Exhibit 2.3
[AFFINITY LOGO]
August 9, 1999
Xxx Xxxxxxxxx, President
Design-A-Tour, Inc.
0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
Reference is made to that certain Asset Purchase Agreement by and between
Affinity International Travel Systems, Inc. ("Affinity") and Design-A-Tour, Inc.
("Design-A-Tour"), entered into as of February 8, 1999 (the "Agreement").
In consideration of the sale by Design-A-Tour of the Assets (as that term
is defined in the Agreement), Affinity hereby agrees to pay to Design-A-Tour
36,320 shares of its Common Stock (the "Shares"), which Shares will be paid in
full and complete satisfaction of the Series "B" Convertible Preferred Stock
owed by Affinity to Design-A-Tour pursuant to Section 1.2 of the Agreement.
If the foregoing correctly expresses our understanding, please so indicate
your agreement by signing the enclosed copy of this letter and returning it to
me.
Very truly yours,
AFFINITY INTERNATIONAL
TRAVEL SYSTEMS, INC.
By: /s/ X.X. Xxxxxxxx
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Xxxxxx Xxxxxxxx, Chief Executive Officer
Understood and Agreed
DESIGN-A-TOUR, INC.
By: /s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx, President
Date: August 24, 1999
ASSET PURCHASE AGREEMENT
AGREEMENT entered into as of the 3rd day of February, 1999, by and between
Affinity International Travel Systems, Inc., a Nevada corporation ("Buyer") with
its principal place of business at 000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000X, Xx.
Xxxxxxxxxx, Xxxxxxx 00000, and Design-A-Tour, Inc., a Georgia corporation
("Seller") with its principal place of business at 0000 Xxxxxxx Xxxxx Xxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000.
WHEREAS, the Buyer wishes to acquire certain of the assets of Seller
consisting of all of the business and assets of Seller related to its travel
operations conducted under the names "Design-A-Tour", "Faraway Travel", and
"Internet Travel Service" (the "Business"), and Seller wishes to convey such
assets to Buyer, on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1. PURCHASE AND SALE OF ASSETS.
1.1. Sale of Assets. Subject to the provisions of this Agreement, Seller
agrees to sell and Buyer agrees to purchase, at the Closing (as defined in
Section 1.4 hereof), all of the properties, assets and business of Seller used
in or related to the business and operations of the Business, including without
limitation, all furniture, fixtures, equipment, computer hardware and software,
business relationships, business opportunities, customer lists and profiles,
customer files, contracts (other than Seller's office lease for the Business),
contract rights (including the benefit of noncompetition covenants and other
agreements given by employees and independent contractors of the Business),
business records, brochures, trade and fictitious names and marks, telephone
numbers and good will, including without limitation, those contracts, furniture,
fixtures, equipment, customers, business opportunities and other assets listed
on Schedule 1.1 (a), hereto and accounts receivable to the extent described on
Schedule 1.1 (b). With respect to any contracts listed on Schedule 1.1 (a),
Buyer shall assume all obligations under such contracts which arise and relate
to periods after the Closing.
1.2. Purchase Price and Payment.
(a) In consideration of the sale by Seller of the Assets, Buyer
shall pay to Seller SEVENTY-FIVE THOUSAND DOLLARS ($75,000),
payable in shares of Buyer's Series "B" Convertible Preferred
Stock, $.00l par value ("Preferred Shares") specified in
Schedule "A" hereto.
(b) The Preferred Shares shall carry a 6% cumulative dividend, by
nonvoting, and shall have the following conversion features:
- The Preferred Shares shall not be convertible to
Common Stock at any time prior to 6 months following the
close of this transaction and SHALL be converted by
Buyer upon the one year anniversary date of the
effective date of this Agreement; and
- The Preferred Shares shall be convertible to Common
Shares of Buyer, as herein above stated, as follows:
- The average daily closing offer price for stock of
Buyer, for twenty (20) consecutive trading days
immediately preceding the 6 month conversion date, or
immediately following the forced 12 month conversion (if
applicable), shall be divided into the sum of
$75,000.00. The resulting number shall determine the
number of shares of common stock that the Seller shall
receive in total.
