EXHIBIT 10.20
ACQUISITION AGREEMENT
This Acquisition Agreement (this "Agreement") is made and entered into on
April 1, 2005, by and among One Link 4 Travel, Inc., a Delaware corporation
("OneLink"), Reservation Center, Inc., a California corporation with its
principal office located at 00000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxxx,
Xxxxxxxxxx 00000 ("RCI"), and the current shareholders of RCI (the "RCI
Shareholders") who are Xxxx Xxxxxxxx ("Xxxx Xxxxxxxx") and Xxxxx Xxxxxxxx, as
Trustee of the Xxxxxxxx Family Trust (the "J Xxxxxxxx Trust").
R E C I T A L S:
A. The RCI Shareholders own all of the issued and outstanding capital stock
of RCI (the RCI Shares"). OneLink desires to acquire, and the RCI Shareholders
desire to sell to OneLink, all of the RCI Shares, and thereby transfer to
OneLink the operations, assets, and business of RCI.
B. RCI also has outstanding a single warrant right held by Xxxxxxx
Xxxxxxxxx ("Kiradjian") which, if exercised, would represent a twenty percent
(20%) ownership interest in RCI (the "Kiradjian Warrant"). OneLink will acquire
the Kiradjian Warrant contemporaneously with the acquisition of the RCI Shares
pursuant to a Warrant Purchase and Settlement Agreement between OneLink and
Xxxxxxx Xxxxxxxxx (the "Kiradjian Agreement"), and this Agreement and the
obligations of both the RCI Shareholders and OneLink set forth herein are
expressly conditioned upon the closing of the Kiradjian Agreement.
C. RCI has operated under an arrangement with Xxxx Xxxxxxxx dba Travel
Reservations (the "Travel Agency") for the purpose of effecting reservations and
other travel related services necessary to RCI's business operations, and
OneLink intends to acquire certain business assets of the Travel Agency pursuant
to an agreement between the owner of the Travel Agency and OneLink Travel
Service, Inc. a Delaware corporation wholly owned by OneLink (the Travel Agency
Purchase Agreement"), and this Agreement and the obligations of OneLink set
forth herein are expressly conditioned upon the execution of the Travel Agency
Purchase Agreement and the closing of the transactions contemplated therein.
D. OneLink and the RCI Shareholders have determined that it is in their
mutual best interests for OneLink to acquire all of the RCI Shares as provided
herein, and subject to the conditions set forth herein in order to effectuate
acquisition of the RCI operations, assets and business. The RCI Shareholders
will be paid consideration as provided herein in exchange for the RCI Shares.
ONELINK, RCI AND THE RCI SHAREHOLDERS AGREE AS FOLLOWS:
1. DEFINITIONS.
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The capitalized terms set forth below shall have the following defined
meanings when used in this Agreement and for all purposes of this Agreement and
the Operating Documents:
"Accounts Receivable" means the face amount of all items invoiced or billed
to RCI's customers with respect to services actually rendered and which items
are set forth on Schedule 3.21 or the Closing Date Accounts Receivable List.
"Accounts Receivable Shortfall" means the amount, if any, by which the
Accounts Receivable actually collected by RCI on or before December 31, 2005, is
less than the ninety percent (90%) of the aggregate face value amount of
Accounts Receivable set forth in Schedule 3.21 and in the Final Closing Date
Accounts Receivable List, provided, that the face amount of any items of
Accounts Receivable set forth in both Schedule 3.21 and in the Final Closing
Date Accounts Receivable shall be counted only once in determining the face
amount of Accounts Receivable and the amount of Accounts Receivable actually
collected.
"Acquisition" means the transaction contemplated by this Agreement, by
which OneLink will acquire RCI Shares.
"Acquisition Consideration" means the consideration to be paid or caused to
be paid by OneLink to RCI Shareholders as set forth in Section 2.2 of this
Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such specified Person.
"Agreement" means this Acquisition Agreement and the attached Schedules and
Exhibits.
"Approvals" means any and all approvals of governmental authorities or
other parties required for the Acquisition and for OneLink to operate the
Business and for OneLink's wholly owned subsidiary Onelink Travel Service, Inc.,
to operate the Travel Agency.
"Assets" means all of the personal properties and assets, tangible and
intangible, of any nature, reflected on the Current Balance Sheet or owned used
by RCI and necessary for the conduct of the Business; provided, however, that
those items of personal property not necessary for the conduct of the Business
and listed on Schedule 3.10 as distributed to the RCI Shareholders at or before
Closing with the consent of Onelink are specifically and expressly excluded from
the meaning of the term "Assets."
"Business" means the following activities: (i) providing a reservation
service center to travel agencies and/or other travel related suppliers such as
hotels, cruise operators, convention and visitor bureaus, tourist offices and
tour operators; (ii) providing commission collection services to travel agencies
through a call center; (iii) providing e-mail or web-based advertising by travel
industry suppliers to travel agencies; (iv) providing negotiated rate programs
(such as RCI's current CCRA hotel program) for groups or consortiums of travel
agencies, giving members of those groups access to negotiated rates or services,
and disseminating availability of such rates and services among the groups; and
(v) operation of an on-line booking system for travel agencies.
"Closing" and "Closing Date" means the time and date set forth in Section
2.4(a) of this Agreement.
"Consulting Agreement" means the consulting agreement entered into between
RCI and Xxxx Xxxxxxxx pursuant to Section 5.8 of this Agreement.
"Contract" means any agreement, contract, lease, note, mortgage, indenture,
loan agreement, franchise agreement, covenant, employment agreement, license,
instrument, purchase and sales order, commitment, undertaking, obligation,
whether written or oral, express or implied.
"Disclosure Schedules" means the schedules delivered by the RCI
Shareholders to OneLink for the purpose of modifying, explaining or clarifying
the representations and warranties set forth in Section 3 of this Agreement.
"Employee Benefit Plan" means each (a) welfare benefit, pension or
retirement or plan or program established for the benefit of employees pursuant
to Sections 3(1) or 3(2) of the Employee Retirement Income Security Act of 1974
("ERISA"), and (b) personnel policy, stock option, stock bonus, restricted
stock, stock appreciation right, phantom stock, or stock purchase plan or
arrangement, worker's compensation, collective bargaining agreement, bonus plan
or arrangement, incentive award plan or arrangement, vacation policy, severance
pay plan, policy, or agreement, deferred compensation agreement or arrangement,
executive compensation or supplemental income arrangement, consulting agreement,
employment agreement, change in control plan or agreement and other employee
benefit plan, agreement, arrangement, program, practice, or understanding, which
is sponsored, maintained, or contributed to by the RCI for the benefit of the
employees, former employees, independent contractors, or agents of RCI, or has
been so sponsored, maintained, or contributed to at any time since 1974.
"Final Closing Date Accounts Receivables List" means the listing of
Accounts Receivables as of the Closing Date created and finalized as set forth
in Section 5.10 of this Agreement.
"Financial Statements" means the profit and loss statements and balance
sheets for RCI dated November 30, 2004 for the Business, reflecting information
for RCI's fiscal year ended November 30, 2004.
"Goodwill Note" means the $200,000.00 unsecured promissory note executed
and delivered by RCI to Xxxx Xxxxxxxx, and guaranteed by OneLink, as partial
consideration under the Goodwill Purchase Agreement.
"Goodwill Purchase Agreement" means the agreement in the form attached
hereto as Exhibit 5.14 pursuant to which RCI has purchased certain goodwill used
in the Business from Xxxx Xxxxxxxx.
"JG Loan Release" means the release of the J Xxxxxxxx Trust (and Xxxxx
Xxxxxxxx) from liability for a $95,000 advance previously made by RCI to the J
Xxxxxxxx Trust, which release is to be delivered as part of the Acquisition
Consideration pursuant to Section 2.2(c) of this Agreement.
"J Xxxxxxxx Trust" means Xxxxx Xxxxxxxx, acting in the capacity of trustee
for the Xxxxxxxx Family Trust.
"Kiradjian Agreement" means an agreement between Xxxxxxx Xxxxxxxxx and
Onelink regarding the complete redemption of Xxxxxxx Xxxxxxxxx'x ownership of
warrants for twenty percent (20%) of the stock of RCI Shareholders and the
release by Xxxxxxx Xxxxxxxxx of RCI and the RCI Shareholders from liabilities
with respect to her employment by RCI and her relationship to the RCI
Shareholders in the form set forth in Exhibit 2.6(c) of this Agreement.
"Kiradjian Warrant" means the warrant rights of Xxxxxxx Xxxxxxxxx to
purchase twenty percent (20%) of RCI, which warrant rights are subject to the
Kiradjian Agreement.
"Lease" means the lease relating to the Premises between RCI Shareholders
and Canwood Corporate Center, LLC, dated February 28, 2000.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
similar or related charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code or comparable law or any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or charge).
"Material Adverse Effect" shall have the meaning set forth in the first
paragraph of Section 3 of this Agreement.
"Material Contract" means written or oral contracts to which RCI is now a
party which are material to the operation of the Business, as defined in greater
detail in Section 3.23 of this Agreement.
"Non-Competition Agreements" means the agreements of each of the RCI
Shareholders described in Section 5.7 of this Agreement in the form attached
hereto as Exhibit 5.7 and delivered to OneLink as a condition of Closing
pursuant to Section 2.4(b) of this Agreement.
"Note" means either of the two promissory notes to be issued to the RCI
Shareholders as partial consideration as provided in Section 2.2(b) of this
Agreement in the forms attached to this Agreement as Exhibits 2.2(b)A and
2.2(b)B.
"OneLink" means One Link 4 Travel, Inc., a Delaware corporation.
"OneLink Common Stock" means the Common Stock (par value $0.001) of
OneLink.
"Operative Documents" means all documents, agreements, schedules, consents
or actions required to carry out the Acquisition, including those documents and
agreements set forth in the Exhibits and Schedules to this Agreement.
"Person" means any: (i) individual; (ii) corporation, general partnership,
limited partnership, limited liability partnership, trust, company (including
any limited liability company or joint stock company) or other organization or
entity; or (iii) governmental body or authority.
"Premises" means the offices, facilities and real property interests
located at 00000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx 00000.
"RCI" means Reservation Center, Inc., a California corporation.
"RCI Shareholders" means Xxxx Xxxxxxxx and the J Xxxxxxxx Trust.
"RCI Shareholder Transaction Fees" means all broker, legal, accounting,
tax, consulting and financial advisory (including, without limitation, any fees
payable to Xxxxxx & Xxxxxxxxxx, Xxxxx Associates, and Value Added Advisors, LLC)
and other fees, commissions and expenses (including any transfer taxes, fees and
expenses) incurred by the RCI Shareholders in connection with the transactions
contemplated hereby.
"RCI Shares" means each of the issued and outstanding shares of the single
class of common stock of RCI.
