FILENAME>ims073004_ex99-1.txt
EXHIBIT 99.1
ASSET PURCHASE AGREEMENT & XXXX OF SALE
Know All Men By These Presents,
That Barter Network, Inc., a Virginia corporation (hereinafter
referred to as "Seller" or as "BNI") is the owner of a barter trade exchange
and of the assets thereof, presently doing business at 0000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxx X000, Xxxxxxxxxxx, XX; F. Xxxxxx Xxxxxx (hereinafter
referred to as "Xxxxxx"), joins in this Agreement to the extent specified
herein; and
That International Monetary Systems, Ltd., a Wisconsin corporation
(hereinafter referred to as "IMS" or "Purchaser") is presently doing
business as Continental Trade Exchange, Ltd. (hereinafter referred to as
"CTE"), a barter network (IMS and CTE collectively hereinafter referred to
as "Purchaser" or as "IMS") located at 00000 Xxxx Xxxxxxxx Xxxxx, Xxx
Xxxxxx, XX; and
That for and in consideration of the mutual covenants contained herein
and for other good, valuable and sufficient consideration as outlined below,
the receipt of which is hereby acknowledged, BNI is hereby selling,
transferring, assigning and conveying all of its barter trade accounts and
all July 2004 client xxxxxxxx to IMS, its heirs, executors, administrators,
successors and assigns subject to the following terms:
1. Sale of Client Barter Accounts. Seller hereby sells, transfers,
assigns and delivers to Purchaser, all barter trade accounts, Purchaser
assuming the then positive and negative account balances, including all
house accounts, of the members of Barter Network, Inc,. listed on Exhibit A
attached hereto. Subsequent to the date of closing, at Purchaser's sole
expense, Seller and Purchaser shall contact all of Seller's client barter
account members, informing them of the ownership transfer to IMS, the
operating procedures of the CTE barter system, and requesting them to enter
into an agreement with CTE. Should any account member decide not to enter
into a CTE agreement, the prior BNI client contract will remain in force and
the existing account balance and membership shall be maintained in full
force and effect by IMS / CTE. For purposes of this Agreement, a barter
trade account is an account of a member of Barter Network, Inc., that member
having entered into a membership agreement with BNI prior to the date of
closing.
2. Accounts Receivable. Seller retains all receivables for all transactions
through June 30th, 2004. IMS will receive all fees billed for any matter
(excluding prior receivables) after June 30th, 2004 and thereafter. The
receivables retained by BNI are listed on Exhibit B attached. It is understood
that if IMS / CTE receives any receivables for pre-July receivables, it will
promptly remit the entire amount to BNI. Such payments will be made weekly, on
the Friday of the week following the date of receipt by IMS / CTE. Any and all
funds that are collected by IMS / CTE will first be applied to the pre-Closing
balances, and only after payment of the outstanding balances to the current CTE
xxxxxxxx. IMS / CTE will make a concerted effort to collect the BNI balances.
BNI shall have the right after October 30th, 2004 to proceed with court action
on all outstanding receivables due it and IMS/CTE shall fully cooperate in such
actions. Any account for which legal action has not been initiated on or before
November 15, 2004 shall be deemed abandoned and IMS/CTE shall have the right to
receipt of the account balance.
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3. Consideration. In consideration of the transfer and delivery at closing
to Purchaser of the assets described in paragraphs 1 and 2, IMS / CTE shall pay
to Seller the amount of $370,873.36 (three hundred seventy thousand, eight
hundred seventy-three dollars and 36 cents) payable as follows:
A. At Closing, Purchaser shall remit to Seller by wire transfer the sum
of $10,000.00 in U. S. currency with additional payments of $15,000.00 on
or before July 31, 2004, $10,000.00 on or before August 31, 2004, and
$15,000.00 on or before September 30, 2004. In the event that any sum due
pursuant to this Section 3.A. is not received within ten days of the due
date, IMS will pay a late fee of ten (10%) on the unpaid amount, which
amount will be paid with the late amount. If any payment is unpaid within
ten days of the due-date, IMS will be in default of this Agreement and the
note, and BNI shall have the option of declaring the entire outstanding
amount due under this Agreement and the note immediately due and payable.
