ims053105bbu_ex99-1.txt
EXHIBIT 99.1
SHARE-EXCHANGE AGREEMENT
This agreement entered into as of the 27th day of May 2005, but to be
effective May 31, 2005, between International Monetary Systems, Ltd. (Buyer), a
Wisconsin corporation, and Xxxxxxx Xxxxxxxx (Seller), a resident of
Southington, Connecticut, is for the purchase of all outstanding shares of
Barter Business Unlimited, Inc (BBU), a Connecticut corporation.
For consideration of the mutual covenants contained herein and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase Price. Seller agrees to sell to Buyer and Buyer agrees to
purchase all of the outstanding and issued shares of stock of BBU in exchange
for $500,000.00 cash 2,050,000 shares of the $0.0001 par value common voting
stock of Buyer, and a promissory note in the amount of $350,000.00.
1.2 Payment. Upon the closing of this Agreement and the assignment of all
of Seller's shares in BBU, Buyer will pay to seller $500,000.00, will execute a
promissory note payable to seller in the amount of $350,000.00, in the form
attached hereto as Exhibit A attached hereto and will issue to Seller
2,050,000 shares of the $0.0001 par value common voting stock of International
Monetary Systems, Ltd. These shares are being issued without registration under
the Securities Act of 1933 and may not be sold in the public market except under
SEC Rule 144, which requires a one-year holding period. At the request of the
Seller, up to 50,000 of such shares may be issued to key employees of BBU.
1.3 Guaranty of Stock Value. Buyer guarantees that Seller will receive a
minimum of $700,000.00, net after all commissions, or Fifty Cents ($.50)
cash per share net (the "Guaranteed Price"), on 1,400,000 of the shares (the
"Guaranteed Shares") that Seller is accepting under this Agreement. Buyer
will not guarantee the price on the remaining 650,000 shares of stock being
transferred to Seller. To secure this guaranty, Buyer agrees to the following:
(a) An escrow account shall be established at a financial institution
mutually agreed upon by the parties pursuant to an escrow agreement
being executed concurrently herewith in the form of Exhibit B attached
hereto. For 35 months following closing, Buyer shall deposit $20,000.00
per month into this account by the 20th day of each month with the first
payment due by July 20, 2005, so that by June 30, 2008 the escrow account
shall contain not less than $700,000. The escrow agent shall be
instructed to confirm such payments directly to the Seller.
(b) If Buyer fails to make the entire deposit of any of the escrow payments
that are required by this agreement within ten days after the due date
(on or before the 30th day of the month), Buyer agrees to pay seller
damages in the amount of $200.00 per calendar day for each day after
the 30th of the month through and including the day the full deposit is
made. This provision shall apply to each deposit independently of any
other deposits.
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(c) If Buyer fails to make the entire deposit of any of the escrow payments
that are required by this agreement on or before the 15th day of the
following month, or if Buyer shall violate any of the Covenants set
forth in Article III of this Agreement, such failure or violation shall
be a Default and Seller shall have the right to require Buyer to make
all remaining cash escrow payments required under this Agreement and to
require that Buyer immediately buy back all remaining Guaranteed
Shares held by Seller at the Guaranteed Price within 10 business days
of Seller's notice to Buyer of the exercise of this right.
1.4 Right to Redeem. During the term of this agreement, Seller may require
Buyer to buy back up to 40,000 of the Guaranteed Shares per month at the
Guaranteed Price. This right is cumulative, so that in the event it is not
exercised during any month, it will carry forward and be exercisable in any
subsequent month. For example, if Seller does not exercise this right for two
consecutive months, the following month Seller would have the right to
require Buyer to purchase 120,000 Guaranteed Shares at a price of $60,000.00
Funds to effect such purchases shall be released from the escrow account.
