Exhibit 10.32
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ASSET PURCHASE AND
AGREEMENT AND PLAN OF MERGER
dated as of January 1, 1999,
by and among
JANUS AMERICAN GROUP, INC., a Delaware corporation,
▇▇▇▇ HOSPITALITY INC. II,
an Ohio corporation,
▇▇▇▇ HOSPITALITY INC. III,
an Ohio corporation,
▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS.................................................. 1
ARTICLE II. THE TRANSACTIONS............................................. 7
2.1. The Transactions............................................. 7
2.2. Closing...................................................... 7
2.3. Effective Time of Merger..................................... 7
2.4. Certificate of Incorporation of Janus........................ 7
2.5. By-Laws of Surviving Corporation............................. 8
2.6. Directors and Officers of Surviving Corporation.............. 8
2.7. Janus Consideration for the Transactions..................... 8
2.8. Assumption of Liabilities.................................... 8
2.9 Tax Consequences............................................. 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS................ 8
3.1. Organization and Good Standing............................... 8
3.2. Authority; No Conflict....................................... 9
3.3. Capitalization...............................................10
3.4. Financial Statements.........................................10
3.5. Properties; Encumbrances.....................................11
3.6. Condition and Sufficiency of Assets..........................12
3.7. Accounts Receivable..........................................12
3.8. No Undisclosed Liabilities...................................12
3.9. Taxes........................................................12
3.10. No Material Adverse Change...................................13
3.11. Intangible Property..........................................13
3.12. Accounts Payable.............................................13
3.13. Employee Benefit Plans.......................................13
3.14. Insurance....................................................15
3.15. Compliance with Legal Requirements;
Governmental Authorizations.................................15
3.16. Legal Proceedings............................................17
3.17. Absence of Certain Changes and Events........................18
3.18. Contracts; No Default........................................19
3.19. Environmental Matters........................................20
3.20. Employees....................................................21
3.21. Labor Relations; Compliance..................................22
3.22. Certain Payments.............................................22
3.23. Disclosure...................................................22
3.24. Relationships with Related Persons...........................22
3.25. Brokers or Finders...........................................23
3.26. Acknowledgment Regarding Information Concerning Janus........23
3.27. Securities Law Representations...............................23
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF JANUS......................24
4.1. Organization and Good Standing...............................24
4.2. Authority; No Conflict.......................................25
4.3 Janus Preferred Stock........................................25
ARTICLE V. CLOSING CONDITIONS...........................................25
5.1. Conditions to Each Party's Obligations Under this Agreement..25
5.2. Additional Conditions to Janus' Obligations
Under this Agreement........................................26
5.3. Additional Conditions to Obligations of the ▇▇▇▇
Entities Under This Agreement...............................27
ARTICLE VI. COVENANTS OF THE PARTIES.....................................28
6.1. Access to Information and Records............................28
6.2. Bank Accounts................................................29
6.3. Conduct of Business Pending Closing..........................29
6.4. Disclosure Letters...........................................30
ARTICLE VII. TERMINATION..................................................30
7.1. Termination Events...........................................30
ARTICLE VIII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................30
ARTICLE IX. MISCELLANEOUS................................................30
9.1. Exhibits and Disclosure Letter of the ▇▇▇▇ Entities..........30
9.2. Publicity....................................................30
9.3. Notices......................................................31
9.4. Entire Agreement.............................................31
9.5. Waivers and Amendments.......................................32
9.6. Expenses.....................................................32
9.7. Governing Law................................................32
9.8. No Assignment................................................32
9.9. Variation in Pronouns........................................32
ii
9.10. Counterparts.................................................32
9.11. Arbitration..................................................33
Exhibits
Exhibit A - Amended and Restated Registration Rights Agreement
iii
ASSET PURCHASE AND AGREEMENT AND PLAN OF MERGER
ASSET PURCHASE AND AGREEMENT AND PLAN OF MERGER, dated as of January 1,
1999, by and among JANUS AMERICAN GROUP, INC., a Delaware corporation ("Janus"),
▇▇▇▇ HOSPITALITY INC. II, an Ohio corporation ("▇▇▇▇ II"), ▇▇▇▇ HOSPITALITY INC.
III, an Ohio corporation ("▇▇▇▇ III"), ▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇
("Yeaggy") (▇▇▇▇ and Yeaggy are collectively referred to as the "Sellers").
Recitals:
▇. ▇▇▇▇▇ desires to acquire various hotel properties and hotel management
agreements which are owned by Persons controlled by the Sellers and the Sellers
desire to cause the sale of the same to Janus.
B. The parties hereto have determined to cause the acquisition of such
properties and agreements by Janus by way of a merger of ▇▇▇▇ II with and into
Janus, upon the terms and subject to the conditions set forth herein.
C. It is the intention of the parties that the merger constitute a
reorganization within the meaning of Code Section 368(a).
NOW, THEREFORE, the parties intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article I:
"Affiliate" shall mean with respect to any Person, (i) each Person that
controls, is controlled by or is under common control with any such Person or
any Affiliate of such Person, (ii) each of such Person's officers, directors,
joint venturers, members and partners and (iii) such Person's spouse, children,
siblings and parents. For purposes of this definition, "control" of a Person
shall mean the possession, directly or indirectly of the power to direct or
cause the direction of its management or policies, whether through the ownership
of voting interests, by contract or otherwise.
"Agreement" shall mean this Asset Purchase and Agreement and Plan of
Merger, as amended or supplemented from time to time and all exhibits and
schedules attached hereto.
"▇▇▇▇" shall have the meaning assigned to that term in the preamble of
this Agreement.
"▇▇▇▇ Disclosure Letters" shall mean, collectively the following
disclosure letters delivered by the ▇▇▇▇ Entities to Janus concurrently with the
execution and delivery of this Agreement: the Juno Disclosure Letter (which
includes all applicable disclosure for the Trustee); the ▇▇▇▇ II Disclosure
Letter; the Beckelbe (LLC)/Beckelbe (Corp.) Disclosure Letter; and the Pompano
Beach Disclosure Letter.
"Beckelbe (Corp.)" shall mean Beckelbe, Inc., a Delaware corporation.
"Beckelbe (LLC)" shall mean Beckelbe, Ltd., an Ohio limited liability
company.
"▇▇▇▇ Entities" shall mean collectively each of Juno, ▇▇▇▇ II, ▇▇▇▇ III,
Beckelbe (LLC), Beckelbe (Corp.) and Pompano Beach.
"▇▇▇▇ II Entities Financial Statements" shall mean the financial
statements described in Section 3.4(b).
"▇▇▇▇ II" shall have the meaning assigned to that term in the preamble of
this Agreement.
"▇▇▇▇ II Entities" shall mean collectively the ▇▇▇▇ Entities with the
exception of ▇▇▇▇ III.
"▇▇▇▇ II Merger" shall mean the merger of ▇▇▇▇ II with and into Janus
described in Section 2.1(a) of this Agreement.
"▇▇▇▇ III" shall have the meaning assigned to that term in the preamble of
this Agreement.
"▇▇▇▇ III Assumption" shall mean the transaction described in Section
2.1(b) of this Agreement.
"Closing" shall have the meaning assigned to that term in Section 2.2 of
this Agreement.
"Closing Date" shall mean the date upon which the Closing actually occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Delaware General Corporation Law" shall mean the General Corporation Law
of the State of Delaware.
"Effective Time" shall mean the effective time of the ▇▇▇▇ II Merger set
forth in the certificates of merger to be filed in the Office of the Delaware
Secretary of State and the Office of the Ohio Secretary of State, whichever is
filed last.
"Encumbrance" shall mean any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any
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kind, including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"Environment" shall mean soil, land surface or subsurface strata, surface
waters, groundwater, drinking water supply, ambient air (including indoor air),
plant and animal life and any other environmental medium or natural resource.
"Environmental Law" shall mean any Legal Requirement that requires:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of Hazardous Materials, violations of discharge
limits, or other prohibitions and of the commencements of activities, such as
resource extraction or construction, that could have significant impact on the
environment;
(b) preventing or reducing to acceptable levels the release of
Hazardous Materials into the environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of Hazardous Materials;
(g) cleaning up Hazardous Materials that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA" shall mean the Employee Retirement Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Florida Business Corporation Act" shall mean the Business Corporation Act
of the State of Florida.
"GAAP" shall mean generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the relevant financial
statements were prepared.
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"Governmental Authorization" shall mean any approval, consent, license,
permit, waiver or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" shall mean any:
(a) nation, state, county, city, town, village, district or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal); or
(d) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Materials" shall mean any (i) "hazardous substance,"
"pollutants," or "contaminant" (as defined in Sections 101(14) and (33) of the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
(42 U.S.C. ss.9601 et seq.) or the regulations issued pursuant to Section 102 of
CERCLA and found at 40 C.F.R. ss.302), (ii) substance that is designated
pursuant to Section 311(b)(2)(A) of the Federal Water Pollution Control Act, as
amended (33 U.S.C. ss.ss.1251, 1321(b)(2)(A)) ("FWPCA"); (iii) hazardous waste
having the characteristics identified under or listed pursuant to Section 3001
of the Resource Conservation and Recovery Act, as amended (42 U.S.C. ss.ss.6901,
6921) ("RCRA"); (iv) toxic pollutant that is listed under Section 307(a) of
FWPCA; (v) hazardous air pollutant that is listed under Section 112 of the Clear
Air Act, as amended (42 U.S.C. ss.ss.7401, 7412); (vi) hazardous chemical
substance or mixture with respect to which action has been or may be taken
pursuant to Section 7 of the Toxic Substances Control Act, as amended (15 U.S.C.
