ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (“Agreement”) is made as of this 20th day of April,
2009 by and between Kinder Travel, Inc., a Nevada corporation (the “Seller”) and
Xxxx Xxxxxxxxx, a resident of British Columbia, Canada (the
“Buyer”).
RECITALS
A. WHEREAS,
Seller is engaged in the sale of travel related products. Sales are generated
from the principal office located in the Province of British Columbia, Canada
(the “Business”).
B. WHEREAS,
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
assets, liabilities and property described herein (the “Business”).
AGREEMENTS
Therefore,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Transaction. Upon the
Closing hereof (as defined in Section 7 below), the Seller shall transfer and
deliver to the Buyer all of the of the “Purchased Assets” (as defined in section
2 below) in exchange for which the Buyer shall return to Seller 191,631 shares
of Seller’s common stock owned by Buyer on the terms and subject to the
conditions specified in this Agreement;
2. Purchased
Assets. The term “Purchased Assets” shall mean all assets of
the Business, including, but not limited to the following:
(a) Seller’s
suppliers, customer and vendor lists and records pertaining
thereto;
(b) The
trade name “Kinder Travel,” “Kinder Travel & Tours,” “Envoy Travel,” and any
related trade names;
(c) All
registered and unregistered trademarks, service marks, sales marks, colors,
names and slogans relating to the Business, and all applications for any of the
foregoing, together with all of the Seller’s rights to use all of the foregoing
forever, and all goodwill associated with the foregoing;
(d) The
existing phone number(s) and web-sites of the Business;
(e) All
assets referred to or referenced within the financial statements of the Business
as of the date of Closing with adjustments for non-Business related
transactions, an example of which is set forth at Exhibit A attached hereto and
incorporated herein by this reference;
(f) Any
and all trade secrets, trade practices, décor, goodwill, clients, equipment,
furniture, assets, machinery, trade fixtures, miscellaneous supplies, inventory,
existing contracts and tangible personal property; and
(g) Any
other necessary items needed to fully transfer the entire Business to
Buyer.
3. Liabilities. All
liabilities referred to or referenced within the financial statements of the
Business as of the date of Closing with adjustments for non-Business related
transactions shall be assumed by and shall become the responsibility of the
Buyer following the Closing (as defined below).
4. Purchase
Price. In consideration of the sale, transfer and assignment
to the Buyer of the Business, the Buyer shall, at Closing, retire an aggregate
of one hundred and ninety-one thousand, six hundred and thirty-one (191,631)
shares of common stock of the Seller (the "Payment Shares") which equals
fifty-seven thousand, four hundred and eighty-nine US Dollars (USD 57,489) based
on the last closing price of the Shares of $0.30 per share as reported by the OTC Bulletin Board on October
8, 2008 (hereinafter referred to as the “Purchase
Price”). The parties agree that the “Purchase Price” will be
calculated as the midpoint between the two valuations of the business using the
“Tangible Asset” and “Industry Multiplier” valuation methods as of December 31,
2008 as determined by the audited financial statements of the Company filed with
the US Securities and Exchange Commission on April 13, 2009. This calculation is
provided in Exhibit A attached hereto.
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5. Manner of Payment of the
Purchase Price. Buyer is paying the Purchase Price by
delivering to the Seller (i) a signature guaranteed stock power executed in
blank, (ii) share certificates with a face value equal to an aggregate of at
least the same as the Purchase Shares as defined in Section 4, and (iii)
irrevocable instructions addressed to the transfer agent of the Seller to retire
the Purchase Shares and issue a certificate for the balance, if any, to the
Buyer.
6. Subject to Shareholder
Approval. This Agreement is subject to approval by written
consent of the shareholders of the Seller who hold a majority of the total
issued and outstanding shares of common stock of the Seller. The Buyer
understands that without such approval this Agreement will be
terminated.
7. The Closing. The term
“Close,” “Closing,” “Closes” or “Closed” shall refer to the Closing of the
various transactions contemplated hereby, all of which shall be deemed
consummated when, and only when, the terms and conditions as set forth herein
have been fully complied with.
8. Conduct and Transactions of
Seller Prior to the Closing. In order to assure protection and
preservation of the Business, the Seller agrees that from the date of this
Agreement up to and including the Closing:
(a) The
Seller shall preserve, or cause to be preserved substantially intact, its
business organization, except such changes as may be required, with the Buyer's
consent, to effect the transactions contemplated hereby, and the Seller shall
use its best efforts to keep available the services of its present officers and
principal employees, and to preserve its existing business
relationships.