"Schedule" means any of the schedules and exhibits referred to on Schedule
9.4 to this Agreement, all of which are to be prepared and delivered on or
before the Closing Date.
"Tax Refund" means the amount by which the $78,261.00 previously deposited
by RCI for RCI's 2004 federal and California income and franchise tax
liabilities exceeds the amount of RCI's federal and California income and
franchise tax liabilities (as finally determined) with respect to RCI's 2004 tax
year ended November 30, 2004.
"Tax Return" means any tax return, filing or information statement required
to be filed in connection with or with respect to any Taxes.
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, use, franchise, intangible,
payroll, withholding, social security and unemployment taxes imposed by any
federal, state, local or foreign government agency, and any interest or
penalties related thereto.
"Travel Agency" means the sole proprietorship of Xxxx Xxxxxxxx, known under
the fictitious business name "Travel Reservations."
"Travel Agency Purchase Agreement" means the agreement between OneLink and
Travel Agency for purchase of certain Travel Agency business assets in the form
set forth in Exhibit 5.9 to this Agreement.
2. PURCHASE OF RCI SHARES; ACQUISITION CONSIDERATION.
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2.1 Purchase of RCI Shares. The RCI Shareholders shall sell, assign,
transfer and convey to OneLink all of the issued and outstanding capital stock
of the RCI Shares, consisting of Two Hundred (200) shares RCI's outstanding
common stock, no par value per share, free and clear of all Liens of any nature
whatsoever, other than such restrictions as may be imposed (i) by the warrant
which is the subject of the Kiradjian Agreement or (ii) pursuant to state or
federal securities laws. The sale and transfer of the RCI Shares shall be
evidenced by delivery to OneLink, at Closing, of the original certificates
representing all of the RCI Shares (or if one or more of the certificates cannot
be located, an affidavit and warranty for the lost certificate in form and
substance acceptable to OneLink), together with assignments executed by the RCI
Shareholders in the form set forth in Exhibit 2.1 to this Agreement (the "Stock
Powers").
2.2 Acquisition Consideration. Subject to the terms and conditions of this
Agreement, Four Million Eight Hundred Thousand Dollars ($4,800,000.00) (the
"Acquisition Consideration") shall be paid by Onelink and RCI to the RCI
Shareholders in consideration of: (i) the RCI Shareholders' transfer of the RCI
Shares to OneLink (and the related covenants set forth in this Agreement) and
(ii) the transfer by RCI Shareholder Xxxx Xxxxxxxx to RCI of certain goodwill
pursuant to the Goodwill Purchase Agreement. The Acquisition Consideration shall
be paid in the manner indicated:
(a) Cash in the amount of Three Million Forty Thousand Dollars
($3,040,000.00) to be paid at Closing, with One Million Five Hundred Twenty
Thousand Dollars ($1,520,000.00) to be paid to each of Xxxx Xxxxxxxx and
the J Xxxxxxxx Trust, and such payments to be made by cashier's check or by
wire transfer according to RCI Shareholders' instructions as set forth in
Schedule 2.2(a);
(b) Two (2) promissory notes (the "Notes," and each, a "Note"), issued
by OneLink in the forms attached hereto as Exhibits 2.2(b)A and 2.2(b)B, in
the total amount of Seven Hundred Five Thousand Dollars ($705,000.00), with
a Note for Four Hundred Thousand Dollars ($400,000.00) to be delivered by
OneLink to Xxxx Xxxxxxxx and a Note for Three Hundred Five Thousand Dollars
($305,000.00) to be delivered to the J Xxxxxxxx Trust at Closing;
(c) RCI's release of Xxxxx Xxxxxxxx and the Xxxxxxxx Trust,
countersigned by OneLink, of RCI's receivable in the amount of Ninety Five
Thousand Dollars ($95,000.00) due from Xxxxx Xxxxxxxx to be executed and
delivered to Xxxxx Xxxxxxxx and the J Xxxxxxxx Trust of the release in the
form attached hereto as Exhibit 2.2(c) (the "JG Loan Release"); and
(d) Effective at Closing, RCI has purchased certain goodwill relating
to the Business from Xxxx Xxxxxxxx pursuant to the Goodwill Purchase
Agreement for cash consideration of Seven Hundred Sixty Thousand Dollars
($760,000.00) and the Goodwill Note in the principal amount of Two Hundred
Thousand Dollars ($200,000.00). OneLink shall forward to RCI, effective at
Closing, the amount of Nine Hundred Sixty Thousand Dollars ($760,000.00) to
fund immediate payment by RCI of RCI's cash obligations under the Goodwill
Purchase Agreement entered into between Xxxx Xxxxxxxx and RCI pursuant to
Section 5.14 of this Agreement; provided, that for convenience of the
parties, OneLink may make a direct transfer of the $760,000.00 to Xxxx
Xxxxxxxx. OneLink shall also sign the Goodwill Note delivered to Xxxx
Xxxxxxxx under the Goodwill Purchase Agreement in OneLink's capacity as
guarantor of the Goodwill Note.
2.3 Allocation of Acquisition Consideration. The Acquisition Consideration
will be allocated as follows: (i) A total of Five Hundred Thousand Dollars
($500.000.00) of the Acquisition Consideration paid under Section 2.2(a) of this
Agreement shall be allocated to the Non-Competition Agreements of the RCI
Shareholders, with Two Hundred Fifty Thousand Dollars ($250,000.00) to be
assigned to the Non-Competition Agreements of each of Xxxxx Xxxxxxxx and Xxxx
Xxxxxxxx, which allocation shall be deemed paid under the Notes; (ii) The
$960,000.00 paid by RCI under the Goodwill Purchase Agreement shall be allocated
to the goodwill purchased under that agreement; (iii) The remainder of the
Acquisition Consideration shall be allocated to the RCI Shares;
2.4 Closing Date; Closing Procedure, and Deliveries.
(a) The Acquisition shall be consummated and given effect (the
"Closing") at 9:00 AM (PST) on April 8, 2005 or such other date as may be
agreed to by the parties (the "Closing Date"); provided that Closing shall
not take place prior to the date and time OneLink and RCI Shareholders are
prepared to deliver all of the documents required to be delivered in this
Section 2.4 (unless subject to a written waiver signed by the party
entitled to delivery) and have met all conditions to Closing set forth in
Sections 2.5 and 2.6 of this Agreement. The Closing shall take place at the
offices of OneLink's counsel, Xxxxxxx Xxxxxxxx Xxxxx & Stikker LLP, at 000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 or such
other place as OneLink and RCI Shareholders shall designate.
(b) On or before the Closing Date, RCI Shareholders shall deliver to
OneLink the following fully executed documents: (i) Original certificates
representing the RCI Shares (or if one or more of the original certificates
cannot be located, an affidavit and warranty for the lost certificate in
form and substance acceptable to OneLink), together with Stock Powers
covering all of the RCI Shares in the form attached hereto as Exhibit 2.1;
(ii) a Non-Competition Agreement for Xxxx Xxxxxxxx in the form attached
hereto as Exhibit 5.7, executed by Xxxx Xxxxxxxx, (iii) a Non-competition
Agreement for Xxxxx Xxxxxxxx in the form attached hereto as Exhibit 5.7,
executed by Xxxxx Xxxxxxxx, (iv) a Consulting Agreement in the form
attached to this Agreement as Exhibit 5.8, executed by Xxxx Xxxxxxxx, (v)
the Representations Certificate as required under Section 2.5(a), (vi) the
fully executed Assignment and Assumption Agreement in the form attached
hereto as Exhibit 5.12, and (vii) the Goodwill Purchase Agreement, executed
by Xxxx Xxxxxxxx in the form attached hereto as Exhibit 5.14.
(c) On or before the Closing Date, OneLink and RCI shall deliver to
the RCI Shareholders the following fully executed documents: (i) the Notes,
duly executed by OneLink; (ii) a Non-Competition Agreement for Xxxx
Xxxxxxxx in the form attached hereto as Exhibit 5.7, executed by Onelink,
(iii) a Non-Competition Agreement for Xxxxx Xxxxxxxx in the form attached
hereto as Exhibit 5.7, executed by Onelink, and (iv) the Consulting
Agreement in the form attached to this Agreement as Exhibit 5.8, executed
by Onelink; (iv) the JG Loan Release in the form attached to this Agreement
as Exhibit 2.2(c), (v) cashier's checks or evidences of completed wire
transfers according to the instructions set forth in Schedule 2.2(a) to
this Agreement in the amount of $3,040,000.00 (less any reductions or
direct payments on behalf of RCI Shareholders as directed in Schedule
2.2(a)), (vi) the Goodwill Purchase Agreement, executed by RCI in the form
attached hereto as Exhibit 5.14, (vii) the Goodwill Note, executed by RCI
as "Debtor" and by OneLink as "Guarantor", in the form attached hereto as
Exhibit 5.14, and (viii) a cashier's check, or evidence of a completed wire
transfer according to instructions set forth in Schedule 2.2(a) to this
Agreement in the amount of $760,000.00 in payment of the Goodwill Purchase
Agreement.
2.5 Conditions Precedent To Obligations of OneLink. Except as otherwise
specifically set forth herein, all obligations of OneLink under this Agreement
are subject to the fulfillment of the following conditions, prior to or on the
Closing Date:
(a) The representations and warranties of RCI Shareholders set forth
in this Agreement shall be deemed to have been made again at and as of the
Closing Date with respect to the state of facts then existing and shall
then be true in all respects, and the RCI Shareholders shall deliver to
OneLink a certificate to that effect in the form attached hereto as Exhibit
2.5(a).
(b) RCI Shareholders shall have met any covenants or completed any
acts required to have been completed by the Closing Date;
(c) Before the Closing Date, there shall have been no adverse change
materially affecting the Business.
(d) OneLink, shall either (i) have received as of the Closing Date all
material licenses, permits, consents, authorizations and Approvals of any
governmental agency or authority, or any other Person, necessary or
appropriate for the consummation of this Agreement or the operation of the
Business by OneLink (and the operation of the Travel Agency), or (ii) if
such Approvals have not been issued prior to the date first set forth
above, OneLink shall be reasonably satisfied that such Approvals will be
issued in the ordinary course after such date and that OneLink may operate
the Business as presently operated after such date prior to the issuance of
such approvals without incurring any material liability or obligation based
on such operation prior to the issuance of such Approvals.
(e) OneLink and its counsel, accountants and other representatives
shall have been afforded full access during normal business hours to all
properties, books, accounts, records, contracts and documents of or
relating to the Business, and the RCI Shareholders shall have furnished or
caused to be furnished to OneLink and its representatives all data and
information concerning the Business requested. Notwithstanding any
investigation by, or knowledge on the part of OneLink concerning the
Business, the representations and warranties of RCI Shareholders set forth
in Section 3 of this Agreement shall be deemed to be in full force and
effect, fully effective and unaffected thereby.
