AGREEMENT AND PLAN OF MERGER
between and among
RIDGEWOOD PROPERTIES, INC.,
RIDGEWOOD ACQUISITION CORP.,
XXXXXX HOTEL GROUP, INC.,
XXXXX XxXXXXX and XXXXXX XXXX
dated
December 7, 1995
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is
dated as of December 7, 1995, between and among Ridgewood
Properties, Inc. ("Purchaser"), a Delaware corporation; Ridgewood
Acquisition Corp. ("Merger Sub"), a Georgia corporation; Xxxxxx
Hotel Group, Inc. (the "Company"), a Georgia corporation; Xxxxx
XxXxxxx ("XxXxxxx"), an individual resident of the State of
Georgia, and Xxxxxx Xxxx ("King") (collectively with XxXxxxx, the
"Shareholders" and, each individually, a "Shareholder"), an
individual resident of the State of Georgia.
W I T N E S S E T H:
WHEREAS, XxXxxxx owns 800 shares of the Company's common
stock, par value $1.00 per share ("Company Stock"); and
WHEREAS, King owns 200 shares of Company Stock; and
WHEREAS, the Company Stock owned by the Shareholders
constitutes 100% of the issued and outstanding shares of Company
Stock; and
WHEREAS, Purchaser owns all of the outstanding capital
stock of Merger Sub; and
WHEREAS, the respective Boards of Directors of Purchaser,
Merger Sub and the Company have approved this Agreement and the
transactions contemplated hereby in accordance with the require-
ments of applicable law and the Articles or Certificate of
Incorporation and the Bylaws of such party; and
WHEREAS, Purchaser, as the sole shareholder of Merger Sub,
has approved this Agreement and the transactions contemplated
hereby pursuant to action taken by written consent in accordance
with the requirements of applicable law and the Articles of Incor-
poration and Bylaws of each of Merger Sub and Purchaser; and
WHEREAS, the Shareholders of the Company have approved this
Agreement, and the transactions contemplated hereby pursuant to
action taken by unanimous written consent in accordance with the
requirements of applicable law and the Articles of Incorporation
and the Bylaws of the Company; and
WHEREAS, pursuant to Section 368 of the Internal Revenue
Code of 1986, as amended, Purchaser desires to acquire by merger of
Merger Sub into the Company the business of the Company upon the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Surviving Corporation. Subject to the
terms and conditions of this Agreement and the Georgia Business
Corporation Code (the "GBCC"), at the Effective Time (as herein-
after defined), Merger Sub shall be merged with and into the
Company (the "Merger"), and the separate corporate existence of
Merger Sub shall cease. The Company shall be the surviving
corporation in the Merger (hereinafter sometimes called the
"Surviving Corporation") and shall continue its corporate existence
under the laws of the State of Georgia.
SECTION 1.2 Articles of Incorporation. The Articles of
Incorporation of the Surviving Corporation shall be amended and
restated at and as of the Effective Time to read as did the
Articles of Incorporation of Merger Sub immediately prior to the
Effective Time (except that the name of the Surviving Corporation
will remain unchanged).
SECTION 1.3 Bylaws. The Bylaws of the Surviving Corporation
shall be amended and restated at and as of the Effective Time
to read as did the Bylaws of Merger Sub immediately prior to the
Effective Time (except that the name of the Surviving Corporation
will remain unchanged).
SECTION 1.4 Directors. The directors of Merger Sub
immediately prior to the Effective Time shall become the directors
of the Surviving Corporation, such directors to hold office from
the Effective Time until their respective successors are duly
elected and qualified.
SECTION 1.5 Officers. The officers of the Surviving
Corporation shall consist of XxXxxxx (as President), King (as Vice
President), and such other officers as shall be duly elected and
qualified, such officers to hold office from the Effective Time
until their respective successors are duly elected and qualified.
SECTION 1.6 Effective Time. If all the conditions set
forth herein shall have been fulfilled or waived in accordance with
the terms hereof and this Agreement shall not have been terminated
in accordance with Article V hereof, the parties hereto shall cause
a Certificate of Merger meeting the requirements of the GBCC (the
"Merger Certificate") to be properly executed and filed on the
Closing Date (as hereinafter defined) with the Secretary of State
of the State of Georgia. The Merger shall become effective as of
the time of filing of the properly executed Merger Certificate.
The date and time when the Merger becomes effective is herein
referred to as the "Effective Time".
SECTION 1.7 Conversion of the Shares. As of the Effective Time,
by virtue of the Merger and without any action on the
part of any holder thereof:
(a) Company Stock. Each share of Company Stock issued and
outstanding immediately prior to the Effective Time shall be
converted into one hundred twenty-five (125) shares of common
stock, par value $.01 per share, of Purchaser ("Purchaser Stock")
(the ratio of 125 shares of Purchaser Stock to one share of Company
Stock is referred to herein as the "Conversion Ratio"); provided,
however, that the Conversion Ratio shall be subject to adjustment
in the event of any stock split, stock dividend, reverse stock
split, or other change in the number of shares of Company Stock
outstanding.
(b) Merger Sub Stock. Each share of capital stock, par
value $.01 per share, of Merger Sub that is issued and outstanding
immediately prior to the Effective Time shall be converted into one
share of the Company Stock.
