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EXHIBIT 10.4
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this Agreement") dated as of
December 30, 1996 is among BridgeStreet International Inc., a Delaware
corporation ("BridgeStreet"), CL Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of BridgeStreet ("Acquisition"), and Corporate Lodgings,
Inc., Corporate Lodgings of Minnesota, Inc., Corporate Lodgings of Wisconsin,
Inc., Corporate Lodgings of Pennsylvania, Inc. and Corporate Lodgings of
Kentucky, Inc., each an Ohio corporation (each individually, a "Company," and
collectively, the "Companies"), and Xxxxx XxXxxxx, the majority stockholder of
the Companies (the "Stockholder"), and provides for the merger of the Companies
with and into Acquisition (the "Merger"). The Boards of Directors of
BridgeStreet, Acquisition and the Companies have determined that the Merger is
in the best interests of their respective stockholders and the Merger has been
approved by the stockholders of the Companies and Acquisition.
Accordingly, the parties hereto, in consideration of the mutual
representations, warranties and covenants contained herein, agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 "Ohio Certificate of Merger" has the meaning given to it in Section
2.2.
1.2 "Balance Sheet Date" means June 30, 1996.
1.3 "Delaware Certificate of Merger" has the meaning given to it in
Section 2.2
1.4 "Closing" means the closing of this Agreement as provided in
Section 2.2.
1.5 "Code" means the Internal Revenue Code of 1986, as amended to date.
1.6 "Commission" means the Securities and Exchange Commission.
1.7 "DGCL" means the Delaware General Corporation Law.
1.8 "Disclosure Schedule" means the Disclosure Schedule attached hereto
as Schedule 1.
1.9 "Effective Time" means 12:01 a.m. EST on January 2, 1997, as such
date shall be specified in the Ohio Certificate of Merger filed with the
Secretary of State of the State of Ohio in accordance with Section 1701.81 of
the OGCL (as defined herein) and the Delaware Certificate of Merger filed with
the Secretary of State of the State of Delaware in accordance with Section 252
of the DGCL, unless Acquisition and the Company agree that
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another time shall be the Effective Time, in which case such time shall be
specified in the Certificates of Merger.
1.10 "Employment Contract" means the employment contract attached
hereto as Exhibit 1.
1.11 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.12 "Financial Statements" means the financial statements of the
Companies attached hereto as Exhibit 2 consisting of the balance sheets as of
December 31, 1994 and 1995 and June 30, 1996 and the statements of operations,
changes in stockholder's equity and cash flows for each of the fiscal years
ended on December 31, 1994 and 1995 and for the six-month period ended on June
30, 1996.
1.13 "Merger Stock" means the shares of BridgeStreet Common Stock
exchanged for Shares pursuant to Section 2.7(c).
1.14 "BridgeStreet Common Stock" means the shares of Common Stock,
$0.01 par value, of BridgeStreet.
1.15 "Non-Competition and Non-Disclosure Agreement" means the
non-competition and non-disclosure agreement attached hereto as Exhibit 3.
1.16 "Securities Act" means the Securities Act of 1933, as amended.
1.17 "Share" means a share of Common Stock, $.01 par value per share,
of each of the Companies, and "Shares" means all of such shares of all of the
Companies.
1.18 "Surviving Corporation" means Acquisition.
1.19 "OGCL" means the Ohio General Corporation Law.
1.20 References to the "knowledge" of any entity or to things which any
entity does or does not "know" or which are "known" by any entity refer to the
knowledge of any of the entity's officers or directors.
2. THE MERGER
2.1 THE MERGER. The Merger shall occur at the Effective Time upon the
terms and subject to the conditions hereof and in accordance with the OGCL and
the DGCL. Following the Merger, Acquisition shall continue as the Surviving
Corporation and be a subsidiary of BridgeStreet, and the separate corporate
existences of the Companies shall cease. Notwithstanding this Section 2.1,
BridgeStreet may elect with the consent of the
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Companies (which consent shall not be unreasonably withheld) to merge into one
of the Companies Acquisition and the other Companies. In such event, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
the foregoing.
2.2 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver
of all conditions to the Merger, the parties (a) shall cause a certificate of
merger (the "Ohio Certificate of Merger") with respect to the Merger to be filed
and recorded in accordance with Section 1701.81 of the OGCL and shall cause a
certificate of merger (the "Delaware Certificate of Merger") with respect to the
Merger to be filed and recorded in accordance with Section 252 of the DGCL and
(b) shall take all such further actions as may be required by law to make the
Merger effective. The Merger shall be effective at the Effective Time. Before
the filing of the Ohio Certificate of Merger and the Delaware Certificate of
Merger, a closing (the "Closing") will be held at the offices of Xxxxxx,
XxXxxxxxx & Fish, LLP, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx (or such
other place as the parties may agree) for the purpose of confirming all the
foregoing.
2.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Section 1701.82 of the OGCL and Sections 259, 260 and 261 of the DGCL.
2.4 TAX CONSEQUENCES. it is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a)(2)(D) of the Code and that
this Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation and the By-Laws of Acquisition, in each case as in effect at the
Effective Time, shall be the Certificate of Incorporation and By-Laws of the
Surviving Corporation, except that Article FIRST of the Certificate of
Incorporation of the Surviving Corporation shall be amended as follows:
"FIRST: The name of the corporation shall be Corporate Lodgings, Inc."
2.6 DIRECTORS AND OFFICERS. On the day following the Effective Time,
the directors and officers of the Surviving Corporation shall be as set forth on
Exhibit 4, and each such person shall hold office until his or her respective
successor is duly elected or appointed and qualified.
2.7 CONVERSION OF STOCK.
At the Effective Time:
(a) Each share of capital stock of Acquisition that is issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding without change.
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(b) All Shares held in the treasury of each Company immediately prior
to the Effective Time shall be cancelled, without the payment of any
consideration therefor.
(c) All other Shares which are outstanding immediately prior to the
Effective Time shall be converted without any action on the part of the holders
thereof into and be exchangeable for such numbers of shares of BridgeStreet
Common Stock as are set forth on Exhibit 5A hereto, subject to the payment of
cash in lieu of fractional shares in accordance with Section 2.8 hereof, with
the effect that the stockholder and share ownership of BridgeStreet will be as
set forth on Exhibit 5B immediately after the Merger.
2.8 EXCHANGE OF AND PAYMENT FOR SHARES.
(a) As soon as practicable after the Effective Time and after surrender
to BridgeStreet of any certificate which prior to the Effective Time shall have
represented any Shares, subject to the provisions of paragraph (c) of this
Section 2.8 and to the provisions of Article 8, BridgeStreet shall cause to be
distributed to the person in whose name such certificate shall have been
registered certificates registered in the name of such person representing the
shares of BridgeStreet Common Stock into which any shares previously represented
by the surrendered certificate shall have been converted at the Effective Time
and a check payable to such person representing the payment of cash in lieu of
any fractional share determined in accordance with paragraph (f) of this Section
2.8. Until surrendered as contemplated by the preceding sentence, each
certificate which immediately prior to the Effective Time shall have represented
any Shares shall be deemed at and after the Effective Time to represent only the
right to receive upon such surrender the certificates and payment contemplated
by the preceding sentence.