1.5 Release of Buyer's Obligations - Market Conditions. In the event that at
any time beginning one year after the effective date the Buyer's stock is
trading in the public market above sixty cents ($.60) per share and average
daily trading volume for the Buyer's stock for 20 consecutive trading days is
greater than 50,000 shares, and if Seller is eligible to sell shares under Rule
144, Buyer shall have the right to give notice to Seller of such circumstance
and to require that Seller elect either: (i) to sell 40,000 of the Guaranteed
Shares into the market, (ii) to allow Buyer to redeem such 40,000 Guaranteed
Shares at the Guaranteed Price, or (iii) to retain such 40,000 Guaranteed
Shares for investment, in which case Buyer shall be relieved of its obligations
to make the $20,000 escrow deposit next falling due and to repurchase such
40,000 Guaranteed Shares. Seller shall notify Buyer of its election
hereunder within ten days following receipt of Buyer's notice. If Seller shall
fail to give such notice, Seller shall be deemed to have elected to retain
40,000 Guaranteed Shares for investment pursuant to clause (iii) above.
1.6 Release of Buyer's Obligations - Prepayment. If at any time after the
first anniversary of the effective date all of Buyer's obligations under
Paragraph 1.3 above shall have been satisfied, either through the deposit of
the full $700,000.00 into the escrow account or through partial release of
Buyer's obligations as provided in Paragraph 1.5 above, and if Seller is
eligible to sell shares under Rule 144, then Buyer shall have the right to
give notice of such circumstance and to require that Seller elect either:
(i) to allow the Buyer to redeem all or any portion of the remaining Guaranteed
Shares at the Guaranteed Price, or (ii) to retain all remaining Guaranteed
Shares for investment, in which case Buyer shall be relieved of all further
obligations of in respect of such remaining Guaranteed Shares.
1.7 Release from Escrow. At such time as all of Buyer's obligations under
Paragraphs 1.3 and 1.4 shall have been satisfied in full, any funds remaining
in the escrow account shall be released and paid over to Buyer.
1.8 Default. In the event of a Default hereunder, Buyer shall pay all of
Seller's legal fees and other costs of collection.
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1.9 Covenant Not to Compete. Concurrently herewith the parties are entering
into a Covenant Not to Compete in the form of Exhibit C attached hereto.
1.10 Security and Pledge Agreement. The Buyer's obligations under this
Agreement, the Promissory Note and the Covenant Not to Compete are
subject to the terms of a Security and Pledge Agreement between the parties
in the form of Exhibit D attached hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties. Buyer and Seller hereby covenants,
represents and warrants to the other that:
(a) Organization and Good Standing. It is a corporation duly incorporated
and organized, validly existing, in good standing and is up to date in
all of the filings and registrations required under the laws of its
jurisdiction of incorporation.
(b) Due Authorization. It has the necessary corporate authority and
capacity to enter into this Agreement and the agreements and other
instruments contemplated herein and to perform its obligations
hereunder and thereunder. The execution and delivery of this
Agreement and the agreements and other instruments contemplated
herein and the performance of the transactions contemplated
hereunder and thereunder have been duly authorized by all necessary
corporate action on its part.
(c) No Violation. It is not a party to, bound by or subject to any
indenture, mortgage, lease, agreement, instrument, charger or bylaw
provision, statute, regulation, order, judgment, decree or law which
would be violated, breached by or under which any default would
occur as a result of the execution and delivery by it of this Agreement
or the performance by it of any of the terms of this Agreement.
(d) Valid and Binding. It has the full power, legal capacity and authority
to execute and deliver this Agreement and to perform its obligations
under this Agreement. This Agreement constitutes the legal, valid and
binding obligation of it, enforceable against it in accordance with its
terms, except as that enforceability may be (i) limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and (ii) subject to general principles of equity. It has taken all
actions necessary for the authorization, execution, delivery and
performance by it of this Agreement.