(c) Treasury Stock. Each share of common stock issued and
outstanding immediately prior to the Effective Time that is then
held in the treasury of the Company shall be cancelled and retired,
without any conversion thereof or payment of any consideration
therefor.
(d) Warrants, Stock Options, etc. Each warrant, stock
option or other right, if any, to purchase shares of Company Stock
issued and outstanding immediately prior to the Effective Time
shall be cancelled (whether or not such warrant, option or other
right is then exercisable) and all rights in respect thereof shall
cease to exist, without any conversion thereof or payment of any
consideration therefor.
SECTION 1.8 Exchange of Shares.
(a) Exchange.
At the Closing, subject to the terms and
conditions hereof, upon surrender by each Shareholder of all certi-
ficates that immediately prior to the Effective Time represented
shares of Company Stock held by such Shareholder ("Certificates"),
Purchaser shall deliver to such Shareholder one or more certifi-
xxxxx as requested by such Shareholder (properly issued, executed
and countersigned, as appropriate) representing the aggregate
number of shares of Purchaser Stock to which such Shareholder shall
have become entitled pursuant to the provisions of Section 1.7
hereof. From the Effective Time until surrender in accordance with
the provisions of this Section 1.8 each Certificate shall represent
for all purposes only the right to receive the consideration pro-
vided for herein.
(b) No Transfers after Effective Time. After the
Effective Time, there shall be no transfers on the stock transfer
books of Surviving Corporation of the shares of Company Stock that
were outstanding immediately prior to the Effective Time.
SECTION 1.9 Adjustment Event.
(a) Adjustment Event. In the event of any change in
Purchaser Stock between the date of this Agreement and the Effec-
tive Time by reason of any stock dividend, stock split, stock
issuance without consideration, subdivision, reclassification,
recapitalization, combination, exchange of shares or the like (an
"Adjustment Event"), the Conversion Ratio shall be appropriately
adjusted so that each Shareholder shall receive the same propor-
tionate amount of outstanding Purchaser Stock that such Shareholder
would have been entitled to receive if the Effective Time had been
immediately prior to such Adjustment Event.
SECTION 1.10 Closing.
(a) Closing. The Merger shall be consummated (the
"Closing") on the second business day following the day on which
the last of the conditions (other than those conditions which by
their terms are to occur only at the Closing) set forth in Article
I hereof shall have been satisfied or, if permissible, waived (the
"Closing Date"), at the offices of Purchaser or Purchaser's counsel
in Atlanta, Georgia, or at such other place and time and/or on such
other date as the parties may hereafter agree in writing.
(b) Deliveries. At the Closing, the Shareholder shall
execute and deliver to Purchaser the Certificates, duly endorsed in
blank, or with separate notarized stock powers attached thereto and
signed in blank, free and clear of all liens, security interests,
claims, restrictions, and any other encumbrances whatsoever, in
exchange for the delivery by Purchaser of certificates to the
Shareholders representing Purchaser Stock as set forth in Sections
1.7, 1.8 and 1.9 hereof.
(c) Corporate Matters. At the Closing, the Shareholders
will deliver to Purchaser the written resignations of all of the
directors and officers of the Company, effective as of the Closing,
except for the officers described in Section 1.5, and shall cause
to be made available to the successor directors and officers all
minute books, stock record books, books of account, corporate
seals, contracts and other documents, instruments and papers be-
longing to the Company and shall cause full possession and control
of all of the assets of the Company and of all other things and
matters pertaining to the operation of its business to be trans-
ferred and delivered to the directors and officers of the Surviving
Corporation. At the Closing, the Shareholders shall also deliver
to Purchaser, and Purchaser shall deliver to the Shareholders, the
certificates, opinions and other instruments and documents referred
to herein.
SECTION 1.11 Additional Conditions to Purchaser's Obligations.
In addition to the conditions in Section 1.10 hereof, the
obligation of Purchaser to consummate the Merger shall be subject
to satisfaction or waiver by Purchaser of the following conditions
prior to or on the Closing Date:
(a) Representations and Warranties. The representations
and warranties of the Shareholders and the Company, as set forth in
Section 2.1 hereof, shall be true and correct on the Closing Date
as if made at such date.
(b) Performance of Obligations. The Shareholders and the
Company shall have performed in all material respects all of their
respective obligations hereunder to be performed by them on or
prior to the Closing Date.
(c) Certificates. Purchaser shall have been furnished
with a certificate signed by the President of the Company, and
certificates signed by the Shareholders, each dated the Closing
Date, certifying to the fulfillment of the conditions specified in
clauses (a) and (b) of this Section 1.11.
(d) Litigation. There shall not have been instituted by
any governmental, regulatory or administrative agency or instrumen-
tality, nor shall there be pending, any action or proceeding before
any court or governmental regulatory or administrative agency or
instrumentality which challenges the legality or validity of the
transactions contemplated hereby.
(e) Resolutions. Purchaser shall have received a certified
copy of resolutions duly adopted by the Board of Directors of
the Company and the Shareholders approving this Agreement and the
Merger.
(f) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body required in connection
with the Company's and the Shareholders' respective execution,
delivery and performance of this Agreement shall have been obtained
or made, except for filing of the Merger Certificate and any docu-
ments required to be filed after the Effective Time and except
where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not
have a material adverse effect on the business of the Company
following the Effective Time.