▇▇.▇▇. 2601, 2606); (vii) source, special nuclear, or by-product material as
defined by the Atomic Energy Act of 1954, as amended (42 U.S.C. ss.2011 et
seq.); (viii) friable asbestos, asbestos-containing material, or urea
formaldehyde; (ix) waste oil and other petroleum products, and (x) any other
toxic materials, contaminants, or hazardous substances or wastes pursuant to any
Environmental Law.
"HELP" shall mean Hospitality Employee Leasing Program, Inc., an Ohio
corporation.
"Hotels" shall mean, collectively, the Owned Hotels and the Managed
Hotels.
"Intellectual Property" shall mean patents, trademarks, tradenames,
service marks, copyrights, applications for any of the foregoing, together with
all other technology, know how, tangible or intangible proprietary information
or material and formulae.
"Janus Common Stock" shall mean the common stock, par value $0.01 per
share of Janus.
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"Janus Preferred Stock" shall mean the Preferred Stock, Series B, par
value $0.01 per share, of Janus.
"Juno" shall mean The ▇▇▇▇ Group of Juno, Inc., an Ohio corporation.
"Legal Requirement" shall mean any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"Managed Hotel" shall mean each of the Days Inn, Inner Harbor and the
Knights Inn, West Palm Beach, owned by third parties, not Affiliates of ▇▇▇▇ and
Yeaggy.
"Management Agreement" shall mean the management agreement for the
respective Managed Hotels.
"Ohio General Corporation Law" means the General Corporation Law of the
State of Ohio.
"Order" shall have the meaning assigned to that term in Section 3.16(b) of
this Agreement.
"Organizational Documents" shall mean (a) the articles or certificates of
incorporation and the bylaws or regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the certificate of formation and operating
agreement or limited liability company agreement of a limited liability company;
(e) any charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person; and (f) any amendment to any
of the foregoing.
"Owned Hotels" shall mean each of the following: (i) the Red Roof Kings
Island, the Days Inn King Island, the Days Inn Cambridge and the Best Western
Cambridge owned by Beckelbe, (LLC); (ii) the Days Inn East owned by ▇▇▇▇ II;
(iii) the Days Inn Pompano Beach owned by Pompano Beach; and (iv) the Holiday
Inn Express Juno Beach beneficially owned by Juno, and title to which is in the
name of the Trustee .
"Person" shall mean any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Pompano Beach" shall mean Motel Associates of Pompano Beach, Inc., a
Florida corporation.
"Proceeding" shall have the meaning assigned to that term in Section
3.16(a) of this Agreement.
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"Registration Rights Agreement" shall mean the Amended and Restated
Registration Rights Agreement between Janus and each Seller, substantially in
the form of Exhibit A hereto.
"Release" shall mean any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping or other releasing into the Environment,
whether intentional or unintentional.
"Restructuring Transactions" shall mean the series of transactions
described in Schedule I to this Agreement.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Sellers" shall have the meaning assigned to that term in the preamble of
this Agreement.
"Subsidiary" shall mean with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries.
"Tax" shall mean any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related share or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Transactions" shall mean collectively the ▇▇▇▇ II Merger and the ▇▇▇▇ III
Assumption.
"Transaction Documents" shall mean each of this Agreement, the
Registration Rights Agreements, each certificate of merger and all other
documents and instruments executed and delivered or to be executed and delivered
in connection with the closing of the Transactions.
"Trustee" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇ in his capacity as Trustee under that
certain Agreement and Declaration of Trust dated June 15, 1987 by ▇▇▇▇▇ ▇. ▇▇▇▇,
trustee and the ▇▇▇▇ Group of Juno, a Florida general partnership, as grantor.
"Yeaggy" shall have the meaning assigned to that term in the preamble of
this Agreement.
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ARTICLE II
THE TRANSACTIONS
2.1. The Transactions. Subject to the terms and conditions of this
Agreement, the acquisition by Janus of the respective businesses and assets of
the ▇▇▇▇ Entities shall be accomplished as follows:
(a) Merger of ▇▇▇▇ II into Janus. At the Effective Time, ▇▇▇▇ II
shall be merged with and into Janus in accordance with the provisions of Section
252 of the Delaware General Corporation Law and the provisions of Section
1701.79 of the Ohio General Corporation Law, and Janus shall be the corporation
surviving the merger. Upon the effectiveness of the ▇▇▇▇ II Merger: (i) the
separate corporate existence of ▇▇▇▇ II shall cease; (ii) Janus shall possess
all of the rights, privileges, powers, immunities, purposes and franchises, both
public and private, of ▇▇▇▇ II; (iii) all real and personal property, tangible
and intangible, of every kind and description, belonging to ▇▇▇▇ II shall be
vested in Janus without further act or deed; (iv) Janus shall be liable for all
the obligations and liabilities of ▇▇▇▇ II; and (v) neither the rights of
creditors nor any Encumbrances upon the property of ▇▇▇▇ II shall be impaired by
the ▇▇▇▇ II Merger.
(b) The ▇▇▇▇ III Assumption. The parties acknowledge and agree that
▇▇▇▇ and Yeaggy are the sole shareholders of each of ▇▇▇▇ II and ▇▇▇▇ III. As a
further inducement for ▇▇▇▇ II to engage in the ▇▇▇▇ II Merger, on the Closing
Date Janus shall assume the following liabilities of ▇▇▇▇ III: (i) the Revolving
Credit Note dated July 31, 1998 in favor of PNC Bank in the original principal
amount of $1,500,000 ($1,500,000 outstanding) and (ii) the Term Note dated July
31, 1998 in favor of PNC Bank in the original principal amount of $1,000,000
($1,000,000 outstanding). Regardless of the Closing Date, for accounting
purposes the ▇▇▇▇ III Assumption shall be deemed to have occurred effective
January 1, 1999.
2.2. Closing. The closing of the Transactions (the "Closing") shall take
place at the offices of ▇▇▇▇▇▇▇, Del Deo, Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, commencing at 10:00 a.m. local time
on the business day following the satisfaction or waiver of all conditions to
the obligations of the parties set forth in Article V, other than conditions
with regard to actions of the respective parties which will take place at the
Closing itself.
2.3. Effective Time of Merger. The ▇▇▇▇ II Merger shall become effective
upon the filing of certificates of merger with the Delaware Secretary of State
and the Ohio Secretary of State meeting the requirements of the Delaware General
Corporation Law and Ohio General Corporation Law, respectively, or at such later
time as the parties agree upon and designate in such filings. Regardless of the
Effective Time, for accounting purposes the ▇▇▇▇ II Merger shall be deemed to
have occurred effective January 1, 1999.
2.4. Certificate of Incorporation of Janus. The Restated Certificate of
Incorporation, as amended of Janus on the Closing Date shall remain in effect as
the certificate of incorporation of the corporation surviving the ▇▇▇▇ II Merger
and shall not be amended as a result of such merger.
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2.5. By-Laws of Surviving Corporation. The By-Laws of Janus on the Closing
Date shall remain in effect as the by-laws of the corporation surviving the ▇▇▇▇
II Merger and shall not be amended as a result of such merger.
2.6. Directors and Officers of Surviving Corporation. The directors and
officers of Janus on the Closing Date shall continue as directors and officers
of Janus.
2.7. Janus Consideration for the Transactions
(a) Existing Janus Securities. The Janus Common Stock and the Janus
Preferred Stock and all options and warrants to acquire Janus Common Stock which
are outstanding at the Effective Time of the ▇▇▇▇ II Merger shall be unaffected
by the merger.
(b) The ▇▇▇▇ II Merger. All of the shares of the common stock of
▇▇▇▇ II issued and outstanding immediately prior to the Effective Time of the
▇▇▇▇ II Merger shall, by virtue of such Merger and without any action on the
part of the holders thereof, be converted into and exchanged for cash in the
amount of $1,908,267 and 6,336.2 shares of Janus Preferred Stock to be issued to
the holders of the common stock of ▇▇▇▇ II ratably in accordance with their
percentage of ownership of such stock.
2.8 Assumption of Liabilities.
It is expressly agreed and understood that except for the
liabilities assumed in the ▇▇▇▇ II Merger by operation of law and the specified
liabilities of ▇▇▇▇ III in Section 2.1(b) above, Janus is not assuming any
liability or obligation of ▇▇▇▇, Yeaggy or any Affiliate of either of them of
any kind or nature, whether known or unknown as the Closing Date.
