Exhibit 1
ASSET PURCHASE AGREEMENT
This Agreement is entered into on August 11, 2000, by and between CARIBBEAN
CONCEPTS CORP., a New York corporation ("Seller"), KAREN BUSHELL as the
controlling principal of Seller ("Principal") and PREFERRED TRAVEL & TOURS,
INC., a Florida corporation ("Buyer") which is a wholly owned subsidiary of
eTravelServe.com, Inc., a Nevada corporation ("eTravel").
In consideration of the mutual promises, covenants and conditions set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by all parties, the parties have
agreed as follows:
1. Description of Assets. Buyer will purchase all of the Seller's
goodwill, customer lists, telephone numbers, trade names, and other
intangible assets used in Seller's business (the "Assets"). Seller will
assign to Buyer all of Seller's right, title and interest in any sales
agreements, advertising agreements, independent contractor agreements
with travel agents and contracts with hotels for wholesale rates used
in the business of Seller being acquired hereby (the "Assumed
Contracts"). Buyer will assume all obligations of Seller under the
Assumed Contracts and indemnify and hold the Seller harmless from any
obligations of Seller thereunder from and after the Closing Date.
Amounts due or prepaid under such Assumed Contracts will be prorated as
of the date of closing. Assets specifically excluded from the
population of Seller's assets that Buyer will purchase in this
transaction are: (i) all cash in banks; and (ii) all accounts
receivable arising from sales occurring prior to the Closing Date. The
Assets which Buyer will purchase from Seller and Assumed Contracts
which Buyer will assume as set forth in this Section 1 are referred to
collectively in this Agreement as the "Business."
2. Purchase Price and Payment. The entire purchase price for the Assets
purchased hereunder shall be $125,000.00, payable as follows:
a. A deposit equal to $12,500.00 (the "Deposit") shall be paid
into escrow with Seller's counsel upon execution hereof to be
administered in accordance with that certain escrow agreement
attached hereto as Exhibit "A" (the "Escrow Agreement"). The
Deposit shall be non-refundable unless (in which case it shall
be refunded to Buyer forthwith): (i) Seller defaults
hereunder; or (ii), if the Seller's and Principal's
representations and warranties as set forth in Section 9
hereof, and most particularly with respect to the
representations and warranties as set forth in Subsection 9
(j) hereof, shall not be true and correct prior to and as of
the Closing Date.
b. $62,500.00 by bank check or cashier's check at closing.
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c. $50,000.00 in eTravel Common Stock, based upon a price per
share equal to the average of the closing bid and asked prices
for such stock as of the close of business on the day prior to
the Closing Date. Such shares of eTravel Common Stock shall be
"restricted securities" as that term is defined under Rule 144
of the Securities Act of 1933 ("Rule 144"), and shall be
subject to the provisions of Rule 144. Seller acknowledges
that such shares of eTravel Common Stock to be received
hereunder shall be restricted securities and is familiar with
the provisions of Rule 144 or has consulted with counsel to
become informed about the provisions of Rule 144.
3. Execution Deliveries. Upon the execution hereof by both parties (the
"Execution Date"), and within not more than ten (10) calendar days
thereafter, Seller shall deliver to Buyer a complete listing of Assumed
Contracts to which it is a party, and shall provide the following
information with respect to each: (i) the date on which each such
contract expires; (ii) the date on which each such contract may be
renewed; and (iii) the duration of the term for which each may be
renewed. All such contracts including those specifically identified as
Major Contracts on Exhibit "B" hereof shall be deemed to be included in
the class of contracts identified as Assumed Contracts hereunder.
Additionally, within ten (10) calendar days after the Execution Date,
Seller shall provide Buyer with a copy of each of the contracts
comprising the Major Contracts as detailed on Exhibit "B" hereto.
Finally, Seller shall within ten (10) calendar days after the Execution
Date, provide Buyer with copies of any contracts for co-op funding and
shall provide Buyer with a schedule to accompany any such contract
copies outlining which travel destination properties are most amenable
to such co-op arrangements.
4. Transition Period. For a period of 30 days after the Closing Date,
Principal will continue her present duties at the Business, at no
additional charge, in order to acquaint Buyer with all aspects of the
Business. Principal is to be engaged by Buyer beyond the 30 day
transition period, in accordance with the terms of that certain
consultant agreement to be entered into as of the Execution Date by and
among Buyer and Principal, to become effective after the Closing Date
by its terms, the form of which is attached hereto as Exhibit "C" and
made a part hereof ("Consultant Agreement").