B. Purchaser will also assume the following debts of Seller: a
note to Xxx Xxxxxxxxxx with a June 15th balance of $13,215.59 and monthly
payments of $1,687.00, a note to Wachovia Bank with a June 15th balance of
$5,226.89 with monthly payments of $761.00, and a credit line with
Wachovia Bank having a June 1st balance of $32,430.88 (collectively
hereinafter referred to as "Assumed Debts"). (Purchaser will reimburse
Seller in cash all principal and interest payments made by Seller on these
loans / lines of credit since July1, 2004 and pay Seller any reduction in
the balance of the debt since June 15, 2004.) The Parties agree to
cooperate in determining the amount due from Purchaser to Seller on the
Assumed Debts and that payment pursuant to such reconciliation will be due
ten days after Closing. It is agreed that IMS will attempt to assume the
loans as well as the Wachovia Bank credit line to remove BNI and F. Xxxxxx
Xxxxxx as responsible parties on these indebtednesses. IMS will attempt
to convert the Wachovia Bank credit line into an installment note. IMS
will indemnify Seller and F. Xxxxxx Xxxxxx against any further liability
to Wachovia Bank and Xxx Xxxxxxxxxx. If IMS, after due diligence and
effort, is unable to assume any loan resulting in the Wachovia credit line
being immediately becoming due and payable and requiring a total lump-sum
payment by IMS in excess of $20,000.00 on or before August 25th, 2004 with
copy of payment submitted to Xxxxxx and BNI, then in such event, the
payment of the $25,000 due to Seller during August and September will be
delayed and IMS will pay Seller $10,000.00 on or before October 31, 2004
and $15,000.00 on or before November 31, 2004 to complete the down payment.
IMS will be solely responsible for all principal and interest payments
on all loans and lines of credit until all are paid in full. Purchaser's
failure to timely make any payment on the Assumed Debts shall be deemed a
default of this Agreement (unless BNI and Xxxxxx have been completely
removed as responsible parties) and the Promissory Note in which event all
monies due Seller under the terms of the Promissory Note and this Section
3 shall immediately be deemed due and payable.
C. At Closing, $20,000.00 Continental Trade Exchange trade dollars will
be deposited into a fee-free account to be 'spent' as directed by Xxxxxx.
Purchaser's failure to establish the trade account within thirty (30) days
of Closing in accordance with the terms herein shall be deemed a default
of this Agreement and the Promissory Note and all monies due Seller under
the terms of the Promissory Note and this Section 3 shall immediately be
deemed due and payable.
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D. Purchaser shall execute and deliver to Seller at Closing the
Promissory Note (hereinafter "note") attached hereto as Exhibit C, in the
amount of $250,000.00. Pursuant to the terms of the note, Principal plus
interest will be paid in thirty-five consecutive monthly payments of
$6,755.00 which includes interest accruing commencing October 1, 2004 with
a balloon payment of $40,000.00 plus accrued interest on September 30,
2007. The note will bear interest at the rate of 6% per annum. To provide
Seller with upside incentive, within thirty (30) days of Closing,
Purchaser will deliver to Seller a total of 553,270 shares of the common
stock of International Monetary Systems, Ltd. to Seller or its designees.
The stock will be subject to a one-year lock-up (until July 15th, 2005)
and will be restricted during this period from disposal under Rule 144 of
the S.E.C. code. The stock is currently traded on the over-the-counter
bulletin board under the symbol INLM. Commencing with the first payment on
October 30th, 2004, within fifteen (15) days of receipt of each principal
payment of $6,755.00 made on this note, Seller will return to Purchaser
13,511 shares of the IMS stock if Seller elects to retain the principal
payment. The preceding notwithstanding, BNI has the right to refuse any
monthly payment for any given month by notifying IMS on or before the 15th
day of the month preceding the month in which the payment is due.
Purchaser's failure to timely make any payment on the note in accordance
with the terms contained therein, including the failure to pay the accrued
interest, shall be deemed a default of the note and all monies due Seller
shall immediately be deemed due and payable.
After the lock-up period, the IMS shares will be free trading and BNI
will have the right to sell its shares. The note will be considered as paid
in full at such time as BNI has received a total of $250,000.00 plus accrued
interest from IMS' monthly payments and/or net proceeds from the sale of
stock. In such event, all of Purchaser's obligations under this note will
have been fulfilled and Purchaser will no longer be required to make the
$6,755.00 monthly payments or the balloon at the end of the term.
Furthermore, after the lock-up period, if BNI elects to not accept the
$6,755.00 payment for any given month, IMS will receive a credit of
$6,755.00 against the principal balance and accrued interest still due on
this note.)
Purchaser's failure to timely make any payment pursuant to the terms
of the note, including the failure to pay the accrued interest, shall be
deemed a default of this Agreement and the note and all monies due Seller
pursuant to this Section 3 and the note shall immediately be deemed due
and payable.