2.9. Tax Consequences. For federal income tax purposes, the ▇▇▇▇ II Merger
is intended to constitute a reorganization within the meaning of Section 368 of
the Code. Janus and ▇▇▇▇ II hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to Janus as
follows:
3.1. Organization and Good Standing
(a) Part 3.1 of the ▇▇▇▇ Disclosure Letters contains a complete and
accurate list for each ▇▇▇▇ Entity of its name, its jurisdiction of
organization, other jurisdictions in which it is authorized to do business, and
its capitalization (including the identity of each stockholder, partner or
member, as applicable, and the ownership interest held by each). The ▇▇▇▇ II
Entities
8
have no Subsidiaries other than the Subsidiaries listed in Part 3.1 of the ▇▇▇▇
Disclosure Letters. Each ▇▇▇▇ Entity is a corporation, partnership or limited
liability company, as applicable, duly organized or formed, validly existing,
and in good standing under the laws of its jurisdiction of organization, with
full corporate, partnership or limited liability company power and authority, as
applicable, necessary to conduct its business as it is now being conducted and
to own or use the properties and assets that it purports to own or use. Each
▇▇▇▇ II Entity is duly qualified to do business as a foreign entity and is in
good standing under the laws of each state or other jurisdiction in which either
the ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except where the
failure to so qualify would not have a material adverse effect on its business,
assets or financial condition of the ▇▇▇▇ II Entities.
(b) The Sellers have delivered to Janus copies of the Organizational
Documents of each ▇▇▇▇ Entity, as currently in effect.
(c) The sole asset of Juno is a 100% beneficial interest in the
corpus of a certain trust created by Agreement and Declaration of Trust dated
June 15, 1987 by ▇▇▇▇▇ ▇. ▇▇▇▇ as trustee and The ▇▇▇▇ Group of Juno, a Florida
general partnership, as grantor and original beneficiary. The corpus of said
trust consists solely of the Owned Hotel known as the Holiday Inn Express Juno
Beach.
3.2. Authority; No Conflict
(a) This Agreement constitutes, and each other Transaction Document
when executed and delivered, will constitute the legal, valid, and binding
obligation of Sellers and the ▇▇▇▇ Entities, as applicable, enforceable against
Sellers and each ▇▇▇▇ Entity, as applicable, in accordance with its terms. Each
Seller and each ▇▇▇▇ Entity, as applicable, has the absolute and unrestricted
right, power, authority, and capacity to execute and deliver this Agreement and
to perform its respective obligations under the Transaction Documents.
(b) Except as set forth in Part 3.2 of the ▇▇▇▇ Disclosure Letters,
neither the execution and delivery of this Agreement or any other Transaction
Documents, nor the consummation or performance of the Transactions will,
directly or indirectly:
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of any of the ▇▇▇▇ Entities, or
(B) any resolution adopted by the board of directors, stockholders, partners or
members, as applicable, of any of the ▇▇▇▇ Entities;
(ii) give any Governmental Body or other Person the right to
challenge either Transaction;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend,
9
cancel, terminate, or modify, any Governmental Authorization that is held by any
▇▇▇▇ Entity or that otherwise relates to the business of, or any of the assets
owned or used by any ▇▇▇▇ Entity;
(iv) cause Janus to become subject to, or to become liable for
the payment of, any Tax except for existing Tax liabilities which are assumed as
a result of the ▇▇▇▇ II Merger;
(v) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any contract disclosed in Part 3.18(a) of the
▇▇▇▇ Disclosure Letters; or
(vi) result in the imposition or creation of any Encumbrance
upon or with respect to the Management Agreements or any of the assets owned or
used by any of the ▇▇▇▇ II Entities.
Except as set forth in Part 3.2 of the ▇▇▇▇ Disclosure Letters, neither
any Seller nor any ▇▇▇▇ Entity is or will be required to give any notice to or
obtain any consent from any Person in connection with the execution and delivery
of this Agreement or any other Transaction Document or the consummation of
either of the Transactions, including, without limitation, the transfer of
Governmental Authorizations, franchise agreements, the Management Agreements and
Intellectual Property rights.
3.3. Capitalization. The Persons listed in Part 3.1 of the ▇▇▇▇ II
Disclosure Letter, will be on the Closing Date, the record and beneficial owner
and holder of all of the capital stock of ▇▇▇▇ II, free and clear of all
Encumbrances. On the Closing Date, ▇▇▇▇ II will own all of the capital stock of
Beckelbe (Corp.) and Juno, and 75% of the capital stock of Pompano Beach, free
and clear of all Encumbrances. Except for standard Securities Act legends on the
transferability of the shares, no legend or other reference to any purported
Encumbrance appears upon any certificate representing the capital stock of ▇▇▇▇
II, Pompano Beach or Juno. All of the outstanding shares of capital stock of
▇▇▇▇ II, Pompano Beach, Beckelbe (Corp.) and Juno have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set forth in Part
3.5 of the ▇▇▇▇ Disclosure Letters, there are no agreements relating to the
issuance, sale, or transfer of any equity securities or other securities of ▇▇▇▇
II, Pompano Beach, Beckelbe (Corp.) or Juno. None of the shares of the capital
stock of ▇▇▇▇ II, Pompano Beach, Beckelbe (Corp.) or Juno have been issued in
violation of any preemptive right. On the Closing Date, ▇▇▇▇ II will own 98% and
Beckelbe (Corp.) will own 2%, of the membership interests of Beckelbe (LLC),
free and clear of all Encumbrances, except for an existing pledge in favor of
PNC Bank pursuant to Security Agreements dated January 11, 1996. There are no
other agreements relating to the issuance, sale or transfer of any ownership
interests in Beckelbe (LLC).
3.4. Financial Statements. Sellers have delivered to Janus the following
financial statements, including in each case, as applicable, the notes thereto:
10
(a) the audited combined financial statements of the real estate
operations of the ▇▇▇▇ II Entities for each of the years ending December 31,
1996 and December 31, 1997 together with the report thereon by ▇.▇. Cloud & Co.,
L.L.P., certified public accountants; and
(b) an annual operating statement for each Owned Hotel, consisting of a
statement of income and cash flows (i) for the last three calendar years or (ii)
if less, the period of ownership of the Owned Hotel by Affiliates of the
Sellers.
The financial statements referred to in paragraph (a) above present the
financial condition and the results of operations, changes in stockholders'
equity and cash flows of the ▇▇▇▇ II Entities, as at the respective dates of and
for the periods referred to in such financial statements, all in accordance with
GAAP.
3.5. Properties; Encumbrances.
(a) Part 3.5 of the ▇▇▇▇ Disclosure Letters contains a complete and
accurate list of all real property, leaseholds, or other interests therein owned
by each of the ▇▇▇▇ II Entities. Sellers have delivered or made available to
Janus copies of the deeds and other instruments (as recorded) by which the ▇▇▇▇
II Entities acquired such real property and interests, and copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of
Sellers or the ▇▇▇▇ Entities and relating to such property or interests. The
▇▇▇▇ II Entities own (with good and marketable title in the case of real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that they purport to own located in the Owned Hotels or reflected
as owned in the books and records of the ▇▇▇▇ II Entities, including all of the
properties and assets reflected in the ▇▇▇▇ II Entities Financial Statements
except for personal property sold since the date of such financial statement, in
the ordinary course of business). The personal property owned by each of the
▇▇▇▇ II Entities is more particularly described in Part 3.5 of the ▇▇▇▇
Disclosure Letters. All material properties and assets of the ▇▇▇▇ II Entities
are free and clear of all Encumbrances and are not, in the case of real
property, subject to any rights of way, building use restrictions, exceptions,
variances, reservations, or limitations of any nature except, with respect to
all such properties and assets, (a) mortgages or security interests disclosed in
Part 3.5 of the ▇▇▇▇ Disclosure Letters and which secure specified liabilities
or obligations, with respect to which no default (or event that, with notice or
lapse of time or both would constitute a default) exists, (b) liens for current
taxes not yet due, and (c) with respect to real property as disclosed in the
title reports for each of the Owned Hotels which are part of Part 3.5 of the
applicable ▇▇▇▇ Disclosure Letters and, (i) minor imperfections of title, if
any, none of which is substantial in amount, materially detracts from the value
or impairs the use of the property subject thereto, or impairs the operations of
any ▇▇▇▇ II Entity and (ii) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto. All
Owned Hotels lie wholly within the boundaries of the real property owned by the
▇▇▇▇ Entities and do not encroach upon the property of, or otherwise conflict
with the property rights of, any other Person.
11
(b) Part 3.5 of the ▇▇▇▇ II Disclosure Letter contains the following
with respect to each Managed Hotel: (i) the term of the applicable Management
Agreement and (ii) a summary of the basis upon which the management fees due
thereunder are calculated.
3.6 Condition and Sufficiency of Assets. The buildings, equipment,
furnishings and fixtures of the Owned Hotels are structurally sound, are in good
operating condition and repair, ordinary wear and tear excepted, and are
adequate for the uses to which they are being put, and none of such buildings,
furnishings and fixtures or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost and except as set forth in Part 3.6 of the ▇▇▇▇ Disclosure
Letters. The buildings, equipment, furnishings and fixtures of the Owned Hotels
are sufficient for the continued conduct of the Owned Hotels' businesses after
the closing of the Transactions in substantially the same manner as conducted
prior to the closing of the Transactions.