5. Cut-off Transactions and Accounts Receivable. At the Closing and as of
the Closing Date, Seller shall provide Buyer with a listing of any
pending transactions originated by Seller, and shall provide Buyer with
a complete listing of any transactions in connection with which Seller
expects to receive a commission. Seller shall be entitled to complete
any such transactions and receive any related commission thereupon. In
the event that substantive activity on the part of Buyer shall be
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required to collect monies or otherwise perfect Seller's interest in
receiving a commission in connection with any such transaction, Buyer
and Seller hereby agree that they shall negotiate in good faith to
arrive at an equitable compensation to Buyer for its efforts, which
amount Seller shall pay to Buyer forthwith. Notwithstanding the
foregoing, Buyer, on Seller's behalf, shall after the Closing Date
accept payment of Seller's accounts receivable arising out of the
operation of the Business prior to the Closing Date and as listed in
accordance with this Section 4, and Buyer shall turn over to Seller
monthly all amounts so accepted, provided however, that Seller shall
reimburse Buyer for Buyer's reasonable costs, if any, of administering
such receivables. Buyer's responsibility for collection is limited to
the acceptance of amounts received on behalf of Seller and Buyer has no
obligation to attempt to enforce payment. No adjustments shall be made
in any of Seller's accounts receivable without the written permission
of Seller or her nominee. As of a date one year subsequent to the
Closing Date, Buyer's obligations under this Section 4 shall terminate.
6. Prorations and Adjustments. Advertising fees such as yellow pages ads,
salaries, lease deposits, prepaid mail box rentals and other prepaid
accounts, if any, and customer deposits shall be prorated as of the
Closing Date.
7. Seller's Employees. Employees of Seller shall be and remain employees
of Seller through the Closing Date and Buyer is not assuming any
obligation or liability of any kind which Seller may have to said
employees for compensation, pension or retirement plan contributions,
or any other obligation or responsibility of any kind. Buyer shall not
be obligated to hire or employ any of Seller's employees as of the
Closing Date, but may hire or employ any of Seller's current employees
in Buyer's sole discretion and upon such terms as it determines. Seller
and Principal agree that, for a period of one (1) year from the Closing
Date, neither Seller, Principal nor any of their affiliates will employ
or seek to employ any of Seller's current employees which are employed
by Buyer as of the Closing Date, without the prior written consent of
Buyer. Seller and Principal agree to indemnify, defend and hold Buyer
harmless with respect to any claims made by any of Seller's employees
arising out of actions which occurred on or prior to the Closing Date.
8. Sales Taxes. Seller represents and warrants that all sales taxes, if
any, as well as any penalties and interest, have been paid and Seller
shall indemnify Buyer in connection therewith. At Closing, Seller will
deliver a copy of its Sales Tax Return, if any, for the prior month and
proof of payment of the amount shown to be due.
9. Representations and Warranties of Seller. Seller and Principal hereby
make the following representations and warranties to Buyer:
a. Seller is a corporation duly organized and existing and in
good standing under the laws of the State of New York, and is
duly authorized to carry on the Business and to own and lease
its properties as and in the places where such properties are
now owned, leased or operated.
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b. Seller has good and marketable title to the Assets, subject to
no mortgage, conditional sales agreement, charges, liens, or
encumbrances, or any other assignment of rights and/or
interests, other than those set forth on the Schedule of Liens
attached hereto, which shall be satisfied from the proceeds of
sale at closing or, if included in the attached Schedule of
Assumed Contracts, shall be assumed by Buyer at closing.
c. Attached hereto are copies of Seller's federal tax returns for
the periods ended December 31, 1999 and 1998. Such tax returns
are true and correct in all material respects, and show all
liabilities required to be shown in accordance with Seller's
basis of accounting used for federal income tax purposes. From
the date of such tax returns to the date of this Agreement,
there has been no material change in the assets, liabilities,
financial condition, business or prospects of Seller from that
reflected in such tax returns, other than changes in the
ordinary course of business, including acquisitions, none of
which have been, either in any case or in the aggregate,
materially adverse. Seller hereby agrees to cooperate in good
faith and with its best efforts upon request of Buyer, to
assist Buyer and its agents, accountants and attorneys in the
preparation of financial information or statements which may
be required to be compiled in respect of the Business as
conducted prior to the Closing Date, as may be necessary to
satisfy Buyer's compliance with its, or its affiliates,
reporting requirements to the United States Securities and
Exchange Commission. The provision set forth in the foregoing
sentence shall survive the Closing for a period of not less
than two (2) years.
