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EXHIBIT 10.2
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this Agreement") dated as of
December 30, 1996 is among BridgeStreet International Inc., a Delaware
corporation ("BridgeStreet"), THEI Acquisition Corp., a Delaware corporation and
a wholly-owned subsidiary of BridgeStreet ("Acquisition"), Temporary Housing
Experts, Inc., a Tennessee corporation (the "Company"), and ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, ▇▇., the sole stockholders of the Company (the
"Stockholders"), and provides for the merger of the Company 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 "Certificate of Merger" has the meaning given to it in Section 2.2
1.4 "Closing" means the closing of this Agreement as provided in
Section 2.2.
1.5 "Code" means the Internal Revenue Code of 1986, as amended to date.
1.6 "Commission" means the Securities and Exchange Commission.
1.7 "DGCL" means the Delaware General Corporation Law.
1.8 "Disclosure Schedule" means the Disclosure Schedule attached hereto
as Schedule 1.
1.9 "Effective Time" means 12:01 a.m. EST on January 2, 1997, as such
date shall be specified in the Articles of Merger filed with the Secretary of
State of the State of Tennessee in accordance with Section ▇▇-▇▇-▇▇▇ of the TBCA
(as defined herein) and the 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 Certificates
of Merger.
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1.10 "Employment Contract" means the employment contract attached
hereto as Exhibit 1.
1.11 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.12 "Financial Statements" means the financial statements of the
Company 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.
1.13 "Merger Stock" means the shares of BridgeStreet Common Stock
exchanged for Shares pursuant to Section 2.7(c).
1.14 "BridgeStreet Common Stock" means the shares of Common Stock,
$0.01 par value, of BridgeStreet.
1.15 "Non-Competition and Non-Disclosure Agreement" means the
non-competition and non-disclosure agreement attached hereto as Exhibit 3.
1.16 "Securities Act" means the Securities Act of 1933, as amended.
1.17 "Share" means a share of Common Stock, $.01 par value per share,
of the Company, and "Shares" means all of such shares.
1.18 "Surviving Corporation" means Acquisition.
1.19 "TBCA" means the Tennessee Business Corporation Act.
1.20 References to the "knowledge" of any entity or to things which any
entity does or does not "know" or which are "known" by any entity refer to the
knowledge of any of the entity's officers or directors.
2. THE MERGER
2.1 THE MERGER. The Merger shall occur at the Effective Time upon the
terms and subject to the conditions hereof and in accordance with the TBCA and
the DGCL. Following the Merger, Acquisition shall continue as the Surviving
Corporation and be a subsidiary of BridgeStreet, and the separate corporate
existence of the Company shall cease. Notwithstanding this Section 2.1,
BridgeStreet may elect with the consent of the Company (which consent shall not
be unreasonably withheld) to merge Acquisition into the Company. In such event,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect the foregoing.
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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 48- 21-107 of the TBCA and shall cause a certificate
of merger (the "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 and the Certificate of Merger, a closing (the "Closing") will
be held at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Fish, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ (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 ▇▇-▇▇-▇▇▇ of the TBCA 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 Housing Experts,
Inc."
2.6 DIRECTORS AND OFFICERS. On the day following the Effective Time,
the directors and officers of the Surviving Corporation shall be as set forth on
Exhibit 4, and each such person shall hold office until his or her respective
successor is duly elected or appointed and qualified.
2.7 CONVERSION OF STOCK.
At the Effective Time:
(a) Each share of capital stock of Acquisition that is issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding without change.
(b) All Shares held in the treasury of the Company immediately prior
to the Effective Time shall be cancelled, without the payment of any
consideration therefor.
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(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
any fractional share determined in accordance with paragraph (f) of this Section
2.8. Until surrendered as contemplated by the preceding sentence, each
certificate which immediately prior to the Effective Time shall have represented
any Shares shall be deemed at and after the Effective Time to represent only the
right to receive upon such surrender the certificates and payment contemplated
by the preceding sentence.