(g) Opinion of the Company's Counsel. At Closing,
Purchaser shall have received from Xxxxxx, Xxxxxxx & Xxxxxx a
written opinion dated the Closing Date in the form attached as
Exhibit 1.11(g).
(h) Liabilities. As of the Closing Date, the Company
shall have satisfied all of its liabilities (including contingent
liabilities) except for those liabilities set forth and the
Company's performance of its obligations under those contracts
described on Schedule 1.11(h) hereof.
(i) Completion of Due Diligence. Purchaser shall have
completed its due diligence examination of the Company and the
results of such examination shall have been reasonably satisfactory
to Purchaser.
SECTION 1.12 Additional Conditions to the Company's and
Shareholders' Obligations. In addition to the conditions in
Section 1.10 hereof, the obligation of the Company and the
Shareholders to consummate the Merger shall be subject to the
satisfaction or waiver by them of the following conditions prior to
or on the Closing Date:
(a) Representations and Warranties. The representations
and warranties of Purchaser and Merger Sub, as set forth in Section
2.2 hereof, shall be true and correct on the Closing Date as if
made at such date.
(b) Performance of Obligations. Purchaser and Merger Sub
shall have performed in all material respects all of their respec-
tive obligations hereunder to be performed by them on or prior to
the Closing Date.
(c) Certificates. The Shareholders shall have been
furnished with certificates signed by the President of each of
Purchaser and Merger Sub, each dated the Closing Date, certifying
to the fulfillment of the conditions specified in clauses (a) and
(b) of this Section 1.12.
(d) Litigation. There shall not have been instituted by
any governmental regulatory or administrative agency or instru-
mentality, nor shall there be pending, any action or proceeding
before any court or governmental regulatory or administrative
agency or instrumentality that challenges the legality or validity
of the transactions contemplated hereby.
(e) Resolutions. The Shareholders shall have received a
certified copy of resolutions duly adopted by the Board of
Directors of Purchaser and the Board of Directors and shareholders
of Merger Sub approving this Agreement and all of the transactions
contemplated hereby.
(f) Other Agreements. Purchaser shall have executed and
delivered the agreements set forth in Section 1.13 hereof.
(g) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body acquired in connection
with the Purchaser's and the Merger Sub's execution, delivery and
performance of this Agreement shall have been obtained or made,
except for filing of the Merger Certificate and any documents
required to be filed after the Effective Time except where the
failure to have obtained or made any such consent, authorization,
order, approval, filing or registration would not have a material
adverse effect on the business of the Purchaser or Merger Sub
following the Effective Time.
(h) Opinion of Purchaser's Counsel. The Shareholders
shall have received a written opinion from Xxxxxx & Xxxxxx dated
the Closing Date in the form attached as Exhibit 1.12(h).
SECTION 1.13 Other Agreements. Purchaser and the
Shareholders agree that at the Closing:
(a) Post-Employment Consulting Agreements.
(i) Purchaser and XxXxxxx shall execute and deliver a
post-employment consulting agreement substantially in the form
attached hereto as Exhibit 1.13(a)(i).
(ii) Purchaser and King shall execute and deliver a
post-employment consulting agreement substantially in the form
attached hereto Exhibit 1.13(a)(ii).
(b) Registration Rights Agreement. Purchaser and the
Shareholders shall execute and deliver a registration rights agree-
ment substantially in the form attached hereto as Exhibit 1.13(b).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 Representations and Warranties by Shareholders and
the Company. The Shareholders and the Company jointly
and severally represent and warrant to Purchaser as follows:
(a) Ownership of Shares. Each Shareholder is the record
and beneficial owner of the shares of the Company Stock attributed
to such Shareholder on Schedule 2.1(a) hereof and, at the Closing,
will own all such shares free and clear of any liens, claims,
options, charges, encumbrances or rights of others.
(b) Consents. Subject to the filing and recordation of
the Merger Certificate, each Shareholder and the Company may enter
into this Agreement and perform his obligations under this
Agreement without the necessity of obtaining any consent from
anyone, including any governmental authority.
(c) Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing
under the laws of the State of Georgia. The Company has all
requisite corporate power and corporate authority to own or lease
and operate its properties and assets and to carry on its business
as, and in the places where, such properties and assets are now
owned or leased and operated and such business is now being con-
ducted. Attached hereto as Schedule 2.1(c)(i) is a true and
complete copy of the Articles of Incorporation and Bylaws of the
Company, as amended. The Company is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction, other than California, in which the failure to be so
qualified would have a material adverse effect on the assets,
liabilities, results of operations, financial condition, business
or prospects of the Company. The Company is currently undertaking
to qualify as a foreign corporation authorized to transact business
within the State of California. Schedule 2.1(c)(ii) contains a
true and correct list of the jurisdictions in which the Company is
qualified to do business as a foreign corporation. The Company has
delivered to Purchaser for inspection its respective minute books
and stock records. Except as set forth in Schedule 2.1(c)(iii),
the Company has no subsidiaries. Each of the subsidiaries set
forth on Schedule 2.1(c)(iii) is a corporation duly incorporated,
validly existing and in good standing under the laws of the state
of its incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and assets and
to carry on its business as, and in the places where, such
properties and assets are now owned or leased and operated and such
business is now being conducted. For purposes of this Section, the
term "subsidiary" shall mean any corporation or other business
entity of which the Company owns a majority of the outstanding
voting securities entitled to vote for the election of directors or
an equivalent equity interest.