(f) The Travel Agency Purchase Agreement shall have been executed and
the transactions contemplated therein shall have been completed as of the
Closing Date, except to the extent waived by the "Buyer" under such
Agreement.
(g) OneLink shall have entered into and received the fully executed
Non-Competition Agreements of Xxxx Xxxxxxxx and Xxxxx Xxxxxxxx.
(h) OneLink shall have entered into and received the fully executed
Consulting Agreement of Xxxx Xxxxxxxx.
(i) RCI Shareholders shall have delivered to OneLink all of the
documents and consideration required to be delivered at Closing under
Section 2.2(b).
(j) The Board of Directors of OneLink shall have approved the
Acquisition, including the Acquisition Agreement and the Operative
Documents.
(k) OneLink shall have received on or before Closing, the resignations
of all of the current officers and directors of RCI, as well as the
resignations of Xxxxx Xxxxxxxx as a consultant to RCI, Xxxx Xxxxxxxx as an
employee of RCI and Xxxxx Xxxxxx, Esq. as in house counsel and employee of
RCI, and in the case of Xxxxx Xxxxxx, an acknowledgement that RCI is not
indebted to him for any payroll or fees as of Closing.
(l) In the event any one or more of the conditions set forth in this
Section 2.5 are not satisfied as required, OneLink, in its sole and
absolute discretion, may elect: (i) to waive any such condition precedent,
(ii) to terminate this Agreement, or (iii) to postpone the Closing Date for
a period not to exceed 30 days.
2.6 Conditions Precedent to Obligations of RCI Shareholders. Except as
otherwise specifically set forth herein, all obligations of the RCI Shareholders
under this Agreement are subject to the fulfillment and satisfaction, on or
before the Closing Date, of the following conditions, which may be waived by RCI
Shareholders:
(a) The representations and warranties of OneLink contained in this
Agreement shall be deemed to have been made again at and as of the Closing
Date with respect to the state of facts then existing and shall then be
true in all respects.
(b) RCI Shareholders shall have met any covenants or completed any
acts required to have been completed by the Closing Date.
(c) OneLink shall have entered into an arrangement with Xxxxxxx
Xxxxxxxxx for release of her claims against RCI Shareholders and RCI in the
form set forth in Exhibit 2.6(c), subject only to changes in dates to
reflect the correct Closing Date and date of execution (the "Kiradjian
Agreement"), and shall have delivered a copy of the executed Kiradjian
Agreement to the RCI Shareholders.
(d) OneLink shall have delivered to RCI Shareholders all of the
documents and consideration required to be delivered at Closing under
Section 2.4(c).
(e) OneLink shall have furnished or caused to be furnished to the RCI
Shareholders the materials described in Section 4.5 of this Agreement.
(f) In the event any one or more of the conditions set forth in this
Section 7.2 are not satisfied as required, RCI Shareholders, in its sole
and absolute discretion, may elect: (i) to waive any such condition
precedent, (ii) to terminate this Agreement, or (iii) to postpone the
Closing Date for a period not to exceed 30 days.
3. REPRESENTATIONS AND WARRANTIES OF THE RCI SHAREHOLDERS.
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The RCI Shareholders, jointly and severally, represent and warrant to
OneLink that the statements contained in this Section 3 are correct and complete
as of the date of this Agreement. All warranties and representations are made
subject to the Disclosure Schedules delivered by the RCI Shareholders to Onelink
prior to execution of this Agreement, or, in the case of Schedule 3.21,
following the Closing Date pursuant to Section 5.10.
Schedule numbers set forth in the Disclosure Schedule are intended to
correspond to the section numbers of this Agreement which are modified by the
disclosures; provided that any information disclosed under any section number in
the Disclosure Schedule shall be deemed to be disclosed and incorporated into
any other section number under the Agreement where such disclosure would be
appropriate.
In this Agreement, any reference to any event, change, condition or effect
being "material" with respect to any entity or individual means any material
event, change, condition or effect related to the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, operations, results of operations or prospects of such entity or
individual. In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or individual means any event, change or effect that is
materially adverse to the condition (financial or otherwise), properties,
assets, liabilities, business, operations, results of operations or prospects of
such entity or individual, taken as a whole.
3.1 Corporate Status. RCI is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has the
requisite power and authority to own or lease its assets and properties and to
carry on its business as now being conducted. RCI is not required to qualify or
be licensed to do business as a foreign corporation in any other jurisdiction in
which failure to so qualify or be licensed would individually or in the
aggregate have a Material Adverse Effect on its business or on its ability to
own or use any of its assets. There is no pending or threatened proceeding for
the dissolution, liquidation, insolvency or rehabilitation of RCI.
3.2 Power and Authority. RCI has the power and authority to execute and
deliver this Agreement and the other Operative Documents to which RCI is a
party, to perform its obligations hereunder, and to consummate the transactions
by it contemplated hereby. RCI has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the other Operative
Documents to which the RCI is a party, the performance of its obligations
hereunder, and the consummation by it of the transactions contemplated hereby.
3.3 Enforceability. This Agreement has been duly executed and delivered on
behalf of RCI and constitutes, and the other Operative Documents to which RCI is
a party when executed and delivered will constitute, the legal, valid and
binding obligation of RCI, enforceable against RCI in accordance with their
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
3.4 Capitalization. RCI has a single class of capital stock, designated as
common stock. There are One Thousand (1,000) authorized shares of common stock
and Two Hundred (200) issued and outstanding shares of common stock (the "RCI
Shares"). All of the issued and outstanding shares of capital stock of RCI have
been duly authorized and validly issued, are fully paid and nonassessable, and
were not issued in violation of any preemptive rights or rights of first refusal
or similar rights or any other laws (except any such violations as would not
have a Material Adverse Effect on RCI or the rights or obligations of the
OneLink after the Closing). Except for the Kiradjian Warrant, RCI has not
granted or entered into and does not have outstanding any subscriptions,
options, rights, warrants, convertible securities or other agreements obligating
RCI to issue, or to transfer from treasury, any shares of capital stock of any
class or kind, or securities convertible into such capital stock.
3.5 RCI Shareholders. The RCI Shareholders own all issued and outstanding
shares of RCI Stock as follows: Xxxx Xxxxxxxx owns One Hundred (100) RCI Shares;
the J Xxxxxxxx Trust owns One Hundred (100) RCI Shares. There are no voting
trusts, proxies, shareholder agreements, buy-sell agreements, puts, calls,
rights of first refusal or other agreements or understandings with respect to
the shares or capital stock of RCI.
3.6 No Violation; Consents. The execution and delivery by RCI of this
Agreement and the other Operative Documents to which it may be a party, the
performance by RCI of its obligations hereunder and the consummation by it of
the transactions contemplated by this Agreement will not (i) materially
contravene any of the Articles of Incorporation, Bylaws, or other organizational
or governing documents of RCI, (ii) materially violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ, injunction, judgment or
order of any governmental authority or of any arbitration award that is either
applicable to, binding upon or enforceable against it, (iii) except as otherwise
provided in Schedule 3.23, conflict with, result in any breach of, or constitute
a default (or an event that would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right of payment
under or the right to terminate, amend, modify, abandon or accelerate, any
Material Contract that is applicable to, binding upon or enforceable against it,
(iv) result in or require the creation or imposition of any Lien upon or with
respect to any of its properties or assets, (v) give to any individual or entity
a right or claim against it, or (vi) require the consent, approval,
authorization or permit of, or filing with or notification to, any governmental
authority, any court or tribunal or any other Person.
3.7 Records of RCI. The copies of the Articles of Incorporation, Bylaws,
and other documents and agreements of RCI that have been provided to OneLink are
true, accurate, and complete and reflect all amendments made thereto. The minute
books and other records of corporate actions for RCI made available to OneLink
for review are (i) correct and complete, (ii) such minute books and records
contain the true photocopied, faxed or original signatures of the Persons
purporting to have signed them, and (iii) such minute books and records contain
an accurate record of all material corporate actions of the RCI Shareholders and
directors of RCI taken by written consent or at a meeting or otherwise since
incorporation or formation. All required corporate actions by RCI have been duly
authorized or ratified. The stock ledger of RCI, as previously made available to
OneLink, contains accurate and complete records of all issuances, transfers and
cancellations of shares of the capital stock of RCI.
3.8 Subsidiaries. RCI does not, directly or indirectly, own any outstanding
voting securities of or other interests in, or control, any other corporation,
partnership, joint venture or other entity or Person.
3.9 Financial Statements.
(a) RCI has delivered to OneLink its financial statements for the
fiscal year ended November 30, 2004 (the "Financial Statements"), which are
attached as Schedule 3.9 hereto. The referenced balance sheet as of
November 30, 2004 is referred to herein as the "Current Balance Sheet." The
Financial Statements, to the best of the RCI Shareholders' knowledge and
subject to Section 3.9(b), (i) present fairly the financial position and
results of operation and cash flow of RCI as of November 30, 2004 and (ii)
reflect and provide adequate provisions for liabilities of RCI, including
(without limitation) all known fixed or contingent liabilities.
(b) OneLink hereby acknowledges that the Financial Statements have not
been audited or subjected to a review and may not meet the standards of
Generally Accepted Accounting Procedures or the accounting methods
ultimately adopted by RCI under OneLink's ownership. In compiling the
Financial Statements, the RCI Shareholders, with the assistance of an
accountant and advisors, have followed RCI's normal accounting practices,
and have compiled the Financial Statements to the best of their ability and
knowledge, but, except as provided in Section 3.9(c) or elsewhere in this
agreement, no representation or warranty is intended or expected as to the
accuracy of a specific number or provision other than that such number or
provisions fairly reflects RCI's financial conditions to the best of the
RCI Shareholders' knowledge. OneLink further acknowledges that the
pro-forma financial statements dated January 31, 2005 previously delivered
to OneLink were based upon estimates and are not subject to the
representations and warranties set forth herein.
(c) Notwithstanding Section 3.9(b) above, the RCI Shareholders hereby
represent and warrant that the Net Asset Value (as defined in this Section
3.9(c)) is not less than negative Four Hundred Seventy Thousand Nine
Hundred Ninety Eight Dollars (-$470,998). For purposes of this Agreement,
"Net Asset Value" shall be defined and calculated as follows (with
capitalized terms referring to amounts properly included under those
accounts or entries on the Current Balance Sheet): (i) Total Assets minus
Prepaid Expenses, minus (ii) the difference between (A) Total Liabilities,
minus (B) the sum of Deferred Income-Sales and Deferred Income-Rentals.
