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EXHIBIT 10.3
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") dated as of
December 30, 1996 is among BridgeStreet International Inc., a Delaware
corporation ("BridgeStreet"), TCHI Acquisition Corp., a Delaware corporation and
a wholly-owned subsidiary of BridgeStreet ("Acquisition"), and Temporary
Corporate Housing - Columbus, Inc., an Ohio corporation, Temporary Corporate
Housing - Cleveland, Inc., an Ohio corporation, Temporary Corporate Housing -
Cincinnati, Inc., an Ohio corporation and Temporary Corporate Housing -
Pittsburgh, Inc., a Pennsylvania corporation (each individually, a "Company,"
and collectively, the "Companies"), and SLD Partnership, an Ohio General
Partnership, Xxxxx Xxxxxxxx and Xxxxx Xxxxxxxx, III and Xxxxx Xxxxxx and Xxxx
Xxxxxx jointly (each individually, a "Stockholder," and collectively, the
"Stockholders"), and provides for the merger of the Companies with and into
Acquisition (the "Merger"). The Boards of Directors of BridgeStreet, Acquisition
and the Company 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 Company 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 "Articles of Merger" has the meaning given to it in Section 2.2.
1.2 "Balance Sheet Date" means June 30, 1996.
1.3 "BridgeStreet Common Stock" means the shares of Common Stock, $0.01
par value, of BridgeStreet.
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 "Delaware Certificate of Merger" has the meaning given to it in
Section 2.2.
1.9 "Disclosure Schedule" means the Disclosure Schedule attached hereto
as Schedule 1.
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1.10 "Effective Time" means 12:01 a.m. EST on January 2, 1997, as such
date shall be specified in the Ohio Certificate of Merger (as defined herein)
filed with the Secretary of State of Ohio in accordance with Section 1701.81 of
the OGCL (as defined herein), the Articles of Merger filed with the Department
of State of the Commonwealth of Pennsylvania in accordance with Section 1927 of
the PBCL (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 another time shall be
the Effective Time, in which case such time shall be specified in the Articles
of Merger, the Ohio Certificate of Merger and the Delaware Certificate of
Merger.
1.11 "Employment Contract" means the employment contract attached
hereto as Exhibit 1.
1.12 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.13 "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 stockholders' 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.
1.14 "Merger Stock" means the shares of BridgeStreet Common Stock
exchanged for Shares pursuant to Section 2.7(c).
1.15 "Non-Competition and Non-Disclosure Agreement" means the
non-competition and non-disclosure agreement attached hereto as Exhibit 3.
1.16 "OGCL" means the Ohio General Corporation Law.
1.17 "Ohio Certificate of Merger" has the meaning given to it in
Section 2.2.
1.18 "PBCL" means the Pennsylvania Business Corporation Law.
1.19 "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.
1.20 "Securities Act" means the Securities Act of 1933, as amended.
1.21 "Surviving Corporation" means Acquisition.
1.22 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.
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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, the
PBCL 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 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 articles of merger
(the "Articles of Merger") with respect to the Merger to be filed and recorded
in accordance with Section 1927 of the PBCL, 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 Articles of Merger, 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, Section 1929 of the PBCL 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 Temporary Corporate
Housing, 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
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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.
(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 stockholders 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 a
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.
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(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.
(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.
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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 (except Temporary Corporate Housing - Pittsburgh, Inc., which Company is
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania), and has full corporate power and authority to
conduct their businesses and own their 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 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. Collectively, the Shares held by the Stockholders comprise
all of the issued and outstanding shares of Common Stock of the Companies, are
duly authorized, validly issued, fully paid and non-assessable and are owned of
record and beneficially by the Stockholders in the respective amounts listed on
the Disclosure Schedule. 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,
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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 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 Articles of Merger pursuant to the PBCL, the Ohio
Certificate of Merger pursuant to the OGCL and 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 financial 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;
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(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:
(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
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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 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 Stockholders 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
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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 would be obtained if the transaction had been between
such Company and an unrelated party. Except for transactions reflected on the
latest balance sheet and 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:
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(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 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;
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(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
were 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 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
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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 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.