2.2 Representations and Warranties of Seller. Seller further covenants,
represents and warrants to Buyer that, save and except as has been disclosed
to Buyer:
(a) Power of Seller. All corporate action on the part of Seller and its
officers, directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement and the other
transaction documents to which Seller is a party, the consummation of
the transactions contemplated thereby, and the performance of all of
execution, delivery and performance of this Agreement and the other
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transaction documents to which Seller is a party, the consummation of
the transactions contemplated thereby, and the performance of all of
Seller's obligations under this Agreement and the other transaction
documents to which it is a party has been taken or will be taken prior
to the closing date. This Agreement has been, and the other
transaction documents to which Seller is a party on the closing date
will be, duly executed and delivered by Seller, and this Agreement is,
and each of the other transaction documents to which seller is a party
on the closing date will, be a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(b) No Conflicts. To its knowledge, Seller's execution, delivery and
performance in accordance with the respective terms of this
Agreement and other transaction documents to which Seller is a party
do not and will not (i) violate or conflict with any governmental
requirement, (ii) to its knowledge, breach or constitute a default under
any agreement or instrument to which Seller is a party or (iii) result
in the creation or imposition of, or afford any person the right to
obtain, any lien upon the purchased assets. Furthermore, to its
knowledge, the execution and performance by Seller will not result in
any of the following:
(i) the acceleration or mandatory prepayment of any indebtedness of
Seller or afford any holder of any of that indebtedness, or any
beneficiary of those guaranties, the right to require Seller or
Buyer, or any subsidiary to redeem, purchase, or otherwise acquire,
reacquire or repay any of that indebtedness, or to perform any of
those guaranties;
(ii) cause or result in the imposition of, or afford any person the
right to obtain, a lien upon any property or assets of Seller,
or upon any revenues, income or profits of Seller; or
(iii) result in the revocation, cancellation, suspension or
material modification of any governmental approval
possessed by Seller at the closing date and necessary for the
ownership or lease or the operation of its properties or the
carrying on of their business as now conducted including
any necessary governmental approval under each
applicable environmental law and industry law
(c) Reports, Notices. To Seller's knowledge, no reports or notices to
report, or filings with, any governmental authority are required to be
made by Seller for the execution, delivery or performance by Seller of
this Agreement, the enforcement against Seller of its obligations
thereunder, or the effectuation of the acquisition and the other
transactions contemplated thereby.
(d) Litigation. To Seller's knowledge, the Seller is not aware of any
pending or threatened suit, action, arbitration, or legal,
administrative, or other proceeding, or governmental investigation
against or affecting any of its assets. To its knowledge, Seller is
not in default with respect to any order, writ, injunction, or decree
or any federal, state, local, or foreign court, department, agency, or
instrumentality. Seller is not presently engaged in any legal action
to recover monies due to, or damages sustained by, Seller.
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(e) Financial Statements. To Seller's knowledge, since April 1, 2005,
except for the distribution of assets specifically contemplated hereby,
no material change has occurred in the business, operations, properties
or assets, liabilities, condition (financial or other) or results of
operations of BBU that could reasonably be expected to have a
material adverse effect on its business or operations. It is understood
and agreed that the following assets of BBU will be distributed to
Seller prior to the closing and are not included in the sale:
(i) all cash on hand as of the closing date;
(ii) all automobiles;
(iii) the personal computer used by the Seller;
(iv) Personal effects of the Seller located in the Seller's office.
(f) Disclosure. To the best of Seller's knowledge, and as of the date of
this Agreement, the information that has been furnished to Buyer by or
on behalf of Seller prior to the date of this Agreement in connection
with the transactions contemplated hereby, taken together, does not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under
which those statements were made.
(g) Compliance with Laws. Seller, to its knowledge:
(i) possesses all necessary certifications and licenses and
similar governmental approvals required for the conduct of
its business and
(ii) is in compliance in all material respects with the terms and
conditions of all governmental approvals necessary for the
ownership or lease and the operation of its properties and
the carrying on of its business as now conducted and
(iii) Seller has not received, nor to the knowledge of Seller has
any employee received, any notice from a governmental
authority which asserts, or raises the possibility of assertion
of, any non-compliance with any of those governmental
requirements and
(iv) To the knowledge of Seller, no condition or state of facts
exists which would provide a valid basis for any such assertion.