3.10 Changes Since the Current Balance Sheet Date. Since the Current
Balance Sheet date RCI has conducted its business only in the ordinary course
and in conformity with past practice and, except as expressly contemplated by
the terms of this Agreement or disclosed in Schedule 3.10, RCI has not:
(a) issued, sold, pledged, disposed of, encumbered, or authorized the
issuance, sale, pledge, disposition, grant or encumbrance of, any shares of
its capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock or any other ownership interest;
(b) declared, set aside, made, or paid any dividend or other
distribution payable in cash, stock, property or otherwise, on or with
respect to its capital stock or other securities, or reclassified,
combined, split, subdivided or redeemed, purchased or otherwise acquired,
directly or indirectly, any of its capital stock or other securities;
(c) sold, leased or transferred any of its properties or assets other
than in the ordinary course of business consistent with past practice;
(d) (i) acquired any interest in any corporation, partnership or other
business organization or division thereof or any assets, or made any
investment either by purchase of stock or securities, contributions of
capital or property transfer or, except in the ordinary course of business
consistent with past practice, purchased any property or assets of any
other Person, (ii) made or obligated itself to make capital expenditures
out of the ordinary course consistent with past practice, (iii) incurred
any indebtedness or other obligations or liabilities other than in the
ordinary course consistent with past practice (other than liabilities that
would constitute RCI Shareholder Transaction Fees), (iv) issued any debt
securities or assumed, guaranteed or endorsed or otherwise as an
accommodation become responsible for, the obligations of any Person, or
made any loans or advances, (v) modified, terminated or entered into any
Contract other than in the ordinary course of business consistent with past
practice, or (vi) imposed any security interest or other Lien on any of its
assets other than in the ordinary course of business consistent with past
practice;
(e) suffered any material theft, damage, destruction or casualty loss,
whether or not covered by insurance;
(f) suffered any extraordinary losses (whether or not covered by
insurance);
(g) waived, canceled, compromised or released any rights other than in
the ordinary course of business consistent with past practice;
(h) made any payment in respect of its liabilities other than in the
ordinary course of business consistent with past practice;
(i) paid any salary, bonus, severance or other compensation to any RCI
Shareholder or any Affiliate thereof (other than in the ordinary course of
business consistent with past practice, and, as set forth on, other than
compensation payments to one or more RCI Shareholders in their capacity as
service providers in connection with this transaction), or increased the
compensation payable or to become payable to any of its other officers,
directors, or employees or, except as presently bound to do, granted any
severance or termination pay to, or entered into any bonus, employment or
severance agreement with, any of its directors, officers, or employees
(other than bonuses to employees in the ordinary course of business
consistent with past practice), or established, adopted, entered into or
amended or taken any action to accelerate any rights or benefits with
respect to any bonus, profit sharing trust, compensation, stock option,
restricted stock pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(j) taken any action or made any changes with respect to accounting
policies or procedures or made any adjustment to its books and records;
(k) paid, discharged or satisfied any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of due and payable liabilities reflected or
reserved against in its financial statements, as appropriate, or
liabilities incurred after the date thereof in the ordinary course of
business and consistent with past practice;
(l) delayed paying any account payable beyond the date on which it was
due and payable except to the extent it was being contested in good faith;
(m) entered into any transaction with any of the RCI Shareholders or
Affiliates thereof (other than in the ordinary course consistent with past
practices and in their capacity as employees or vendors of RCI, as set
forth on Schedule 3.10);
(n) entered into any other transaction or been subject to any event or
series of transactions or events that has or may reasonably be expected to
have a Material Adverse Effect on RCI; or
(o) agreed to do or authorized any of the foregoing.
3.11 Liabilities. RCI has no material liabilities or obligations, whether
accrued, absolute, contingent or otherwise, except:
(a) to the extent reflected on the Current Balance Sheet and not
heretofore paid or discharged; and
(b) liabilities incurred in the ordinary course of business consistent
with past practice since the date of the Current Balance Sheet (none of
which relates to (A) any breach of contract, or (B) any tort, infringement
or violation of law, or that arose out of any action, suit, claim,
governmental investigation or arbitration proceeding) and which are not
individually or in the aggregate material in amount or scope or which do
not have a Material Adverse Effect;
(c) liabilities which constitute RCI Shareholder Transaction Fees and
which will be paid by the RCI Shareholders.
3.12 Litigation. Except as disclosed in Schedule 3.12, there is no
litigation or action, suit, proceeding, investigation pending and served on, or
to the knowledge of the RCI Shareholders threatened against, or affecting RCI,
its Business, properties or assets, and to the knowledge of the RCI Shareholders
there is no basis for any of the foregoing.
3.13 Real Estate.
(a) RCI does not own and has never owned any real property or interest
therein (including, without limitation, any option or other right or
obligation to purchase any real property or any interest therein, but
excluding leasehold interests).
(b) As of the date of this Agreement, the Lease is in full force and
effect and has not been amended, and neither RCI nor, to the knowledge of
the RCI Shareholders, the lessors, are materially in default or breach of
the Lease. No event has occurred that, with the passage of time or the
giving of notice or both, would cause a material breach of or default under
the Lease by RCI nor, to the knowledge of the RCI Shareholders, by the
lessors. RCI has not entered into any subleases of the Premises or any
portion thereof, or granted any licenses or occupancy rights with respect
to the Premises.
(c) The Lease, by its terms, expires on March 31, 2005, and therefore,
if the Closing Date occurs on or before March 31, 2005, the representation
set forth in the first sentence of Section 3.13(b) shall not apply.
Furthermore, the Acquisition would constitute a default under the Lease
unless the prior consent of the landlord is obtained, and thus an Approval
will be required from the Landlord on the Lease.
3.14 Environment, Health and Safety. To the knowledge of the RCI
Shareholders, there is no environmental or health and safety matter that could
give rise to any material liability, cost or expense to RCI (and to the
knowledge of the RCI Shareholders there is no basis relating to any past or
present operations, properties, or facilities of RCI for any present or future
charge, complaint, action suit, proceeding, hearing, investigation, claim or
demand against RCI giving rise to any such liability). To the knowledge of the
RCI Shareholders, RCI has complied with all laws of any governmental authority
concerning the environment, public health and safety, and employee health and
safety where the failure to so comply would have a Material Adverse Effect on
RCI, and no charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand or notice has been filed or commenced against any of them alleging
any failure to comply with any such law or regulation.
3.15 Good Title to, Adequacy and Condition of Assets.
(a) The Assets as of Closing (including the Assets purchased by RCI
from Xxxx Xxxxxxxx pursuant to the Goodwill Purchase Agreement) constitute
all of the Assets necessary to operate the Business, and the RCI
Shareholders, as of the Closing Date and after giving effect to the
Goodwill Purchase Agreement, own none of the Assets. RCI has good and
marketable title to, or a valid leasehold interest in or license or other
right to use, all of the Assets, free and clear of any Liens, other than
Liens described on Schedule 3.15.
(b) The Fixed Assets in use or necessary for the Business and
operations of RCI are in good operating condition, normal wear and tear
excepted, and have been maintained in accordance with all applicable
manufacturer's specifications and warranties. For purposes of this
Agreement, the term "Fixed Assets" means all vehicles, machinery,
equipment, tools, supplies, leasehold improvements, furniture and fixtures,
owned, used by or located on the Premises of RCI or set forth on the
Current Balance Sheet or acquired by RCI since the date of the Current
Balance Sheet.
3.16 Compliance with Laws; Permits. To the knowledge of the RCI
Shareholders, RCI has been in material compliance with all laws, regulations and
orders applicable to RCI, its business and operations (as conducted by it now
and in the past), the Premises and any other properties and assets owned or used
by it now or in the past. RCI has not been cited, fined or otherwise notified of
any asserted past or present failure to comply with any laws, regulations or
orders and no proceeding with respect to any such violation is pending and
served or, to the knowledge of the RCI Shareholders, threatened. RCI is not
subject to any Contract, decree or injunction that restricts the continued
operation of any business or the expansion thereof to other geographical areas,
customers and suppliers or lines of business. To the best knowledge of the RCI
Shareholders, neither RCI, nor any of its employees or agents, has made any
payment of funds in connection with its business that is prohibited by law, and
no funds have been set aside to be used in connection with its business for any
payment prohibited by law. RCI possesses all permits and licenses applicable to
it, its business and operations and all such permits are in full force and
effect and RCI is in compliance therewith. All such permits and licenses are
listed on Schedule 3.16.
3.17 Labor and Employment Matters.
(a) Set forth in Schedule 3.17 is a true and complete list of all
directors, officers, employees and consultants of RCI showing the current
salary, benefits and other compensation (including any bonus) for such
director, officer, employee and consultant and including a list of all
contracts or agreements with each such Person. The employment of each
employee, consultant or free-lancer is terminable at will, without any
notice or severance of any kind.
(b) RCI is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims or unfair
labor practices, or other collective bargaining disputes. To the knowledge
of the RCI Shareholders, there is no organizational effort presently being
made or threatened by or on behalf of any labor union with respect to
employees of RCI.
(c) No employee or former employee of RCI has any claim against RCI
(whether under applicable law, pursuant to any employment agreement, or
otherwise) on account of, or for: (i) overtime pay; (ii) wages or salary,
other than for the current payroll period; (iii) vacation, time off or pay
in lieu of vacation or time off, other than vacation or time off (or pay in
lieu thereof) earned in respect of the current or past fiscal year, accrued
on the Current Balance Sheet; or (iv) any other claims arising under any
law governing labor and employment matters including without limitation,
employment discrimination claims.
(d) RCI is current with respect to all wages, salaries, bonuses,
expenses and other amounts payable to any of its employees (other than for
the current payroll period). RCI has complied with all laws relating to
health, safety and conditions of employment and employment practices and
wages and hours including payment of all Taxes where the failure to so
comply would have a Material Adverse Effect on RCI.
3.18 Employee Benefit Plans. Except as set forth in Schedule 3.18, RCI does
not maintain or contribute to any current Employee Benefit Plan, and has not
maintained or contributed to any Employee Benefit Plan. All payments necessary
to fund any Employee Benefit Plan with respect to any obligations accrued or
incurred on or before the Closing Date have either been paid in full or are
reflected on the Current Balance Sheet.
3.19 Tax Matters.
(a) RCI has timely filed (subject to applicable extensions) all Tax
Returns that it was required to file in compliance with all applicable laws
and regulations. All such Tax Returns were correct and complete in all
respects, or, in the case of Tax Returns which were later amended, the
final amended version of the Tax Return was correct and complete in all
respects. All Taxes owed by RCI as of any time on or before the Closing
Date (whether or not shown on any Tax Return) have been paid, other than
payroll taxes for the payroll period which includes the Closing Date. RCI
currently is not the beneficiary of any extension of time within which to
file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where RCI does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Liens on any of the
assets of RCI that arose in connection with any failure (or alleged
failure) to pay any Tax.
(b) RCI has timely withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party in compliance with
all applicable laws and regulations.