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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 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-
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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 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
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"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.
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, were 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.
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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 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 STOCKHOLDERS
The Stockholders represent and warrant to BridgeStreet and Acquisition
as follows:
4.1 TITLE TO THE SHARES. The Stockholders own all issued and
outstanding Shares free and clear of any claims, liens, charges, encumbrances,
security interests and rights of others whatsoever, and that such Shares are not
bound by or subject to any proxy, agreement, voting trust or other restriction
regarding the voting thereof.
4.2 AUTHORITY. Each Stockholder has full power, authority and capacity
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 all necessary action on behalf
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of each Stockholder where applicable, 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 Stockholders
and constitutes a legal, valid and binding obligation of the Stockholders
enforceable against them in accordance with its terms.
5. REPRESENTATIONS AND WARRANTIES OF BRIDGESTREET AND ACQUISITION
BridgeStreet and Acquisition represent and warrant to the Company and
the Stockholders 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 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 and acceptance of the Articles of Merger pursuant
to the PBCL, 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,
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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.
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 Stockholders and
the former stockholders of each of Temporary Housing Experts, Inc., Corporate
Lodgings, Inc. and Exclusive Interim Properties, Ltd. shall each have the right
to designate one director of BridgeStreet, and the 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
Xxxxxxxx.
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 the 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 any of the Companies to keep
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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.
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. The 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 STOCKHOLDERS. The Stockholders hereby covenant and
agree with BridgeStreet and Acquisition that they shall:
(a) use their 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 the 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.
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(b) provide to BridgeStreet the notifications required of the 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 their 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
(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.
6.7 TAX FREE REORGANIZATION. From and after the Effective Time, neither
BridgeStreet nor the Surviving Corporation nor the Stockholders 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) of the Code.
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 the 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 the 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 Stockholders 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) The Stockholders shall have executed and delivered to BridgeStreet
a letter agreement substantially in the form attached hereto as Exhibit 8 (the
"Securities Representation Letter").
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(e) The 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 the
Company's shareholders.
(f) The 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:
(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.
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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 Stockholders 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 any Indemnified Party arising from or in
connection with any actual or alleged breach of any representation, warranty,
covenant or agreement made by the Company or by the Stockholders 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 Stockholders under this Agreement shall be subject to the following
limitations:
(a) The indemnity obligations of the Stockholders 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
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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 Stockholders
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 each 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 (i)
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 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
Stockholders in writing of any Claim asserted by a third person that might give
rise to any indemnity obligation of the Stockholders 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 Stockholders of their obligation to
indemnify under this Article 9, but as a result of any such failure, the
Stockholders 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 Stockholders 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 Stockholders 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 their expense and through counsel of
their own choosing and to control such defense if they give written notice of
their 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 Stockholders or their
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 Stockholders 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 Stockholders shall
have the right to elect to settle any Third Party Claim subject to the consent
of
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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 Stockholders' liability hereunder shall be limited
to the amount of any such proposed settlement. The foregoing provisions
notwithstanding, in no event may the Stockholders (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 the 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 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:
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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, Secretary
If to the Company or any Stockholder, to it, him or her at:
Temporary Corporate Housing - Columbus, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
with a copy to:
Xxxx Xxxxxx Parks
One Columbus
00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
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.
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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 Stockholders.
10.9 JOINT AND SEVERAL. The representations, warranties, agreements,
covenants and obligations of the Stockholders under this Agreement are joint and
several.
10.10 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.
10.11 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
TEMPORARY CORPORATE HOUSING -COLUMBUS, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Title: President
TEMPORARY CORPORATE HOUSING - CLEVELAND, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Title: President
TEMPORARY CORPORATE HOUSING - CINCINNATI, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Title: President
TEMPORARY CORPORATE HOUSING - PITTSBURGH, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Title: President
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TCHI ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Title: President
SLD PARTNERSHIP
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Title: Partner
/s/ Xxxxx Xxxxxx
--------------------------------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxxxx
--------------------------------------------
Xxxx Xxxxxx
/s/ Xxxxx Xxxxxxxx
--------------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx, III
--------------------------------------------
Xxxxx Xxxxxxxx, III
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