d. Seller has filed all federal, state and local governmental tax
returns required to be filed in accordance with applicable law
and has paid all taxes and assessments (including, without
limitation, income, excise, unemployment, social security,
occupation, franchise, property, sales, and import taxes,
duties or charges and all penalties and interest in respect
thereto) required to have been paid to date.
e. Except as set forth on the Schedule of Legal Matters attached
hereto, there are no legal, quasi-judicial or administrative
actions, suits or proceedings of any kind or nature now
pending or threatened before any court or administrative body
in any manner involving Seller, the Business or the Assets, or
which may adversely affect the power or authority of Seller to
carry out the transactions to be performed by Seller
hereunder. Seller and Principal agree to defend any matters
set forth on the Schedule of Legal Matters attached hereto at
their own expense and indemnify Buyer from any and all
liabilities and expenses which may be incurred by Buyer in
connection with such matters.
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f. Except as listed on the Schedule of Assumed Contracts, Seller
is not a party to any written or oral (i) contract not made in
the ordinary course of business, (ii) employment contract
which is not terminable without cost or other liability to
Seller, or any successor, upon notice of thirty (30) days or
less, (iii) contract with any labor union, (iv) bonus,
pension, profit-sharing, retirement, share purchase,
hospitalization insurance or similar plan providing employee
benefits, (v) lease or sublease with respect to any property,
real or personal, whether as lessor or lessee, (vi)
advertising contract or contract for public relations
services, (vii) continuing contract for the purchase of
materials, supplies or equipment, or (viii) contract
continuing for a period of more than thirty (30) days or which
is not terminable without cost or other liability to Seller or
its successors. Seller has in all respects performed all
obligations required to be performed by it to date and is not
in default in any respect under any such agreements or
obligations.
g. Seller will pay all of its trade and other creditors as such
obligations become due, except for obligations which Seller is
contesting in good faith, so as not to adversely affect the
Business.
h. The consummation of the transactions contemplated by this
Agreement and compliance with the provisions hereof will not
conflict with or result in a breach of the terms, conditions
or provisions of, any order of any court or other agency of
government, the charter or bylaws of Seller, or any note,
debenture, mortgage, loan agreement or other instrument to
which Seller is a party, or by which it is bound, or result in
the creation or imposition of any lien, charge or encumbrance
of any kind whatsoever on any of the Assets.
i. No broker, finder or other intermediary has acted on behalf of
Seller in connection with the transactions contemplated
herein, or is owed any fee or other compensation as a result
of this transaction.
j. That all Assumed Contracts and all Major Contracts are
assignable to Buyer so as to provide Buyer with all of the
benefits of such Assumed Contracts and Major Contracts that
Seller has had prior to the Closing Date, and that Buyer's and
Seller's completion of the closing of the transaction set
forth in this Agreement shall in no way whatsoever effect
Buyer's ability to obtain Seller's rights under the Assumed
Contracts and Major Contracts.
10. Representations and Warranties of Buyer.
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a. Buyer is a corporation duly organized and existing and in good
standing under the laws of the State of Florida, and its
status is active.
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b. The consummation of the transactions contemplated by this
Agreement and compliance with the provisions hereof will not
conflict with or result in a breach of the terms, conditions
or provisions of, any order of any court or other agency of
government, the charter or bylaws of Buyer, or any note,
debenture, mortgage, loan agreement or other instrument to
which Buyer is a party, or by which it is bound.
c. No broker, finder or other intermediary has acted on behalf of
Buyer in connection with the transactions contemplated herein,
or is owed any fee or other compensation as a result of this
transaction.
d. Buyer is in good standing with the Airlines Reporting
Corporation ("ARC") and with the International Airlines Travel
Agent Network ("IATAN") and that subsequent to the Closing
Date, Buyer shall include Principal on the list of persons
eligible to participate in Buyer's license for the usage of
such services.
11. Covenants of Seller. Seller and Principal represent and covenant to
Buyer that pending completion of the sale of Assets contemplated hereby
and as of the Closing Date:
a. Each representation and warranty set forth in Section 8 hereof
shall be true and correct in all material respects.
b. Seller will maintain itself at all times up to and including
the Closing Date as a duly licensed corporation in good
standing under the laws of its state of incorporation.
c. Seller will keep the Business open during its usual and
customary hours and cause the Business to function in the
ordinary course of business and in a good and efficient manner
in keeping with Seller's customary practices.
d. Seller will afford Buyer and its accountants, attorneys,
consultants, representatives, agents and employees, at all
reasonable times, access and facilities to use, with respect
to the Assets and the Business, Seller's files, records and
all supplier contracts for the purpose of audit, inspection
and examination thereof, and will do everything reasonably
necessary to enable Buyer to make a complete examination of
the Assets and the condition thereof. All information so
obtained by Buyer and its representatives, agents, and
employees shall be kept confidential.
e. Seller will not mortgage, pledge or allow any lien to be
placed upon any of the Assets.
