EXHIBIT 10.4
Exchange
Agreement
Page 1
Conversion Agreement
This Conversion Agreement (the "Agreement") is made and entered into by
and among IBX Group, Inc., a Florida corporation ("IBX"), and The Xxxxx Family
Spendthrift Trust, a Florida trust (the "CFST"), IBX and CFST being sometimes
hereinafter collectively referred to as the "Parties" or generically as a
"Party").
Preamble:
WHEREAS, the CFST desires to enter into arrangements to insure that it
is not and will not become a "control person" of IBX, as such term is used for
purposes of Item 401(d) of Regulation SB promulgated by the Commission; and
WHEREAS, IBX desires to assure that such representation is and remains
accurate:
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the Parties, intending to be legally bound, hereby agree as follows:
Witnesseth:
Article I
Definitions
The following terms or phrases, as used in this Agreement, shall have
the following meanings:
(A) Commission: The United States Securities and Exchange
Commission
(B) Exchange Act The Securities Exchange Act of 1934, as
amended.
(C) Exchange Act Reports: Reports on Commission
Forms 10-KSB, 10-QSB and 8-K and Commission
Schedules 14A and 14C, that IBX would be
required to file pursuant to Sections 13,
14, 15(d) and 12(g) of the Exchange Act.
(D) Exchange Exemption: Securities Act Section 3(a)(9), Securities
Exempted by Act, Subsubsection (9),
Securities Exchanged with Security Holders.
"Except as hereinafter expressly provided
the provisions of this title shall not apply
to any of the following classes of
securities: ....(9) Except with respect to a
security exchanged in a case under title 11
of the United States Code, any security
exchanged by the issuer with its existing
security holders exclusively where no
commission or other remuneration is paid or
given directly or indirectly for soliciting
such exchange ....
(D) Florida Act The Florida Securities and Investor
Protection Act
(E) Florida Exemption Sec. 517.061, Florida Statutes, Exempt
transactions. .... (6) Any transaction
involving the distribution of the securities
of an issuer exclusively among its own
security holders, including any person who
at the time of the transaction is a holder
of any convertible security, any
nontransferable warrant, or any transferable
warrant which is exercisable within not more
than 90 days of issuance when no commission
or other remuneration is paid or given
directly or indirectly in connection with
the sale or distribution of such additional
securities.
(F) Securities Act The Securities Act of 1933, as amended.
Article II
Exchange
(A) The CFST hereby exchanges 8,000,000 shares of IBX common stock, $0.001
par value (the "Exchanged Common Stock") for shares of IBX' Class A
Non-Voting Convertible Preferred Stock, as more particularly described
in the certificate of amendment annexed hereto and made a part hereof
as exhibit II-A-1 (the "Preferred Stock" and the
1
"Certificate," respectively) in an amount equal to 1/100th the number
of shares of Preferred Stock as the number of shares of Common Stock
exchanged, as calculated in exhibit annexed II-A-2 hereto and made a
part hereof (the "Exchange Calculation"). The CFST hereby exchanges all
of the Class A and Class B Warrants to purchase shares of Common Stock
for Class E and Class F Warrants to Purchase Preferred Stock (the
"Exchanged Warrants"), as more particularly described in the forms of
warrants annexed hereto and made a part hereof as exhibit II-A-2 and 3.
The Exchanged Common Stock and the Exchanged Warrants are referred to
as the "IBX Securities".
(B) The exchange is being effected without registration under the
Securities Act or the Florida Act, based on the exemption from
registration provided by the Exchange Exemption and the Florida
Exemption.
(C) As a material inducement to IBX' consideration of the CFST's offer to
effect the exchange, the CFST represents, warrants and covenants to
IBX, as follows:
(1) The CFST acknowledges that it has, based on its own
substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks
thereof in general and the suitability of the transaction for
it in particular;
(2) The CFST understands that the offer and issuance of IBX
Securities is being made in reliance on the CFST's
representation that it has reviewed IBX' Exchange Act Reports,
and is familiar with the information disclosed therein,
including that contained in exhibits filed with such reports.