(h) Assets. Seller, to its knowledge, has good and marketable title to the
purchased assets, other than assets to be distributed to the Seller as
specifically contemplated hereby. All the purchased assets are free and
clear of restrictions on or conditions to transfer or assignment, and of
liens, pledges, charges, encumbrances, equities, claims Buyer, covenants,
conditions, or restrictions. All tangible personal property is in good
operating condition and repair, ordinary wear and tear excepted.
(i) Real Property. No real property is part of this agreement.
(j) Customer List. Exhibit E sets forth a complete and accurate list of
all of Seller's member accounts, including member balances as of
May 31, 2005.
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(k) Other Material Contracts. Except as otherwise disclosed, Seller is
not a party to, nor is the property of Seller bound by, any
representative or agency agreement; any agreement not entered into in
the ordinary course of business; and indenture or lease; or any
agreement that is unusual in nature or duration that would materially
affect the Buyer.
2.3 Buyer's Representations and Warranties.
(a) Capitalization. As of May 1, 2005, Buyer's authorized capital stock
consists of 280,000,000 shares of common stock, par value $0.0001 per
share, of which 40,086,404 shares are outstanding and of which 2,286,000
are reserved for issuance under Buyer's Non-qualified Stock Option Plan;
and 20,000,000 shares of preferred stock, par value $0.0001 per share.
No shares of preferred stock are issued or outstanding.
ARTICLE III
COVENANTS
3.1 Restriction on Expansion of Buyer's Debt. Buyer agrees that it will not
incur indebtedness of more than $2,500,000.00 in addition to that reflected on
its December 31, 2004 balance sheet, plus $810,000 of convertible debt
acquired in private placements in March and May of 2005, without the
express written consent and permission of Seller. Such consent not to be
unreasonably withheld.
3.2 Insider Transactions with Buyer. The officers of Buyer agree that they
will not enter into any transactions with Buyer or any of it customers or
suppliers without full disclosure and consent of Xxxxxxx Xxxxxxxx. Such consent
not to be unreasonably withheld. A transaction for the purchase of the Buyer
corporate building in New Berlin, WI upon all material terms disclosed to
Seller has been contemplated and is excluded from this provision.
3.3 Subordination of Debt Owed to Management. Buyer has previously
borrowed funds from Xxxxxx Xxxxxx and Xxxxx Xxxxxxxx, the CEO and
CFO of Buyer, as evidence by [2] promissory notes, copies of which have
been furnished to Seller. Buyer and Xxxxxx Xxxxxx and Xxxxx Xxxxxxxx
agree that these promissory notes will not be accelerated while a balance
of more than $200,000.00 is required to be placed in the escrow account.
Payment on each of these notes may not exceed $6,000.00 per month plus
interest, as outlined in the repayment schedules. Any amounts advanced by
management after the date of this Agreement are not subject to the terms of
such subordination.
3.4 Waiver of Officer Severance Plans. In the event of Default on this
Agreement, Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxxx X. Xxxxxxxx and Xxxx X.
Xxxxxx agree to waive all severance payments as provided for in their
respective employment contracts. Such waiver will cease to be effective
upon Buyer's cure of any Default on this Agreement.
3.5 Non-Compete Agreements. The Buyer and the Seller have entered into
this Agreement in reliance upon Non-Competition Agreements between BBU and
each of Xxxxx Xxxxx, Xxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, and Xxxxxxx Xxxx on
the other hand.
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3.6 Liabilities of BBU. Seller warrants that BBU shall be free and clear
of any liabilities on May 31, 2005, except positive and negative trade account
balances incurred before the date of closing, disclosed employee benefit
plans, regular periodic tax payments accrued but not yet due and payable and
utility and similar bills incurred in the ordinary course of business.