3.7. Accounts Receivable. All accounts receivable of each of the ▇▇▇▇ II
Entities and the Owned Hotels that are reflected on the balance sheet which is
part of the ▇▇▇▇ II Entities Financial Statements or on the accounting records
of each of the ▇▇▇▇ II Entities as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. Notwithstanding the above, certain of the inter-▇▇▇▇ Entity and
Affiliates Accounts Receivable, while representing valid obligations, did not
arise from sales actually made or services actually performed. Unless paid prior
to the Closing Date, or, in the case of inter-▇▇▇▇ Entity receivables, canceled
as of the Closing Date, the Accounts Receivable are or will be as of the Closing
Date current and collectible net of the respective reserves shown on the ▇▇▇▇ II
Entities Financial Statements or on the accounting records of each of the ▇▇▇▇
II Entities as of the Closing Date (which reserves are adequate and calculated
consistent with past practice). Part 3.7 of the ▇▇▇▇ Disclosure Letters contains
a complete and accurate list of all Accounts Receivable of each of the ▇▇▇▇ II
Entities as of November 30, 1998, which list sets forth the aging of such
Accounts Receivable.
3.8. No Undisclosed Liabilities. Except as set forth in Part 3.8 of the
▇▇▇▇ Disclosure Letters, each of the ▇▇▇▇ II Entities has no material
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the ▇▇▇▇ II Entities Financial
Statements and current liabilities incurred in the ordinary course of business
since the respective dates thereof.
3.9. Taxes. To the Sellers' knowledge, each of the ▇▇▇▇ II Entities has
filed or caused to be filed all federal, state and local tax returns and reports
that are or were required to be filed by or with respect to it, either
separately or, as applicable, as a member of a group of corporations, pursuant
to applicable law. The ▇▇▇▇ II Entities have delivered to Janus copies of, and
Part 3.9 of the ▇▇▇▇ Disclosure Letters contain a complete and accurate list of,
all such tax returns relating to income, franchise or sales and use taxes filed
with respect to reporting periods beginning on or after January 1, 1996. Each
▇▇▇▇ II Entity has paid, or has made provision for the payment of, all Taxes
that have or may have become due pursuant to those tax returns or
12
otherwise, or pursuant to any assessment received by each of the ▇▇▇▇ II
Entities, except such Taxes, if any, as are listed in Part 3.9 of the ▇▇▇▇
Disclosure Letters and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in the
▇▇▇▇ II Entities Financial Statements. Except as set forth in Part 3.9 of the
▇▇▇▇ Disclosure Letters, no audit of any tax return of any ▇▇▇▇ II Entity is in
progress or, to the knowledge of any ▇▇▇▇ II Entity, threatened, and no waiver
or agreement by any ▇▇▇▇ II Entity is in force for the extension of time for the
assessment or payment of any Tax. Each of the Restructuring Transactions was
effected in a tax-free manner and no ▇▇▇▇ II Entity has any liability for taxes
resulting therefrom.
3.10. No Material Adverse Change. Since December 31, 1997, there has not
been any material adverse change in the business, operations, properties,
assets, or condition of any ▇▇▇▇ II Entity, and no event has occurred or
circumstance exists that may result in such a material adverse change.
3.11 Intangible Property. Each ▇▇▇▇ II Entity owns or is licensed to use,
in each case free and clear of any Encumbrance, all Intellectual Property rights
that are necessary and material to the business of the Owned Hotels as currently
conducted. Part 3.11 of the ▇▇▇▇ Disclosure Letters lists all patents,
trademarks, trade names, service marks, copyrights and applications included in
the Intellectual Property. Except as set forth in Part 3.11 of the ▇▇▇▇
Disclosure Letters, no ▇▇▇▇ II Entity has received a notice of any claims by any
person, (i) against the use by any ▇▇▇▇ II Entity or any Owned Hotel of any
trademarks, trade names, technology, know-how or process necessary and material
for the operation of the business of any ▇▇▇▇ II Entity or any Owned Hotel as
currently conducted or presently contemplated, or (ii) challenging or
questioning the validity of effectiveness of any of the Intellectual Property of
any ▇▇▇▇ II Entity or any Owned Hotel.
3.12. Accounts Payable. Except as set forth in the schedule of the ▇▇▇▇ II
Entities accounts payable as at November 30, 1998 which is Part 3.12 of the ▇▇▇▇
Disclosure Letters, other than inter-▇▇▇▇ II Entity accounts payable and there
are no accounts payable of any ▇▇▇▇ II Entity in excess of $10,000 as at said
date which have been past due and payable in accordance with their terms for
more than 60 days.
3.13. Employee Benefit Plans.
(a) Part 3.13 of the ▇▇▇▇ Disclosure Letters sets forth a true and
complete list of all written and oral pension, profit sharing, retirement,
deferred compensation, stock purchase, stock option, incentive compensation,
bonus, vacation, severance, sickness or disability, hospitalization, individual
and group health and accident insurance, individual and group life insurance and
other material employee benefit plans, programs, commitments or funding
arrangements maintained by each of the ▇▇▇▇ II Entities, to which each ▇▇▇▇ II
Entity is a party, or under which each ▇▇▇▇ II Entity has any obligations,
present or future (other than obligations to pay current wages, salaries or
sales commissions terminable on notice of 30 days or less) as a result of the
Restructuring Transactions or otherwise in respect of, or which otherwise cover
or benefit, any of the current or former employees of each ▇▇▇▇ II Entity or
predecessors of the ▇▇▇▇ II Entities, or their
13
beneficiaries (hereinafter individually referred to as "Employee Benefit Plan"
and collectively referred to as "Employee Benefit Plans"). Each ▇▇▇▇ II Entity
has delivered or made available to Janus true and complete copies of all
documents, as they may have been amended to the date hereof, embodying the terms
of the Employee Benefit Plans.
(b) Except for the Employee Benefit Plans identified in Part 3.13 of the
▇▇▇▇ Disclosure Letters, there is no "employee pension benefit plan", "employee
welfare benefit plan" or "employee benefit plan" within the meaning of Sections
3(1), 3(2) and 3(3) of ERISA. No Employee Benefit Plan to which any ▇▇▇▇ II
Entity or any ERISA Affiliate (as hereinafter defined) has maintained or
contributed to is subject to Title IV of ERISA or Section 412 of the Code. For
purposes of this Section 3.13, the term "ERISA Affiliate" shall mean a trade or
business (whether or not incorporated) which is under common control with any
▇▇▇▇ II Entity within the meaning of Sections 414(b) and 414(c) of the Code or
the regulations promulgated thereunder.
(c) No ▇▇▇▇ II Entity maintains nor has maintained a plan which meets the
safe harbor requirements of Section 414(n)(5) of the Code and no ▇▇▇▇ II Entity
has made representations (including oral representations) with respect to the
existence of such a plan to any customers, clients, employees or any other
person. No ▇▇▇▇ II Entity either maintains or has maintained any "voluntary
employees' beneficiary association" within the meaning of Section 501(c)(9) of
the Code.
(d) Except as set forth in Part 3.13 of the ▇▇▇▇ Disclosure Letters, each
Employee Benefit Plan described therein is in full force and effect in
accordance with its terms and there are no material actions, suits or claims
pending (other than routine claims for benefits), or, threatened, against any
Employee Benefit Plan or any fiduciary thereof and the applicable ▇▇▇▇ II Entity
has performed all material obligations required to be performed by it
thereunder, and is not in default under or in violation of, any Employee Benefit
Plan, in any material respect, and each ▇▇▇▇ II Entity is in compliance in all
material respects with the requirements prescribed by all statutes, laws,
ordinances, orders or governmental rules or regulations applicable to the
Employee Benefit Plans, including, without limitation, ERISA and the Code. With
respect to each Employee Benefit Plan, each ▇▇▇▇ II Entity has delivered or made
available to Janus true and complete copies of the following documents where
applicable: (i) the most recent annual report (Form 5500 series) and
accompanying schedules filed with the IRS, any financial statement and opinion
required by Section 103(a)(3) of ERISA; (ii) the most recent determination
letter issued by the IRS and any outstanding request for a determination letter;
(iii) the most recent summary plan description and all modifications; and (iv)
the text of each Employee Benefit Plan and of any trust, insurance or annuity
contract maintained in connection therewith. Neither the ▇▇▇▇ II Entities nor
any other "party-in-interest", as defined in Section 3(14) of ERISA, has engaged
in any "prohibited transaction," as defined in Section 406 of ERISA, which could
subject any Employee Benefit Plan, any ▇▇▇▇ II Entity or Janus or any officer,
director, partner or employee of any ▇▇▇▇ II Entity or Janus or any fiduciary of
any Employee Benefit Plan to a material penalty or excise tax imposed under
Section 502(i) of ERISA and Section 4975 of the Code.