(c) To the best knowledge of the RCI Shareholders, RCI does not expect
any authority to assess any additional Taxes against RCI for any period for
which Tax Returns have been filed. There is no dispute or claim concerning
any tax liability of RCI either (i) claimed or raised by any authority in
writing and delivered to RCI or (ii) as to which RCI has knowledge based
upon personal contact with any agent of such authority.
(d) RCI has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) The unpaid Taxes of RCI (including any Taxes with respect to the
net income of RCI for the period since November 30, 2004) do not exceed,
and as of the Closing Date will not exceed, the reserve for tax liability
set forth on the face of the Financial Statements as adjusted for the
passage of time through the Closing Date in accordance with the past custom
and practice of RCI.
(f) The amount of Taxes payable to any governmental authority for the
RCI fiscal year ending November 30, 2004 will not exceed the amount
previously paid as estimated taxes for that fiscal year.
3.20 Insurance. RCI is covered by valid, outstanding enforceable policies
of insurance listed in Schedule 3.20 (the "Insurance Policies"). Such Insurance
Policies are in full force and effect, and all premiums due thereon have been
paid. RCI has complied with the provisions of such Insurance Policies applicable
to it, and has provided OneLink copies of all Insurance Policies and all
amendments and riders thereto or other evidence thereof. To the best knowledge
of the RCI Shareholders, there are no pending claims under any of the Insurance
Policies, including any claim for loss or damage to the properties, assets or
business of RCI. To the best knowledge of the RCI Shareholders, RCI has not
failed to give, in a timely manner, any notice required under any of the
Insurance Policies to preserve its rights thereunder.
3.21 Accounts Receivable. A listing of the Accounts Receivable of RCI as of
November 30, 2004 is attached hereto as Schedule 3.21. The accounts listed on
Schedule 3.21 represent all amounts invoiced by RCI and which, unless indicated
on Schedule 3.21, remain unpaid and have not been written off, compromised, set
off or settled and are not subject to any claim or refusal to pay by the party
to which the invoice was issued as of the Closing. At least ninety percent (90%)
of the face value of Accounts Receivable of RCI set forth in Schedule 3.21,
shall be collectible in the ordinary course on or before December 31, 2005.
3.22 Relationships with Customers and Suppliers; Affiliated Transactions.
To the knowledge of the RCI Shareholders, no current supplier to RCI has
threatened to terminate its business relationship with RCI for any reason. RCI
does not have any direct or indirect ownership interest in any customer,
supplier or competitor of RCI or in any Person from whom or to whom RCI leases
real or personal property.
3.23 Material Contracts. Schedule 3.23 sets forth all Material Contracts to
which RCI is a party or bound. RCI has not materially violated any of the terms
or conditions of any Material Contract or any term or condition that would
permit termination or modification of any Material Contract, all of the material
covenants to be performed by any other party thereto have, to the knowledge of
the RCI Shareholders, been fully performed, and no claims have been made or
issued for breach or indemnification or notice of default or termination under
any Material Contract. Each Material Contract is currently in full force and
effect, and except as set forth in Schedule 3.23, no Material Contract is, by
its terms, due to expire before July 1, 2005. Each of the Material Contracts
constitutes the legal, valid and binding obligation of RCI. No event has
occurred that constitutes, or after notice or the passage of time, or both,
would constitute, a material default by RCI under any Material Contract and, to
the knowledge of the RCI Shareholders, no such event has occurred that
constitutes or would constitute a material default by any other party. RCI is
not subject to any liability for payment resulting from renegotiation of amounts
paid under any Material Contract. The RCI Shareholders have delivered true and
correct copies of all written Material Contracts to which RCI is now a party or
by which it or its properties or assets may be bound or affected.
As used in this Section 3.23, "Material Contracts" means written or oral
contracts to which RCI is now a party or by which it or its properties or assets
may be bound or affected in one or more of the following categories: (a) loan
agreements, indentures, mortgages, pledges, hypothecations, deeds of trust,
conditional sale or title retention agreements, security agreements, equipment
financing obligations or guaranties, or other sources of contingent liability in
respect of any indebtedness or obligations to any other Person, or letters of
intent or commitment letters with respect to same; (b) leases of real or
personal property (c) distribution, sales agency or franchise or similar
agreements, or agreements providing for an independent contractor's services, or
letters of intent with respect to same; (d) employment agreements, management
service agreements, consulting agreements, confidentiality agreements,
non-competition agreements or any other agreements relating to any employee,
consultant, officer or director of RCI; (e) licenses, development, teaming,
assignments or transfers of trademarks, trade names, service marks, patents,
copyrights, trade secrets or know how, or other agreements regarding proprietary
rights or intellectual property; (f) contracts relating to pending capital
expenditures by RCI; (g) contracts obligating RCI to expend more than $1,000 to
purchase supplies, equipment, advertising, media and media related services of
any kind; (h) non-competition agreements restricting RCI in any manner; (i) any
other contracts obligating RCI to make payments of more than $5,000 after the
Closing Date; (j) any Employee Benefit Plans; and (k) any agreement or contracts
with any Affiliate of RCI or the RCI Shareholders. Except for the consents set
forth on Schedule 3.23, no Material Contract requires the consent or approval of
any party based upon the sale of the RCI Stock to OneLink or in connection with
the consummation of the transactions contemplated hereby, and the sale of the
RCI Stock will not result in the termination of any Material Contract and will
not bring into operation any other provisions thereof (including penalties or
acceleration) nor result in a breach or default thereunder.
3.24 Brokers and Finders. RCI Shareholders and RCI have retained Xxxxx
Corporation dba Xxxxx Associates, and the RCI Shareholders are solely
responsible for any fees payable to Xxxxx Corporation dba Xxxxx Associates in
connection with the Acquisition except to the extent such fees were paid by RCI
prior to August 1, 2004. Neither RCI nor the RCI Shareholders have retained or
contracted with any other broker or finder, and RCI will not be indebted to any
broker or finder, in connection with the transactions contemplated by this
Agreement.
3.25 Power and Authority (RCI Shareholder). Each RCI Shareholder warrants
and represents, severally but not jointly with any other party, that it has the
power and authority and legal capacity to execute and deliver this Agreement and
the other Operative Documents to which such RCI Shareholder is a party, to
perform its obligations hereunder, and to consummate the transactions by it
contemplated hereby. Each RCI Shareholder warrants and represents, severally but
not jointly with any other party, that it has taken all action (corporate, trust
or otherwise) necessary to authorize its execution and delivery of this
Agreement and the other Operative Documents to which such RCI Shareholder is a
party, the performance of its obligations hereunder, and the consummation by it
of the transactions contemplated hereby.
3.26 Enforceability. Each RCI Shareholder warrants and represents,
severally but not jointly with any other party, that this Agreement has been
duly executed and delivered by it or on its behalf and constitutes, and the
other Operative Documents to which each such RCI Shareholder is a party when
executed and delivered will constitute, the RCI Shareholder's legal, valid and
binding obligation, enforceable against the RCI Shareholder in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
3.27 Ownership of RCI Stock. Each RCI Shareholder warrants and represents,
severally but not jointly with any other party, that (i) the RCI Shareholder
owns the number of RCI Shares indicated in Section 3.5 free and clear of all
Liens, restrictions and claims of any kind, other than restrictions imposed by
the Kiradjian Warrant and restrictions which may be imposed by state or federal
securities laws, and (ii) upon the delivery of the certificates for the RCI
Stock to OneLink as provided herein, OneLink will receive good and marketable
title thereto, free and clear of all Liens and other restrictions, other than
restrictions imposed by state or federal securities laws.
3.28 No Violation; Consents (RCI Shareholder). Each RCI Shareholder
warrants and represents, severally but not jointly with any other party, that
the execution and delivery by the RCI Shareholder of this Agreement and all
other Operative Documents to which it may be a party, the performance by the RCI
Shareholder of its obligations hereunder and the consummation by it of the
transactions contemplated by this Agreement will not require the consent,
approval, authorization or permit of, or filing with or notification to any
other Person.
3.29 Payments of Personal Expenses; Distributions to RCI Shareholders and
Affiliates. Since August 1, 2004, except as set forth on Schedule 3.29, RCI has
not paid any personal expenses of either RCI Shareholder or made any
distribution, whether in the form of a bonus, dividend, employee benefit or
perquisite, loan or advance or any other payment of any kind on behalf of an RCI
Shareholder or an Affiliate of an RCI Shareholder.
3.30 Untrue or Omitted Facts. No representation, warranty, Schedule or
statement by RCI Shareholders in this Agreement contains any untrue statement of
a material fact, or omits or will omit to state a fact necessary in order to
make such representations, warranties or statements not materially misleading.
Without limitation of the foregoing, there is no fact known to the RCI
Shareholders that has had, or which may be reasonably expected to have, a
materially adverse effect on either the Business or the Assets and that has not
been disclosed in writing to the OneLink.
4. REPRESENTATIONS AND WARRANTIES OF ONELINK. OneLink represents and
warrants to RCI Shareholders that the following statements are true, complete
and correct as of the date hereof and shall be true, complete and correct on the
Closing Date:
4.1 Organization and Authority of OneLink. OneLink is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and properly qualified to engage in business in California. OneLink has
all requisite power and authority to enter into, perform and carry out this
Agreement, and the signatory hereto for OneLink has proper authorization to
execute this Agreement on behalf of OneLink. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary action
of OneLink and its directors.
4.2 Enforceability. This Agreement has been duly executed and delivered by
OneLink, and, upon delivery, will constitute OneLink's legal, valid and binding
obligation enforceable against OneLink in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
4.3 No Violation. The execution and delivery of this Agreement by OneLink,
the performance by OneLink of its obligations hereunder and the consummation of
the transactions contemplated by this Agreement and by the Operative Documents
will not (i) contravene any material provision of the Certificate of
Incorporation or Bylaws, or other organizational or governing documents of
OneLink, (ii) violate or conflict with any material law, statute, ordinance,
rule, regulation, decree, writ, injunction, judgment, ruling or order of any
governmental authority or of any arbitration award that is either applicable to,
binding upon, or enforceable against OneLink, (iii) conflict with, result in any
breach of, or constitute a default (or an event that would, with the passage of
time or the giving of notice or both, constitute a default) under, or give rise
to a right to terminate, amend, modify, abandon or accelerate, any material
contract that is applicable to, binding upon or enforceable against OneLink, or
(iv) require the consent, approval, authorization or permit of, or filing with
or notification to, any governmental authority, any court or tribunal or any
other Person.
4.4 Brokers and Finders. OneLink has not retained any broker or finder in
connection with the transactions contemplated by this Agreement.
4.5 OneLink Financial Statements and Financial Statements of The Call
Center, LLC.