(d) Continuity of Interest. There is no plan or intention
by the Shareholders to sell, exchange or otherwise dispose of a
number of shares of Purchaser Stock received in the Merger that
would reduce the Shareholders' ownership of the Purchaser Stock
received in the Merger to a number of shares having a value, as of
the Effective Time, of less than fifty percent (50%) of the value
of all of the formerly outstanding Company Stock as of the Effec-
tive Time.
(e) Capitalization of the Company. The authorized capital
stock of the Company consists of 10,000 shares of Company Stock of
which 1,000 shares are validly issued and outstanding, all of which
are fully paid and nonassessable and free of preemptive rights.
Except as set forth on Schedule 2.1(e), there are no outstanding
options, warrants, convertible securities or other rights, agree-
ments, arrangements or commitments obligating the Company or any
Shareholder to issue or sell any shares of capital stock of the
Company. Except as contemplated under Article II hereof, no
dividends shall have been declared prior to Closing with respect to
any shares of capital stock of the Company which shall not have
been paid prior to Closing.
(f) Authority Relative to Agreement; Non-Contravention.
The Company and the Shareholders have all requisite power and
authority to enter into this Agreement and to perform their
respective obligations hereunder. The execution and delivery of
this Agreement by the Company and the Shareholders and the per-
formance by the Company and the Shareholders of its obligations
hereunder and the consummation of the Merger and the other trans-
actions provided for herein have been duly and validly authorized
by all necessary action on the part of the Company and the Share-
holders. This Agreement has been duly executed and delivered by
the Company and the Shareholders and (i) constitutes the valid and
binding obligation of the Company and the Shareholders, enforceable
against the Company and the Shareholders in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or
other laws relating to or affecting the enforcement of creditors'
rights or the collection of debtors' obligations in general or by
general equitable principles, and (ii) does not (A) conflict with
any provision of the Articles of Incorporation or Bylaws of the
Company or (B) to the Shareholders' knowledge, result in any
violation of or default under, or permit the acceleration of any
obligation under, any mortgage, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regula-
tion applicable to the Company or the Shareholders or their respec-
tive assets and properties or any agreement or understanding
between any administrative or regulatory authority or any rules or
regulations of any trade association or organization of which the
Company or the Shareholders are members, if such conflict, xxxxx-
tion, default or acceleration would have a material adverse effect
on the assets, liabilities, results of operations or financial
condition, business or prospects of the Company taken as a whole.
(g) Financial Statements. Attached to Schedule 2.1(g)(i)
are true, correct and complete copies of (i) the balance sheets of
the Company as of December 31, 1994 (the "Latest Year-End Balance
Sheet") and 1993, and the related statements of income, stock-
holders' equity, and cash flows for the years then ended, together
with the report thereon of [accountant]. Also attached to Schedule
2.1(g) is a true, complete and correct copy of the unaudited
balance sheet of the Company at November 30, 1995 and the related
unaudited statement of income and retained earnings for the period
from the Latest Year-End Balance Sheet Date to November 30, 1995.
All of the foregoing financial statements (the "Financial State-
ments") were prepared in accordance with generally accepted
accounting principles ("GAAP") and, subject to any qualifications
set forth in the applicable notes and schedules, to the Share-
holders' knowledge present fairly the financial position and
results of operations of the Company at the dates and for the
periods covered thereby. To the Shareholders' knowledge, the
Company has no liability or obligation of any nature whatsoever,
whether accrued, absolute, contingent or otherwise, other than (x)
current liabilities and obligations which are recurring in nature
and not overdue on their terms, (y) liabilities and obligations
reflected and adequately provided for on the latest Balance Sheet
and (z) liabilities and obligations arising in the ordinary course
of business of the Company since the date of the Latest Year-End
Balance Sheet. Schedule 2.1(g)(iii) sets forth a true and complete
list of each loss contingency of the Company exceeding $5,000, if
it is "probable" (within the meaning of SFAS 5) that future events
will confirm the loss or impairment of an asset or the incurrence
of a liability.
(h) Books of Account; Returns and Reports; Taxes. To the
Shareholders' knowledge, the books of account of the Company fairly
reflect (i) all transactions relating to the Company and (ii) all
items of income and expense, assets and liabilities and accruals
relating to the Company. The Company has not engaged in any
transaction, maintained any bank account or used any corporate
funds except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records
of the Company. For taxable years beginning on and after May 1,
1988, the Company has continuously been (and currently is) an "S"
corporation within the meaning of Section 1361 of the Code and the
equivalent provisions of all applicable state income tax statutes.
To the Shareholders' knowledge, the Company has duly filed all
federal, state, local and foreign tax returns required to be filed
by it through the last date hereof and has duly paid or made
adequate provision for the payment of all taxes which are due and
payable for taxable years ending on or before the date immediately
preceding the Closing Date. To the Shareholders' knowledge, the
liability for taxes reflected in the Latest Year-End Balance Sheet
(excluding any reserve for deferred taxes or portion thereof which
is attributable to differences between the timing of income or
deductions for tax and financial accounting purposes) is sufficient
for the payment of all accrued but unpaid taxes, whether or not
disputed, for the period then ended and for all years and periods
ended prior thereto. All deficiencies asserted as a result of any
examinations conducted by the IRS or any other taxing authority
prior to the date hereof have been paid, fully settled or ade-
quately provided for in the Latest Year-End Balance Sheet. There
are no pending claims asserted for taxes of the Company or out-
standing agreements or waivers extending the statutory period of
limitation applicable to any tax return of the Company for any
period. The Company has made all estimated income tax deposits
through the date hereof and all other required tax payments or
deposits and has complied for all prior periods in all material
respects with the tax withholding provisions of all applicable
federal, state, local, foreign and other laws. The Company has
made available to Purchaser true, complete and correct copies of
its federal income tax returns for the last three (3) taxable years
and made available such other tax returns as have been requested by
Purchaser.