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f. Seller will not acquire additional assets or dispose of any of
the Assets, or in any way obligate itself to do so, except in
the ordinary course of business.
g. Seller will keep all of its insurable Assets insured in
accordance with its present practice, and it will maintain,
preserve and keep all improvements on property constituting a
part of the Assets in a good condition and state of repair,
reasonable wear and tear or damage or loss by fire, storm or
other casualty loss excepted.
h. Seller will not enter into any contract or commitment, or
incur or agree to incur any liability, or make any capital
expenditures, except in the normal course of business.
i. Seller will not increase compensation payable or to become
payable to any officer, employee or agent.
12. Seller's and Principal's Non-Compete Agreement. In consideration of the
purchase price to be paid by Buyer hereunder and the mutual covenants
and agreements of the parties herein contained, and in recognition by
Seller and Principal that (i) the parties entering into this Agreement
are induced primarily by the covenants and assurances made by Seller
and Principal, (ii) that the Seller's and Principal's covenants not to
compete are necessary to ensure the continuation of the Business, and
(iii) that irrevocable harm and damage will be done to the Buyer if
Seller or the Principal compete with the Buyer, Seller and Principal,
severally and not jointly, covenant and agree with and for the benefit
of the Buyer that for a period of two (2) years after the Closing Date,
Seller and Principal will not, either directly or indirectly, own,
manage, operate, control, participate in the management or assist in
building, plan, or assist in planning, finance or lend money to, or
assist in obtaining a loan or loans for (as a loan broker, guarantor,
or otherwise), have any financial interest in, or otherwise participate
in, the operation, management, financing or ownership of, or maintain
or continue any interest whatsoever in, any travel agency business
within Nassau County, New York, nor solicit business pursuant to any
mailing list or prospect list generated from Seller's customer or
service records. Notwithstanding anything contained in the foregoing to
the contrary, Seller, Principal and Buyer agree that Seller's and/or
Principal's involvement in "providing retail travel services" to her
family, friends and other retail clients after the Closing Date, as
contrasted with engaging in, or in any way being involved with, the
"wholesale travel business" (as those terms are defined in the
Consultant Agreement) except with respect to Seller's involvement in
the wholesale travel business as a consultant to Buyer on Buyer's sole
behalf in accordance with the provisions of the Consultant Agreement,
shall be excepted from activities of Seller or Principal proscribed by
the terms of this Section 11.
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13. Conditions Precedent to Closing. Closing of the transaction described
in this Agreement is contingent upon:
a. Neither Buyer nor Seller having discovered any material error,
misstatement or omission in any of the representations or
warranties made by the other herein. If any such material
error, misstatement or omission is discovered, either party
may terminate this Agreement by written notice to the other.
b. There not having been any fire, accident or other casualty or
any labor disturbance, civil commotion, riot, act of God or
the public enemy, or any material change in the Business or
the Assets, or applicable laws, regulations and ordinances
pertaining to the Business or the Assets, which would have a
material adverse effect on the conduct of the Business at the
present business location. If any such Act of God shall occur,
either party may terminate this Agreement by written notice to
the other.
14. Closing. Subject to satisfaction of all of the foregoing conditions
precedent, closing of the transaction provided for in this Agreement
shall take place within 45 days after the date of this Agreement (the
"Closing Date"). The transfer of the Assets shall be effective as of
the close of business on the day preceding the Closing Date. At
closing, Seller, or Buyer as applicable, shall take the following
actions:
a. Seller shall transfer to Buyer all of its sales and service
records.
b. Seller shall transfer to Buyer Seller's right in the Business'
telephone numbers.
c. Seller shall deliver to Buyer a Bill of Sale for the Assets,
other documents of transfer of title, and any other documents
necessary or desirable in the opinion of Buyer's counsel in
connection with the transfer, which documents shall warrant
title to Buyer and shall in all respects be in such form as
may be reasonably required by Buyer or its counsel.
d. Seller shall furnish to Buyer evidence to the reasonable
satisfaction of Buyer or its counsel of proper entity action
authorizing or ratifying the execution of this Agreement and
the consummation of the transaction contemplated hereby.
e. Buyer shall furnish to Seller evidence to the reasonable
satisfaction of Seller or its counsel of proper entity action
authorizing or ratifying the execution of this Agreement and
the consummation of the transaction contemplated hereby.