(b) No dividends or other distributions declared after the Effective
Time with respect to BridgeStreet Common Stock shall be paid to the holder of
any unsurrendered certificate representing Shares until the holder thereof shall
surrender such certificate in accordance with this Section 2.8. After the
surrender of such certificate in accordance with this Section 2.8, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of BridgeStreet Common Stock represented by such
certificate.
(c) If any cash or certificate representing shares of BridgeStreet
Common Stock is to be paid to or issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it shall be a
condition of the payment or issuance thereof that the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to BridgeStreet any transfer or
other taxes required by reason of the issuance of a certificate representing
shares of BridgeStreet Common Stock in any name other than that of the
registered holder of the certificate surrendered, or otherwise required, or
shall establish to the satisfaction of BridgeStreet that such tax has been paid
or is not payable.
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(d) All rights to receive BridgeStreet Common Stock and cash in lieu of
fractional shares shall be deemed, when paid or issued hereunder, to have been
paid or issued, as the case may be, in full satisfaction of all rights
pertaining to the Shares.
(e) After the Effective Time, there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing such Shares are presented to the
Surviving Corporation, they shall be cancelled and exchanged for cash or
certificates representing the shares of BridgeStreet Common Stock into which
they were converted, or both, as provided herein.
(f) Notwithstanding any other provision of this Agreement, no
certificates or scrip representing fractional shares of BridgeStreet Common
Stock shall be issued upon the surrender for exchange of certificates which
prior to the Effective Time shall have represented any Shares, no dividend or
distribution of BridgeStreet shall relate to any fractional share and such
fractional share interests will not entitle the owner thereof to vote or to any
rights of a shareholder of BridgeStreet. In lieu of any fractional shares, there
shall be paid to each holder of Shares who otherwise would be entitled to
receive a fractional share of BridgeStreet Common Stock an amount of cash equal
to the fair value of such fractional shares as of the Effective Time as
conclusively determined in good faith by the Board of Directors of the Surviving
Corporation.
2.9 ADJUSTMENTS. If, between the date of this Agreement and the
Effective Time, the outstanding shares of BridgeStreet Common Stock shall have
been changed into a different number of shares or a different class by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or a stock dividend thereon shall be declared with a
record date within said period, the number of shares of BridgeStreet Common
Stock into which the Shares are to be converted shall be correspondingly and
appropriately adjusted.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
The Companies represent and warrant to BridgeStreet and Acquisition
that, except as expressly provided in the Disclosure Schedule by specific
reference to a Section of this Article 3, the following representations and
warranties are true and correct as of the date hereof:
3.1 ORGANIZATION AND AUTHORITY. Each Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Ohio and has full corporate power and authority to conduct its business and own
its properties as now conducted and owned. Each Company is duly qualified or
licensed and in good standing as a foreign corporation in those states listed on
the Disclosure Schedule, which are the only jurisdictions in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary. Each Company has
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full corporate power and authority to execute and deliver this Agreement and to
consummate the trans actions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors and stockholders of
each Company, and no other corporate proceedings on the part of each Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
each Company and constitutes a legal, valid and binding obligation of each
Company enforceable against it in accordance with its terms.
3.2 CAPITALIZATION OF THE COMPANY; NO SUBSIDIARIES. The authorized
capital and number of issued and outstanding shares of capital stock of each
Company are set forth on the Disclosure Schedule. No Shares are held in any
Company's treasury. The issued and outstanding Shares of each Company are duly
authorized, validly issued, fully paid and non-assessable and are owned of
record and beneficially by the holders thereof. No Company has any other
authorized class of capital stock other than the Common Stock. No Company owns
and no Company has owned any shares of capital stock or other securities of, or
any other interest in, nor does any Company control or has it controlled,
directly or indirectly, any other corporation, association, joint venture,
partnership, or other business organization. The outstanding Shares have been
issued and sold in full compliance with all applicable federal and state
securities laws. No holder of Shares has any dissenting shareholder or appraisal
rights with regard to the Merger.
3.3 NO RIGHTS TO PURCHASE OR REGISTER STOCK. No person, firm, or
corporation has any written or oral agreement, option, warrant, call,
understanding, commitment, or any right or privilege capable of becoming a
binding agreement, for either the purchase of any of the Shares or the
acquisition of shares of any other class of capital stock of any Company, and no
Company has otherwise agreed to issue or sell any shares of its capital stock or
has any obligation to register any of the Shares under the Securities Act. No
Company is obligated directly, indirectly or contingently to purchase any
Shares.
3.4 NAME. No Company has had any other name or conducts or operates, or
has heretofore conducted or operated, its business under any name other than its
current name.
3.5 NO VIOLATION OF EXISTING AGREEMENTS. The execution and delivery of
this Agreement, together with all documents and instruments contemplated herein,
the consummation of the transactions contemplated hereby and thereby, and the
compliance with the terms, conditions and provisions hereof by each Company do
not (i) contravene any provisions of any Company's articles of incorporation or
By-Laws; (ii) conflict with or result in a breach of or constitute a default (or
an event that might, with the passage of time or the giving of notice or both,
constitute a default) or give rise to any right to terminate, cancel or
accelerate or to any loss of benefit under any of the terms, conditions, or
provisions of any lease, indenture, mortgage, loan, or credit agreement or any
other agreement or instrument to which any Company is a party or by which it or
its assets may be bound or affected; (iii) violate or constitute a breach of any
decision, judgment, or order of any court or arbitration
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board or of any governmental department, commission, board, agency, or
instrumentality, domestic or foreign, by which any Company is bound or to which
it is subject; or (iv) violate any applicable law, rule, or regulation to which
any Company or any of its property is bound.
3.6 NO CONSENTS OR APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent or
approval of, or filing and expiration of a waiting period or a period for
disapproval by, any governmental authority is required for any Company to
consummate the transactions contemplated by this Agreement, except for filing
and acceptance of the Ohio Certificate of Merger pursuant to the OGCL and for
filing and acceptance of the Delaware Certificate of Merger pursuant to the
DGCL.
3.7 FINANCIAL STATEMENTS.
(a) The Financial Statements fairly present (subject, in the case of
the unaudited statements, to (i) recurring audit adjustments normal in nature
and amount and (ii) disclosure of notes in connection therewith) the financial
position of each Company as of their respective dates, and the results of
operations and cash flows for the periods presented therein, all in conformity
with generally accepted accounting principles applied on a consistent basis,
except as otherwise noted therein.
(b) Each Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and with
statutory accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth or reserved
against in the most recent balance sheet in the Financial Statements, no Company
(a) had as of the Balance Sheet Date any liability or obligation of any nature,
whether accrued, absolute, contingent, or otherwise and whether due or to become
due, including without limitation liabilities that may become known or arise
after the date hereof and which relate to transactions entered into or any state
of facts existing on or before the Balance Sheet Date which would be required
under generally accepted accounting principles to be shown in such balance sheet
or referenced in the notes thereto, and (b) has incurred since the Balance Sheet
Date any such liability or obligation except in the ordinary course of business.