(i) No Default or Litigation.
(i) The business of the Company is being conducted in
compliance with, and the Company has made (or has caused to be
made) all material filings required by, the laws, orders,
regulations, policies and guidelines of all applicable govern-
mental entities (including, without limitation, applicable
laws, orders and regulations relating to labor relations or
environmental protection).
(ii) The Company is not in default under the terms of
any outstanding contract, agreement, lease or other commitment
and there does not currently exist under any such contract,
agreement, lease or commitment any condition or event that,
with notice or lapse of time or both, would constitute a
default.
(iii) Except as set forth on Schedule 2.1(i)(iii),
there are no actions at law, suits in equity, administrative
proceedings or claims pending or threatened against or affect-
ing the Company or its assets or properties.
(iv) The Company has not received written notice that
it has been charged by any governmental entity with any xxxxx-
tion of any applicable law, order or regulation and the Company
is not threatened by any governmental entity with a charge of
any violation of, any applicable law, order or regulation.
(v) The Company is not subject to any judgment, order,
writ, injunction, decree or award of any court, arbitrator or
governmental department, agency, board, bureau or instrumen-
tality issued or entered in a proceeding to which the Company
is or was a party which is binding upon the Company.
(vi) Neither the Company nor the Shareholders are aware
of any issue that, if discovered upon audit by any governmental
or accounting agency, would have a material adverse effect on
the assets, liabilities, results of operations, financial
condition, business or prospects of the Company.
(j) Licenses, Permits and Authorizations. The Company has
validly and legally obtained and duly holds all material approvals,
licenses or other permits of all governmental or regulatory
agencies, whether federal, state or local, which are required for
the operation of its business as it is presently being conducted.
(k) Labor Controversies. Except for that certain
Collective Bargaining Agreement identified in Schedule 3.9 (the
"Union Agreement"), the Company is not a party to any collective
bargaining agreement with respect to any of its employees. Except
as set forth in Schedule 2.1(k), there are no labor controversies
presently pending or, to the best of the Company's and the
Shareholders' knowledge, threatened against the Company.
(l) Employee Benefit Plans.
(i) Except as required under the Union Agreement,
neither the Company nor any Affiliate contributes to any multi-
employer pension plan as defined in Section 3(37) of the
Employment Retirement Income Security Act of 1974 ("ERISA").
Except as set forth on Schedule 2.1(l) or under the Union
Agreement:
(a) There is no "employee welfare benefit plan" (as
defined in Section 3(l) of ERISA maintained by the Company
or any corporate or other trade or business under common
control of the Company (hereinafter, an "Affiliate"),
within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended (the "Code"), or to which the
Company or any Affiliate thereof contributes or is required
to contribute (such plans being hereinafter collectively
referred to as "Employee Welfare Benefit Plans") for
employees or for former employees of the Company.
(b) There is no "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) maintained by the Company
or any Affiliate, and there is no such plan to which the
Company or any Affiliate contributes, is required to
contribute or has contributed (such employee benefit plans
being hereinafter collectively referred to as the "Employee
Pension Benefit Plans"). Neither the Company nor or any
Affiliate maintains or contributes to any pension plan
(including any multi-employer pension plan as defined in
Section 3(37) of ERISA) which is subject to the provision
of Part 3 of Title I or Title IV of ERISA.
(c) Neither the Company nor any Affiliate maintains
any tax-qualified plans within the meaning of Section 401
of the Code.
(d) Neither the Company nor any Affiliate is a
party to or obligated under any agreement, plan, contract
or other arrangement pursuant to which the Company or any
Affiliate or Purchaser is or might be required to make
payments that would not be deductible or capitalizable for
federal income tax purposes by reason of the application of
Section 280G of the Code. Further, the consummation of the
transactions contemplated by this Agreement will not by
their occurrence result in any employee becoming entitled
to severance payments from the Company or any Affiliate.
(e) The Company and all Affiliates have complied
with the requirements of Section 162(k) of the Code
regarding continuation of health care coverage under any
group health plans.
(f) Except as contemplated in Article III hereof,
there are no material liabilities (in excess of $5,000
individually or $50,000 in the aggregate), absolute or
contingent, of the Company, or of any employee, officer,
director or any person which may have indemnity rights or
contribution rights or other recourse against the Company
with respect thereto, to any employee benefit plan, pro-
gram, practice, arrangement, agreement or understanding,
whether written or oral, except for liabilities which have
been fully accrued on the most recent Financial Statements.
(ii) Neither the Company nor any Affiliate currently
has any liability to make any withdrawal liability payment to
any pension or welfare benefit plan that is a "multiemployer
plan" within the meaning of Section 400(a)(3) of ERISA (a
"Multiemployer Plan"). Neither the Company nor any Affiliate
is delinquent in making contributions required to be paid to
any Multiemployer Plan. There is no pending dispute between
the Company or any Affiliate and any Multiemployer Plan
concerning payment of contributions or withdrawal liability
payment.