3.7 Income Taxes. Seller shall cause final income tax returns for BBU for
the periods prior to the closing date to be prepared and filed. Buyer hereby
appoints Seller its authorized agent for the purpose of preparing and signing
such returns. In the event that any taxes are due on the BBU final income tax
returns, such amounts will be the responsibility of, and will be paid by,
Seller.
3.8 Indemnifications. Buyer and Seller agree to indemnify each other from
and against any and all claims, demands, losses, costs, expenses, liabilities
or damages suffered or incurred by either party by any misrepresentation or
breach of this agreement by either party.
ARTICLE IV
GENERAL PROVISIONS
4.1 Public Notices. The parties agree that all notices to third parties and
all other publicity concerning the purchase of BBU shall be jointly planned and
coordinated and no party shall act unilaterally in this regard without the
prior approval of the other unless such disclosure shall be required to meet
timely disclosure obligations of any party under applicable securities laws and
stock exchange rules in circumstances where prior consultation with the other
party is not practicable.
4.2 Lease of BBU Facility. At the closing of this Agreement, Buyer agrees
to assume and pay all continuing obligations under the existing lease agreement
between BBU and its landlord and to indemnify Seller and hold her harmless
from and against any liability in respect thereof.
4.3 Expenses. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such expenses.
4.4 Notices. All payments and communications which may be or are required
to be given by either party shall, in the absence of a specific provision to
the contrary, be in writing and delivered or sent by facsimile to the parties
at their following respective addresses and shall be deemed to have been
received at the time of delivery or facsimile transmission as the case may be.
Either party may from time to time change its address by providing written
notice to the other party.
For the Seller: Xxxxxxx Xxxxxxxx, President
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Facsimile: N.A.
For the Buyer: International Monetary Systems, Ltd.
Attn: Xxxxxx X. Xxxxxx, President
00000 X. Xxxxxxxx Xx
Xxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
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4.5 Governing Law; Submission to Jurisdiction. This agreement shall be
construed in accordance with the laws of the State of Connecticut. Venue for
any disputes arising from this Agreement shall be placed exclusively with the
courts of the State of Connecticut. Buyer hereby irrevocably submits to the
jurisdiction of any state or Federal court located in the State of Connecticut
and agrees that process may be served upon it by any means resulting in
actual notice to it.
4.6 Assignment. Neither this Agreement nor any rights or obligations
hereunder shall be assignable by Buyer without the prior written consent of
the Seller. Subject thereto, this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing herein shall prohibit Buyer from selling any or all
of the assets acquired herein, either independently, or as part of a sale of
Buyers other assets or a merger or acquisition of Buyer after closing.
4.7 Entire Agreement. This Agreement and the attached exhibit represent the
entire agreement between the parties and any persons who have in the past or
who are now representing either of the parties. Each party acknowledges and
represents that this Agreement is entered into after full investigation and
that no party is relying upon any statement or representation made by any
other which is not embodied in this Agreement. Each party acknowledges that it
shall have no right to rely upon any amendment, promise, modification,
statement or representation made or occurring subsequent to the execution of
this Agreement unless the same is in writing and executed by both parties.
4.8 Further Assurances. The parties shall with reasonable diligence do all
such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby and each party hereto shall
provide such further documents or instruments required by the other party as
may be reasonably necessary or desirable to effect the purpose of this
Agreement and carry out its provisions.
4.9 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.
4.10 Headings. The headings in this Agreement are for reference purposes
only and shall not be deemed a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.
International Monetary Systems, Ltd. Barter Business Unlimited, Inc.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxxxx
---------------------------- ---------------------------
Xxxxxx X. Xxxxxx, President Xxxxxxx Xxxxxxxx, President
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The undersigned hereby consent and agree to the provisions of Paragraphs 3.3,
3.4 and 3.5 of the foregoing Agreement>
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx, individually
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Xxxxx X. Xxxxxxxx, individually
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Xxxx X. Xxxxxxxx, individually
By: /s/ Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx, individually
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