14
(e) Except as set forth in Part 3.13 of the ▇▇▇▇ Disclosure Letters, no
▇▇▇▇ II Entity is a party to any agreement to provide nor does any ▇▇▇▇ II
Entity have an obligation to provide (except pursuant to Section 162(k) of the
Code with respect to tax years beginning before January 1, 1989 and Section
4980B of the Code thereafter) any individual, or such individual's spouse or
dependent, with any benefit following his or her retirement or termination of
employment, nor his or her spouse, any dependent or any beneficiary subsequent
to his or her death, with retirement, medical or life insurance or any benefit
under any employee pension benefit plan and any employee welfare benefit plan.
Each ▇▇▇▇ II Entity has complied with all its obligations under Section 162(k)
and Section 4980B of the Code.
3.14. Insurance. Part 3.14 of the ▇▇▇▇ Disclosure Letters lists all
material policies or binders of fire, liability (including product liability),
worker's compensation, vehicular, casualty, title or other insurance held by or
on behalf of each of the ▇▇▇▇ II Entities and each Owned Hotel (specifying the
insurer, the policy number or covering note number with respect to binders, the
amount of coverage thereunder and describing each pending claim thereunder other
than routine claims for coverage under a group medical plan insurance policy).
Such policies and binders are in full force and effect. No ▇▇▇▇ II Entity, or
predecessor of any ▇▇▇▇ II Entity as a result of the Restructuring Transactions,
has failed to give any material notice or present any material claim under any
such policy or binder in a due and timely fashion. Except for claims set forth
in Part 3.14 of the ▇▇▇▇ Disclosure Letters and routine medical claims, there
are no outstanding unpaid claims under any such policy or binder. No ▇▇▇▇ II
Entity has received a notice of cancellation or non-renewal of any such policy
or binder and, there is no material inaccuracy in any application for any such
policy or binder, failure to pay premiums when due or other similar state of
facts which would form the basis for termination of any such insurance. Part
3.14 of the ▇▇▇▇ Disclosure Letters contains a brief description of the ▇▇▇▇ II
Entities and their predecessors' general liability loss history under the
policies of insurance therein listed.
3.15. Compliance with Legal Requirements; Governmental Authorizations
(a) Except as set forth in Part 3.15 of the ▇▇▇▇ Disclosure Letters:
(i) To the Sellers' knowledge, each of the ▇▇▇▇ II Entities
and each Owned Hotel is, and at all times since December 31, 1997, has been, in
compliance with each Legal Requirement, including, without limitation, the
Americans with Disabilities Act and liquor licensing laws, that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its assets;
(ii) To the Sellers' knowledge, no event has occurred or
circumstance exists that (with or without notice or lapse of time) (A) may
constitute or result in a violation by any ▇▇▇▇ II Entity or any Owned Hotel of,
or a failure on the part of any ▇▇▇▇ II Entity or any Owned Hotel to comply
with, any Legal Requirement, or (B) may give rise to any obligation on the part
of any ▇▇▇▇ II Entity or any Owned Hotel to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature; and
15
(iii) neither the ▇▇▇▇ II Entities nor any Owned Hotel has
received, at any time since December 31, 1997, any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any actual, alleged,
possible or potential obligation on the part of either any ▇▇▇▇ II Entity or any
Owned Hotel to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
The foregoing representations and warranties set forth in Section 3.15(a) are
not intended to cover those matters specifically addressed by Sections 3.9,
3.13, 3.19 and 3.21.
(b) Part 3.15 of the ▇▇▇▇ Disclosure Letters contains a complete and
accurate list of each Governmental Authorization that is held by each of the
▇▇▇▇ II Entities or any Owned Hotel or that otherwise relates to the business
of, or to any of the assets owned or used by any of the ▇▇▇▇ II Entities or any
Owned Hotel. Each Governmental Authorization listed or required to be listed in
Part 3.15 of the ▇▇▇▇ Disclosure Letters is valid and in full force and effect.
Except as set forth in Part 3.15 of the ▇▇▇▇ Disclosure Letters:
(i) To the Sellers' knowledge, each of the ▇▇▇▇ II Entities
and each Owned Hotel is, and at all times since December 31, 1997 has been, in
full compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part 3.15 of the ▇▇▇▇
Disclosure Letters;
(ii) To the Sellers' knowledge, no event has occurred or
circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental Authorization listed or
required to be listed in Part 3.15 of the ▇▇▇▇ Disclosure Letters, or (B) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation,
or termination of, or any modification to, any Governmental Authorization listed
or required to be listed in Part 3.15 of the ▇▇▇▇ Disclosure Letters;
(iii) neither any of the ▇▇▇▇ II Entities nor any Owned Hotel
has received, at any time since December 31, 1997, any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Part 3.15 of the ▇▇▇▇ Disclosure Letters have been duly filed on a timely basis
with the appropriate Governmental Bodies, and all other filings required to have
been made with respect to each Governmental Authorizations have been duly made
on a timely basis with the appropriate Governmental Bodies, except to the extent
noncompliance could not be expected to have a material adverse effect on the
Owned Hotels' operations in accordance with past practice.
16
(c) The Governmental Authorizations listed in Part 3.15 of the ▇▇▇▇
Disclosure Letters collectively constitute all of the Governmental
Authorizations necessary to permit each of the ▇▇▇▇ II Entities to conduct
lawfully and operate their respective businesses, including, without limitation,
the ownership and operation of the Owned Hotels, in the manner it currently
conducts and operates such businesses and to permit each of the ▇▇▇▇ II Entities
to own and use its assets in the manner in which it currently owns and uses such
assets, except to the extent noncompliance could not be expected to have a
material adverse effect on the Owned Hotels' operations in accordance with past
practice.
(d) Each of the Owned Hotels is in compliance with all federal,
state and local zoning, subdivision, use and building codes except to the extent
noncompliance could not be expected to have a material adverse effect on the
Owned Hotels' operations in accordance with past practice.
3.16. Legal Proceedings.
(a) Except as set forth in Part 3.16 of the ▇▇▇▇ Disclosure Letters,
there is no pending litigation or judicial, administration or arbitration
proceeding or known investigation (each a "Proceeding"):
(i) that has been commenced by or against any of the ▇▇▇▇ II
Entities or any predecessor of the Restructuring Transactions or that otherwise
relates to or may affect the business of, or any of the assets owned or used by,
any of the ▇▇▇▇ II Entities or any Owned Hotel; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with the
Transactions.
To the knowledge of the Sellers, (1) no such Proceeding has been
threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. Each of
the ▇▇▇▇ Entities has delivered to Janus copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in Part
3.16 of the ▇▇▇▇ Disclosure Letters. The Proceedings listed in Part 3.16 of the
▇▇▇▇ Disclosure Letters will not have a material adverse effect on the business,
operations, assets, condition, or prospects of any of the ▇▇▇▇ Entities.
(b) Except as set forth in Part 3.16 of the ▇▇▇▇ Disclosure Letters:
(i) there is no decision, injunction, judgment, order, or
ruling by any Court, administrative agency, other Governmental Body or by any
arbitrator (each, an "Order") to which any ▇▇▇▇ II Entity or any Owned Hotel, or
any of the assets owned or used by any of the ▇▇▇▇ II Entities, is subject;
17
(ii) The Sellers are not subject to any Order that relates to
the Management Agreements or to the business of, or any of the assets owned or
used by, any of the ▇▇▇▇ II Entities or any Owned Hotel; and
(iii) no officer, director, agent or employee of any of the
▇▇▇▇ II Entities is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct, activity, or
practice relating to the business of any of the ▇▇▇▇ II Entities or any Owned
Hotel.
(c) Except as set forth in Part 3.16 of the ▇▇▇▇ Disclosure Letters:
(i) Each of the ▇▇▇▇ II Entities is, and at all times since
December 31, 1997, has been, in full compliance with all of the terms and
requirements of each Order to which it, or any of the assets owned or used by
it, or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which any of
the ▇▇▇▇ II Entities, or any of the assets owned or used by any of the ▇▇▇▇ II
Entities is subject; and
(iii) None of the ▇▇▇▇ II Entities has received, at any time
since December 31, 1997, any notice or other communication (whether oral or
written) from any Governmental Body regarding any actual, alleged, possible, or
potential violation of, or failure to comply with, any term or requirement of
any Order to which any of the ▇▇▇▇ II Entities, any Owned Hotel or any of the
assets owned or used by any of the ▇▇▇▇ II Entities, any Owned Hotel, is or has
been subject.
3.17 Absence of Certain Changes and Events. Except as set forth in Part
3.17 of the ▇▇▇▇ Disclosure Letters, since December 31, 1997, the business of
the ▇▇▇▇ II Entities, the predecessors of the ▇▇▇▇ II Entities (prior to the
Restructuring Transactions), and the Owned Hotels have been conducted only in
the ordinary course of business and there has not been any:
(a) payment or increase of any bonuses, salaries, or other
compensation to any employee of the ▇▇▇▇ II Entities, except for the payment of
bonuses consistent with past practice, or entry into any employment, severance,
or similar contract with any director, officer or employee;
(b) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any of
the ▇▇▇▇ II Entities or any Owned Hotel;
(c) damage to or destruction or loss of any asset or property of any
of the ▇▇▇▇ II Entities or any Owned Hotel, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business, financial
condition, or prospects of any Owned Hotel;
18
(d) entry into, termination of, or receipt of notice of termination
of (i) any license, franchise, joint venture, credit, or similar agreement, or
(ii) any contract or transaction involving a total remaining commitment by or to
any of the ▇▇▇▇ II Entities or any Owned Hotel of at least $15,000;
(e) mortgage, pledge or imposition of any lien or other encumbrance
on any material asset or property of any of the ▇▇▇▇ II Entities or any Owned
Hotel;
(f) cancellation or waiver of any claims or rights with a value in
excess of $15,000; or
(g) agreement, whether oral or written, by any of the ▇▇▇▇ II
Entities or any Owned Hotel to do any of the foregoing.