(b) No dividends or other distributions declared after the Effective
Time with respect to BridgeStreet Common Stock shall be paid to the holder of
any unsurrendered certificate representing Shares until the holder thereof shall
surrender such certificate in accordance with this Section 2.8. After the
surrender of such certificate in accordance with this Section 2.8, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of BridgeStreet Common Stock represented by such
certificate.
(c) If any cash or certificate representing shares of BridgeStreet
Common Stock is to be paid to or issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it shall be a
condition of the payment or issuance thereof that the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to BridgeStreet any transfer or
other taxes required by reason of the issuance of a certificate representing
shares of BridgeStreet Common Stock in any name other than that of the
registered holder of the certificate surrendered, or otherwise required, or
shall establish to the satisfaction of BridgeStreet that such tax has been paid
or is not payable.
(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.
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(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 shares of Company Common Stock are to be converted shall be
correspondingly and appropriately adjusted.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants 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. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Tennessee and has full corporate power and authority to conduct its business and
own its properties as now conducted and owned. The 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. The Company 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 Board of Directors and stockholders of the Company,
and no other corporate
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proceedings on the part of the 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 the Company and constitutes a legal, valid
and binding obligation of the 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 the
Company are as set forth on the Disclosure Schedule. No Shares are held in the
Company's treasury. The Shares held by the Stockholders comprise all of the
issued and outstanding shares of Common Stock of the Company, are duly
authorized, validly issued, fully paid and non-assessable and are owned of
record and beneficially by the Stockholders. The Company has no other authorized
class of capital stock other than the Common Stock. The Company does not own and
has not owned any shares of capital stock or other securities of, or any other
interest in, nor does it control or has it controlled, directly or indirectly,
any other corporation, association, joint venture, partnership, or other
business organization. The 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 the Company, and
the Company has not otherwise agreed to issue or sell any shares of its capital
stock and has no obligation to register any of the Shares under the Securities
Act. The Company is not obligated directly, indirectly or contingently to
purchase any Shares.
3.4 NAME. The Company has not had any other name and does not conduct or
operate, and has not 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 the Company do
not (i) contravene any provisions of the Company's Charter 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 the 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 the Company is bound or to which it is subject; or (iv) violate
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any applicable law, rule, or regulation to which the 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 the Company to
consummate the transactions contemplated by this Agreement, except for filing
and acceptance of the Articles of Merger pursuant to the TBCA and for filing and
acceptance of the Certificate of Merger pursuant to the DGCL.
3.7 FINANCIAL STATEMENTS.
(a) The Financial Statements fairly present (subject, in the case of
the unaudited statements, to (i) recurring audit adjustments normal in nature
and amount and (ii) disclosure of notes in connection therewith) the financial
position of the 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) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and with
statutory accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth or reserved
against in the most recent balance sheet in the Financial Statements, the
Company (a) did not have 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 not
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, the Company has not taken or agreed to take any action that would
obligate the 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;
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(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 the 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 the 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 the 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 the Company, including any cancelled, released,
hypothecated, or assigned indebtedness owed to the Company, or any claims held
by the Company;
(e) made any investment of a capital nature or entered into a
commitment for such investment either by purchase of stock or securities,
contributions to capital, property transfer, or otherwise, or by the purchase of
any property or assets of any other individual, partnership, firm, or
corporation;
(f) declared, set aside, or paid any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect of the
capital stock of the Company, or redeemed or otherwise acquired, directly or
indirectly, any shares of capital stock of the 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 the 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 the Company, (ii) to sell any material assets of the Company
other than in the ordinary course of business, (iii) to effect any merger,
consolidation, or other reorganization of the Company, or (iv) to enter into any
agreement with respect thereto; or
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(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 the Company. The 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. The Company owns, or is licensed or
otherwise has the full and unrestricted right to use, all trademarks, trade
names, service marks, copyrights, technology, know-how, trade secrets and
techniques used in its business (collectively, the "Proprietary Information").