Example: If the average closing offer price is $2.00,
then the Seller will be entitled to a total of 37,500
shares of Buyer's Common Stock.
- If Seller has not converted its Preferred Shares by
the one year anniversary date, Buyer shall convert the
Preferred Shares on the first day following the one year
Anniversary date.
1.3. No Assumption of Liabilities. Xxxxx agrees to assume only those
liabilities expressly set forth and described in Schedule 2.6 hereto ("Assumed
Liabilities"). It is expressly acknowledged and agreed that any and all other
debts, obligations, responsibilities or liabilities of the Seller or the
Stockholder, known or unknown, absolute or contingent, asserted or unasserted or
otherwise ("Retained Liabilities") will be retained by the Seller and/or the
Stockholder, as the case may be, and Buyer shall not assume nor shall Buyer be
liable in any respect for any of the Retained Liabilities. All known or
suspected Retained Liabilities are expressly set forth in Schedule 2.7 hereto.
1.4. Time and Place of Closing. The closing of the purchase and sale
provided for in this Agreement (herein called the "Closing") shall be deemed to
occur upon the complete execution hereof, the satisfaction of all conditions
contemplated hereby and the provision of all documents or agreements required
hereby.
1.5. Transfer of Assets. At the Closing, Seller shall deliver or cause to
be delivered to Buyer good and sufficient instruments of transfer transferring
to Buyer title to all of the Assets. Such instruments of transfer (a) shall be
in the form and will contain the warranties, covenants and other provisions (not
inconsistent with the provisions hereof) which are usual and customary for
transferring the type of property involved under the laws of the jurisdictions
applicable to such transfers, (b) shall be in form and substance satisfactory to
counsel for Buyer, and (c) shall effectively vest in Buyer good and
marketable title to all the Assets free and clear of all security interest
liens, restrictions and encumbrances.
1.6. Delivery of Records and Contracts. At the Closing, Seller shall
deliver or cause to be delivered to Buyer all of Seller's leases, contracts,
commitments and rights referenced on Schedules 1.1, with such assignments
thereof and consents to assignments as are necessary to assure Buyer of the full
benefit of the same, and Seller shall take all requisite steps to put Buyer in
actual possession and operating control of the Assets.
1.7. Further Assurances. Seller from time to time after the Closing at the
request of Buyer and without further consideration shall execute and deliver
further instruments of transfer and assignment (in addition to those delivered
under Section 1.4) and take such other action as Buyer may reasonably require to
more effectively transfer and assign to, and vest in, Buyer each of the Assets.
Nothing herein shall be deemed a waiver by Buyer of its right to receive at the
Closing an effective assignment of each of the leases, contracts, commitments or
rights of Seller.
1.8. Right to Hire Employees. Seller shall make available to the Buyer all
of Seller's employees and independent contractors engaged by the Seller prior to
the Closing with respect to the business and operations of the Business for hire
by the Buyer at or after the Closing. Buyer shall have the right, but not the
obligation, to hire any of such employees. The Seller shall be responsible for
all wages, benefits, severance obligations, sick leave accruals, vacation
accruals and other obligations for such employees up to the date such employee
is no longer an employee of Seller. Within forty-eight (48) hours after the
Closing, Seller shall pay to its employees the cash value of all such
obligations that exist as of the Closing date.
1.9. Right to Use ARC Number(s).
(a) Seller agrees that until such time as ARC approves the change of
ownership of the Business and the change of name of the Business to "Affinity
International" or a derivative, affiliate, or subsidiary thereof, Seller shall
(i) keep its standing Letter of Credit posted for the benefit of ARC in place;
(ii) permit Buyer to use Seller's ARC accreditation and number; and (iii) permit
Buyer to use Seller's bank account related to its arrangements with ARC, from
which Seller shall remove its signatures and permit Buyer to appoint new
signatures.
(b) From and after the date of Closing until Buyer is assigned its
own ARC number, Xxxxx agrees to and shall make prompt payment of all charges it
makes under Seller's ARC number. Xxxxx will indemnify and hold Seller harmless
against any charges it makes on said account during said period.