(a) OneLink has filed all reports on Forms 10-K, 10-Q and 8-K required
to be filed by OneLink with the Securities Exchange Commission. Such
reports on Forms 10-K, 10-Q and 8-K are available to the RCI Shareholders
at xxx.xxx.xxx. OneLink has prepared a DRAFT of its report on Form 10-K for
the year ended on December 31, 2004, which must be filed by March 31, 2005
(unless an extension is filed), and has provided a copy thereof to the RCI
Shareholders. As of their respective dates (and in the case of the DRAFT
Form 10-K for December 31, 2004, subject to final auditor adjustments),
such reports did not contain any untrue statements of material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of circumstances under which they were
made, not misleading.
(b) OneLink has delivered to the RCI Shareholders the financial
statement as of December 31, 2004 of The Call Center, LLC, a business
entity which OneLink has contracted to acquire (subject to certain
conditions to be met prior to closing) on or about the Closing Date
pursuant to an Acquisition Agreement dated March 28, 2005 (the "TCC
Acquisition Agreement"). The Call Center, LLC financial statements
delivered to the RCI Shareholders are true and correct copies of the
financial statements delivered to OneLink in connection with OneLink's
acquisition of The Call Center, LLC, supported by representations and
warranties of the seller in that transaction. The TCC financial statements
are subject to exceptions and disclosures made in the TCC Acquisition
Agreement, and OneLink has accepted and executed the TCC Acquisition
Agreement subject to those exceptions and disclosures, a copy of which
disclosures have been provided to the RCI Shareholders. The representations
of OneLink set forth in this Section 4.5 are made expressly subject to
those disclosures. Subject to the conditions and disclosures set forth in
the TCC Acquisition Agreement, OneLink is not aware, to the best of its
knowledge, of any other fact or circumstance which would affect the
accuracy of the December 31, 2004 TCC financial statements. OneLink has not
audited the financial statements and makes no further representation or
warranty as to the accuracy or correctness of the financial statements.
5. COVENANTS AND OTHER AGREEMENTS.
5.1 Deliveries of Schedules and Exhibits. All Schedules and Exhibits
referenced in this Agreement which have not been prepared or delivered to
OneLink as of the date of this Agreement shall be delivered to OneLink on or
before the Closing Date, and OneLink and RCI Shareholders shall cooperate and
use their respective best efforts to complete such Schedules on a timely basis.
5.2 Operation of Business Prior to Closing Date. During the period from the
date of this Agreement until the Closing Date, RCI Shareholders shall cause RCI
to conduct the Business in a prudent, responsible manner, and in the ordinary
course consistent with past practice, and shall not, without the consent of the
OneLink fail to perform in all material respects all of its obligations under
all material contracts and commitments applicable to the Business.
5.3 Access. During the period until the Closing Date, RCI Shareholders
shall (a) give OneLink and OneLink's authorized representatives reasonable
access during normal working hours and at all times on weekends to all of the
Premises and to the books and records relating to the Business, (b) permit
OneLink to make inspections thereof, and (c) furnish OneLink with such financial
and operating data and other information with respect to the Business, and to
discuss with OneLink and its authorized representatives its affairs, all as
OneLink may from time to time reasonably request. RCI Shareholders expressly
acknowledges and agrees that, until the Closing, the Business remains under the
sole control and responsibility of RCI Shareholders; the RCI Shareholders
remains responsible for all decisions and operations in respect to the Business;
and OneLink shall in no manner be deemed to be in control of the Business or its
operations.
5.4 Confidentiality. RCI Shareholders and its agents each agree that all
confidential and proprietary information (including without limitation,
technical information, customer lists and financial data) relating to the
Business shall be treated as confidential, and RCI Shareholders shall not use or
disclose such information after the Closing Date; provided, however, that there
shall be no obligation to keep in confidence any information which (a) was
permitted in writing by OneLink to be used or disclosed, or (b) is within the
public domain or comes within the public domain without any breach of this
Agreement.
5.5 Duties Under Agreement. RCI Shareholders and OneLink each shall use
their best efforts to complete and execute all acts, undertakings and duties
required under this Agreement on or before the projected Closing Date, or on a
timely basis as provided in this Agreement.
5.6 Satisfaction of Waived Conditions or Deliveries. In the event delivery
of any document or approval required under this Agreement is waived at the
Closing Date, the parties agree to use commercially reasonable efforts
thereafter to deliver such document or approval as soon as practical, unless the
terms of the waiver state that the delivery or act is permanently waived.
5.7 Noncompetition. For a period of five (5) years, commencing on the
Closing Date, the RCI Shareholders, will not be employed by, consult with, own,
or conduct, either directly or through any contracting party, agent or
representative, or through any subsidiary, venture, partnership or entity
partially or wholly owned by either or both of the RCI Shareholders, any
business or entity that offers any of the services included in the Business. The
Business has been conducted and is expected to continue to be conducted on a
worldwide basis with existing customers worldwide, and therefore, this
noncompetition obligation shall apply to all countries, worldwide, including all
regions, countries and political subdivisions worldwide where the RCI
representatives are located as of the Closing Date. Nothing in this Section 5.7
shall be construed as preventing RCI Shareholders from: (i) enforcing RCI
Shareholders' rights under the Note, or (ii) RCI Shareholders' acquisition and
holding, solely as an investment, commercial paper or other corporate debt
instruments commonly traded, or any publicly traded securities of any
corporation or business enterprise so long as such securities do not, in the
aggregate, constitute more than one percent (1%) of the outstanding securities
of such corporation or business entity. The RCI Shareholders acknowledge that
the noncompetition covenant set forth in this Section 5.7 is reasonable and
necessary to protect OneLink's interests in the Business and that any violation
hereof would result in irreparable injury to OneLink. The RCI Shareholders
therefore acknowledge and agree that, in the event of any violation hereof,
OneLink shall be entitled and authorized to obtain, from any court of competent
jurisdiction, temporary or permanent injunctive relief as well as an equitable
accounting of all profits or benefits arising out of such violation, which
rights and remedies shall be cumulative and in addition to any other rights and
remedies to which OneLink may be entitled. This Non-Competition obligation shall
be set forth in Non-Competition Agreements among RCI, OneLink and each of Xxxx
Xxxxxxxx and Xxxxx Xxxxxxxx in the form set forth in Exhibit 5.7 to this
Agreement (the "Non-Competition Agreements").
5.8 Consulting Agreement. Xxxx Xxxxxxxx shall provide services for OneLink
and RCI for the period beginning on the Closing Date and ending on the first
anniversary of the Closing Date pursuant to terms of a consulting agreement in
the form attached to this Agreement as Exhibit 5.8 (the "Consulting Agreement").
5.9 Travel Agency Purchase Agreement. The Travel Agency Purchase Agreement
shall be in the form set forth in Exhibit 5.9 to this Agreement. OneLink agrees
to cause its wholly owned subsidiary, Onelink Travel Service, Inc. to execute
the Travel Agency Purchase Agreement on or before the Closing Date, and the RCI
Shareholders shall use their best efforts to cause Xxxx Xxxxxxxx to execute the
Travel Agency Purchase Agreement on or before the Closing Date. OneLink and the
RCI Shareholders shall use their best efforts to obtain any Approvals of third
parties required to implement the Travel Agency Purchase Agreement prior to the
Closing Date, or, if not obtained before the Closing Date, as promptly as
commercially feasible after the Closing Date.
5.10 Accounts Receivable.
(a) RCI Shareholders have stated that it is not feasible to prepare a
statement of Accounts Receivable as of the Closing Date (or the business
day immediately prior) and provide that update to OneLink on the Closing
Date. Therefore, following the Closing Date, OneLink shall cause RCI to
prepare a statement of Accounts Receivable as of the Closing Date. The
schedule of Closing Date Accounts Receivable shall be prepared according to
past practice of RCI, but presented in a manner acceptable to OneLink's
auditors. The RCI Shareholders agree to cooperate with RCI to cause such
statement to be prepared as promptly as practical, and in any event within
thirty (30) days after the Closing Date. After preparation of the updated
Accounts Receivable statement, Xxxx Xxxxxxxx, as representative of the RCI
Shareholders, shall review, and suggest appropriate changes to the Accounts
Receivable statements within five (5) business days after receiving the
updated statements. If there is any dispute regarding the Accounts
Receivable statement, such dispute shall be resolved pursuant to Section
8.2 of this Agreement; provided, however, that any such dispute must be
initiated by the RCI Shareholders on or before the date sixty (60) days
after the Closing Date; and, further provided, that the listing of Closing
Date Accounts Receivables shall become final (the "Final Closing Date
Accounts Receivable") upon the earliest of the following events: (i) the
mutual acceptance of OneLink and Xxxx Xxxxxxxx, (ii) sixty (60) days after
the Closing Date if Xxxx Xxxxxxxx has not delivered notice of a dispute
pursuant to Section 8.2(a) with respect to the Closing Date Accounts
Receivable, and (iii) the date any dispute with respect to the Closing Date
Accounts Receivable is resolved pursuant to Section 8.2.
(b) OneLink shall cause RCI to make diligent commercially reasonable
efforts to collect the Accounts Receivables. In the event RCI fails to
collect all of the Accounts Receivable on the Closing Date Accounts
Receivable List, the face amount of such Accounts Receivable and the actual
amount of such Accounts Receivable collected shall be taken into account in
determining whether an Accounts Receivable Shortfall exists, which would be
subject to indemnification by the RCI Shareholders pursuant to Section 6.1
of this Agreement.
5.11 Audit of RCI. For the purposes of presenting the financial statements
of RCI in a form acceptable for consolidation of RCI with OneLink financials for
the purpose of reporting to the Securities and Exchange Commission, after the
Closing, OneLink and its auditors will conduct an audit and restatement of the
financial statements of RCI. OneLink shall use its best efforts to cause the
audit to be completed on or before June 1, 2005, and the RCI Shareholders agree
to provide reasonable cooperation, at OneLink's expense, in the conduct of the
audit.
5.12 Distribution of Vehicles and Assumption of Obligations. Schedule 5.12
sets forth the description of all motor vehicles owned or leased by RCI as of
the date of this Agreement (the "Vehicles"). On or before the Closing Date, but
in no event after the Closing, the RCI Shareholders shall cause all of the
vehicles listed on Schedule 5.12 to be distributed or transferred out of RCI,
and the RCI Shareholders shall have assumed any continuing lease obligations or
other continuing obligations with respect to the Vehicles or otherwise arranged
for the assumption of such obligations and an indemnification of RCI with
respect to such obligations. All costs arising out of such distributions
(including taxes or licensing fees, or surrender fees or charges) shall be paid
by the RCI Shareholders. The assignment and assumption pursuant to this Section
5.12 shall be pursuant to an Assignment and Assumption Agreement in the form
attached hereto as Exhibit 5.12.
