FILENAME>ims033104_ex99-1.txt
EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
This Agreement for the sale and purchase of assets is made and
entered into this 29th day of March, 2004 (the closing date), but
effective on March 31, 2004, by and between Xxxxxx Boom and Xxxx
Xxxxxx, on behalf of California Barter Exchange (hereinafter referred
to as CBX or "Seller") and Xxxxxx X. Xxxxxx, on behalf of International
Monetary Systems, Ltd. (hereinafter referred to as IMS or "Purchaser").
WITNESSETH:
WHEREAS, Seller is the owner of the assets of the barter trade
exchange presently known as California Barter Exchange and of the assets
thereof, presently doing business at 0000 Xxxxxxx Xxxx, Xxxxxx, XX; and
WHEREAS, Seller desires to sell and transfer its client barter
accounts, its barter exchange accounts receivable, and its furniture,
fixtures and inventory to IMS; and
WHEREAS, IMS, a holding company that operates the Continental Trade
Exchange barter network (CTE) based in New Berlin, WI, desires to purchase
and assume said client barter accounts, barter exchange accounts receivable,
furniture, fixtures and inventory, and
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other good, valuable and sufficient consideration, the
receipt of which is hereby acknowledged, the parties hereby agree as
follows:
1. Sale of Client Barter Accounts. On the closing date, Seller
hereby sells, transfers, assigns and delivers to Purchaser, free and clear
of all liens, claims, encumbrances and charges, all client barter accounts
of the members of CBX as listed on Exhibit A attached hereto. Subsequent to
the date of closing, Seller and Purchaser shall contact all of Seller's
client barter account members, informing them of the ownership transfer to
IMS/CTE, the operating procedures of CTE, and requesting them to enter into
an agreement with CTE. Should any account member decide not to enter into a
CTE agreement, the prior CBX contract will remain in force but will be
serviced by, and belong to IMS. For purposes of this Agreement, a client
barter account is an account of a member of CBX, that member having entered
into a membership agreement with CBX prior to the date of closing.
2. Sale of Other Business Assets. On the closing date, Seller
hereby sells, conveys, transfers, assigns and delivers to Purchaser, and
Purchaser accepts and purchases certain of the Seller's other business
assets. These assets shall include, but not be limited to, the following:
A. All furniture, fixtures and inventory currently being used
in the CBX office as set forth on Exhibit B attached hereto.
B. Accounts receivable as listed on Exhibit C attached
hereto. It is understood that any payments on these accounts
received by CBX after March 31, 2004 shall immediately be
remitted to CTE.
Page 1
3. Consideration. In consideration of the transfer and delivery at
closing to Purchaser of the assets described in paragraphs 1 and 2, and upon
compliance with the covenants and agreements set forth herein, IMS shall pay
to Seller the amount of $600,000.00 (six hundred thousand dollars) payable
as follows:
At the closing, remit to Seller the sum of $20,000.00 in U. S.
currency. In addition, Purchaser shall make a payment of $10,000.00 on
April 30, 2004, and a payment of $20,000.00 on May 31, 2004. Purchaser
shall also execute a note payable to Seller in the amount of
$200,000.00 to be paid in thirty-three monthly payments. (There will
be thirty-two payments of $6,000.00 each, plus a final payment of
$8,000.00.) Purchaser will assume Seller's balance due to Dell
Financial Services for computer equipment being used by CBX. This
balance is not to exceed $10,000.00. Purchaser shall also issue three
hundred, fifty thousand (350,000) 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 and will be restricted
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. All IMS payments of cash or stock under this Agreement
will be divided evenly between Xxxxxx Boom and Xxxx Xxxxxx.
4. Deficit Trade Accounts of Xxxxxx Boom and Xxxx Xxxxxx. While
operating California Barter Exchange, both Xxxxxx Boom and Xxxx Xxxxxx have
spent more trade dollars than were available in their personal accounts. At
the time of closing, those negative balances are: Xxxxxx Boom - $143,000.00,
and Xxxx Xxxxxx - $343,000.00. Therefore, under the terms of this Agreement,
Messrs. Boom and Xxxxxx will execute notes for these amounts, payable to
CTE. It is agreed that these balances may be paid back in trade dollars at
the rate of $40,000 on each of the outstanding balances per year. In the
event that either Mr. Boom or Xx. Xxxxxx do not earn sufficient trade to pay
back these balances, IMS/CTE may deduct those amounts from its payments that
are due to Messrs. Xxxxxx and Boom. If cash payments are required under this
clause, Xxxxxx Boom and Xxxx Xxxxxx will be allowed to purchase CTE trade
dollars at $.50 on the dollar. In other words, the deduction will be 50% in
cash for the trade dollars still due.
