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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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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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 outstanding;
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(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
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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
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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);
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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
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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.
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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
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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
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
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
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
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
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
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
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
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