3.9 CONDUCT OF BUSINESS SINCE THE BALANCE SHEET DATE. Since the Balance
Sheet Date, no Company has taken or agreed to take any action that would
obligate such Company to have:
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(a) taken any action or entered into or agreed to enter into any
transaction, agreement, or commitment other than in the ordinary course of
business;
(b) entered into or agreed to enter into any transaction, agreement, or
commitment, suffered the occurrence of any event or events, or experienced any
change in financial condition, business, results of operations, prospects, or
otherwise, (i) that has interfered or is reasonably likely to interfere with the
normal and usual operations of such Company's business or its business prospects
or (ii) that, singly or in the aggregate, has resulted or is reasonably likely
to result in a material adverse change in the financial condition, assets,
liabilities, earnings, business, or business prospects of such Company;
(c) incurred any indebtedness for borrowed money, or assumed,
guaranteed, endorsed, or otherwise become responsible for the obligations of any
other individual, partnership, firm, or corporation (except to endorse checks
for collection for deposit in the ordinary course of business), or made any loan
or advance to any individual, partnership, firm, or corporation (except for
loans to any employee of such Company in the ordinary course of business which
in the aggregate do not exceed $5,000);
(d) mortgaged, pledged, or otherwise encumbered, or, other than in the
ordinary course of business, sold, transferred, or otherwise disposed of, any of
the properties or assets of such Company, including any cancelled, released,
hypothecated, or assigned indebtedness owed to such Company, or any claims held
by such Company;
(e) made any investment of a capital nature or entered into a
commitment for such investment either by purchase of stock or securities,
contributions to capital, property transfer, or otherwise, or by the purchase of
any property or assets of any other individual, partnership, firm, or
corporation;
(f) declared, set aside, or paid any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect of the
capital stock of such Company, or redeemed or otherwise acquired, directly or
indirectly, any shares of capital stock of such Company;
(g) paid any long-term liability, otherwise than in accordance with its
terms;
(h) paid any bonus compensation to any officer, director, shareholder,
or employee of such Company or otherwise increased the compensation paid or
payable to any of the foregoing;
(i) sold, assigned, or transferred any trademarks, trade names, logos,
copyrights, formulae, or other intangible assets;
(j) contracted with or committed to any third party (i) to sell any
capital stock of such Company, (ii) to sell any material assets of such Company
other than in the ordinary
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course of business, (iii) to effect any merger, consolidation, or other
reorganization of such Company, or (iv) to enter into any agreement with respect
thereto; or
(k) incurred any expenses or fees of counsel, accountants or
consultants for personal services rendered to the Stockholder after September
30, 1996 in preparation for or in connection with this Agreement, the
transactions contemplated hereunder or otherwise.
3.10 TITLE TO ASSETS. The Disclosure Schedule describes fully all real
property owned by each Company. Each Company has good and clear record and
marketable title to such real property and good and sufficient title to all
other properties owned by it, including, without limitation, all property
reflected in the most recent balance sheet in the Financial Statements, other
than property disposed of in the ordinary course of business subsequent to the
Balance Sheet Date (none of such dispositions being materially adverse), free
and clear of any mortgage, lien, pledge, charge, claim or encumbrance, or
rights, title and interest in others, except (a) as reflected in the most recent
balance sheet in the Financial Statements, or as specified in the notes thereto,
(b) the lien of taxes not yet due or payable or being contested in good faith by
appropriate proceedings and (c) such imperfections of title and encumbrances, if
any, as do not materially detract from the value or interfere with the use of
the properties subject thereto or affected thereby, or otherwise materially
impair business operations.
3.11 INTELLECTUAL PROPERTY. Each Company owns, or is licensed or
otherwise has the full and unrestricted right to use, all trademarks, trade
names, service marks, copyrights, technology, know-how, trade secrets and
techniques used in its business (collectively, the "Proprietary Information").
All such trademarks, trade names, service marks and federally registered
copyrights are listed on the Disclosure Schedule. No Company has any obligation
still outstanding to compensate other persons for the use of any Proprietary
Information or for the sale of any service comprising or derived from
Proprietary Information. No Company has granted to any other person any license
or other right to use in any manner any of the Proprietary Information, whether
or not requiring the payment of royalties. To the knowledge of each Company (a)
no other person has a right or license granted directly or indirectly by or
through any Company to use any Proprietary Information; (b) none of the
Proprietary Information is being infringed by others, or is subject to any
outstanding order, decree, judgment or stipulation; (c) there are no claims or
demands of any other person, and no proceedings have been instituted, or are
pending or threatened, relating to the Proprietary Information; and (d) no
proceeding has been filed or threatened charging any Company with infringement
of any patent, trademark, copyright, or other proprietary right, nor is there
any basis for any such proceeding.
3.12 OBLIGATIONS TO OR FROM AFFILIATES.
(a) All transactions heretofore between each Company and each of its
stockholders, officers or directors or any Affiliate (as defined below) of such
stockholder, officer or director have been conducted on an arm's-length basis on
terms no different than
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would be obtained if the transaction had been between such Company and an
unrelated party. Except for transactions reflected on the latest balance sheet
or accompanying schedules in the Financial Statements there are no debts or
other obligations of any Company outstanding to or from each stockholder,
officer or director or Affiliate of such stockholder, officer or director of
such Company. As used herein, "Affiliate" of a stockholder, officer or director
means any member of the immediate family of such person or any entity in which
such person or any such family member is an officer or owner of more than five
percent of the outstanding equity securities.
(b) The Disclosure Schedule contains a true and complete description of
each transaction conducted or completed, in whole or in part, during the current
fiscal year, or is currently proposed, between each Company and any officer,
director or stockholder thereof or any Affiliate of any such person. With
respect to each of the last three complete fiscal years, the Disclosure Schedule
sets forth all information that would be required to be provided under Items 402
and 404 of Regulation S-K of the Commission under the Securities Act if a
registration statement on Form S-1 were filed by such Company with the
Commission on the date hereof.