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f. Buyer shall furnish to Seller the unpaid cash balance of the
purchase price as set forth in Section 2 (b) of this Agreement
and a certificate representing so many of the restricted
shares of common stock of eTravel as are contemplated in
Section 2(c) of this Agreement.
g. Buyer shall deliver the Consultant Agreement.
15. Seller's and Principal's Indemnity. Seller and Principal, jointly and
severally, agree to defend, indemnify and hold Buyer harmless from and
against any and all claims, liabilities, losses, damages, obligations,
assessments, lawsuits, actions, proceedings and/or demands, including
reasonable attorneys' fees and the costs and expenses of enforcing this
indemnification provision, that Buyer may suffer, sustain or incur or
that may be asserted against Buyer, the Assets, the Business or any
rights to be acquired or purchased by Buyer, that result from any
material inaccuracy of any representation or warranty made by Seller or
Principal in this Agreement or otherwise as a result of any material
breach of any provision of this Agreement by Seller or Principal,
including any claims asserted by local, state or federal authorities
for unpaid taxes or arising from any imposition of taxes or the
assessment of any deficiency for taxes or penalties or interest
incidental thereto.
16. Buyer's Indemnity. Buyer agrees to defend, indemnify and hold Seller
harmless from and against any and all claims, liabilities, losses,
damages, obligations, assessments, lawsuits, actions, proceedings
and/or demands, including reasonable attorneys' fees and the costs and
expenses of enforcing this indemnification provision, that Seller may
suffer, sustain or incur or that may be asserted against Seller, the
Assets, the Business or any rights to be acquired or purchased by
Seller, that result from any material inaccuracy of any representation
or warranty made by Buyer in this Agreement or otherwise as a result of
any material breach of any provision of this Agreement by Buyer.
17. Liabilities of Seller. Buyer does not assume any liabilities of Seller,
including liabilities which may arise after closing based upon
occurrences prior to the Closing Date except as may otherwise be
expressly specified herein.
18. Expenses. Each party shall pay its own expenses incident to this
Agreement and the transactions hereby contemplated. In the event of any
litigation between the parties arising out of this Agreement, the
prevailing party shall be entitled to recover from the other party its
court costs and reasonable attorneys' fees at the trial and all
appellate levels.
19. Schedule and Exhibits. Each Schedule and Exhibit attached hereto shall
be deemed to be a part of this Agreement to the same extent as if set
forth verbatim in the body of this Agreement.
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20. Time of Essence. Time is of the essence with respect to this Agreement.
21. Enforcement. The laws of the State of Florida shall govern the
interpretation, validity, performance and enforcement of this
Agreement. If any provision of this Agreement should be held to be
invalid or unenforceable, the validity and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
22. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by binding
arbitration in Broward County, Florida, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The arbitration shall be
conducted before and by a single arbitrator selected by the parties. If
the parties have not selected an arbitrator within 10 days of written
demand for arbitration, the arbitrator shall be selected by the
American Arbitration Association pursuant to the then current rules of
that Association. The expenses of arbitration shall be divided equally
between the parties. The duty to arbitrate shall survive the
cancellation or termination of this Agreement.
23. Parties. This Agreement shall be binding upon and enforceable against,
and shall inure solely to the benefit of, the parties hereto and their
respective successors and assigns.
24. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this
Agreement by signing any such counterpart.
25. Facsimile Signature. This Agreement may be executed and accepted by
facsimile signature and any such signature shall be of the same force
and effect as an original signature.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
PREFERRED TRAVEL & TOURS, INC. CARIBBEAN CONCEPTS CORP.
By: \s\ Paul R. Johnson By: \s\ Karen Bushell
----------------------------- -------------------------
Paul R. Johnson, President Karen Bushell, President
\s\ Karen Bushell
--------------------------
Karen Bushell
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List of Schedules
Schedule of Fixed Assets
Schedule of Assumed Contracts
Seller's Tax Returns
Schedule of Liens
Schedule of Legal Matters
List of Exhibits
Exhbit "A" - Escrow Agreement
Exhibit "B" - Major Contracts
Exhibit "C" - Consultant Agreement
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