3.18. Contracts; No Defaults.
(a) Except for any contract, agreement or understanding that was entered
into in the ordinary course of business that (i) has a term, or remaining term,
of less than one year, or (ii) involves less than $15,000 or (iii) can be
canceled on thirty days or less notice without penalty, Part 3.18 of the ▇▇▇▇
Disclosure Letters contains a complete and accurate list, and each of the ▇▇▇▇
II Entities has delivered to Janus true and complete copies (if in writing), of:
(i) each contract that involves the provision of rooms or the
performance of other services by any of the ▇▇▇▇ II Entities or any Owned Hotel
of an amount or value in excess of $15,000;
(ii) each contract that involves performance of services or delivery
of goods or materials to any of the ▇▇▇▇ II Entities of an amount or value in
excess of $15,000;
(iii) each contract that was not entered into in the ordinary course
of business and that involves expenditures or receipts by any of the ▇▇▇▇ II
Entities in excess of $15,000;
(iv) each lease, rental or occupancy agreement (other than
short-term room rentals in the ordinary course of business) and other contracts
affecting the ownership of or leasing of any real or personal property;
(v) each franchise agreement and each licensing agreement or other
contract with respect to patents, trademarks, copyrights, or other Intellectual
Property, including agreements with current employees, consultants, or
contractors regarding the appropriation or the non-disclosure of Intellectual
Property rights;
(vi) each collective bargaining agreement and other contract to or
with any labor union or other employee representative of a group of employees;
19
(vii) each joint venture, partnership, and other contract (however
named) involving a sharing of profits, losses, costs, or liabilities by or with
any other Person;
(viii) each contract containing covenants that in any way purport to
restrict the business activity of any of the ▇▇▇▇ II Entities or limit the
freedom of any of the ▇▇▇▇ II Entities to engage in any line of business or to
compete with any Person;
(ix) each contract providing for payments to or by any Person based
on sales, purchases, or profits, other than direct payments for goods;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each contract for capital expenditures in excess of $15,000;
(xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by any of the ▇▇▇▇
II Entities other than in the ordinary course of business; and
(xiii) each contract pursuant to which any of the ▇▇▇▇ II Entities
is obligated to pay money in excess of $15,000 in any one year including any
note or loan agreement and any document securing the payment of such funds
including any mortgage or security agreement.
(b) Except as set forth in Part 3.18 of the ▇▇▇▇ Disclosure Letters, and
except as enforceability may be limited by principals of bankruptcy and
insolvency law and general principals of equity each contract identified or
required to be identified in accordance with paragraph (a) above, is in full
force and effect and is valid and enforceable in accordance with its terms.
(c) Except as set forth in Part 3.18 of the ▇▇▇▇ Disclosure Letters, no
event has occurred or circumstance exists that (with or without notice or lapse
of time) may contravene, conflict with, or result in a violation or breach of,
or give any of the ▇▇▇▇ II Entities, ▇▇▇▇ III or other Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify either Management Agreement
or any contract identified in Part 3.18 of the ▇▇▇▇ Disclosure Letters.
(d) Each of the ▇▇▇▇ II Entities is in full compliance in all material
respects with its obligation to maintain any reserves in accordance with the
agreements identified pursuant to clause (xiii) of paragraph (a) above.
3.19. Environmental Matters. Except as set forth in part 3.19 of the ▇▇▇▇
Disclosure Letters and to the knowledge of the Sellers:
(a) Each of the ▇▇▇▇ II Entities and each Owned Hotel is in material
compliance with all Environmental Laws. The Sellers have no basis to expect, nor
has any of them or any other Person for whose conduct they are or may be held to
be responsible received,
20
any actual or threatened order, notice, or other communication from (i) any
Governmental Body or private citizen acting in the public interest, or (ii) the
current or prior owner or operator of any real property or leaseholds now or
previously occupied by any of the ▇▇▇▇ II Entities or any Owned Hotel, of any
actual or potential violation or failure to comply with any Environmental Law,
or of any action or threatened obligation to undertake or bear the cost of any
environmental health, and safety liabilities with respect to any properties or
assets (whether real, personal, or mixed) in which any of the ▇▇▇▇ II Entities
has had an interest, or with respect to any property at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used, or
processed by any of the ▇▇▇▇ II Entities, any Owned Hotel, or any other Person
for whose conduct they are or may be held responsible, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(b) There are no pending or, to the knowledge of the Sellers,
threatened claims, encumbrances, or other restrictions of any nature, resulting
from or arising under or pursuant to any Environmental Law, with respect to or
affecting any properties and assets (whether real, personal, or mixed) in which
any of the ▇▇▇▇ II Entities or the predecessors of the ▇▇▇▇ II Entities (prior
to the Restructuring Transactions) has or had an interest.
(c) There has been no Release or, to the knowledge of the Sellers,
threat of Release, of any Hazardous Materials in violation of Environmental Law
at or from any locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or processed or
from or by any other properties and assets (whether real, personal, or mixed) in
which any of the ▇▇▇▇ II Entities or the predecessors of the ▇▇▇▇ II Entities
(prior to the Restructuring Transactions) has or had an interest.
(d) There are no above ground or underground storage tanks located
on any real estate owned or leased by any of the ▇▇▇▇ II Entities.
(e) There is no friable asbestos-containing material within any
Owned Hotel.
(f) Copies of all environmental reports in possession of, or
performed on behalf of, any of the ▇▇▇▇ II Entities or the Sellers and
pertaining to any Owned Hotel have been provided to Janus.
3.20. Employees.
(a) Part 3.20 of the ▇▇▇▇ Disclosure Letters contains a complete and
accurate list of the following information for each employee of each of the ▇▇▇▇
II Entities or any Person (other than HELP) with respect to whom any of the ▇▇▇▇
II Entities has an obligation to reimburse a third party for the compensation of
such person: employee or person; name; job title; current compensation paid or
payable and any change in compensation since December 31, 1997; vacation
accrued; and service credited for purposes of vesting and eligibility to
participate under any pension, retirement, profit-sharing, thrift-savings,
deferred compensation, stock bonus, stock option, cash bonus, employee stock
ownership (including investment credit or payroll stock
21
ownership), severance pay, insurance, medical, welfare, or vacation plan, other
employee pension benefit plan or employee welfare benefit plan.
(b) No employee of any of the ▇▇▇▇ II Entities is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement, between such employee or
person and any other Person ("Proprietary Rights Agreement") that in any way
adversely effects or will affect (i) the performance of his duties as an
employee of any of the ▇▇▇▇ II Entities, or (ii) the ability of any of the ▇▇▇▇
II Entities to conduct its business, including any Proprietary Rights Agreement
with the Sellers by any such employee or key person. To the knowledge of the
Sellers, no key employee of any ▇▇▇▇ II Entity intends to terminate his
employment or relationship with such ▇▇▇▇ II Entity.
(c) Pursuant to a Client Service Agreement between ▇▇▇▇ Hospitality, Inc.,
an affiliate of the ▇▇▇▇ Entities, and HELP, the management, operation and
maintenance of all of the Hotels is provided totally and exclusively by
employees of HELP.
3.21. Labor Relations; Compliance. None of the ▇▇▇▇ II Entities nor HELP
has ever been nor is a party to any collective bargaining or other labor
contract. Since December 31, 1997, there has not been, there is not presently
pending or existing, and to the Sellers' knowledge there is not threatened, (a)
any strike, slowdown, picketing, work stoppage, or employee grievance process,
(b) except as set forth in Part 3.21 of the ▇▇▇▇ Disclosure Letter, any
proceeding against or affecting any ▇▇▇▇ II Entity relating to the alleged
violation of any requirement of law pertaining to labor relations or employment
matters, including any charge or complaint filed by any employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Body, organization activity, or other labor or
employment dispute against or affecting any of the ▇▇▇▇ II Entities, or its
premises, or (c) any application for certification of a collective bargaining
agent. To the Sellers' knowledge, no event has occurred or circumstance exists
that could provide the basis for any work stoppage or other labor dispute. There
is no lockout of any employees by any ▇▇▇▇ II Entity, and no such action is
contemplated by any of the ▇▇▇▇ II Entities. Each of the ▇▇▇▇ II Entities and
HELP has complied in all material respects with all requirements of law relating
to employment, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining, the payment of social security
and similar taxes, occupational safety and health, and plant closing. None of
the ▇▇▇▇ II Entities nor HELP is liable for the payment of any compensation,
damages, taxes, fines, penalties, or other amounts, however, designated, for
failure to comply with any for the foregoing requirements of law.