E. Purchaser will assume Seller's trade account balances, both negative
and positive, of the client barter accounts transferred effective as of
the date of closing. "Seller's trade account balance" is defined as the
total amount of trade dollars of members reflected on Exhibit A.
F. All of the terms of this Section 3 shall survive Closing and shall
not merge into the Xxxx of Sale.
4. Lease of Premises. At Closing, Purchaser agrees to execute a standard
commercial lease for a term of six-months for a portion of the offices
presently being used by BNI in the building located at 0000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxx X000, Xxxxxxxxxxx, XX at the rental rate of $950.00 per month,
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including utilities. Prior to December 31, 2004, Seller may cancel the lease
with a 60-day notice. On January 15, 2005, the lease will become month-to-
month, requiring a 60-day termination notice by either party to terminate.
While operating its business at this location, Seller will designate the use
of two work stations and the related equipment currently in place for
Purchaser's use. Purchaser shall be responsible for maintaining all equipment
used exclusively by them.
5. Guarantee of Stock Value. The IMS stock issued under this Memorandum will
be subject to a one-year lock-up agreement. Because IMS is guaranteeing that
BNI will receive $250,000.00 under this stock-price guarantee, IMS is to
receive credit against its note balance for the net proceeds received by BNI
from stock sales in any month. "Net proceeds" shall be defined for purposes of
this Agreement and the Promissory Note as the amount received by Seller as a
result of the sale of shares, less any transaction fees, less the $6755.00 for
any month (commencing with the first month for which shares were retained for
which IMS previously received credit). The net proceeds received by BNI for
such stock sales will be subtracted from the then-current principal balance on
the note. BNI will provide IMS management with an accounting of such sales by
sending a copy of its brokerage statement for each month in which shares of IMS
are sold. At any time prior to September 30, 2006, Seller shall have the right
to return any shares retained by Seller during the 'lock-up' period to IMS and
receive commencing fifteen (15) days from delivery an amount representing fifty
($.50) cents per share in U.S. Dollars for each share returned except that no
more than 40,000 shares may be returned every 15 days. Purchaser's failure to
make payment pursuant to the terms of this Section 5 shall be deemed a default
of this Agreement and the note in which event all monies due Seller pursuant to
this Agreement, including this Section 5, shall immediately become immediately
due and payable.
6. Liabilities. Except for the assumption of debt detailed in no. 3 above
and customer trade balances (both positive and negative), BNI shall be liable
for any and all BNI liabilities incurred before the date of closing and as
otherwise provided in this Agreement. IMS shall not be considered a successor
corporation of BNI, and will not be responsible for any other BNI liabilities
except as previously provided and those items listed on attachment A. It is
understood that Purchaser intends to cancel the agreement with Xxxx Xxxxxxx for
accounting services currently being provided but Purchaser shall be solely
responsible for Xxxxxxx'x fees until such cancellation is effective. BNI will
aid Purchaser, at no cost to BNI or Xx. Xxxxxx, in getting current client trade
account balances and histories from Xx. Xxxxxxx as of July 1, 2004 and will
help Purchaser in negotiating a satisfactory resolution to the contract.
To the best of BNI's knowledge and understanding:
A. All federal, state, county and local income, ad valorem, excise,
sales, use, gross receipts and other taxes and assessments which were
due and payable prior to Closing have been dully reported, fully paid
and discharged as reported by BNI, and there are no unpaid taxes which
are or could become a lien on the properties and assets of BNI. All
tax returns of any kind required to be filed have been or will be
filed and the taxes paid or accrued. BNI has no knowledge of any
possible deficiency assessments in respect to federal income tax
returns or other tax returns filed by it.
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B. BNI is not in default in any material respect under any contracts
assumed by Buyer. All barter accounts are assignable to Buyer .
C. All corporate acts required of BNI have been taken and
all reports and returns required to be filed by it with any
governmental agency have been filed. BNI is in substantial compliance
with all, and has no notice of any claimed violation of any,
applicable federal, state, county and local laws, ordinances or
regulations, including those applicable to discrimination in
employment, pollution and safety.
D. There are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions, either threatened, pending or
outstanding against or involving BNI, or its assets, properties, or
business, nor does BNI know, or have reasonable grounds to know, of
any basis for any such proceedings, investigations or inquiries,
product liability or other claims judgments, injunctions or
restrictions.
7. Representations and Warranties of F. Xxxxxx Xxxxxx and BNI.
A. F. Xxxxxx Xxxxxx and BNI have the full right, power and
authority to carry out this Agreement in all respects and are not
subject to any restriction or agreement which prohibits or would be
violated by consummation of the transactions contemplated by this
Agreement.