All such trademarks, trade names, service marks and federally registered
copyrights are listed on the Disclosure Schedule. The Company has no 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. The Company has granted to no 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 Company's knowledge (a) no
other person has a right or license granted directly or indirectly by or through
the 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 the 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 the Company and each
Stockholder, officer or director of the Company 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 the Company and an unrelated party. Except for
transactions reflected on the latest balance sheet or accompanying schedules in
the Financial Statements there are no debts or other obligations of the Company
outstanding to or
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from each Stockholder, officer or director or Affiliate of such Stockholder,
officer or director of the 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 the Company and any officer,
director or Stockholder 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 the 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 the Company (the "Material
Contracts"). The 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 the Company is a party:
(a) labor union contracts, together with a list of all labor unions
representing or attempting to represent employees of the 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 the 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 the
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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
▇▇▇▇, trade name, whether domestic or foreign, owned in whole or in part or used
by the 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
the Company to anyone;
(j) agreements, contracts or other arrangements to which the 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 the Company's
requirements for a particular product from a single supplier or to a single
customer;
(l) contracts, agreements, commitments, arrangements or understandings
limiting the freedom of the 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 the Company of more than $50,000 or not terminable without penalty or
otherwise materially affecting the assets, financial condition, properties or
business of the Company.
All of the Material Contracts are in full force and effect. Except to the extent
that a material adverse effect on the Company's financial condition, assets,
liabilities, earnings, business or prospects would not result if the following
was not true: (A) the 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) the Company
has no present expectation or intention of not fully performing all its
obligations under any of
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the Material Contracts, and the 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 the Company, threatened
termination, cancellation or limitation of the business relationship of the
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 the Company, threatened
against the 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 the 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 the Company. The Company does not know or have 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 the Company or its business.
3.15 TAXES. The 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. The Company is not 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. The Company has either paid or, in accordance
with generally accepted accounting principles applied consistently with prior
periods, adequately provided for, by reserves or other proper accounting
treatment shown in the records and books of account, its liability for all taxes
of every kind, including without limitation its liability for federal, state,
and municipal income or franchise tax for the current tax year and for all prior
years. The Company has no 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 the 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
the 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
the Company nor, to the Company's knowledge, are any such changes threatened,
anticipated or contemplated; (b) any actual or, to the 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
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materially affect the properties, assets, business affairs or prospects of the
Company; (c) any material and adverse pending or, to the 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 the Company, or any pending or, to the 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
the 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 the Company.
3.17 ABSENCE OF IMPROPER PAYMENTS. Since January 1, 1993 the Company:
(a) has not 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 not 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 not 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 not made any contribution, or has reimbursed any political
gift or contribution made by any other person, to candidates for public office,
whether Federal, state or local, where such contribution or reimbursement would
be in violation of applicable law.
3.18 ERISA.
(a) None of the employee benefit plans maintained at any time by the
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 the
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 the Company under ERISA nor has any such employee
benefit plan of the 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;
the Company has not withdrawn from or caused a partial withdrawal to occur with
respect to any Multi-employer Plan resulting in any assessed and unpaid
withdrawal liability; the 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; the
Company has not incurred any accumulated funding deficiency with respect to any
such plan, whether or not waived; nor has there been
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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 the
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 Company's knowledge, (i) each employee pension benefit plan
subject to Title IV of ERISA, maintained by the 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) The Company has no liability not disclosed on any of the Financial
Statements, contingent or otherwise, under any plan or program or the equivalent
for unfunded post-retirement benefits, including pension, medical and death
benefits, which liability would have a material adverse effect on the financial
condition of the Company.
3.19 LABOR MATTERS. A true and complete list of all of the 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 the Company, threatened by or between the Company and
any of the Employees. With respect to the Employees, the 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 the Company
is pending or, to the Company's knowledge, threatened. The Company has not 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 the Company are listed on the Disclosure Statement and true and complete
copies thereof have been provided to BridgeStreet. No Employee or consultant of
the Company shall have the right to receive from the Surviving Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ payment or other payment in the nature thereof in the
event his or
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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. The 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 the
Company's business. All such material Permits are in full force and effect, and,
to the knowledge of the 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. The Company has not 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 the Company's business, and there are no
proceedings pending or, to the Company's knowledge, threatened, nor has the
Company received any notice, regarding any such failure.