3.13 MATERIAL CONTRACTS. The Disclosure Schedule lists all material
leases, contracts, instruments, agreements or commitments (whether written or
oral) relating to the conduct of the business of each Company (the "Material
Contracts"). Each Company has delivered to BridgeStreet true and correct copies
of each Material Contract and a written description, accurate in all material
respects, of each oral arrangement so listed. Without limiting the generality of
the foregoing, the aforesaid list includes all contracts, agreements and
instruments of the following types to which each Company is a party:
(a) labor union contracts, together with a list of all labor unions
representing or attempting to represent employees of each Company;
(b) pension, retirement, deferred compensation, death benefit, profit
sharing, bonus or other employee incentive, fringe benefit, stock purchase,
stock option, hospitalization or insurance plans or arrangements (and grant
certificates or other documents issued thereunder) or vacation pay, severance
pay and other similar benefit arrangements for officers, employees or agents,
together with a list of all pensioned employees or obligations to provide any
pensions hereafter other than pursuant to the plans hereinbefore in this item
described;
(c) employment contracts or agreements, consulting agreements,
agreements providing for termination or severance benefits, non-competition
agreements, non-disclosure agreements, contracts for professional personal
services, contracts with other persons engaged in sales or distributing
activities, and advertising contracts;
(d) written or oral agreements, understandings and arrangements of any
kind with any officer, director, employee, shareholder or agent of each Company
relating to present or
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future compensation or other benefits available to such person or otherwise,
together with a list of the names and current annual salary rates of all present
officers and employees of each Company whose current salary rate is $25,000 or
more and any bonuses paid or payable to each such person for the 1995 fiscal
year and to date in the 1996 fiscal year;
(e) indentures, loan agreements, notes, security agreements, mortgages,
conditional sales contracts, leases of personal property, contracts for the
purchase or sale of real or personal property, and agreements for financing;
(f) licenses and other contractual rights to any Proprietary
Information, including without limitation, any copyright, trademark, service
xxxx or trade name, whether domestic or foreign, owned in whole or in part or
used by each Company;
(g) other license agreements (as licensor or licensee);
(h) property, casualty, crime, directors and officers, and other forms
of insurance;
(i) bank accounts and safety deposit boxes identifying all authorized
signatories, together with a list of all effective powers of attorney granted by
each Company to anyone;
(j) agreements, contracts or other arrangements to which each Company
is a guarantor, surety or endorser;
(k) contracts, agreements, commitments, arrangements or understandings
providing for the purchase or sale of all or substantially all of each Company's
requirements for a particular product from a single supplier or to a single
customer;
(l) contracts, agreements, commitments, arrangements or understandings
limiting the freedom of each Company from competing in any line of business or
with any person or entity;
(m) leases of real property with a term of more than one year
(regardless of whether the Company is the lessor or lessee); and
(n) contracts, agreements, instruments, arrangements or understandings
which have not been included in items (a) through (m) above involving payment by
or to each Company of more than $50,000 or not terminable without penalty or
otherwise materially affecting the assets, financial condition, properties or
business of the Company.
All of the Material Contracts are in full force and effect. Except to the extent
that a material adverse effect on the Company's financial condition, assets,
liabilities, earnings, business or prospects would not result if the following
was not true: (A) each Company and each other party to each of the Material
Contracts have performed all the obligations required to be performed by them to
date, have received no notice of default and are not in default (with
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due notice or lapse of time or both) under any of the Material Contracts; (B)
each Company has no present expectation or intention of not fully performing all
its obligations under any of the Material Contracts, and each Company has no
knowledge of any breach or anticipated breach by any other party to any of the
Material Contracts; and (C) there exists no actual or, to the knowledge of each
Company, threatened termination, cancellation or limitation of the business
relationship of such Company with any party to any Material Contract.
3.14 LITIGATION. There are no actions, suits, causes of action, claims,
litigation, arbitration, administrative hearings, or other form of proceedings
or disputes of any kind pending or, to the knowledge of any Company, threatened
against any Company or its officers or directors (in their capacities as such)
in any court, at law or in equity, or before any arbitration board or any
governmental department, commission, board, bureau, agency, or instrumentality;
nor has any Company been, nor is it, subject to any orders, awards, fines,
judgments, decrees, or injunctions the effect of which in the aggregate would
have a material adverse effect on the business or financial position or
prospects of such Company. No Company knows or has grounds to know of any basis
for any such action, suits, or other form of proceeding or disputes or of any
governmental investigation relating to such Company or its business.
3.15 TAXES. Each Company has filed all tax returns, reports and
information filings that are required to be filed, including, without
limitation, federal (U.S.), state, and municipal income or franchise tax
returns, and has paid all taxes shown as due on such returns, together with any
interest and penalties accrued with respect thereto. No Company is required to
pay any other taxes except as shown in such tax returns, reports and information
filings. All such returns, reports, and information filings required to be
filed, including any amendments to date, have been prepared in good faith and
without misrepresentation. Each Company has either paid or, in accordance with
generally accepted accounting principles applied consistently with prior
periods, adequately provided for, by reserves or other proper accounting
treatment shown in the records and books of account, its liability for all taxes
of every kind, including without limitation its liability for federal, state,
and municipal income or franchise tax for the current tax year and for all prior
years. No Company has any knowledge of any proposed or threatened assessment or
reassessment of federal, state, or municipal income or franchise taxes. The
United States federal income tax returns of each Company have been examined by
the Internal Revenue Service for all taxable years through and including the
fiscal year ended as set forth in the Disclosure Schedule. In addition, at the
date hereof all withholding tax or source deductions have been deducted and
remitted as due to the appropriate governmental authority as required by law or
each Company has adequately provided for such deductions by reserves or other
proper accounting treatment in its books and records of account.
3.16 ABSENCE OF MATERIAL EVENTS. Since January 1, 1996 there has not
been (a) any material adverse change in the business, affairs or prospects of
any Company nor, to the best of each Company's knowledge, are any such changes
threatened, anticipated or contemplated; (b) any actual or, to each Company's
knowledge, threatened, anticipated or
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contemplated damage, destruction, loss, conversion, termination, cancellation,
default or taking by eminent domain or other action by governmental authority
which has materially affected or may hereafter materially affect the properties,
assets, business affairs or prospects of any Company; (c) any material and
adverse pending or, to each Company's knowledge, threatened, anticipated or
contemplated dispute of any kind with any material customer, supplier, source of
financing, employee, landlord, subtenant or licensee of any Company, or any
pending or, to each Company's knowledge, threatened, anticipated or contemplated
occurrence or situation of any kind, nature or description which is reasonably
likely to result in any reduction in the amount, or any change in the terms or
conditions, of business with any material customer, supplier, or source of
financing; or (d) any pending, or, to each Company's knowledge, threatened,
anticipated or contemplated occurrence or situation of any kind, nature or
description materially and adversely affecting the properties, assets, business,
affairs or prospects of any Company.
3.17 ABSENCE OF IMPROPER PAYMENTS. Since January 1, 1993 no Company:
(a) has made any contributions, payments or gifts of its property to or for the
private use of any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift is illegal under
the laws of the United States, any state thereof or any other jurisdiction
(foreign or domestic); (b) has established or maintained any unrecorded fund or
asset for any purpose, or has made any false or artificial entries on its books
or records for any reason; (c) has made any payments to any person with the
intention or understanding that any part of such payment was to be used for any
other purpose other than that described in the documents supporting the payment;
or (d) has made any contribution, or has reimbursed any political gift or
contribution made by any other person, to candidates for public office, whether
Federal, state or local, where such contribution or reimbursement would be in
violation of applicable law.
3.18 ERISA.
(a) None of the employee benefit plans maintained at any time by any
Company or the trusts created thereunder has engaged in a prohibited transaction
which could subject any such employee benefit plan or trust to a material tax or
penalty on prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA.
(b) None of the employee benefit plans maintained at any time by any
Company which are employee pension benefit plans and which are subject to Title
IV of ERISA or the trusts created thereunder has been terminated so as to result
in a material liability of any Company under ERISA nor has any such employee
benefit plan of any Company incurred any material liability to the Pension
Benefit Guaranty Corporation established pursuant to ERISA, other than for
required insurance premiums which have been paid or are not yet due and payable;
no Company has withdrawn from or caused a partial withdrawal to occur with
respect to any Multi-employer Plan resulting in any assessed and unpaid
withdrawal liability; each Company has made or provided for all contributions to
all such employee pension benefit plans which it maintains and which are
required as of the end of the most recent
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fiscal year under each such plan; no Company has incurred any accumulated
funding deficiency with respect to any such plan, whether or not waived; nor has
there been any reportable event, or other event or condition, which presents a
material risk of termination of any such employee benefit plan by the Pension
Benefit Guaranty Corporation.