B. Except as to the debts being assumed by IMS pursuant to Section
3.B. above, neither the execution and delivery of this Agreement nor
performance of this Agreement by Seller will result in or constitute
any of the following: (i) a default or an event that, with notice or
lapse of time or both, would be default, breach or violation under any
lease, license, promissory note, conditional sales contract,
indenture, mortgage, deed of trust or other contract, agreement or
arrangement to which F. Xxxxxx Xxxxxx or BNI is a party or by which
the corporation or its property is bound; (ii.) an event that would
permit any party to terminate any agreement, or to accelerate the
maturity of any indebtedness or other obligation of BNI; or (iii.) the
creation of imposition of any lien, charge, or encumbrance on any of
the properties of BNI.
C. Except as otherwise set forth herein, to the best of Seller's
knowledge there is no fact, event, or condition which might materially
and adversely affect the financial condition of Seller's business
prior to the closing date.
8. Representations and Warranties of Purchaser.
To the best of IMS' knowledge and understanding:
A. Purchaser has the full right, power, and legal capacity to enter
into this Agreement and to consummate the transaction contemplated
hereby. This Agreement is valid and binding upon Purchaser in
accordance with its terms.
Page 5
B. Neither the execution and delivery of this Agreement nor
performance of this Agreement by Purchaser will conflict with or
result or constitute any of the following: (i.) a default or an event
that, with notice or lapse of time or both, would be default, breach
or violation under any lease, license, promissory note, conditional
sales contract, indenture, mortgage, deed of trust or other contract,
agreement or arrangement to which IMS is a party or by which the
corporation or its property is bound; (ii.) an event that would permit
any party to terminate any agreement, or to accelerate the maturity of
any indebtedness or other obligation of IMS; or (iii.) the creation of
imposition of any lien, charge, or encumbrance on any of the
properties of IMS.
C. All federal, state, county and local income, ad valorem, excise,
sales, use, gross receipts and other taxes and assessments which are
due and payable have been dully reported, fully paid and discharged as
reported by IMS, and there are no unpaid taxes which are or could
become a lien on the properties and assets of IMS. All tax returns of
any kind required to be filed have been or will be filed and the taxes
paid or accrued. IMS has no knowledge of any possible deficiency
assessments in respect to federal income tax returns or other tax
returns filed by it.
D. IMS is not in default in any material respect under any contracts
to which it is a party.
E. All corporate acts required of IMS have been taken and
all reports and returns required to be filed by it with any
governmental agency have been filed. IMS is in substantial compliance
with all, and has no notice of any claimed violation of any,
applicable federal, state, county and local laws, ordinances or
regulations, including those applicable to discrimination in
employment, pollution and safety.
F. There are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions, either threatened, pending or
outstanding against or involving IMS, or its assets, properties, or
business, nor does IMS know, or have reasonable grounds to know, of
any basis for any such proceedings, investigations or inquiries,
product liability or other claims judgments, injunctions or
restrictions.
9. Conditions Precedent to the Obligations of Purchaser. The obligations
of Purchaser hereunder, including the obligation of Purchaser to close the
transaction herein contemplated, are subject to the following conditions
precedent:
A. The representations and warranties made by Seller in this
Agreement shall be true in all material respects on and as of the
closing date.
B. Seller shall have performed and complied with all of its
obligations under this Agreement which are to be performed or complied
with by it prior to or on the closing date.
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C. No suit or proceeding shall be threatened or pending in which
anyone seeks to restrain, prohibit, challenge, or obtain relief in
connection with any material claim against Seller not disclosed
herein.
10. Conditions Precedent to Obligations of Seller. The obligations of
Seller under this Agreement, including the obligation of Seller to close the
transactions herein contemplated, are subject to the following conditions:
A. The representations and warranties of Purchaser contained in
this Agreement shall be true in all material respects on and as of the
closing date.
B. Purchaser shall have performed and complied with all of its
obligations under this Agreement which are to be performed or complied
with by it prior to or on the closing date.
C. No suit or proceeding shall be threatened or pending in which
anyone seeks to restrain, prohibit, challenge, or obtain relief in
connection with any material claim against Seller not disclosed
herein.
11. Exhibits. This Agreement may be signed by the parties prior to the
date of closing and prior to the completion of the Exhibits to be attached
to this Agreement. The parties acknowledge that the Exhibits attached to
this Agreement on the date of closing shall be updated on the date of
closing and attached at Closing in accordance with the terms of this
Agreement.