(3) The CFST is fully aware of the material risks associated with
being an investor in IBX and confirms that it was previously
informed that all documents, records and books pertaining to
this investment have been available from IBX and that all
documents, records and books pertaining to this transaction
requested by it have been made available to it;
(4) The CFST has had an opportunity to ask questions of and
receive answers from the officers of IBX concerning the terms
and conditions of this Agreement and the transactions
contemplated hereby, as well as the affairs of IBX and related
matters;
(5) The CFST has had an opportunity to obtain additional
information necessary to verify the accuracy of the
information referred to in subparagraphs (1), (2), (3) and (4)
hereof;
(6) The CFST has represented to IBX that it has the general
ability to bear the risks of the subject transaction and that
it is a suitable investor for a private offering and the CFST
hereby affirms the correctness of such information to IBX;
(7) The CFST acknowledges and is aware that:
(a) The IBX Securities are a speculative investment with
no assurance that IBX will be successful, or if
successful, that such success will result in payments
to the CFST or to realization of capital gains by the
CFST on disposition of the IBX Securities; and
(b) The IBX Securities to be issued to it has not been
registered under the Securities Act or under any
state securities laws, accordingly the CFST may have
to hold such common stock and may not be able to
liquidate, pledge, hypothecate, assign or transfer
it;
(8) The CFST has obtained its own opinion from its legal counsel
to the effect that after an examination of the transactions
associated herewith and the applicable law, no action needs to
be taken by either the CFST or IBX in conjunction with this
Agreement and the issuance of the IBX Securities in
conjunction therewith, other than such actions as have already
been taken in order to comply with the securities law
requirements of the CFST's state of domicile, including the
safe harbor provided in conjunction with compliance with the
Florida Exemption; and
(9) (a) The certificates for the Preferred Stock will bear
restrictive legends and IBX' transfer agent will be
instructed not to transfer the subject securities
unless they have been registered pursuant to Section
6 of the Securities Act or an opinion of counsel to
the CFST satisfactory to legal counsel
2
to IBX and IBX' president has been provided, to the
effect that the proposed transaction is exempt from
registration requirements imposed by the Securities
Act, the Exchange Act and any applicable state or
foreign laws.
(b) The legend shall read as follows: "The securities
represented by this certificate were issued without
registration under the Securities Act of 1933, as
amended, or comparable state laws in reliance on the
provisions of Section 3(a)(9) of such act, and
comparable state law provisions. These securities may
not be transferred pledged or hypothecated unless
they are first registered under applicable federal,
state or foreign laws, or the transaction is
demonstrated to be exempt from such requirements to
IBX' satisfaction."
Article III
General Provisions
3.1 Interpretation.
(A) When a reference is made in this Agreement to Schedules or Exhibits,
such reference shall be to a Schedule or Exhibit to this Agreement
unless otherwise indicated.
(B) The words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without
limitation."
(C) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of
this Agreement.
(D) The captions in this Agreement are for convenience and reference only
and in no way define, describe, extend or limit the scope of this
Agreement or the intent of any provisions hereof.
(E) All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the
Party or Parties, or their personal representatives, successors and
assigns may require.
(F) The Parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.
3.2 Notice.
(A) All notices, demands or other communications given hereunder shall be
in writing and shall be deemed to have been duly given on the first
business day after mailing by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
(1) To IBX:
IBX Group, Inc.
000 Xxxxxxxxx 00 Xxxxxx; Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxx, President
Telephone (000) 000-0000, Fax (000)000-0000; and, e-mail xxxxx@xxxxxx0.xxx;
(2) the CFST:
The Xxxxx Family Spendthrift Trust
0000 Xxxxxxxxx 00xx Xxxxxxx; Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Trustee
Telephone (000) 000-0000, Fax (000) 000-0000; and,
e-mail, xxxxxxxxxx@xxxxxxx.xxx;
3
or such other address or to such other person as any Party shall
designate to the other for such purpose in the manner hereinafter set
forth.