1.10. Right to Use of WorldSpan Contract.
(a) Seller agrees that until such time as the Buyer shall
renegotiate Seller's existing CRS Contract with WorldSpan (see Schedule 1.1.a),
Buyer may use and take advantage of the benefits and Buyer shall keep current on
any and all obligations incurred with regards to said contract.
(b) From and after the date of closing until Xxxxx has renegotiated
the aforesaid WorldSpan Contract, Xxxxx agrees to and shall make prompt payment
of all charges, and, shall indemnify and hold Seller harmless from and against
any and all sums due under such contract during said period.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER.
Each of Seller and the Stockholder, jointly and severally, hereby
represents and warrants to Buyer as follows:
2.1. Organization and Qualification of Seller. Seller is a corporation
duly organized, validly existing and in good standing under the law of the State
of Georgia with full power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it.
2.2. Stockholders. The undersigned Stockholder is the sole stockholder of
the Seller, and no other individual or entity currently owns or will own at the
Closing, any of the capital stock of Seller or any right thereto.
2.3. Authorization of Transaction. All necessary action, corporate or
otherwise, has been taken by Seller to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby, and the
Agreement is the valid and binding obligation of Seller and the Stockholders
enforceable in accordance with its terms, and has been duly authorized by the
Stockholders.
2.4. Compliance of Transaction With Laws. The Seller is not in violation
of its Charter or bylaws as of the date hereof. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby does not
require any approval or consent which has not been obtained and which is not in
full force and effect as of the date hereof, will not conflict with or
constitute a breach or violation of the Seller's Charter or bylaws and will not
result in a violation of any law or regulation.
2.5. Financial Statements. Attached as Schedule 2.5 hereto are the most
recent financial statements of the Seller and the Business, audited or unaudited
as indicated, all of which statements are complete and correct and fairly
present the financial position of the Seller on the date of such statements find
the results of the Seller's and the Businesses operations on the applicable
basis for the periods covered thereby, and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved and prior periods. Also attached to Schedule 2.5 are financial
projections indicating that the revenues of Seller during calendar year 1998
will be in excess of $800,000, which projections are true and correct and based
on valid assumptions.
2.6. Title to Properties: Liens: Condition of Properties.
(a) Except as specifically disclosed in Schedule 2.6, Seller has
good and marketable title in fee simple to all of the Assets referenced thereon
and all of the leases
and contracts listed on said Schedule are valid and subsisting, free of default
and fully assignable by Seller such that Buyer shall have the benefit of said
leases and contracts subject to the continuing obligation of Buyer to make any
and all payments required thereunder. None of the Assets listed on Schedule 2.6
is subject to any mortgage, pledge, lien, conditional sale agreement, security
title, encumbrance or other charge except as specifically disclosed in said
Schedule.
(b) Except as otherwise specified in Schedule 2.6 hereto, all of the
Assets (other than the furniture, fixtures or equipment, which is being
transferred "as is" without any representations or warranties except as to
title) owned or leased by Seller and included within the Assets, are in good
repair, have been well maintained, substantially conform with all applicable
laws, ordinances and regulations, environmental or otherwise, and each such
Asset is in good working order; and
2.7. Payment of Taxes. Seller has filed all federal, state and local
income, excise or franchise tax returns, real estate and personal property tax
returns, sales and use tax returns and other tax returns required to be filed by
them and have paid all taxes owing by them except taxes which have not yet
accrued or otherwise become due, for which adequate provision has been made in
the pertinent financial statements and will be paid when due. All transfer,
excise or other taxes payable to any jurisdiction by reason of the sale and
transfer of the Assets pursuant to this Agreement shall be paid or provided for
by Seller after the Closing.
2.8. Absence of Undisclosed Liabilities. There are no material liabilities
of the Seller of any nature, whether accrued, absolute, contingent or otherwise
not disclosed in the financial statements attached as Schedule 2.5 or disclosed
on Schedule 2.8 attached hereto. There is no fact which materially adversely
affects, or may in the future materially adversely affect, the business,
properties, operations or condition of Seller which has not been specifically
disclosed herein or in a schedule furnished herewith.
2.9. Customer Lists. Buyer has the right to use, free and clear of any
claims or rights of others, any and all customer lists identified on Schedule
1.1.