3.22. Certain Payments. Neither of the Sellers, nor any of the ▇▇▇▇ II
Entities, nor any director, officer, agent, or employee of any of the Sellers or
the ▇▇▇▇ II Entities or to the Sellers' knowledge, any other Person associated
with or acting for or on behalf of any of the Sellers or the ▇▇▇▇ II Entities,
has directly or indirectly (a) made any contribution, gift, bribe, rebate,
payoff, payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any of the ▇▇▇▇ II Entities,
or (iv) in violation of
22
any requirement of law, or (b) established or maintained any fund or asset that
has not been recorded in the books and records of any of the ▇▇▇▇ II Entities.
3.23. Disclosure. No representation or warranty of any of the ▇▇▇▇ II
Entities or the Sellers in this Agreement and no statement in the ▇▇▇▇
Disclosure Letters omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading.
3.24. Relationships with Related Persons. Except as disclosed in Part 3.24
of the ▇▇▇▇ Disclosure Letters, neither the Sellers nor any Affiliate of the
Sellers has, or since December 31, 1997, has had, (i) any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the businesses of any of the ▇▇▇▇ II Entities, (ii) an
equity interest or any other financial or other profit interest in, a Person
that has (A) had business dealings or a material financial interest in any
transaction with any ▇▇▇▇ II Entity (other than business dealings or
transactions conducted in the ordinary course of business at substantially
prevailing market prices and on substantially prevailing market terms), or (B)
engaged in competition with any ▇▇▇▇ II Entity (a "Competing Business") in any
market served by such ▇▇▇▇ II Entity except for the ownership of less than one
percent of the outstanding capital stock of any Competing Business that is
publicly traded on any recognized exchange or in the over-the-counter market.
3.25. Brokers or Finders. Neither any of the ▇▇▇▇ II Entities nor the
Sellers nor their respective agents have incurred any obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
3.26. Acknowledgment Regarding Information Concerning Janus. ▇▇▇▇ and
Yeaggy as a group, are major stockholders of Janus and its Chairman and Vice
Chairman of the Board, respectively. As such, they have full access to all
information regarding Janus and its business as they deem necessary for the
purpose of entering into this Agreement and closing the Transactions.
3.27. Securities Law Representations. Each Seller represents and warrants
as to himself as follow:
(a) The Seller is an accredited investor (under the
qualifications set forth in paragraph (g) below) and is able to bear the
economic risk of an investment in the Janus Preferred Stock, including the loss
of his entire investment.
(b) The Seller has prior substantial investment experience,
including investments in non-registered securities, and recognizes the highly
speculative nature of an investment in the Janus Preferred Stock.
(c) The Seller has been afforded the opportunity to ask
questions of, and receive answers from, directors and executive officers of
Janus concerning Janus and the
23
terms and conditions of the offering of the Janus Preferred Stock pursuant to
this Agreement. The Seller has been furnished with all information and all
documents which he has requested.
(d) Neither the offer nor the sale of the Janus Preferred
Stock is being registered under the Securities Act or the securities laws of any
state. The Janus Preferred Stock is being offered and sold in reliance on
exemptions from registration under the Securities Act and the various state
securities laws for transactions not involving any public offering. Accordingly,
none of the Janus Preferred Stock can be sold, assigned, bequeathed, exchanged,
pledged, hypothecated or otherwise transferred (each individually a "Transfer")
by the Seller unless and until each is registered under the Securities Act and
the securities laws of each applicable state or an exemption from registration
pursuant to the Securities Act and such laws is available to the Seller.
(e) Janus is relying on exemptions from the various federal
and state securities laws which depend, in part, upon the Seller's investment
intent and upon the information the Seller has set forth in this Section 3.27.
This Agreement is delivered to Janus by the Seller with the understanding and
intent that Janus will rely on the information contained in this Section 3.27
and with such Seller's consent to such reliance.
(f) The Janus Preferred Stock is being acquired by the Seller
for the Seller's own account for investment and not for distribution or resale
or fractionalization thereof or reselling thereof or any part thereof within the
meaning of the Securities Act other than in compliance therewith or in
accordance with an exemption therefrom. The Seller will not transfer any of the
Janus Preferred Stock unless it is registered under the Securities Act and the
securities laws of each applicable state or unless an exemption from each such
registration is available for such Transfer. The Seller has adequate means of
providing for the Seller's current needs and possible personal and business
contingencies and has no need for liquidity of his investment in the Janus
Preferred Stock.
(g) The Seller is a natural person who has a net worth or
joint net worth with the Seller's spouse in excess of $1,000,000; had an
individual income in excess of $200,000 in each of the two most recent years or
a joint income with the Seller's spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the
current year; and the Seller is an officer and/or director of Janus.
(h) The Seller understands the meaning and legal consequences
of the foregoing representations and warranties in this Section 3.27, which are
true and correct as of the date hereof and will be true and correct as of the
date of the Seller's purchase of the Janus Preferred Stock subscribed for
herein. Each such representation and warranty shall survive such purchase.
24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇
▇▇▇▇▇ represents and warrants to each of ▇▇▇▇ II, ▇▇▇▇ III and to the
Sellers as follows:
4.1. Organization and Good Standing. Janus is a corporation, duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted and to own or use the
properties and assets that it purports to own or use. Janus is duly qualified to
do business as a foreign entity and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
4.2. Authority; No Conflict.
(a) This Agreement constitutes, and each other Transaction Document
when executed and delivered, will constitute the legal, valid, and binding
obligation of Janus, enforceable against Janus in accordance with its terms.
Janus has the absolute and unrestricted right, power, authority, and capacity to
execute and deliver this Agreement and to perform its respective obligations
under the Transaction Documents.
(b) Neither the execution and delivery of this Agreement or any
other Transaction Documents, nor the consummation or performance of the
Transactions will, directly or indirectly:
(i) contravene, conflict with, or result in a violation of (A)
any provision of its Organizational Documents, or (B) any resolution adopted by
its board of directors or stockholders;
(ii) give any Governmental Body or other Person the right to
challenge any Transaction;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Janus or that otherwise relates to the business
of, or any of the assets owned or used by Janus;
(iv) cause Janus to become subject to, or to become liable for
the payment of, any Tax;
(v) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by Janus.
25
Except for the approval of the Transactions by the stockholders of
Janus, Janus will not be required to give any notice to or obtain any consent
from any Person in connection with the execution and delivery of this Agreement
or any other Transaction Document or the consummation of any of the
Transactions.
4.3 Janus Preferred Stock. The shares of Janus Preferred Stock to be
issued to the Sellers pursuant to this Agreement will, at the time of issuance,
be duly authorized and validly issued.
ARTICLE V
CLOSING CONDITIONS
5.1. Conditions to Each Party's Obligations Under This Agreement. The
respective obligations of each party under this Agreement to close the
Transactions shall be subject to the satisfaction or waiver at or prior to the
Closing of the following conditions:
(a) Approval. This Agreement and the Transactions shall have been
approved in the manner required by applicable law.
(b) Suits and Proceedings. None of the parties hereto shall be
subject to any order or injunction of a court of competent jurisdiction which
prohibits the consummation of the Transactions. In the event any such order or
injunction shall have been issued, the parties agree to use their reasonable
efforts to have any such injunction lifted.
(c) Governmental Body Approval. All consents, authorizations, orders
and approvals of or filings or registrations with any Governmental Body required
in connection with the execution, delivery and performance of this Agreement
shall have been obtained or made, except for filings in connection with the
Mergers.
(d) Inter-Company Obligations. All of the inter-company accounts
receivable and accounts payable between the ▇▇▇▇ II Entities and Persons
affiliated with the Sellers other than the ▇▇▇▇ II Entities shall have been
satisfied, or provision for their satisfaction shall have been made, on terms
and conditions mutually acceptable to Janus and the Sellers.
5.2. Additional Conditions to Janus' Obligations Under this Agreement. In
addition to the conditions set forth in Section 5.1 above, the obligation of
Janus to close the Transactions shall be subject to the satisfaction or waiver
at or prior to the Closing of the following conditions:
(a) Third-Party Consents. The Sellers shall have furnished to Janus
the consent of each of the lenders to the ▇▇▇▇ II Entities to the applicable
Transaction and all other consents of third parties referred to in Part 3.2 of
the ▇▇▇▇ Disclosure Letters. Such consents shall provide for, in the case of
Juno, the merger following the Effective Time, of such corporation with and into
a limited liability company of which Janus is the sole member.
26
(b) Management Agreements. The Persons owning the Managed Hotels
shall have consented to the sale and assignment of the applicable Management
Agreements to Janus.
(c) HELP Agreement; Computel Agreement. The agreements dated April
23, 1997 between each of HELP and Computel Systems, Inc. shall have amended, as
necessary, to take into account the Hotels which are the subject of the
Transactions.
(d) Fairness Opinion. Janus shall have received an opinion from
▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated that the consideration being paid by Janus in
connection with the Transactions is fair to the stockholders of Janus from a
financial point of view.