(b) The
Seller agrees that prior to Closing it will not, without the prior written
consent of the Buyer (which consent shall not be unreasonably
withheld):
(i) Merge
or consolidate, or sell all or substantially all of its assets or enter into any
agreement for such merger, consolidation, or sale of assets, except as required
by the transactions contemplated by this Agreement;
(ii) Change
the character of its business;
(iii) Except
in the ordinary course of business, waive any contractual rights of substantial
value; and
(iv) Breach
any agreement to which the Seller is a party if such breach would have a
material adverse effect on the business of the Seller.
(c) The
Seller will exert its best efforts to fulfill in a timely manner all objectives
and conditions to permit consummation of the transactions as contemplated and
execute and deliver to the Buyer any and all documents necessary to consummate
the transactions contemplated by this Agreement.
9. Conduct and Transactions by
the Buyer Prior to Closing. Between the date of this Agreement and the
Closing, the Buyer shall use its best efforts to fulfill in a timely manner all
objectives and conditions to permit consummation of the transactions as
contemplated herein and execute and deliver to the Seller any and all documents
necessary to consummate the transactions contemplated by this
Agreement.
10. Conditions
Precedent.
(a) Neither
the Buyer nor the Seller shall have (i) made a general assignment for the
benefit of creditors, (ii) filed a petition in bankruptcy, or been adjudicated a
bankrupt or insolvent, (iii) filed a petition seeking any reorganization,
arrangement, imposition, readjustment, liquidation, dissolution or similar
relief under any present or future bankruptcy or similar statute, law or
regulations, (iv) filed an answer admitting or not contesting the material
allegations of a petition against it in any such proceeding, or (v) sought or
consented to or acquiesced in the appointment of any trustee, receiver, or
liquidator of any material part of its properties.
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(b) There
shall not be pending any suit or action seeking to enjoin the transactions
contemplated by this Agreement nor shall any judgment, temporary restraining
order, injunction or similar relief restraining or inhibiting such transaction
have been issued by any court or governmental agency (other than any suit or
action with respect to which it is not reasonable to believe that the
transactions contemplated by this Agreement may be enjoined). If any request for
an injunction in connection with the transactions contemplated by this Agreement
is scheduled to be heard, the Closing shall not take place until after the
disposition of such request. If an injunction is granted, either party may
terminate this Agreement.
11. Closing
Deliveries. On the date hereof the parties are executing
and/or delivering such documents as are reasonably required in order to
effectuate the consummation of the transaction contemplated hereby.
12. Taxes. The parties
hereto have been advised and have agreed to seek independent counsel regarding
the tax consequences and liabilities that may arise upon the Closing of this
Agreement.
13. Further
Assurances. The parties shall execute such further documents,
and perform such further acts, as may be necessary to transfer and convey the
Purchased Assets to Buyer, on the terms herein contained, and to otherwise
comply with the terms of this Agreement and to consummate the transaction
contemplated hereby.
14. Miscellaneous.
a Entire
Agreement. This Agreement and the instruments to be delivered
by the parties pursuant to the provisions hereof constitute the entire agreement
between the parties.
b. Survival;
Nonwaiver. All representations and warranties shall survive
the consummation of the transaction contemplated herein and for a period of two
(2) years following the date hereof (and none shall merge into any instrument of
conveyance) regardless of any investigation or lack of investigation by any of
the parties hereto. The failure in any one or more instances of a
party to insist upon performance of any of the terms, covenants or conditions of
this Agreement, to exercise any right or privilege in this Agreement conferred,
or the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, right or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party.
c. Applicable
Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Nevada applicable to contracts
made in that State, without regard to any conflict of law principles of the
State of Nevada. Buyer and Seller irrevocably consent and submit to
the exclusive jurisdiction of any local, state or federal court State of Nevada
for enforcement of this Agreement. Buyer and Seller irrevocably waive
any objection they may have to venue in the defense of an inconvenient forum to
the maintenance of such actions or proceedings to enforce this
Agreement.
d. Binding
Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended
to confer on any person other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
e. Amendments. This
Agreement shall not be modified or amended except pursuant to an instrument in
writing executed and delivered on behalf of each of the parties
hereto.