5.13 Releases of RCI Shareholder Guarantees. After Closing, OneLink shall,
and shall cause RCI to, use commercially reasonable efforts to cause the RCI
Shareholders to be removed as guarantors or co-signers of any liabilities for
which RCI will have continuing responsibility after Closing and with respect to
which the RCI Shareholders have informed OneLink that one or both of the RCI
Shareholders have personal liability as a guarantor or co-signer. Specifically,
and without limitation of the preceding sentence, OneLink shall, or shall cause
RCI to, pay off all liabilities of RCI to CitiNational Bank ("CNB") and close
all RCI accounts at CNB with respect to which the RCI Shareholders have
liabilities as guarantors or co-signers before any amounts of RCI cash flow or
income may be distributed by RCI to OneLink, whether by dividend, or through
distributions or intercompany transfers of any kind. In the event OneLink and
RCI are unable to remove an RCI Shareholder as guarantor or co-signer with
respect to any liability subject to this Section 5.13, the indemnity rights set
forth in Section 6.2(a)(iii) shall continue to apply to such RCI Shareholder in
the capacity of guarantor or co-signer.
5.14 Goodwill Purchase Agreement. Attached to this Agreement as Exhibit
5.14 is an agreement, entered into by RCI and Xxxx Xxxxxxxx, effective
simultaneously upon Closing, for the purchase by RCI of certain goodwill
relating to the Business, which has been developed and retained by Xxxx Xxxxxxxx
(the "Goodwill Purchase Agreement"). OneLink agrees: (i) to transfer to RCI
$960,000.00 for the purpose of funding the payments due under the Goodwill
Purchase Agreement on the Closing Date, and (ii) to cause RCI to pay the
$960,000.00 to Xxxx Xxxxxxxx on the Closing Date, or, OneLink may make a direct
transfer of the $960,000.00 to Xxxx Xxxxxxxx with the understanding that the
amount is transferred by OneLink on behalf of RCI. OneLink further agrees to
take such actions as are necessary to cause RCI to timely pay the Goodwill Note,
and OneLink shall act as "Guarantor" of the Goodwill Note.
6. INDEMNITIES.
6.1 Indemnity of OneLink by RCI Shareholders.
(a) RCI Shareholders shall indemnify, hold harmless and defend OneLink from
and against any and all claims, losses, costs, expenses, liabilities, claims,
demands and judgments of every nature (including the defense thereof and
reasonable attorneys' fees incurred) arising out of or in connection with or
related to (i) the breach or failure of any representation made by RCI
Shareholders pursuant to this Agreement, whether made on behalf of the RCI
Shareholders or RCI, (ii) the non-performance, partial or total, of any covenant
made by RCI Shareholders pursuant to this Agreement, and (iii) the amount of any
Accounts Receivable Shortfall.
(b) Notwithstanding the provisions of this Section 6.1, no claim for
indemnity shall be made by OneLink against RCI Shareholders except to the extent
that the aggregate amount of all claims hereunder exceeds $10,000.00 plus the
amount of the Tax Refund, if any, and further provided that the maximum amount
which RCI Shareholders may be obligated to pay for Indemnity Claims arising
hereunder shall be the amount of Acquisition Consideration actually paid to the
RCI Shareholders (including payments made under the Goodwill Purchase
Agreement).
6.2 Indemnity of RCI Shareholders by OneLink.
(a) OneLink shall indemnify and hold RCI Shareholders harmless from and
against any and all claims, losses, costs, expenses, liabilities, claims,
demands and judgments of every nature (including the defense thereof and
reasonable attorneys' fees incurred) arising out of or in connection with or
which are related to (i) the breach by OneLink of any warranty or representation
made by OneLink pursuant to this Agreement, (ii) the non-performance, partial or
total, of any covenant made by OneLink pursuant to this Agreement, (iii) the
Assets and operations of the Business on or after the Closing Date, and (iv) any
personal guarantees or personal liabilities of the RCI Shareholders with respect
to liabilities relating to the Business (other than the vehicles to be
distributed pursuant to Section 5.12), but only to the extent such guarantee or
liability relates to a liability disclosed in the Schedules.
(b) Notwithstanding the provisions of this Section 6.2, no claim for
indemnity shall be made by RCI Shareholders against OneLink except to the extent
that the aggregate amount of all claims hereunder exceeds $10,000.00, and
further provided that the maximum amount which OneLink may be obligated to pay
for Indemnity Claims arising hereunder shall be the Acquisition Consideration.
6.3 Notice of Claims; Disputed Claims; Third Party Suits.
(a) Any party making a claim for indemnity under this Section 6
("Indemnitee") against the other party ("Indemnitor") shall give notice of such
claim in writing (the "Claim Notice"), which Claim Notice shall state in general
terms the facts upon which Indemnitee makes such claim for indemnification
together with reasonable documentation of such claim. Within fifteen (15) days
following the date of the Claim Notice, the Indemnitor receiving the Claim
Notice shall respond with a written notice to Indemnitee (the "Response
Notice"): (i) accepting the claim set forth in the Claim Notice (a "Claim
Acceptance"), (ii) disputing the claim in the Claim Notice and stating in
general terms the basis for disputing the claim together with reasonable
documentation, if any, of the basis for disputing the claim (a "Claim Dispute"),
(iii) disputing in a portion of the claim set forth in the Claim Notice, in
which case only the portion that is disputed shall be treated as subject to a
Claim Dispute and the remainder shall be deemed subject to a Claim Acceptance.
(b) In the event of any claim or demand asserted against Indemnitee by a
third party upon which Indemnitee may claim indemnification under this Section
6, Indemnitee shall give Indemnitor a Claim Notice within fifteen (15) days
after receipt thereof, and indicating in the Claim Notice whether Indemnitee
intends to conduct the defense of such claim or demand. Indemnitor shall have
the right, at such Indemnitor's own expense, to participate in such defense. If
Indemnitee conducts the defense and Indemnitor does not participate in such
defense, Indemnitee shall have the right fully to control and to settle the
proceeding. If Indemnitor elects to participate in such defense, Indemnitee
shall nonetheless control the proceeding, but shall not settle the same without
the consent of Indemnitor, which consent shall not be unreasonably withheld. If
Indemnitee elects not to conduct the defense, Indemnitor shall conduct such
defense and Indemnitor shall not settle the same without the consent of
Indemnitee, which consent shall not be unreasonably withheld.
(c) No Claim Notice shall be effective if given by either OneLink or RCI
Shareholders at any time after the date one year after the Closing Date.
6.4 Procedure for Determining Indemnity Obligations. With respect to any
Claim Dispute given pursuant to Section 6.3 of this Agreement, the following
procedure shall be followed: (i) Indemnitee and Indemnitor shall attempt in good
faith to resolve the Claim Dispute within thirty (30) days after the date of the
Response Notice which sets forth the Claim Dispute; (iii) in the event that the
attempt to resolve the Claim Dispute is unsuccessful, the parties shall pursue
the dispute resolution procedure set forth in Section 8.2 of this Agreement.
6.5 Payment of Claims; Setoff. The amount of the any claim for indemnity
under this Section 6 shall be paid by Indemnitor to Indemnitee within five (5)
business days after the claim is resolved as evidenced by any of the following
(each, an "Indemnity Decision"): (i) a Claim Acceptance or other written
agreement of Indemnitor and Indemnitee; (ii) the decision of an arbitrator
pursuant to Section 8.2 that Indemnitor is liable for such indemnity, or (iii)
the decision of a court of competent jurisdiction that Indemnitor is liable for
such indemnity. In the event the OneLink is the Indemnitee, the OneLink shall be
entitled to set off the amount of the indemnity claim subject to the Indemnity
Decision, or any portion thereof, against the principal amount under the Notes,
in either order or priority; provided that such setoff may not occur prior to an
Indemnity Decision. In the event a Claim Dispute is in effect on the date the
principal amount of the Note is to be paid to RCI Shareholders, OneLink may
defer payment of a portion of the principal of the Note not in excess of the
amount of the Indemnity Claim which is subject to the Claim Dispute until an
Indemnity Decision is reached, and at that time the Note shall either be paid or
offset in the amount provided in the Indemnity Decision; provided that any
amounts ultimately paid shall be augmented by additional interest and penalties
as set forth in Section 8(b) of the Notes.
7. Termination. This Agreement may be terminated as follows:
(a) At any time upon the mutual consent of the parties hereto;
(b) By RCI Shareholders upon the giving of notice in the event that
the one or more of the conditions described in Section 2.6 has not been
fulfilled by OneLink or waived by RCI Shareholders on or before the Closing
Date; or
(c) By OneLink upon the giving of notice in the event that any or all
of the conditions described in Section 2.5 have not been fulfilled by RCI
Shareholders or waived by OneLink on or before the Closing Date.
In the event of termination of this Agreement pursuant to this Section 7,
no party shall have any obligation to the others whatsoever with respect to this
Agreement, the transactions provided for herein, or the expenses incurred in
connection with or in contemplation of this Agreement.
8. Miscellaneous.
8.1 Assignment. Neither the RCI Shareholders nor OneLink may assign, in
whole or in part, any of their respective rights or obligations under this
Agreement, unless such assignment is expressly consented to by the other. This
Agreement shall be binding upon and inure to the benefit of the assigns, heirs,
administrators, executors, legal representatives and successors in interest of
the parties hereto.
8.2 Dispute Resolution; Arbitration. Except as otherwise provided in this
Agreement or in the relevant Operative Document, any controversy, dispute, or
claim arising out of or relating to this Agreement (including the Operative
Documents) or the performance or breach thereof, shall be settled according to
the following procedures.
(a) Notice of Dispute. Any party may initiate this dispute resolution
procedure by giving notice to the other party or parties, which notice
shall describe the claim or dispute at issue and shall propose an
arbitrator. For a period of fifteen (15) days following such notice, the
parties shall attempt in good faith to settle their dispute without resort
to arbitration.
(b) Mediation. The parties may, with the approval of each party
involved, attempt in good faith to settle their dispute by mediation.
(c) Arbitration. Any matter not settled among the parties by mediation
shall be submitted to JAMS/Endispute, Inc. for binding arbitration in San
Francisco, California. Arbitration may be commenced at any time after
thirty (30) days following a Dispute Notice given under Section 8.2(a)
hereof. The cost of arbitration, including any administration fee, the
arbitrator's fee, and costs for use of facilities during any hearing, shall
be borne equally by the parties to the arbitration. Attorneys' fees may be
awarded to the prevailing or most prevailing party at the discretion of the
arbitrator. The provisions of Sections 1282.6, 1283, and 1283.05 of the
California Code of Civil Procedure apply to the arbitration. The arbitrator
shall not have the power to alter, amend, modify or change any of the terms
of this Agreement, nor to grant any remedy which is either prohibited by
the terms of this Agreement or not available in a court of law.
8.3 Expenses. Unless otherwise provided in this Agreement, OneLink and RCI
Shareholders shall each pay their own costs and expenses incurred in connection
with this Agreement and the transactions and activities contemplated herein.
