer, pursuant to Section 6.1 or 6.2 hereof,
written notice thereof shall forthwith be given to the other party
and the transactions contemplated by this Agreement shall be
terminated and/or abandoned, without further action by Buyer or
Seller. If the transactions contemplated by this Agreement are
terminated and/or abandoned as provided herein:
6.2.1 Each party will redeliver all documents, work
papers, and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before
or after the execution of this Agreement, to the party
furnishing the same; and
6.2.2 No party hereto shall have any liability or
further obligation to any other party to this Agreement except
as stated in this Section 6.2, as the case may be; provided,
however, that: (a) if such termination and/or abandonment is a
result of the failure of any condition set forth in Section
5.1 hereof, then Buyer shall be entitled to recover from
Seller all out-of-pocket costs which Buyer has incurred
(including reasonable attorney's fees, accounting fees, and
expenses); and (b) if such termination and/or abandonment is a
result of the failure of any condition set forth in Section
5.2 hereof, then Seller shall be entitled to recover from
Buyer all out-of-pocket costs which Seller has incurred
(including reasonable attorney's fees, accounting fees, and
expenses).
6.3 Arbitration. In the event of any dispute arising out of
this Section 6 only, the parties shall then submit the dispute to
binding arbitration in accordance with the Rules of the American
Arbitration Association, the parties agreeing to each pay one-half
of the costs of the arbitration and to pay its own expenses
including its own legal fees. The parties agree that the
arbitrator shall be an independent certified public accountant or
attorney with experience in public merger transactions.
7. Miscellaneous.
7.1 Notices. Any notice required or permitted hereunder
shall be in writing and shall be sufficiently given if personally
delivered or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to Buyer:
International Mercantile Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chairman
14
EX-10.1
With Copies to:
Art Fillmore ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 202-857-1757
▇▇▇▇ ▇▇▇▇▇▇ 215-665-9300
If to Seller:
Red River Trading Company, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
With Copies to:
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
7.2 Execution of Additional Documents. The parties hereto
will at any time, and from time to time after the Closing Date,
upon request of the other party, execute, acknowledge and deliver
all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney, and assurances as may be required to carry out
the intent of this Agreement, and to transfer and vest title to any
Micromatix Shares being transferred hereunder, and to protect the
right, title, and interest in and enjoyment of all of the
Micromatix Shares sold, granted, assigned, transferred, delivered,
and conveyed pursuant to this Agreement; provided, however, that
this Agreement shall be effective regardless of whether any such
additional documents are executed.
7.3 Binding Effect, Benefits. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective heirs, successors, executors, administrators,
and assigns. Notwithstanding anything contained in this Agreement
to the contrary, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto
or their respective heirs, successors, executors, administrators,
and assigns any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
7.4 Entire Agreement. This Agreement, together with the
Exhibits, Schedules, and other documents contemplated hereby,
constitute the final written expression of all of the agreements
between the parties, and is a complete and exclusive statement of
those terms. It supersedes all understandings and negotiations
concerning the matters specified herein. Any representations,
promises, warranties, or statements made by either party that
differ in any way from the terms of this written Agreement and the
Exhibits, Schedules, and other documents contemplated hereby, shall
be given no force or effect. The parties specifically represent,
each to the other, that there are no additional or supplemental
agreements between them related in any way to the matters herein
contained unless specifically included or referred to herein. No
addition to or modification of any provision of this Agreement
shall be binding upon any party unless made in writing and signed
by all parties.
15
EX-10.1
7.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland
exclusive of the conflict of law provisions thereof.
7.6 Survival. All of the terms, conditions, warranties, and
representations contained in this Agreement shall survive, in
accordance with their terms, delivery by Buyer of the consideration
to be given by him hereunder and delivery by Seller of the
consideration to be given by them hereunder, and shall survive the
execution hereof and the Closing hereunder.
7.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same instrument.
Until manually signed counterparts have been exchanged between the
parties, the parties agree to be bound by counterparts delivered by
facsimile containing facsimile representations of actual signatures
affixed by the parties.
7.8 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be
given no substantive or interpretive effect whatsoever.
7.9 Waivers. Either Buyer or Seller may, by written notice
to the other; (a) extend the time for the performance of any of the
obligations or other actions of the other under this Agreement; (b)
waive any inaccuracies in the representations or warranties of the
other contained in this Agreement or in any document delivered
pursuant to this Agreement; (c) waive compliance with any of the
conditions or covenants of the other contained in this Agreement;
or (d) waive performance of any of the obligations of the other
under this Agreement. Except as provided in the preceding sentence,
no action taken pursuant to this Agreement, including without
limitation any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or
agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or
be construed as a waiver of any prior or subsequent breach of the
same or any other provision hereunder.
7.10 Merger of Documents. This Agreement and all agreements
and documents contemplated hereby constitute one agreement and are
interdependent upon each other in all respects.
7.11 Incorporation of Exhibits and Schedules. All Exhibits
and Schedules attached hereto are by this reference incorporated
herein and made a part hereof for all purposes as if fully set
forth herein.
7.12 Severability. If for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to
be inoperative, unenforceable, or invalid as applied to any
particular case or in all cases, such circumstances shall not have
the effect of rendering such provision invalid in any other case or
of rendering any of the other provisions of this Agreement
inoperative, unenforceable, or invalid.
7.13 Assignability. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable to any party hereto
without the prior written consent of the other parties hereto.
16
EX-10.1
IN WITNESS WHEREOF the respective parties hereto have hereunto
affixed their respective hands and/or seals on the day, month, and
year first above written.
FOR: INTERNATIONAL MERCANTILE CORPORATION ("BUYER")
/s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 9/6/99
by: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chairman Date
FOR: RED RIVER TRADING COMPANY, INC. ("SELLER")
/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 9/6/99
by: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President Date
FOR: ▇▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED ("COMPANY")
/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 9/6/99
by: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President Date
17
EX-10.1
STOCK PURCHASE AGREEMENT
By and between
International Mercantile Corporation
and
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
ADENDUM
It is hereby agreed that the transaction referenced in the Stock
Purchase Agreement dated September 6, 1999 shall be accounted for
as a capital transaction with no recognition of goodwill or other
intangible assets. This transaction is a recapitalization of
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (the predecessor company) and not a business
combination. As such, all historical data shall be that of
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. A Reverse Merger.
FOR: INTERNATIONAL MERCANTILE CORPORATION ("BUYER")
/s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ /s/
by: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chairman Witness
Date 9/6/99 Date 9/6/99
FOR: ▇▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED ("COMPANY")
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/
by: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President Witness
Date 9/6/99 Date 9/6/99