2.10. Contracts and Commitments. Seller is neither a party to nor subject
to any contract, commitments, plans, agreements or licenses related to the
business and operations of the Business, except as disclosed in Schedule 1.1 and
except for Seller's existing office lease for the Business location, which
lease, together with all obligations thereunder, is being retained by Seller and
constitutes a Retained Liability hereunder. Seller is not in material default
under any such contracts, commitments, plans, agreements or licensed nor does
Seller have knowledge of any termination, cancellation, limitation, modification
or change in any business relationship with any supplier or customer.
2.11. Employees and Employee Benefits. Set forth on Schedule 2.11 hereto
is the name, rate of compensation (including bonuses) and list of benefits of
each employee of Seller who performs services for the Business. Except as
specifically disclosed on said Schedule, Seller is not a party to any pension,
retirement, profit sharing, savings, bonus, incentive, deferred compensation,
group health insurance or group life insurance plan or
obligation relating to employees of the Business, or to any collective
bargaining agreement or other contract, written or oral, with any trade or labor
union, employees' association or similar organization relating to employees of
the Business.
2.12. Permits. Seller holds all licenses, permits and franchises required
to permit the Seller to conduct the business and operation of the Business. All
such licenses and permits are listed on Schedule 2.12 and are and will be after
the Closing valid and in full force and effect and Buyer shall have full benefit
of the same.
2.13. Compliance with Laws. Seller is in full compliance with all laws and
regulations which apply to the conduct of its business, including all laws and
regulations relating to employment, occupational safety and environmental
matters.
2.14. Litigation. There is no litigation pending or, to the knowledge of
Seller or any Stockholder, threatened against Seller and there are no
outstanding court orders, court decrees, or court stipulations to which Seller
is a party which question this Agreement or affect the transactions contemplated
hereby, or which will result in any materially adverse change in the business,
properties, operations, prospects, assets or in the condition, financial or
otherwise, of Seller.
2.15. Disclosure of Material Information. Neither this Agreement nor any
exhibit or schedule thereto or certificate issued pursuant hereto contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements herein or therein not misleading, relating to the
business or affairs of Seller. There is no fact which materially adversely
affects the business, condition (financial or otherwise) or prospects of Seller
which has not been set forth herein.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to the Seller and each of the
Stockholders as follows:
3.1. Organization of Buyer. Buyer is a corporation in formation under the
laws of the State of Nevada.
3.2. Authorization of Transaction. All necessary action, corporate or
otherwise, has been taken by Xxxxx to authorize the execution, delivery and
performance of this Agreement, and the same is the valid and binding obligation
of Buyer enforceable in accordance with its terms, subject to laws of general
application affecting creditor's rights generally.
ARTICLE 4. CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to consummate this Agreement and the transactions
contemplated hereby are subject to the condition that on or before the Closing
the actions required by the Article 5 will have been accomplished.
4.1. Representations: Warranties: Covenants. Each of the representations
and warranties of Seller contained in Article 2 shall be true and correct as
though made on and as of the Closing; and Seller shall, on or before the
Closing, have performed all of its obligations hereunder which by the terms
hereof are to be performed on or before the Closing.
4.2. Bill of Sale and Conveyance. The Seller shall have delivered to Buyer
a Bill of Sale and Conveyance relative to all of the Assets referenced on
Schedule 1.1 in the form of Exhibit B hereto.
4.3. Lease. The Buyer shall have entered into a lease with _________ for
the office at which the Seller currently operates the Business on the same terms
and conditions as the Seller's existing lease for such office or such other
terms acceptable to Buyer in its sole and unfettered discretion.
4.5. Noncompetition Agreement. Seller and its shareholder each shall have
executed and delivered to the Buyer a noncompetition and proprietary information
agreement in substantially the forms of Exhibit D-I, D-2, and D-3.
4.6. Approval of Xxxxx's Counsel. All actions, proceedings, instruments
and documents required to carry out this Agreement and all related legal matters
contemplated by this Agreement shall have been approved by counsel for Buyer,
provided that the approval of such counsel shall not be unreasonable withheld.
4.7. Absence of Certain Litigation. There shall not be any injunction,
restraining order, suit, action or other proceeding or order of any nature
issued by any court of competent jurisdiction or any governmental agency which
directs that this Agreement or any material transaction contemplated hereby
shall not be consummated as herein provided or asserts the illegality thereof.