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f. Headings. The
headings contained in this Agreement are for convenience of reference only and
shall not affect the meaning or interpretation of this Agreement.
g. Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
and this Agreement shall be reformed, construed and enforced in such
jurisdiction so as to best give effect to the intent of the parties under this
Agreement.
h. Counterparts. This
Agreement may be executed in separate counterparts, each of which is deemed to
be an original and all of which taken together constitute one and the same
agreement.
i. No Strict
Construction. The parties hereto jointly participated in the
negotiation and drafting of this Agreement. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their collective mutual intent, this Agreement shall be construed as if
drafted jointly by the parties hereto, and no rule of strict construction shall
be applied against any person or entity.
j. Interpretation. Whenever
the term “include” or “including” is used in this Agreement, it shall mean
“including, without limitation,” (whether or not such language is specifically
set forth) and shall not be deemed to limit the range of possibilities to those
items specifically enumerated. The words “hereof”, “herein” and
“hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular provision. Terms defined in the singular have a comparable
meaning when used in the plural and vice versa.
k. Attorneys' Fees. In
the event that either party hereto brings an action or proceeding against the
other party to enforce or interpret any of the covenants, conditions, agreements
or provisions of this Agreement, the prevailing party in such action or
proceeding shall be entitled to recover all costs and expenses of such action or
proceeding, including, without limitation, reasonable attorneys' fees, charges
and disbursements actually incurred, and the reasonable fees and costs of expert
witnesses actually incurred.
IN WITNESS WHEREOF, the
parties have executed this Asset Purchase Agreement on the date first
above
written.
| BUYER: | SELLER: | ||
| _________________________ | _________________________ | ||
| Xxxx Xxxxxxxxx | Xxxxx Xxxxxxxx, President |
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Valuation
of Travel Business of Kinder Travel Inc.
Valuation
by Tangible Asset Method
The
Balance Sheet Tangible Asset Method of business valuation is typically used for
businesses that are losing money. Selling such a business is often a
methd of getting the best possible price for the equipment, inventory, or other
assets of the business. Kinder Travel has at best broken even since
inception and sales for the past three years have been on a steady decline.
Therefore, this business falls within the category of a business where this
method would be considered appropriate.
Therefore,
based on the December 31, 2008 Balance Sheet of the Company included with
the Company’s Form 10-K Annual Report as filed with US Securities and Exchange
Commission on April 13, 2009, the tangible assets of the business are as
follows:
|
Cash
on deposit at financial institutions
|
$ | 21,220 | ||
|
Net
Book Value of Vehicles and Equipment
|
21,957 | |||
|
Travel
Agency Bond
|
15,000 | |||
|
Valuation
- Tangible Asset Method (CDN Dollars)
|
$ | 58,177 |
Valuation
by Industry Multiplier Method
The
Industry Multipler (or Rule-of-Thumb) Method of business valuation looks at a
series of past business acquisitions in the same industry to determine what
multiplier of gross revenue was used to valuate the business. According to the
"Business Reference Guide" published by Business Brokerage Press, the
multiplier for the travel industry should fall between 40% - 60% of annual
commissions. Kinder Travel Inc.'s annual commissions have declined steadily for
the past 3 years which would indicate that a multiplier at the low end of this
range would be the most appropriate.
Therefore,
taking an average of the past 3 years commission revenue as determined from the
December 31, 2008 Income Statement of the Company included with the Company’s
Form 10-K Annual Report filed with the US Securities and Exchange Commission
(the "SEC") on April 13, 2009 and the December 31, 2007 and 2006 Income
Statements included with the Company’s Form 10-KSB Annual Report filed with
the SEC on April 14, 2008, and applying a 40% multiplier, would yield a
valuation as follows:
|
2006
annual commissions
|
$ | 232,227 | ||
|
2007
annual commissions
|
195,580 | |||
|
2008
annual commissions
|
191,878 | |||
|
Average
|
206,562 | |||
|
Multiplier
|
X 0.40 | |||
|
Valuation
- Industry Multiplier Method (CDN Dollars)
|
$ | 82,625 |
Calculation
of Midpoint Between Valuation Methods
Therefore,
for the purposes of this agreement, the value of the travel business of Kinder
Travel Inc. will be determined as the midpoint between the two valuations
determined above as follows:
|
Tangible
Asset Method
|
58,177 | |||
|
Industry
Multiplier Method
|
82,625 | |||
|
Midpoint
(CDN Dollars)
|
$ | 70,401 | ||
|
US/CDN
Exchange Rate (December 31, 2008)
|
0.8166 | |||
|
Valuation
of Travel Business (US Dollars)
|
$ | 57,489 |
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