8.4 Schedules and Exhibits. All references in this Agreement to schedules
and exhibits refer to those schedules and exhibits set forth on Schedule 8.4,
which schedules and exhibits have been delivered to and initialed by OneLink or
RCI Shareholders as the case may be.
8.5 Additional Documentation. RCI Shareholders shall from time to time,
subsequent to the date first set forth above, at OneLink's request and without
further consideration, execute and deliver such other instruments of conveyance,
assignment and transfer and take such other action as OneLink reasonably may
require in order more effectively to consummate the transactions contemplated by
this Agreement.
8.6 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given: (a) upon delivery if
delivered personally, (b) five (5) days after mailing if mailed, certified or
registered mail with postage prepaid, or (c) upon confirmed delivery if sent by
courier, next-day or overnight mail or delivery, , to the address, facsimile
number, or e-mail address set forth below:
If to OneLink or OneLink: OneLink 4 Travel, Inc.
Xxx Xxxxxx Xxxxx
Xxxxx Xxxxxx Xxxxx
00XX Xxxxx
Xxx Xxxxxxxxx, XX 94105
Attn: X. X. Xxxxxx, CEO
With a Copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Xxxxxxxx Xxxxx & Stikker LLP
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to RCI Shareholders: Xxxx Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
With a Copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
The addresses provided for notice hereunder may be changed by any party by
providing notice to the other party.
8.7 Survival of Terms. All warranties and covenants contained in this
Agreement or in any certificates or other instrument delivered by or on behalf
of the parties hereto shall be continuous and survive the execution of this
Agreement.
8.8 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of California
applicable to contracts executed by residents of California and wholly to be
performed in California; provided, however, that in any matter or dispute
involving the application of laws to the location or operation of the Business
or of a particular transaction or asset of the Business, reference shall be made
to the laws of the applicable jurisdiction. Subject to the obligations of the
parties under Section 8.2, each party hereby submits to the exclusive
jurisdiction and venue of the Superior Court of the State of California for the
City and County of San Francisco or the Federal District Court for the Northern
District of California for purposes of any legal or equitable action or
proceeding arising out of this Agreement. Each party agrees that service upon
such party in any such action or proceeding may be made by first class mail,
certified or registered, return receipt requested as provided by the giving of
notices in Section 8.6.
8.9 Captions. The captions to Sections of this Agreement have been inserted
for identification and reference purposes and shall not by themselves determine
the construction or interpretation of this Agreement.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument.
8.11 Entire Agreement and Modification. This Agreement and the schedules
and exhibits hereto constitute and contain the entire agreement of the parties
and supersede any and all prior negotiations, correspondence, understandings and
agreements between the parties respecting the subject matter hereof. This
Agreement may only be amended by a written instrument signed by the parties
hereto.
8.12 Attorneys' Fees. Subject to Section 8.2(c) of this Agreement, if any
legal action or any arbitration or other proceeding (other than mediation) is
brought by any party against another relating to interpretation or enforcement
of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provision of this Agreement, then the
prevailing party shall be entitled to recover from the non-prevailing party its
reasonable attorneys' fees and related costs and expenses as fixed and
determined by the court or arbitrator(s).
8.13 Release of Xxxxxxx Xxxxxxxxx. OneLink has obtained a release of RCI
and the RCI Shareholders from claims of Xxxxxxx Xxxxxxxxx pursuant to the
Kiradjian Agreement. In consideration of the release set forth in the Kiradjian
Agreement and other valuable consideration provided in this Agreement, RCI and
each of the RCI Shareholders (acting separately) agree as follows:
(a) Release. RCI and the RCI Shareholders each irrevocably and
unilaterally releases, acquits and forever discharges Kiradjian and her
agents, attorneys, servants, employees, representatives, shareholders,
trustees, directors, officers, affiliates, customers, clients, heirs,
executors, administrators, predecessors, successors and assigns of each
(the "Released Parties"), from any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys' fees, damages and obligations
of any nature whatsoever, known or unknown, fixed or contingent,
anticipated or unanticipated, which may now exist or may hereafter arise or
become known, for or by reason of any event, act, occurrence, omission,
transaction or other relationship or cause whatsoever, directly or
indirectly in any manner arising out of or in any way related to
Kiradjian's relationship to RCI with respect to any and all periods prior
to the Closing.
(b) Covenant Not to Xxx. RCI and the RCI Shareholders each further
covenants and agrees not to bring, commence, institute, maintain, prosecute
or voluntarily aid any action at law, proceeding in equity, administrative
proceeding, arbitration or other similar action against Kiradjian or any
Released Party, nor prosecute or xxx the agents, attorneys, servants,
employees, representatives, partners, shareholders, directors, officers,
trustees, affiliates, customers, clients, heirs, executors, administrators,
predecessors, successors or assigns of the Released Parties, either
affirmatively or by way of cross-complaint, cross-claim, indemnification,
contribution, defense or counter-claim or by any other manner, or at all,
by, for or on account of any alleged claim, demand, liability, damage, loss
or cause of action directly or indirectly in any manner arising out of or
in any way relating to the Kiradjian's relationship with RCI through the
Closing Date. Notwithstanding anything to the contrary contained herein,
Kiradjian reserves all rights and remedies that are or may be available to
enforce the terms of this Agreement.
(c) Waiver. Subject to the matters set forth in this Agreement, each
of RCI and the RCI Shareholders expressly waives and relinquishes any and
all rights and benefits under Section 1542 of the Civil Code of the State
of California and similar laws of any state or territory of the United
States. Such section reads as follows:
"A general release does not extend to the claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
Each of RCI and the RCI Shareholders recognizes that there may exist causes
of action in its favor which are unknown at this time; and each of RCI and the
RCI Shareholders has taken that possibility into account in deciding to execute
this Agreement.
(d) Ownership of Claims. Each of RCI and the RCI Shareholders confirms
that it or he is the owner of all claims asserted, released, or in any
other way affected by this Section 8.13, and no other person or entity has
any interest therein; nor has any of RCI or the RCI Shareholders sold,
assigned, conveyed or otherwise disposed of any claim involving a matter in
any way arising out of or in any way related to the Kiradjian Claims.
8.14 Mutual Release of RCI and the RCI Shareholders. In consideration of
the mutual releases set forth in this Section 8.14, RCI and each of the RCI
Shareholders (acting separately) agree as follows:
(a) Release by RCI. RCI irrevocably and unilaterally releases, acquits
and forever discharges each of the RCI Shareholders and their respective
agents, attorneys, servants, employees, representatives, shareholders,
trustees, directors, officers, affiliates, customers, clients, heirs,
executors, administrators, predecessors, successors and assigns of each
(together the "RCI Shareholder Releasees," and separately, a "Released
Party"), from any and all claims, liabilities, demands, causes of action,
costs, expenses, attorneys' fees, damages and obligations of any nature
whatsoever, known or unknown, fixed or contingent, anticipated or
unanticipated, which may now exist or may hereafter arise or become known,
for or by reason of any event, act, occurrence, omission, transaction or
other relationship or cause whatsoever, directly or indirectly in any
manner arising out of or in any way related to the RCI Shareholder
Releasees' relationships to RCI with respect to any and all periods prior
to the Closing.
(b) Release by RCI Shareholders. The RCI Shareholders each irrevocably
and unilaterally releases, acquits and forever discharges RCI and RCI's
agents, attorneys, servants, employees, representatives, shareholders,
trustees, directors, officers, affiliates, customers, clients, heirs,
executors, administrators, predecessors, successors and assigns of each
(together the "RCI Releasees," and separately, a "Released Party"), from
any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys' fees, damages and obligations of any nature
whatsoever, known or unknown, fixed or contingent, anticipated or
unanticipated, which may now exist or may hereafter arise or become known,
for or by reason of any event, act, occurrence, omission, transaction or
other relationship or cause whatsoever, directly or indirectly in any
manner arising out of or in any way related to the RCI Releasees'
relationships to the RCI Shareholders with respect to any and all periods
prior to the Closing.
(c) Covenant Not to Xxx. RCI and the RCI Shareholders each further
covenants and agrees not to bring, commence, institute, maintain, prosecute
or voluntarily aid any action at law, proceeding in equity, administrative
proceeding, arbitration or other similar action against any Released Party,
nor prosecute or xxx the agents, attorneys, servants, employees,
representatives, partners, shareholders, directors, officers, trustees,
affiliates, customers, clients, heirs, executors, administrators,
predecessors, successors or assigns of the Released Parties, either
affirmatively or by way of cross-complaint, cross-claim, indemnification,
contribution, defense or counter-claim or by any other manner, or at all,
by, for or on account of any alleged claim, demand, liability, damage, loss
or cause of action directly or indirectly in any manner arising out of or
in any way relating to their relationships with RCI and with each other
through the Closing Date. Notwithstanding anything to the contrary
contained herein, each of the RCI Shareholders and RCI reserves all rights
and remedies that are or may be available to enforce the terms of this
Agreement.
(d) Waiver. Subject to the matters set forth in this Agreement, each
of RCI and the RCI Shareholders expressly waives and relinquishes any and
all rights and benefits under Section 1542 of the Civil Code of the State
of California and similar laws of any state or territory of the United
States. Such section reads as follows:
"A general release does not extend to the claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
Each of RCI and the RCI Shareholders recognizes that there may exist causes of
action in its favor which are unknown at this time; and each of RCI and the RCI
Shareholders has taken that possibility into account in deciding to execute this
Agreement.
(e) Ownership of Claims. Each of RCI and the RCI Shareholders confirms
that it or he is the owner of all claims asserted, released, or in any
other way affected by this Section 8.14, and no other person or entity has
any interest therein; nor has any of RCI or the RCI Shareholders sold,
assigned, conveyed or otherwise disposed of any claim which is subject to
this Section 8.14.
(f) Limitation of Release. Nothing in this Section 8.14 or in Section
8.13 is intended to cause RCI or the RCI Shareholders to release any claims
arising under the terms of this Agreement or under any of the Operative
Documents or release any claim of either of the RCI Shareholders against
RCI with respect to any obligation of RCI to an RCI Shareholder as the
result of a debt outstanding at Closing to the extent that such debt is
included in the Financial Statements or otherwise disclosed in the
Disclosure Schedules.
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed as of the date first above written.
RCI: RESERVATION CENTER, INC.,
a California Corporation
By: /s/ Xxxx Xxxxxxxx
___________________________
Xxxx Xxxxxxxx, CEO
RCI SHAREHOLDERS: /s/ Xxxxx Xxxxxxxx
_______________________________________
Xxxxx Xxxxxxxx, Trustee of the Xxxxxxxx
Family Trust
/s/ Xxxx Xxxxxxxx
_______________________________________
Xxxx Xxxxxxxx
ONELINK: ONE LINK 4 TRAVEL, INC.,
a Delaware corporation
By: /s/ X X Xxxxxx
___________________________________
X. X. Xxxxxx, Chief Executive Officer