(iii) Neither the Company nor any Affiliate (a) has
incurred (or has experienced any event that will, within the
ensuing twelve months, result in) a withdrawal, either complete
or partial (as defined in Section 4203 or 4205 of ERISA), from
any Multiemployer Plan, or (b) has incurred a decline in con-
tributions to any Multiemployer Plan such that, if the current
state of contributions continues, a seventy-percent decline in
contributions (as defined in Section 4205 of ERISA) will occur
within the next three plan years. Neither the Company nor any
Affiliate has received any notice of any failure by a Multi-
employer Plan to satisfy the minimum funding requirements of
Section 412 of the Code, or of any application for or receipt
of a waiver of such minimum funding requirements with respect
to any Multiemployer Plan.
(iv) For each Multiemployer Plan (including each
welfare benefit plan which, pursuant to its trust agreement,
operating rules, or otherwise, imposes any post-withdrawal
liability of contribution obligations upon employers with-
drawing from such plan) to which the Company or an Affiliate
has an obligation to contribute (or otherwise is regarded as an
employer in relation to such plan within the meaning of Section
3(5) of ERISA), the Multiemployer Plan has no unfunded vested
benefits for withdrawal liability purposes as of the date
hereof and the Company would not be subject to withdrawal
liability imposed by such Multiemployer Plan if the Company
were to withdraw from the Multiemployer Plan in a complete
withdrawal as of the date hereof.
(m) Environmental Matters. There has been no release
of a hazardous substance, as that term is defined in the Com-
prehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Section 9601(14), or any petroleum product by
the Company into the environment at any property ever owned,
leased, managed or used by the Company (the "Premises"), in-
cluding, without limitation, any such release in the soil or
groundwater underlying the Premises and, to the best knowledge
of the Company and the Shareholders, there has been no such
release by any other party at any of the Premises. The Company
has not disposed of any material at any hazardous waste treat-
ment or disposal facility and has not disposed of any hazardous
substances (as defined above) at any location. The Company has
not received notice of any violation of any Environmental Law
nor has it been advised of any claim or liability pursuant to
any Environmental Law brought by any governmental agency or
private party. There are no Environmental Liabilities (as
defined below) of the Company. As used in this Agreement,
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licen-
ses, agreements and governmental restrictions, whether now or
hereafter in effect, relating to human health, the environment
or to emissions, discharges or releases of pollutants, contami-
nants, Hazardous Substances or wastes into the environment,
including without limitation ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, pro-
cessing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation
thereof. "Environmental Liabilities" with respect to any
person means any and all liabilities of or relating to such
person or any of its subsidiaries (including any entity which
is, in whole or in part, a predecessor of such Person or any of
its subsidiaries), whether vested or unvested, contingent or
fixed, actual or potential, known or unknown, which (i) arise
under or relate to matters covered by Environmental Laws and
(ii) relate to actions occurring or conditions existing on or
prior to the Closing Date. "Hazardous Substances" means any
toxic, radioactive, caustic or otherwise hazardous substance,
including asbestos, petroleum, its derivatives, by-products and
other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics,
including, without limitation, any substance regulated under
Environmental Laws.
(n) Intellectual Property. Schedule 2.1(n) sets forth a
complete and correct list of (i) each patent, patent application,
trademark (whether or not registered), trademark application, trade
name, service xxxx, copyright and proprietary intellectual property
(including, without limitation, proprietary computer software,
whether in object or source form, but excluding computer software
routinely licensed to the public for use on personal computers)
(collectively, "Intellectual Property") that is owned, used or
licensed by the Company and that is material to its business and a
description of whether such Intellectual Property is owned or
licensed by the Company. Except as noted on Schedule 2.1(n), the
Company has the right to use such Intellectual Property and the
current use by the Company of such Intellectual Property does not
infringe upon the rights of any other person. To the best of the
Company's and the Shareholders' knowledge, no other person is
infringing upon the rights of the Company in any such Intellectual
Property.
(o) Title to Properties; Absence of Liens and Encum-
brances, Etc. The Company does not own, nor has it at any time
owned, any real property. All real and personal property leased to
or managed by the Company is described in Schedule 2.1(o) hereof.
Except as set forth in Schedule 2.1(o), the Company has good and
marketable title to all its properties and assets, real, personal
and mixed, used in its business free and clear of any liens,
charges, pledges, security interests or other encumbrances, except
for liens with respect to (i) those items shown on Schedule 2.1(o)
hereto; (ii) statutory liens arising or incurred in the ordinary
course of business with respect to which the underlying obligations
are not delinquent; and (iii) liens for taxes not yet due. All
leases under which the Company is the lessee of any real or per-
xxxxx property, and all contracts under which the Company is
manager of any real property, are valid and binding on the lessors,
or the owners, as the case may be, thereunder in accordance with
their respective terms.