3.21 ENVIRONMENTAL MATTERS. The 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 the Company. The term "Hazardous Material" means (a) any "hazardous
substance" as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, (b) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act, as amended, (c) any petroleum or
petroleum product, (d) any polychlorinated biphenyl and (e) any pollutant or
contaminant or hazardous, dangerous, or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental Law.
There is no alleged liability, or to the 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 the
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 the 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 the
Company.
3.22 LEASES. The Disclosure Schedule sets forth as of October 31, 1996
the number of units of real property leased by the Company (each a "Leased
Premises"). Except to the extent that a material adverse effect on the Company's
financial condition, assets, liabilities, earnings, business or prospects would
not occur if the following, in the aggregate, was not true: (a) each lease
covering a Leased Premises is in full force and effect (there
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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) the
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 the 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 the 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 the 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 the Company.
3.25 ACCOUNTS RECEIVABLE. All of the accounts receivable of the 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. The
Company has no 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. The 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 the 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 the 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 the Company omit to state a material
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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. The Company has no 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 the Shares free and clear
of any claims, liens, charges, encumbrances, security interests and rights of
others whatsoever, and that the 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, 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
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other corporate proceedings on the part of BridgeStreet or Acquisition are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by each of BridgeStreet and Acquisition and constitutes a
valid and binding agreement of each, enforceable against each in accordance with
its terms.
5.2 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by BridgeStreet and Acquisition nor the consummation
of the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective charter documents or By-Laws of
BridgeStreet or Acquisition; (ii) require any consent, approval, authorization,
or permit of, or filing with or notification to, any governmental or regulatory
authority, except (A) filing the Articles of Merger pursuant to the TBCA and the
Certificate of Merger pursuant to the DGCL and (B) filings required under the
Securities Act and the securities or blue sky laws of the various states; (iii)
result in a default (or an event that might, with the passage of time or the
giving of notice or both, constitute a default) or give rise to any right to
terminate, cancel or accelerate or to any loss of benefit under any of the
terms, conditions, or provisions of any note, license, lease, agreement, or
other instrument or obligation to which BridgeStreet or Acquisition is a party
or by which BridgeStreet or Acquisition or any of their respective assets may be
bound, other than as previously disclosed in writing to the Company; or (iv)
violate any order, writ, injunction, decree, statute, rule, or regulation
applicable to BridgeStreet or Acquisition or any of their respective assets.
5.3 LITIGATION. There are no actions, suits, causes of action, claims,
litigation, arbitration, administrative hearings or other form of proceedings or
disputes pending, or, to the knowledge of BridgeStreet or Acquisition,
threatened, against, involving or affecting BridgeStreet or Acquisition, in any
court, at law or in equity, or before any arbitration board or any governmental
department, commission, board, bureau, agency, or instrumentality, that either
singly or in the aggregate might prevent BridgeStreet and Acquisition from
consummating the transactions contemplated hereby or that would have a material
adverse effect on the business, operations, or financial condition of
BridgeStreet and its subsidiaries taken as a whole.
5.4 MERGER STOCK. The Merger Stock has been duly authorized by all
necessary corporate action and, when issued and delivered by BridgeStreet
pursuant to this Agreement, will be validly issued, fully paid and
non-assessable.
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.
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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 Corporate Lodgings, Inc., Temporary Corporate
Housing Columbus, Inc. and Exclusive Interim Properties, Ltd. shall each have
the right to designate one director of BridgeStreet, and the Stockholders and
such stockholders agree to vote their Merger Stock (and any additional voting
securities of BridgeStreet issued in respect thereof) and take such other action
as shall be necessary (i) to cause each such designee to be elected to
BridgeStreet's Board of Directors and (ii) to fix the number of directors on the
Board of Directors at six. The Stockholders' initial designee pursuant to this
Section 6.1 shall be ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇.
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 Company,
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 the Company to keep such information confidential, (iii)
that is or becomes known to the public (other than through a breach of this
Agreement), (iv) that was in BridgeStreet's possession before disclosure thereof
to it in connection with this Agreement or (v) that was independently developed
by BridgeStreet.