(c) The present value of all vested accrued benefits under the employee
pension benefit plans which are subject to Title IV or ERISA, maintained by each
Company, did not, as of the most recent valuation date for each such plan,
exceed the then current value of the assets of such employee benefit plans
allocable to such benefits.
(d) To the best of each Company's knowledge, (i) each employee pension
benefit plan subject to Title IV of ERISA, maintained by each Company, has been
administered in accordance with its terms in all material respects and is in
compliance in all material respects with all applicable requirements of ERISA
and other applicable laws, regulations and rules, and (ii) the Company has filed
in a timely manner with respect to all such plans those actuarial reports,
annual reports and all other filings required by all such applicable
requirements of ERISA and other applicable laws, regulations and rules, and the
Company has delivered to BridgeStreet a copy of any such report filed since
December 31, 1993.
(e) As used in this Agreement, the terms "employee benefit plan",
"employee pension benefit plan", "accumulated funding deficiency", "reportable
event", and "accrued benefits" shall have the respective meanings assigned to
them in ERISA, and the term "prohibited transactions" shall have the meaning
assigned to it in Code Section 4975 and ERISA.
(f) No Company has any liability disclosed on any of the Financial
Statements, contingent or otherwise, under any plan or program or the equivalent
for unfunded post-retirement benefits, including pension, medical and death
benefits, which liability would have a material adverse effect on the financial
condition of any Company.
3.19 LABOR MATTERS. A true and complete list of all of each Company's
officers and employees (the "Employees") and their respective salaries, wages,
other compensation, dates of employment, date and amount of last salary
increase, and positions has been provided to BridgeStreet by the Company. There
are no material disputes, employee grievances, or disciplinary actions pending
or, to the knowledge of any Company, threatened by or between any Company and
any of the Employees. With respect to the Employees, each Company has complied
in all respects with all provisions of all laws relating to the employment of
labor and has no liability for any arrears of wages or taxes or penalties for
failure to comply with any such law or for any severance or termination payments
of any type. No election or proceedings relating to the labor relations of any
Company is pending or, to any Company's knowledge, threatened. No Company has
had any material union activity or had any material labor trouble of any kind,
nature or description at any time heretofore. All personnel policies and manuals
of each Company are listed on the Disclosure Statement and true and complete
copies thereof have been provided to BridgeStreet. No
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Employee or consultant of any Company shall have the right to receive from the
Surviving Corporation or XxxxxxXxxxxx x xxxxxxxxx payment or other payment in
the nature thereof in the event his or her employment is terminated by the
Surviving Corporation following the Merger, whether such right arises as a
matter of contract, past policy or understanding, by operation of law, or
otherwise.
3.20 PERMITS; COMPLIANCE WITH LAW. Each Company possesses all
franchises, permits, licenses, certificates, approvals, and other authorizations
("Permits") necessary to own or lease and operate its properties and to conduct
its business as now conducted, except for incidental Permits that would be
readily obtainable without undue burden in the event of any lapse, termination,
cancellation, or forfeiture or that if not obtained would not materially and
adversely affect each Company's business. All such material Permits are in full
force and effect, and, to the knowledge of each Company, no suspension or
cancellation of any of them is threatened, and no material Permits will be
adversely affected by the consummation of the Merger. No Company has failed nor
is it failing to comply with any applicable law, rule, regulation, or order,
where such failure would have a material adverse effect on any Company's
business, and there are no proceedings pending or, to each Company's knowledge,
threatened, nor has any Company received any notice, regarding any such failure.
3.21 ENVIRONMENTAL MATTERS. Each Company is in material compliance with
all applicable existing federal, state and local laws and regulations relating
to protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material (as hereinafter defined)
("Environmental Laws"), except, in each case, where such noncompliance, singly
or in the aggregate, would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of any Company. The term "Hazardous Material" means (a) any "hazardous
substance" as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, (b) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act, as amended, (c) any petroleum or
petroleum product, (d) any polychlorinated biphenyl and (e) any pollutant or
contaminant or hazardous, dangerous, or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental Law.
There is no alleged liability, or to each Company's knowledge, potential
liability (including, without limitation, alleged or potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) of such
Company arising out of, based on or resulting from (i) the presence or release
into the environment of any Hazardous Material at any location, whether or not
owned by any Company or (ii) any violation or alleged violation of any
Environmental Law, which alleged or potential liability, singly or in the
aggregate, would have a material and adverse effect on the condition, financial
or otherwise, or the earnings, business affairs or business prospects of such
Company.
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3.22 LEASES. The Disclosure Schedule sets forth as of October 31, 1996
the number of units of real property leased by each Company (each a "Leased
Premises"). Except to the extent that a material adverse effect on the Company's
financial condition, assets, liabilities, earnings, business or prospects would
not occur if the following, in the aggregate, was not true: (a) each lease
covering a Leased Premises is in full force and effect (there existing no
default under any such lease which, with the lapse of time or notice or
otherwise, would entitle the lessor or lessee to terminate the same); (b) each
Company has the right to use the Leased Premises in accordance with the terms of
the respective leases free and clear of all claims or other interests or rights
of third parties; (c) there is no violation of any covenant, restriction or
other agreement or understanding, oral or written, affecting or relating to
title or use of any Leased Premises; and (d) there is no pending or threatened
condemnation or similar proceedings or assessments affecting any of the Leased
Premises, nor to each Company's knowledge is any such condemnation or assessment
threatened or contemplated by any governmental authority.
3.23 CORPORATE RECORDS. The corporate record books of each Company are
in good order, complete, accurate, up to date, with all necessary signatures,
and set forth all meetings and actions taken by the shareholders and directors,
and all votes of the shareholders or Directors set forth in certificates
furnished to anyone at any time heretofore.
3.24 CONDITION OF ASSETS. All premises, fixtures and equipment owned or
used by each Company have been properly maintained and are in good operating
order and repair, free from known defects in construction or design, sound and
properly functioning, usable and not obsolete, and in compliance with all
zoning, building and fire codes and all other laws, rules, regulations and
requirements of governmental authorities and the fire insurance rating
association having jurisdiction, except to the extent that the failure to do so,
in the aggregate, would not have a material adverse effect on the financial
condition, assets, liabilities, earnings, business or prospects of such Company.
3.25 ACCOUNTS RECEIVABLE. All of the accounts receivable of each
Company shown or reflected on the most recent balance sheet in the Financial
Statements, less the reserve for doubtful accounts in the amount shown on such
balance sheet, are valid and enforceable claims and subject to no set off or
counterclaim and will be collectible in the normal course of business. No
Company has accounts or loans receivable from any of its directors, officers or
employees (other than loans to any employee in the ordinary course of business
which in the aggregate do not exceed $5,000).
3.26 CHARTER DOCUMENTS. Each Company has heretofore delivered to
BridgeStreet copies of its articles of incorporation, as amended to date,
certified by the appropriate governmental authority, and copies of its by-laws,
as amended to date, and a list of the officers and directors of such Company in
office, all as certified by its Secretary.