(p) Contracts and Commitments. Except as set forth on
Schedule 2.1(p) or Schedule 2.1(l) or as contemplated under Article
III, the Company is not a party to or subject to any liabilities
arising from:
(i) any management or employment contract, special
termination agreement or other contract for personal services
with an officer, consultant, director, employee or other person
that is not terminable by the Company on not more than one (1)
month's notice without penalty;
(ii) any single contract to sell goods or any single
contract to purchase goods which exceeds $5,000 in price which
was not incurred in the ordinary course of business;
(iii) except for the Union Agreement, any agreement
providing for liability for severance pay, labor contracts, or
labor or personnel policies;
(iv) any contract, agreement, or instrument, not
reflected in the Financial Statements, evidencing or relating
to any outstanding indebtedness for borrowed money or the
deferred purchase price of property, or any direct or indirect
guarantee of any such indebtedness or deferred purchase price;
(v) except as noted under Schedule 2.1(n) or 3.9 or as
contemplated under Article III, any agreement that restricts
the right of the Company to engage in any line of business,
solicit employees or customers or otherwise compete in any line
of business;
(vi) any contract, commitment, or agreement that
involves (A) any single capital expenditures by the Company in
excess of $5,000 which expenditure is not in the ordinary
course of the Company's business or (B) except as contemplated
in Article III, the disposition of any assets reflected in the
Financial Statements not in the ordinary course of business
consistent with past practices;
(vii) except as contemplated under Article III, any
contract, commitment, or agreement between (A) the Company and
(B) any shareholder, officer or director (or any of their
affiliates) of the Company;
(viii) except for that certain Agreement of Limited
Partnership of Xxxxxx Hotel Group, Ltd. dated April 18, 1988,
as amended (the "Partnership Agreement"), and that certain
Certificate of Limited Partnership of Xxxxxx Hotel Group, Ltd.
dated April 18, 1988, as amended, any partnership agreement in
which the Company is a partner; or
(ix) except for the Partnership Agreement, any joint
venture contract or arrangement or any other agreement that
involves a sharing of profits.
Complete and correct copies (in the case of any of the
foregoing that are in writing) or descriptions (in the case of any
of the foregoing that are not in writing) of each of the foregoing
have been delivered to Purchaser.
(q) Insurance. The Company has been and is insured with
respect to its properties and the conduct of its business in such
amounts and against such risks as are reasonable in relation to its
business and will maintain such insurance at least through the
Effective Time. The Company has heretofore provided to Purchaser
a true and complete list of its current insurance coverages,
including names of carriers, amounts of coverage and premiums
therefor. The Company has made available to Purchaser true and
complete copies of all insurance policies covering the Company, its
properties, assets, employees and operations.
(r) Absence of Certain Changes.
(i) Since the Latest Year-End Balance Sheet Date,
except as described on Schedule 2.1(r) or contemplated under
Article III, there has not been (A) to the Shareholders' knowl-
edge, any material adverse change in the assets, liabilities,
results of operations, financial condition, business or pro-
spects of the Company, (B) any damage, destruction, loss or
casualty to property or assets of the Company, whether or not
covered by insurance, which property or assets are material to
the operations or business of the Company, (C) except as con-
templated under Article III, any declaration, setting aside or
payment of any dividend or distribution (whether in cash, stock
or property) in respect of the capital stock of the Company or
any redemption or other acquisition by the Company of any of
the capital stock of the Company or any split, combination or
reclassification of shares of capital stock declared or made by
the Company, or (D) to the Shareholders' knowledge, any
agreement to do any of the foregoing.
(ii) Except as set forth on Schedule 2.1(r), since the
Latest Year-End Balance Sheet Date, there have not been, with
respect to the Company (A) any material assets mortgaged,
pledged or made subject to any lien, charge or other encum-
brance, (B) any material liability or obligation (absolute,
accrued or contingent) incurred or any material bad debt,
contingency or other reserve increase suffered, except, in each
such case, in the ordinary course of business and consistent
with past practice, (C) any material claims, liabilities or
obligations (absolute, accrued or contingent) paid, discharged
or satisfied, other than the payment, discharge or satisfac-
tion, in the ordinary course of business and consistent with
past practice, of claims, liabilities and obligations reflected
or reserved against in the Financial Statements or incurred in
the ordinary course of business and consistent with past prac-
xxxx since the date of the Latest Year-End Balance Sheet Date,
(D) any material guarantees, checks, notes or accounts receiv-
able written off as uncollectible, except write-offs in the
ordinary course of business and consistent with past practice,
(E) any material write down of the value of any asset or invest-
ment on the Company's books or records, except for depreciation
and amortization taken in the ordinary course of business and
consistent with past practice, (F) to the Shareholders' knowl-
edge, any cancellation of any material debts or waiver of any
material claims or rights of substantial value, or sale,
transfer or other disposition of any material properties or
assets (real, personal or mixed, tangible or intangible) of
su1bstantial value, except, in each such case, in transactions
in the ordinary course of business and consistent with past
practice and which in any event do not exceed $50,000 in the
aggregate, (G) any single capital expenditure or commitment in
excess of $5,000 for additions to property or equipment, or
aggregate capital expenditures and commitments in excess of
$50,000 (on a combined basis) for additions to property or
equipment, (H) any other material transactions entered into
other than in the ordinary course of business, (I) any agree-
ments to do any of the foregoing, or (J) any other events,
developments or conditions of any character that have had or
are reasonably likely to have a material adverse effect on the
assets, liabilities, results of operations, financial condi-
tion, business or prospects of the Company.