5. Guarantee of Stock Value. Purchaser will guarantee Seller
a price of $1.00 per share for the IMS stock issued under this
Memorandum. The shares will be subject to a one-year lock-up agreement.
If after that time (the one-year anniversary date of closing this asset
purchase), the stock has had a prior 30-day trading average of $1.00
per share or more, Seller will have the right to sell all, or any
portion of its stock in the open market, and Purchaser's obligations
under this price guarantee will have been fulfilled. If the 30-day
trading average is less than $1.00 per share, Purchaser will either
issue additional shares of stock to compensate for such variance in
price, or, at its discretion, enter into a buy-back agreement. Under
that agreement, Purchaser will then execute a note, payable at the rate
of $10,000.00 per month for a period of 35 months, unless the parties
agree to other mutually acceptable terms.
Page 2
6. Liabilities. Xxxxxx Boom, Xxxx Xxxxxx and CBX shall be liable for
any and all CBX liabilities incurred before the date of closing. Neither
IMS nor CTE shall be considered a successor corporation of California
Barter Exchange, and will not be liable for any other CBX liabilities
except for the Dell Financial Services note described in Section 3 above.
Xxxxxx Boom and Xxxx Xxxxxx further warrant that:
A. 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 CBX, and
there are no unpaid taxes which are or could become a lien
on the properties and assets of CBX. All tax returns of any
kind required to be filed have been filed and the taxes
paid or accrued. CBX has no knowledge of any possible
deficiency assessments in respect to federal income tax
returns or other tax returns filed by it.
B. All parties with whom CBX has contractual
arrangements are in substantial compliance therewith. CBX
is not in default in any material respect under any
contracts to which it is a party. All leases and contracts
to which CBX is a party are assignable, or the other party
has consented to assignment.
C. All corporate acts required of CBX have been taken,
and all reports and returns required to be filed by it with
any governmental agency have been filed. CBX 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 CBX or its assets, properties, or business, nor
does CBX 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 Xxxxxx Boom, Xxxx Xxxxxx and CBX.
A. Xxxxxx Boom and Xxxx Xxxxxx have been doing business
as California Barter Exchange since 1998.
B. Xxxxxx Boom, Xxxx Xxxxxx and CBX 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.
Page 3
C. 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 Xxxxxx Boom, Xxxx Xxxxxx or CBX 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 CBX; or (iii.) the
creation of imposition of any lien, charge, or encumbrance
on any of the properties of CBX.
D. 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.
From the date of closing until March 31, 2004, Seller
agrees to continue to operate its business in the same
manner as it has in the past.
8. Representations and Warranties of Purchaser.
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.
B. Neither the execution and delivery of this Agreement
nor performance of this Agreement by Purchaser will
conflict with or result in the breach of any contract or
agreement to which Purchaser is a party or by which
Purchaser is bound.
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.
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:
Page 4
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.
11. Documents to be Delivered by Seller at Closing. At the
closing, Seller shall deliver to Purchaser the following documents in
form and substance acceptable to counsel for Purchaser:
A. A certificate from Seller that the representations
and warranties made by Seller in this Agreement are true
and correct in all material respects on and as of the
closing date, and that Seller has 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.
B. Xxxx of Sale, transferring all of the client barter
accounts listed on Exhibit A, furniture, fixtures and
inventory listed on Exhibit B, and accounts receivable
listed on Exhibit C.
C. Such other documents as Purchaser may reasonably request.
12. Documents and Properties to be Delivered by Purchaser at
Closing. At the closing, Purchaser shall deliver to Seller the
following documents in form and substance acceptable to counsel for
Seller:
A. A certificate from Purchaser that the representations
and warranties set forth in paragraph 8 hereof are true
and correct as of the closing date.
B. Such other documents as Seller may reasonably request.
13. 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.
14. 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.
Page 5
15. Non-Compete Agreement. Xxxxxx Boom and Xxxx Xxxxxx agree
that for a period of eighteen (18) months from the date of closing this
transaction, they 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. Messrs. Boom and Xxxxxx also
agree that they 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.
16. 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.
17. 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.
18. Headings. The headings in this Agreement are for reference
purposes only and shall not be deemed a part of this Agreement.
19. Benefit. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their legal representatives,
successors, and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date and year first above written.
INTERNATIONAL MONETARY SYSTEMS, LTD. CALIFORNIA BARTER EXCHANGE, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx Boom
------------------------------ -------------------------------
Xxxxxx X. Xxxxxx, President Xxxxxx Boom, President
By: /s/ Xxxx Xxxxxx
-------------------------------
Xxxx Xxxxxx, C.E.O.
Page 6