3.27 DISCLOSURE OF ALL MATERIAL MATTERS. No statement of fact set forth
in this Agreement (including without limitation all information in the Financial
Statements and the
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other Schedules, Exhibits, and attachments hereto, taken as a whole) or
otherwise provided by or on behalf of each Company to BridgeStreet is false or
misleading in any respect, nor does this Agreement (including, without
limitation all information in the Financial Statements and the other Schedules,
Exhibits, and attachments hereto, taken as a whole) or any information provided
to BridgeStreet by or on behalf of any Company omit to state a material fact
necessary in order to make the statements made or information disclosed, in the
light of the circumstances under which they were made or disclosed, not
misleading.
3.28 BROKERS. No broker, finder, or investment banker is entitled to
any brokerage, finder's, or other fee or commission in connection with the
Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
3.29 TAX-FREE REORGANIZATION. No Company has any reason to believe that
the Merger will not qualify as a reorganization within the meaning of Section
368 of the Code.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder represents and warrants to BridgeStreet and Acquisition
as follows:
4.1 TITLE TO THE SHARES. The stockholders of the Companies own all
issued and outstanding Shares free and clear of any claims, liens, charges,
encumbrances, security interests and rights of others whatsoever, and such
Shares are not bound by or subject to any proxy, agreement, voting trust or
other restriction regarding the voting thereof.
4.2 AUTHORITY. The Stockholder has full power, authority and capacity
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and no other action is necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by the Stockholder and constitutes
a legal, valid and binding obligation of the Stockholder enforceable against him
in accordance with its terms.
5. REPRESENTATIONS AND WARRANTIES OF BRIDGESTREET AND ACQUISITION
BridgeStreet and Acquisition represent and warrant to the Companies and
the Stockholder as follows:
5.1 ORGANIZATION AND AUTHORITY. Each of BridgeStreet and Acquisition is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, and each has all requisite corporate power and
authority to conduct its business and own its properties as now conducted and
owned, and is qualified to do business as a
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foreign corporation in each jurisdiction where the failure to be so qualified
would, in the aggregate, have a material adverse effect on the business or
financial condition of BridgeStreet. Each of BridgeStreet and Acquisition has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the respective Boards of Directors of
BridgeStreet and Acquisition and the sole stockholder of Acquisition, and no
other corporate proceedings on the part of BridgeStreet or Acquisition are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by each of BridgeStreet and Acquisition and constitutes a
valid and binding agreement of each, enforceable against each in accordance with
its terms.
5.2 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by BridgeStreet and Acquisition nor the consummation
of the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective charter documents or By-Laws of
BridgeStreet or Acquisition; (ii) require any consent, approval, authorization,
or permit of, or filing with or notification to, any governmental or regulatory
authority, except (A) filing the Ohio Certificate of Merger pursuant to the OGCL
and the Delaware Certificate of Merger pursuant to the DGCL and (B) filings
required under the Securities Act and the securities or blue sky laws of the
various states; (iii) result in a default (or an event that might, with the
passage of time or the giving of notice or both, constitute a default) or give
rise to any right to terminate, cancel or accelerate or to any loss of benefit
under any of the terms, conditions, or provisions of any note, license, lease,
agreement, or other instrument or obligation to which BridgeStreet or
Acquisition is a party or by which BridgeStreet or Acquisition or any of their
respective assets may be bound, other than as previously disclosed in writing to
the Company; or (iv) violate any order, writ, injunction, decree, statute, rule,
or regulation applicable to BridgeStreet or Acquisition or any of their
respective assets.
5.3 LITIGATION. There are no actions, suits, causes of action, claims,
litigation, arbitration, administrative hearings or other form of proceedings or
disputes pending, or, to the knowledge of BridgeStreet or Acquisition,
threatened, against, involving or affecting BridgeStreet or Acquisition, in any
court, at law or in equity, or before any arbitration board or any governmental
department, commission, board, bureau, agency, or instrumentality, that either
singly or in the aggregate might prevent BridgeStreet and Acquisition from
consummating the transactions contemplated hereby or that would have a material
adverse effect on the business, operations, or financial condition of
BridgeStreet and its subsidiaries taken as a whole.
5.4 MERGER STOCK. The Merger Stock has been duly authorized by all
necessary corporate action and, when issued and delivered by BridgeStreet
pursuant to this Agreement, will be validly issued, fully paid and
non-assessable.
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5.5 CHARTER DOCUMENTS. BridgeStreet has heretofore delivered to the
Company copies of its Articles of Incorporation, as amended to date, certified
by the appropriate governmental authority, and copies of its by-laws, as amended
to date, and a list of the officers and directors of BridgeStreet in office, all
as certified by its Secretary.
6. COVENANTS
6.1 BOARD OF DIRECTORS. Until such time as BridgeStreet completes an
initial public offering of its common stock (the "IPO"), the Stockholder and the
former stockholders of each of Temporary Housing Experts, Inc., Temporary
Corporation Housing Columbus, Inc. and Exclusive Interim Properties, Ltd. shall
each have the right to designate one director of BridgeStreet, and the
Stockholder and such stockholders agree to vote their Merger Stock (and any
additional voting securities of BridgeStreet issued in respect thereof) and take
such other action as shall be necessary (i) to cause each such designee to be
elected to BridgeStreet's Board of Directors, and (ii) fix the number of
directors on the Board of Directors at six. The Stockholders' initial designee
pursuant to this Section 6.1 shall be Xxxxx XxXxxxx.
6.2 CONFIDENTIAL INFORMATION. BridgeStreet will, and will cause its
employees and agents and Acquisition to, hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law, all Confidential Information (as
hereinafter defined) and will not disclose the same to any person. If this
Agreement is terminated, BridgeStreet will promptly return to each Company or
destroy all documents (including all copies thereof) received by BridgeStreet
containing such Confidential Information. For purposes hereof, "Confidential
Information" shall mean all information of any kind concerning the Companies,
except information (i) ascertainable or obtained from public or published
information, (ii) received from a third party not known to BridgeStreet to be
under an obligation to one of the Companies to keep such information
confidential, (iii) that is or becomes known to the public (other than through a
breach of this Agreement), (iv) that was in BridgeStreet's possession before
disclosure thereof to it in connection with this Agreement or (v) that was
independently developed by BridgeStreet.
6.3 BEST EFFORTS. Subject to the terms and conditions hereof each party
to this Agreement agrees to fully cooperate with the others and the others'
counsel, accountants and representatives in connection with any steps required
to be taken as part of its obligations under this Agreement. Each party to this
Agreement agrees that it will use its reasonable efforts to cause all conditions
to its obligations under this Agreement to be satisfied as promptly as possible,
and will not undertake a course of action inconsistent with this Agreement or
which would make any of its representations, warranties, agreements or covenants
in this Agreement untrue in any material respect or any conditions precedent to
its obligations under this Agreement unable to be satisfied at or prior to the
Closing.
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6.4 PUBLIC ANNOUNCEMENTS. All public announcements, notices or other
communications regarding this Agreement and the transactions contemplated hereby
to third parties other than the parties hereto and their respective advisors and
the shareholders of the Companies shall require the prior approval of
BridgeStreet.