6.3 BEST EFFORTS. Subject to the terms and conditions hereof each party
to this Agreement agrees to fully cooperate with the others and the others'
counsel, accountants and representatives in connection with any steps required
to be taken as part of its obligations under this Agreement. Each party to this
Agreement agrees that it will use its reasonable efforts to cause all conditions
to its obligations under this Agreement to be satisfied as promptly as possible,
and will not undertake a course of action inconsistent with this Agreement or
which would make any of its representations, warranties, agreements or covenants
in this Agreement untrue in any material respect or any conditions precedent to
its obligations under this Agreement unable to be satisfied at or prior to the
Closing.
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 Company shall require the prior approval of
BridgeStreet.
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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.
(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.
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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").
(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 the Company to consummate this Agreement is
subject to the satisfaction at the Closing, or waiver by the Company in writing,
in whole or in part, of each of the following conditions:
(a) The Company shall have received the opinion, dated the date of the
Closing and in form and substance satisfactory to the Company and its counsel,
of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & 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
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connection with the transactions herein contemplated shall be satisfactory in
form and substance to counsel for the Company, acting reasonably.
(c) BridgeStreet and Acquisition shall have delivered to the Company a
certificate of its Secretary, certifying as to requisite corporate or other
action authorizing the transactions contemplated by this Agreement.
(d) BridgeStreet shall have executed and delivered each Employment
Contract.
(e) On the day following the Effective Time, the officers and directors
of BridgeStreet shall be as set forth on Exhibit 4.
8. RESTRICTIONS ON SALE OR TRANSFER OF MERGER STOCK; LEGEND
The shares of Merger Stock will not have been registered under the
Securities Act or the blue sky laws of any state by reason of their contemplated
issuance in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act and of such state laws. Such shares may not
be sold, transferred, or otherwise disposed of without registration under the
Securities Act and such state laws or an exemption therefrom.
9. INDEMNIFICATION
9.1 AGREEMENTS TO INDEMNIFY.
(a) As used in this Article 9:
(i) "Damages" means claims, damages, liabilities,
losses, judgments, settlements, and expenses, including,
without limitation, all reasonable fees and disbursements of
counsel incident to the investigation or defense of any claim
or proceeding or threatened claim or proceeding.
(ii) "Indemnified Party" means each of BridgeStreet, the
Surviving Corporation, and their respective subsidiaries.
(b) On the terms and subject to the limitations set forth in this
Agreement, the 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").
(c) The Company's 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
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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 the Company 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 minimum.
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
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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 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
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Acquisition may assign its respective rights and obligations to any direct or
indirect subsidiary of BridgeStreet, but no such assignment shall relieve
BridgeStreet of its obligations hereunder.
10.3 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
10.4 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by electronic facsimile transmission,
cable, telegram, or telex, or when mailed by registered or certified mail
(postage prepaid, return receipt requested) or delivered to a courier of
national reputation to the respective parties as follows:
If to BridgeStreet or Acquisition, to it at:
BridgeStreet International Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Fish, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
If to the Company or any Stockholder, to it, him or her at:
Temporary Housing Experts, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
with a copy to:
Apperson, Crump, et al.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
10.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
10.6 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
10.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
10.8 EXPENSES. All costs and expenses incurred Subsequent to September
30, 1996 in connection with the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses; provided that the Company's
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 PLAN OF MERGER. For purposes of Section ▇▇-▇▇-▇▇▇ of the TBCA, the
plan of merger with respect to the Merger (the "Plan of Merger") shall be as set
forth on Exhibit 11. The stockholders and directors of the Company by virtue of
their approval of this Agreement shall be deemed to have approved the Plan of
Merger upon the satisfaction of the conditions contained in Article 8 of this
Agreement. Notwithstanding such approval and the filing with the Secretary of
State of Tennessee of the Plan of Merger as a part of the Articles of Merger,
the Plan of Merger shall continue to be subject to all the other provisions of
this Agreement and such other provisions shall control in the event of any
inconsistencies between such provisions and the Plan of Merger.
[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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Vice-President
----------------------------
TEMPORARY HOUSING EXPERTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
-------------------------------
Title: President
----------------------------
THEI ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: President
----------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
Stockholder
/s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
Stockholder
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