12. Indemnification. Seller shall indemnify Purchaser for any loss, cost,
expense or other damage, including attorney's fees suffered by Purchaser
resulting from, arising out of, or incurred with respect to any liabilities
incurred by Seller prior to the closing hereunder, or the falsity or the
breach of any representation, warranty or covenant made by Seller herein.
Purchaser shall indemnify BNI and Xxxxxx for any loss, cost, expense or
other damage, including attorney's fees suffered by either BNI or Xxxxxx
resulting from a breach or default of the terms of this Agreement or arising
out of, or incurred with respect to any liabilities incurred by Purchaser
subsequent to the closing hereunder, Purchaser's failure to pay the
consideration under Section 3 of this Agreement, or the falsity or the
breach of any representation, warranty or covenant made by Seller herein.
13. Non-compete Agreement. F. Xxxxxx Xxxxxx agrees that for a period of
eighteen (18) months from the date of closing this transaction, he will not
engage in or otherwise affiliate with any barter or trade exchange located
within a fifty (50) mile radius of any IMS/CTE office, nor with any other
business operation directly or indirectly related to, or in competition with,
the business operation of International Monetary Systems, Ltd. Xx. Xxxxxx also
agrees that he will not influence nor attempt to influence any of IMS/CTE's
customers or clients to transfer their patronage relating to IMS/CTE's business
from IMS/CTE to any other business or company engaged in a similar business.
14. Amendment. This Agreement supersedes all prior agreements and
understandings between the parties and may not be changed or terminated
orally, and no attempted change, termination or waiver of any of the
provisions hereof shall be binding unless in writing and signed by the party
against whom the change, termination or waiver is sought to be enforced.
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15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
16. Headings. The headings in this Agreement are for reference purposes
only and shall not be deemed a part of this Agreement.
17. Benefit. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their legal representatives, successors, and
assigns.
18. Survival. All of the terms contained in this Agreement shall survive
Closing and shall not merge with Closing.
19. Legal fees.
(i) In the event of a breach or default of any of the terms or
conditions contained in this Agreement by IMS, all monies due
pursuant to the terms of this Agreement as well as all sums
remaining unpaid under the note shall immediately become due and
payable. Further, IMS shall reimburse BNI and Xxxxxx incurred in
obtaining compliance with the terms of this Agreement and, in
addition, BNI and Xxxxxx shall be reimbursed all of their attorney
fees and court costs, regardless of whether legal action was filed.
(ii) In the event of a breach or default of any of the terms or
conditions contained in this Agreement by BNI or Xxxxxx, BNI and
Xxxxxx shall reimburse IMS all legal fees incurred by it in
obtaining compliance with the terms of this Agreement, regardless
of whether legal action was filed.
20. Security Interest: BNI is hereby granted a security interest on all
trade accounts being sold under this Asset Purchase Agreement & Xxxx of Sale
and is hereby granted a first lien on those assets. In the event of a
breach or default by IMS or CTE of this Agreement or the note, BNI shall
have a right to the return of all trade accounts and the transfer to it of
all new member accounts located in Maryland, Virginia and the District of
Columbia.
21. Miscellaneous. This Agreement shall be governed by, construed and
enforced under the laws of the Commonwealth of Virginia. This Agreement
sets forth the entire agreement and understanding between the parties with
respect to the contemplated transactions and supersedes all prior
agreements, arrangements and understandings. Failure of any party at any
time or times to require performance of any provisions hereof shall in no
manner affect the right at a later time to enforce the provision. No waiver
by either party of any condition, or the breach of any term, covenant,
representation or warranty contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed a further or
continuing waiver of any condition or covenant, representation or warranty
of this Agreement. Any change to this Agreement shall be made only in
writing executed by the party sought to be charged thereby. The captions
and paragraph headings are for convenience only and shall not be used in
construing or enforcing any of the provisions of this Agreement. Unless
otherwise provided herein, the words "herein," "hereof," "hereunder," and
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other words of similar import refer to this Agreement as a whole and not to
particular provisions. The terms "include" and "including" shall mean
without limitation by reason of enumeration. Unless otherwise provided
herein, no consent or approval requested or required hereunder shall be
unreasonably withheld, conditioned or delayed. This Agreement is executed
under seal. Any legal proceedings between the parties shall be filed in
Fairfax County Circuit Court or corresponding federal court
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this 15th day of July, 2004.
INTERNATIONAL MONETARY SYSTEMS, LTD. BARTER NETWORK, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ F. Xxxxxx Xxxxxx
-------------------------------- --------------------------------
Xxxxxx X. Xxxxxx, President F. Xxxxxx Xxxxxx, President
CONTINENTAL TRADE EXCHANGE, LTD. (CTE)
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx, President
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