6.5 NOTIFICATION OF CERTAIN MATTERS. Each of the parties (the
"Notifying Party") shall give prompt notice to the other parties of (i) the
occurrence or non-occurrence of any event that would be likely to cause any
representation or warranty of the Notifying Party contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time and (ii) any material failure of the Notifying Party to comply with or
satisfy any covenant, condition, or agreement to be complied with or satisfied
by it hereunder. Each Company shall promptly notify BridgeStreet in writing if
at any time prior to a closing in connection with the IPO it shall obtain
knowledge of any facts that might make it necessary or appropriate to amend or
supplement the Prospectus in order to make the statements contained therein not
misleading or comply with applicable law. The delivery of any notice pursuant to
this Section 6.5 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
6.6 COVENANTS OF THE STOCKHOLDER. The Stockholder hereby covenants and
agrees with BridgeStreet and Acquisition that he shall:
(a) use his best efforts to take whatever action may be reasonably
necessary or desirable to (i) effect, perfect or confirm of record or otherwise
in the Surviving Corporation full right, title and interest in and to the
business, properties and assets now conducted or owned by each Company, free and
clear of all restrictions, liens, encumbrances, rights, title and interests in
others, or to collect, realize upon, gain possession of, or otherwise acquire,
full right, title and interest in and to such business, properties and assets;
(ii) carry out the intent and purposes of the transactions contemplated hereby;
and (iii) cause or permit BridgeStreet to undertake and complete the IPO.
(b) provide to BridgeStreet the notifications required of each Company
under Section 6.5;
(c) (i) execute and deliver at the Closing the Employment Contract, the
Securities Representation Letter (as defined below) and the Non-Competition and
Non-Disclosure Agreement, and (ii) use his best efforts to obtain and deliver at
the Closing the Non-Competition and Non-Disclosure Agreements executed by the
persons set forth in Exhibit 7.1(c) and any Securities Representation Letters
executed by stockholders that are not parties to this Agreement; and
(d) execute and deliver such other instruments and take such other
actions as may be reasonably required in order to carry out the intent of this
Agreement.
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6.7 TAX FREE REORGANIZATION. From and after the Effective Time, neither
BridgeStreet nor the Surviving Corporation nor the Stockholder shall take or
suffer to be taken any action which will cause the Merger not to constitute a
reorganization within the meaning of Section 368(a)(2)(D).
6.8 CONSENT TO SERVICE OF PROCESS. Acquisition hereby consents to be
sued and served with process in the State of Ohio, and irrevocably appoints the
Secretary of State of Ohio as its agent to accept such service of process.
7. CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 The obligations of BridgeStreet and Acquisition to consummate the
Merger are subject to the satisfaction at the Closing, or waiver by BridgeStreet
in writing, in whole or in part, of each of the following conditions:
(a) BridgeStreet and Acquisition shall have received the opinion of
counsel to each Company, dated the date of the Closing and in form and substance
satisfactory to the BridgeStreet and its counsel, substantially to the effect
set forth on Exhibit 6.
(b) All proceedings taken by each Company and all instruments executed
and delivered by the Company prior to the date of the Closing in connection with
the transactions herein contemplated shall be satisfactory in form and substance
to counsel for BridgeStreet acting reasonably.
(c) The Stockholder shall have executed and delivered to BridgeStreet
the Employment Contract, the Non-Competition and Non-Disclosure Agreement, and
the persons listed on Exhibit 7 shall have executed and delivered to
BridgeStreet the Non-Competition and Non-Disclosure Agreement.
(d) Each of the stockholders of the Companies shall execute and deliver
to BridgeStreet a letter agreement substantially in the form attached hereto as
Exhibit 9.
(e) Each Company shall have delivered to BridgeStreet and Acquisition a
certificate of its Secretary certifying as to requisite corporate or other
action authorizing the transactions contemplated by this Agreement, the
incumbency of officers and directors, and the status of record ownership of each
Company's shareholders.
(f) Each Company shall have delivered to BridgeStreet such other
certificates, documents and opinions as BridgeStreet and its counsel shall
reasonably require.
7.2 The obligation of each Company to consummate this Agreement is
subject to the satisfaction at the Closing, or waiver by the Companies in
writing, in whole or in part, of each of the following conditions:
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(a) The Companies shall have received the opinion, dated the date of
the Closing and in form and substance satisfactory to the Company and its
counsel, of Xxxxxx, XxXxxxxxx & Fish, LLP, counsel to BridgeStreet,
substantially to the effect set forth on Exhibit 9.
(b) All proceedings taken by BridgeStreet and Acquisition and all
instruments executed and delivered by BridgeStreet and Acquisition prior to the
date of the Closing in connection with the transactions herein contemplated
shall be satisfactory in form and substance to counsel for the Companies, acting
reasonably.
(c) BridgeStreet and Acquisition shall have delivered to the Companies
a certificate of its Secretary, certifying as to requisite corporate or other
action authorizing the transactions contemplated by this Agreement.
(d) BridgeStreet shall have executed and delivered each Employment
Contract.
(e) On the day following the Effective Time, the officers and directors
of BridgeStreet shall be as set forth on Exhibit 4.
8. RESTRICTIONS ON SALE OR TRANSFER OF MERGER STOCK; LEGEND
The shares of Merger Stock will not have been registered under the
Securities Act or the blue sky laws of any state by reason of their contemplated
issuance in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act and of such state laws. Such shares may not
be sold, transferred, or otherwise disposed of without registration under the
Securities Act and such state laws or an exemption therefrom.
9. INDEMNIFICATION
9.1 AGREEMENTS TO INDEMNIFY.
(a) As used in this Article 9:
(i) "Damages" means claims, damages, liabilities,
losses, judgments, settlements, and expenses, including,
without limitation, all reasonable fees and disbursements of
counsel incident to the investigation or defense of any claim
or proceeding or threatened claim or proceeding.
(ii) "Indemnified Party" means each of BridgeStreet,
the Surviving Corporation, and their respective subsidiaries.
(b) On the terms and subject to the limitations set forth in this
Agreement, the Stockholder shall, from and after the Effective Time, indemnify,
defend, and hold each Indemnified Party harmless from, against and in respect of
any and all Damages incurred by
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any Indemnified Party arising from or in connection with any actual or alleged
breach of any representation, warranty, covenant or agreement made by each
Company or by the Stockholder in this Agreement (collectively referred to herein
as "Claims"), including, with respect to Section 3.20 herein, any Claims arising
out of the failure of any Company to be duly qualified as a foreign corporation
at all times in all jurisdictions in which it conducts or has conducted business
operations.
(c) The Companies' representations, warranties, covenants and
agreements set forth in Article 3 shall, for purposes of this Article 9, be
deemed to have survived the Effective Time notwithstanding any contrary terms of
this Agreement, and whenever such representations, warranties, covenants and
agreements are referred to in this Article 9, the text of the same as set forth
in Article 3 shall be deemed to be set forth in their entirety herein, and the
same are hereby incorporated herein by such references. Each such
representation, warranty, covenant and agreement shall be deemed to have been
relied upon by the party or parties to which made, notwithstanding any
investigation or inspection made by or on behalf of such party or parties and
shall not be affected in any respect by any such investigation or inspection.