(B) At the request of any Party, notice will also be provided by overnight
delivery, facsimile transmission or e-mail, provided that a
transmission receipt is retained.
3.3 Merger of All Prior Agreements Herein.
(A) This instrument, together with the instruments referred to herein,
contains all of the understandings and agreements of the Parties with
respect to the subject matter discussed herein.
(B) All prior agreements whether written or oral are merged herein and
shall be of no force or effect.
3.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and the Reorganization and
shall be effective regardless of any investigation that may have been made or
may be made by or on behalf of any Party.
3.5 Severability.
If any provision or any portion of any provision of this Agreement,
other than one of the conditions precedent or subsequent, or the application of
such provision or any portion thereof to any person or circumstance shall be
held invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
3.6 Governing Law.
This Agreement shall be construed in accordance with the substantive
and procedural laws of the State of Florida (other than those regulating
Taxation and choice of law).
3.7 Indemnification.
(A) Each Party hereby irrevocably agrees to indemnify and hold the other
Parties harmless from any and all liabilities and damages (including
legal or other expenses incidental thereto), contingent, current, or
inchoate to which they or any one of them may become subject as a
direct, indirect or incidental consequence of any action by the
indemnifying Party or as a consequence of the failure of the
indemnifying Party to act, whether pursuant to requirements of this
Agreement or otherwise.
(B) In the event it becomes necessary to enforce this indemnity through an
attorney, with or without litigation, the successful Party shall be
entitled to recover from the indemnifying Party, all costs incurred
including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted.
3.8 Dispute Resolution.
(A) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement any
proceedings pertaining directly or indirectly to the rights or
obligations of the Parties hereunder shall, to the extent legally
permitted, be held in Broward County, Florida, and the prevailing Party
shall be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations, trials
and appeals, whether or not any formal proceedings are initiated.
(B) In the event of any dispute arising under this Agreement, or the
negotiation thereof or inducements to enter into the Agreement, the
dispute shall, at the request of any Party, be exclusively resolved
through the following procedures:
4
(1) (a) First, the issue shall be submitted to mediation
before a mediation service in Broward County, Florida
to be selected by lot from four alternatives to be
provided, two by the CFST and two by IBX.
(b) The mediation efforts shall be concluded within ten
business days after their initiation unless the
Parties unanimously agree to an extended mediation
period;
(2) In the event that mediation does not lead to a resolution of
the dispute then at the request of any Party, the Parties
shall submit the dispute to binding arbitration before an
arbitration service located in Broward County, Florida to be
selected by lot, from four alternatives to be provided, two by
the CFST and two by IBX.
(3) (a) Expenses of mediation shall be borne equally by the
Parties, if successful.
(b) Expenses of mediation, if unsuccessful and of
arbitration shall be borne by the Party or Parties
against whom the arbitration decision is rendered.
(c) If the terms of the arbitral award do not establish a
prevailing Party, then the expenses of unsuccessful
mediation and arbitration shall be borne equally by
the Parties involved.
3.9 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees but are not intended to confer upon
any other person any rights or remedies hereunder.
3.10 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
3.11 Counterparts.
(A) This Agreement may be executed in any number of counterparts.
(B) All executed counterparts shall constitute one Agreement
notwithstanding that all signatories are not signatories to the
original or the same counterpart.
(C) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for
aesthetic purposes, prepare a fully executed original version of this
Agreement which shall be the document filed with the Commission under
the Exchange Act.
In Witness Whereof, IBX and the CFST have caused this Agreement to be
executed by themselves or their duly authorized respective officers, all as of
the last date set forth below:
IBX Group, Inc. The Xxxxx Family Spendthrift Trust
(A Florida corporation) (A Florida trust)
By:_________________________________ By:_________________________________
Xxxx Xxxxxxxxx, President Xxxxx X. Xxxxx, Trustee
Dated: May 17, 2002 Dated: May 17, 2002
5