ARTICLE 5. INDEMNIFICATION.
5.1. Indemnification by Seller. Seller and the Stockholder jointly and
severally agree to defend, indemnify and hold Buyer harmless from and against
any damages, liabilities, losses and expenses (including reasonable counsel
fees) of any kind or nature whatsoever which may be sustained or suffered by
Buyer based upon (i) a breach of any representation, warranty or covenant made
by Seller or the Stockholder in this Agreement or in any exhibit, certificate or
financial statement delivered hereunder, or (ii) by reason of any claim, action
or proceeding asserted or instituted growing out of any matter or thing covered
by such representations, warranties or covenants, or (iii) from any liability of
Seller including without limitation any of the Retained Liabilities and any
other liabilities relating to the operation of the Business, prior to Closing.
Promptly upon a claim being made against Buyer by a third party upon which a
claim for indemnification may be based, Buyer shall give Seller thirty (30) days
written notice of such claim, provided that the failure to provide such notice
not impair Xxxxx's rights hereunder unless Xxxxxx is materially prejudiced as a
result.
5.2. Payment of Claims. Indemnification claims shall be paid or otherwise
satisfied by Seller, the Stockholder's or Seller's transferees in liquidation
within thirty (30) days after notice thereof is given by Buyer. Buyer may offset
such amounts against any amounts owing by Buyer to Seller, including under the
Note.
ARTICLE 6. MISCELLANEOUS.
6.1. Fees and Expenses. Each of the parties will bear its own expenses in
connection with the negotiation and the consummation of the transactions
contemplated by this Agreement, and no expenses of Seller relating in any way to
the purchase and sale of the Assets hereunder shall be charged to or paid by
Xxxxx or included in any account of Seller as of the Closing.
6.2. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
telegram) addressed as provided below and if either (a) actually delivered at
said address, or (b) in the case of a letter, three business days shall have
elapsed after the same shall have been deposited in the United States mail,
postage prepaid and registered or certified, return receipt requested:
If to the Seller or the Stockholder, to:
Xxx Xxxxxxxxx, President
Design-A-Tour, Inc.
0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxx Xxxxxx, Esquire
Suite 850, 000 Xxxxxx 00 Xxxxxxx
Xxxxxxx, XX 00000
If to the Buyer, to:
Xxxxxx Xxxxxxxx, C.E.O.
Affinity International Travel Systems, Inc.
000 Xxxxxx Xxx. S, Suite 000X
Xx. Xxxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Xx., Esquire
0000-X 00xx Xxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.
6.3. Entire Agreement. This Agreement (including all exhibits or schedules
appended to this Agreement and all documents delivered pursuant to or referred
to in this Agreement, all of which are hereby incorporated herein by reference)
constitutes the entire Agreement between the parties, and all promises,
representations, understandings, warranties and agreements with reference to the
subject matter hereof and inducements to the making of this Agreement relied
upon by my party hereby, have been expressed herein or in the documents
incorporated herein by reference.
6.4. Assignability. This Agreement shall be binding upon, and shall be
enforceable by and inure to the benefit of, the parties named herein and their
respective successors and assigns; provided, however, that (a) an assignment of
this Agreement may be made by Buyer to a nominee of Buyer or otherwise upon
written notice to Seller, although no such assignment shall relieve Buyer of any
liabilities or obligations under this Agreement and (b) this Agreement may not
be assigned by Seller without the prior written consent of Buyer.
6.5. Governing Law; Severability. This Agreement shall be deemed a
contract made under the laws of the State of Florida and, together with the
rights and obligations of the - heading herein contained is for convenience of
reference only and shall not affect the meaning of construction of any of the
provisions hereof.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed in multiple counterparts as of the date set forth above by their duly
authorized representatives.
AFFINITY INTERNATIONAL
TRAVEL SYSTEMS, INC.
BY: /s/ X.X. Xxxxxxxx
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Xxxxxx Xxxxxxxx, C.E.O.
DESIGN-A-TOUR, INC.
BY: /s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx, President
BY: /s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx, as Stockholder of
Design-A-Tour, Inc.