9.2 LIMITATIONS OF INDEMNITY OBLIGATIONS. The indemnity obligations of
the Stockholder under this Agreement shall be subject to the following
limitations:
(a) The indemnity obligations of the Stockholder shall expire on the
third anniversary of the Effective Time (the "Cut-off Date"); provided, however,
that such obligations with respect to (i) the representations and warranties
contained in Sections 3.1, 3.2, 3.18 and 3.21 and Article 4 of this Agreement
shall continue forever without limitation, and (ii) the representations and
warranties regarding taxes, which are contained in Section 3.15, shall remain in
effect until all claims for taxes due by or on account of any of the Companies
for any period up to and including the Effective Time have been settled and any
statute of limitations period with respect to such taxes has expired; and
provided further that the indemnity obligations of the Stockholder for Claims
timely asserted by an Indemnified Party in the manner provided in this Agreement
shall continue until such Claims are finally resolved and discharged.
(b) The aggregate indemnity obligations of the Stockholder for any
Damages shall not in any event exceed the amount set forth on Exhibit 10
opposite such Stockholder's name or, in the event of an IPO, the greater of (1)
such amount and (ii) the amount equal to the Merger Stock received by such
Stockholder (after adjusting for any stock split or combination) multiplied by
the price at which the BridgeStreet Common Stock is sold to the public in the
IPO.
(c) The Indemnified Parties shall be entitled to indemnification only
if the aggregate and collective Damages incurred or suffered by them exceed
$50,000, in which event they shall be entitled to indemnification of the full
amount of such Damages. Notwithstanding the immediately preceding sentence,
however, the Indemnified Parties shall
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be entitled to indemnification for Damages incurred or suffered by them as a
result of the breach of Section 3.15 without regard to such $50,000 basket.
9.3 NOTICE OF CLAIM. An Indemnified Party shall promptly notify the
Stockholder in writing of any Claim asserted by a third person that might give
rise to any indemnity obligation of the Stockholder hereunder (a "Third Party
Claim"), specifying in reasonable detail the nature thereof and indicating the
amount (estimated if necessary) of the Damages that have been or may be
sustained by the Indemnified Party. Failure of any Indemnified Party to promptly
give such notice shall not relieve the Stockholder of his obligation to
indemnify under this Article 9, but as a result of any such failure, the
Stockholder shall not be liable to the Indemnified Parties for the amount of
actual damages caused by such failure. Together with or following such notice,
the Indemnified Parties shall deliver to the Stockholder copies of all notices
and documents received by the Indemnified Parties relating to the Third Party
Claim (including court papers).
9.4 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS. The Stockholder shall
have the right (without prejudice to the right of any Indemnified Party to
participate at their own expense through counsel of their own choosing) to
defend against any Third Party Claim at his expense and through counsel of his
own choosing and to control such defense if he gives written notice of his
intention to do so within 15 business days of their receipt of notice of Third
Party Claim. The Indemnified Parties shall cooperate fully in the defense of
such Third Party Claim and shall make available to the Stockholder or his
counsel all pertinent information under their control relating thereto. The
Indemnified Parties shall have the right to elect to settle any Third Party
Claim; provided, however, the Stockholder shall not have any indemnification
obligation with respect to any monetary payment to any third party required by
such settlement unless they shall have consented thereto. The Stockholder shall
have the right to elect to settle any Third Party Claim subject to the consent
of BridgeStreet; provided, however, that if BridgeStreet fails to give such
consent within 15 business days of being requested to do so, BridgeStreet shall,
at its expense, assume the defense of such Third Party Claim and regardless of
the outcome of such matter, the Stockholder's liability hereunder shall be
limited to the amount of any such proposed settlement. The foregoing provisions
notwithstanding, in no event may the Stockholder (a) adjust, compromise or
settle any Third Party Claim (i) unless such adjustment, compromise or
settlement unconditionally releases BridgeStreet or the Surviving Corporation
from all liability or (ii) if such adjustment, compromise or settlement affects
the absolute and sole right of BridgeStreet or the Surviving Corporation to own
or use any of any Company's assets or (b) defend any Third Party Claim which, if
adversely determined, would materially impair the financial condition, business
or prospects of BridgeStreet or the Surviving Corporation.
10. MISCELLANEOUS
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as provided in
Article 9 with respect to the representations and warranties contained in
Article 3 and 4 and except
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for the representations and warranties contained in Article 5, the
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
10.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a) constitutes, with
the Disclosure Schedule and the Exhibits hereto, the entire agreement among the
parties with respect to the subject matter hereto and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof (except for the
confidentiality and secrecy agreements that previously have been executed by
BridgeStreet, the Company and American Business Partners) and (b) shall not be
assigned by operation of law or otherwise, provided that BridgeStreet or
Acquisition may assign its respective rights and obligations to any direct or
indirect subsidiary of BridgeStreet, but no such assignment shall relieve
BridgeStreet of its obligations hereunder.
10.3 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
10.4 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by electronic facsimile transmission,
cable, telegram, or telex, or when mailed by registered or certified mail
(postage prepaid, return receipt requested) or delivered to a courier of
national reputation to the respective parties as follows:
If to BridgeStreet or Acquisition, to it at:
BridgeStreet International Inc.
00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Secretary
with a copy to:
Xxxxxx, XxXxxxxxx & Fish, LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxxxxxx Xxxxxxxxx, Esq.
If to the Company or the Stockholder, to it or him at:
Corporate Lodgings, Inc.
0000 Xxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx XxXxxxx
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with a copy to:
Xxxxx X. Xxxxx, Esq.
00 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxx, XX 00000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
10.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
10.6 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
10.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
10.8 EXPENSES. All costs and expenses incurred subsequent to September
30, 1996 in connection with the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses; provided that the Companies'
costs and expenses, including all brokerage, investment banking, legal, and
accounting fees, shall be borne by the Stockholder.
10.9 PARTIES IN INTEREST. Except as provided in Section 6.1, this
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
10.10 PRINCIPAL OFFICE. The principal office of the Surviving
Corporation in the State of Delaware is located at Corporation Trust Center,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx.
[Rest of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
BRIDGESTREET INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Title: Vice-President
---------------------------------------
CL ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Title: President
---------------------------------------
CORPORATE LODGINGS, INC.
By: /s/ Xxxxx Xx Xxxxx
-----------------------------------------
Title: President
---------------------------------------
CORPORATE LODGINGS OF MINNESOTA, INC.
By: /s/ Xxxxx Xx Xxxxx
-----------------------------------------
Title: President
---------------------------------------
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CORPORATE LODGINGS OF WISCONSIN, INC.
By: /s/ Xxxxx Xx Xxxxx
-----------------------------------------
Title: President
---------------------------------------
CORPORATE LODGINGS OF PENNSYLVANIA, INC.
By: /s/ Xxxxx Xx Xxxxx
-----------------------------------------
Title: President
---------------------------------------
CORPORATE LODGINGS OF KENTUCKY, INC.
By: /s/ Xxxxx Xx Xxxxx
-----------------------------------------
Title: President
---------------------------------------
/s/ Xxxxx Xx Xxxxx
---------------------------------------------
Xxxxx XxXxxxx,
Stockholder