(s) Accounts Receivable. All accounts receivable of the
Company as set forth on the Latest Year-End Balance Sheet or
arising since the Latest Year-End Balance Sheet Date (i) have
arisen only in the ordinary course of business consistent with past
practice for goods sold and delivered or services performed and
(ii) to the Shareholders' knowledge are collectible at the recorded
amounts thereof (free of any, and subject to no, defenses, setoffs
or counterclaims) in the ordinary course of business (without
resort to litigation or assignment to a collection agency), net of
(in the case of accounts receivable set forth on the Latest Year-
End Balance Sheet) any allowance for doubtful accounts reflected in
the Latest Year-End Balance Sheet and net of (in the case of
accounts receivable arising since the Latest Year-End Balance Sheet
Date) an allowance for doubtful accounts established on a basis
consistent with the allowance reflected in the Latest Year-End
Balance Sheet. Nothing contained in this Paragraph shall consti-
tute any guarantee or assurance by the Shareholders that any such
accounts receivable shall be collectible by the Company or Pur-
chaser and the Shareholders shall have no liability from the
Company's or Purchaser's failure or inability to collect any such
accounts.
(t) Accuracy of Statements. No representation or warranty
made herein, and no statement, exhibit certificate or schedule
furnished, or to be furnished, by the Company or the Shareholders
to Purchaser pursuant hereto, or in connection with the transac-
tions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or
therein not misleading.
(u) Affiliates. For purposes of Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"), there
are no persons (other than the Shareholders) who are "affiliates"
of the Company.
(v) Qualification of Shareholders. Each Shareholder, with
respect to himself and not with respect to the other Shareholders,
represents and warrants that he (i) is acquiring the Purchaser
Stock to be issued in the Merger for his own account and not with
a view to, or for resale in connection with, any distribution
thereof; (ii) understands and acknowledges that such Purchaser
Stock has not been registered under the Securities Act or any state
securities laws by reason of certain exemptions from the registra-
tion provisions thereof which depend upon, among other things, the
bona fide nature of such Shareholder's investment intent as ex-
pressed herein; (iii) is able to bear the economic risk of invest-
ment in such Purchaser Stock and has such knowledge and experience
in financial and business matters that he is capable of evaluating
the risks and merits of such Purchaser Stock; and (iv) understands
and acknowledges that such Purchaser Stock will be "restricted
securities" as that term is defined in Rule 144 under the Securi-
ties Act and that the certificate representing such Purchaser Stock
will bear a legend restricting transfer unless (A) the transfer is
exempt from the registration requirements under the Securities Act
and any applicable state securities law and an opinion of counsel
reasonably satisfactory to Purchaser that such transfer is exempt
therefrom is delivered to Purchaser or (B) the transfer is made
pursuant to an effective registration statement under the Securi-
ties Act and any applicable state securities law
SECTION 2.2 Representations and Warranties by Purchaser.
Purchaser represents and warrants to the Company and the Share-
holders as follows:
(a) Organization of Purchaser. Purchaser is a corporation
duly incorporated and validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate
power and corporate authority to own or lease and operate its
properties and assets and to carry on its business as, and in the
places where, such properties and assets are now owned or leased
and operated and such business is now being conducted. Merger Sub
is duly incorporated and validly existing and in good standing
under the laws of the State of Georgia and has all requisite power
and authority to carry on its business as such business is now, and
at the time of Closing, will be conducted. Purchaser has delivered
to the Company a true, correct and complete copy of the Certificate
or Articles of Incorporation and Bylaws of Purchaser and Merger
Sub, and all amendments thereto, as in effect on the date hereof.
Purchaser is duly qualified and authorized to transact business in
the State of Georgia.
(b) Authority Relative to Agreements; Non-Contravention.
Purchaser and Merger Sub have all requisite corporate power and
corporate authority to enter into this Agreement and to perform
their obligations hereunder. The execution, delivery and perfor-
xxxxx of this Agreement have been duly authorized by the Board of
Directors of Purchaser and the Board of Directors and the share-
holders of Merger Sub. This Agreement and has been duly executed
and delivered by Purchaser and Merger Sub and (i) constitutes a
valid and binding obligation of Purchaser and Merger Sub, enforce-
able against Purchaser and Merger Sub in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or other laws
relating to or affecting the enforcement of creditors' rights or
the collection of debtors' obligations in general or by general
equitable principles, and (ii) do not (A) conflict with any pro-
vision of the Articles or Certificate of Incorporation or Bylaws of
Purchaser or Merger Sub or (B) result in any violation of or
default under, or permit the acceleration of any obligation under,
any material mortgage, indenture, lease, agreement or other instru-
ment, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applic-
able to Purchaser or Merger Sub or their respective properties or
any material agreement or understanding between any administrative
or regulatory authority or any rules or regulations of any trade
association or organization of which Purchaser or Merger Sub is a
member, if such conflict, violation, default, or acceleration would
have a material adverse effect on the assets, liabilities, results
of operations, financial condition, business or prospects of Pur-
chaser and its subsidiaries (including Merger Sub) taken as a
whole. Merger Sub has not previously conducted any business and is
not a party to any material contract other than this Agreement.
For purposes of this Agreement, the term "subsidiary," when used
with respect to Purchaser, shall mean any corporation or other
business entity of which Purchaser owns a majority of the outstand-
ing securities entitled to vote for the election of directors or an
equivalent equity interest.