(e) Opinions of Counsel. Janus shall have received the opinion of
▇▇▇▇▇▇▇▇ & Shohl as to matters pertaining to the ▇▇▇▇ Entities and the Sellers
and matters of Ohio law in form and substance satisfactory to Janus.
(f) Tax Opinion. Janus shall have received the opinion of ▇▇▇▇▇▇▇,
Del Deo, Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇, in form and substance satisfactory to
Janus to the effect that the ▇▇▇▇ II Merger will be treated as a reorganization
described in Section 368(a) of the Code.
(g) Representations. The representations and warranties of each of
the ▇▇▇▇ Entities and the Sellers contained in this Agreement shall be true and
complete in all material respects, except for changes in the ordinary course of
business and as contemplated by this Agreement, on and as of the Closing Date
with the same force and effect as though made on and as of such date. Each of
the ▇▇▇▇ Entities and the Sellers shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to such date, and Sellers and each of the ▇▇▇▇ Entities
shall have delivered to Janus a certificate, executed by its principal executive
officer and principal financial officer, dated such date to the foregoing
effect.
(h) Release of Certain Mortgage. First National Bank shall have
released its mortgage on the Days Inn, East.
(i) Modification of Certain Lien. PNC Bank shall have modified the
terms of its security interest in the membership interest of Beckelbe (LLC) and
the Owned Hotel Days Inn East to exclude as secured indebtedness all
indebtedness that will not be liabilities of Janus after giving effect to this
transaction.
(j) Title Insurance. There shall have been issued polices of
insurance, insuring the title to each of the Owned Hotels (with the exception of
the Days Inn East), in form and substance satisfactory to Janus and its counsel.
(k) No Adverse Change. From the date of this Agreement through the
Closing Date, there shall not have occurred any change in the financial
condition, business or operations of the ▇▇▇▇ II Entities, taken as a whole,
that would have or reasonably be likely to have a material adverse effect on
their respective business, properties or assets.
27
(l) Liquidity; Working Capital. The Owned Hotels shall have working
capital in the form of cash or cash equivalents of at least $70,000 in the
aggregate.
5.3. Additional Conditions to Obligations of the ▇▇▇▇ Entities Under this
Agreement. In addition to the conditions set forth in Section 5.1 above, the
obligation of Sellers and each of the ▇▇▇▇ Entities to close the Transactions
shall be subject to the satisfaction or waiver at or prior to the Closing of the
following conditions:
(a) Representations. The representations and warranties of Janus
contained in this Agreement shall be true and complete in all material respects,
except for changes in the ordinary course of business and as contemplated by
this Agreement, on and as of the Closing Date with the same force and effect as
though made on and as of such date. Janus shall have performed and complied with
all covenants and agreements required by this Agreement to be performed or
complied with by it on or prior to such date, and Janus shall have delivered to
each of the ▇▇▇▇ Entities a certificate, executed by its President dated such
date to the foregoing effect.
(b) Opinion of Counsel. The Sellers shall have received the opinion
of ▇▇▇▇▇▇▇, Del Deo, Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇, counsel for Janus, in form
and substance satisfactory to the Sellers.
(c) Tax Opinion. The Sellers shall have received the opinion of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, in form and substance satisfactory to the Sellers to the effect
that the ▇▇▇▇ II Merger will be treated as a reorganization described in Section
368(a) of the Code.
(d) No Adverse Change. From the date of this Agreement through the
Closing date, there shall not have occurred any change in the financial
condition, business or operations of Janus and its Subsidiaries, taken as a
whole, that would have or reasonably be likely to have a material adverse effect
on the business, property or assets of Janus.
(e) Registration Rights Agreement. Janus shall have executed and
delivered a Registration Rights Agreement with each of the Sellers.
(f) Amendment of Certificate of Designations. The Board of Directors
of Janus shall have amended the Certificate of Designation, Rights and
Preferences of the Janus Preferred Stock to increase the number of authorized
shares.
28
ARTICLE VI
COVENANTS OF THE SELLERS
6.1. Access to Information and Records.
(a) During the period from the date hereof to the Closing
Date, the Sellers shall cause the ▇▇▇▇ Entities to give Janus, its counsel,
accountants and other authorized representatives, reasonable access during
normal business hours to all of its properties, books, records, contracts and
other documents and, with the prior consent of such party (which shall not be
unreasonably withheld), to its salaried personnel, if any; and the Sellers shall
furnish or cause to be furnished to Janus and its representatives all
information with respect to its business and affairs as such other party may
reasonably request.
(b) Any investigation conducted by Janus pursuant to this
Section 6.1 shall be so conducted as not to interfere unreasonably with the
business operations of the ▇▇▇▇ Entities and its relationships with its
employees, customers and suppliers. No such investigation by Janus shall affect
or be deemed to modify any representation or warranty made by the Sellers.
(c) During the period from the date hereof to the Closing
Date, Janus will maintain in confidence, and will cause its directors, officers,
employees, agents, and advisors to maintain in confidence, any written, oral, or
other information obtained in confidence from the Sellers in connection with
this Agreement or the Transactions, unless (i) such information is already known
to Janus or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (ii) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Transactions, or (iii)
the furnishing or use of such information is required by or necessary or
appropriate in connection with legal proceedings. If the Transactions are not
consummated, each of the parties will return or destroy as much of such written
information as the other parties may reasonably request.
6.2. Bank Accounts. Not less than ten (10) days prior to the anticipated
Closing Date, each of the ▇▇▇▇ Entities shall provide to Janus a list of each
bank in which each of the ▇▇▇▇ Entities has an account or safe deposit box,
together with the name and number of each such account or safe deposit box and
the names of all persons authorized to draw thereon or who have access thereto,
specifying the amounts that each such person is authorized to draw therefrom.
6.3. Conduct of Business Pending Closing. The Sellers agree that from the
date hereof until the Closing Date, except as otherwise approved in writing by
all parties:
(a) Maintain Business and Organization. Each of the ▇▇▇▇
Entities will carry on its business in the ordinary course consistent with past
practice, and to the extent consistent therewith, will use its reasonable best
efforts to maintain and preserve its business organization intact and to
maintain its current relationships with suppliers, employees and others having
business relationships with them.
29
(b) No Material Contracts. No contract or commitment will be
entered into, and no purchase of supplies and no sale of assets (real, personal,
or mixed, tangible or intangible) will be made, by or on behalf of any party
hereto, except (i) contracts or commitments for the purchase of, materials and
supplies made in the ordinary course of business consistent with past practice,
(ii) contracts or commitments for the provision of services in the ordinary
course of business consistent with past practice, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business consistent
with past practice which are not material to such party.
(c) Capital Expenditures. No ▇▇▇▇ II Entity shall make any
capital expenditures or commitments therefor, in excess of $25,000 for any
single item or $75,000 in the aggregate for additions to property, plant or
equipment, or agree to make any such expenditures or commitments, except
pursuant to existing expenditure or commitment programs in a manner consistent
with the performance of such programs to date, and except in the case of an
unforeseen emergency or as may be required by any franchiser of the Owned
Hotels.
(d) No Dividends. ▇▇▇▇ II will not declare or pay any dividend
or make any other distribution in respect of its capital stock or ownership
interests; directly or indirectly, redeem, purchase or otherwise acquire any of
its own stock, or grant any options or other rights to acquire ownership
interests.
(e) No Corporate Changes. None of the ▇▇▇▇ II Entities will
amend its Organizational Documents or make any changes in its authorized or
issued capital stock.
(f) Indebtedness. None of the ▇▇▇▇ II Entities will create any
indebtedness, other than short-term indebtedness incurred in the ordinary course
of business consistent with past practices.
(g) Maintenance of Insurance. Each of the ▇▇▇▇ II Entities
will use its best efforts, consistent with past practice and prudent business
judgment, to maintain all of the insurance held by it and the Hotels in effect
as of the date hereof.
6.4. Disclosure Letters. The Sellers shall have a continuing obligation to
promptly notify Janus in writing with respect to any matter arising or
discovered after the date of execution of this Agreement, which matter, if
existing or known at the date hereof, would have been required to be set forth
or described in ▇▇▇▇ Disclosure Letters.
ARTICLE VII
TERMINATION
7.1. Termination Events. This Agreement may be terminated by mutual
consent of Janus and the Sellers.
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ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
No representations, warranties, covenants and obligations in this
Agreement, in any ▇▇▇▇ Disclosure Letter, in any other Transaction Document or
in any other certificate or document delivered pursuant to this Agreement, will
survive the closing of the Transactions, with the exception of the
representations and warranties of the Sellers in Section 3.27.
ARTICLE IX
MISCELLANEOUS
9.1. Exhibits and Disclosure Letter of the ▇▇▇▇ Entities. The Exhibits to
this Agreement, and the ▇▇▇▇ Disclosure Letters are a part of this Agreement as
if set forth in full herein.
9.2. Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued without
advance approval of the form and substance thereof by both Janus and the
Sellers.
9.3. Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage prepaid,
and shall be deemed given when so delivered personally, or telecopied or if
mailed, two days after the date of mailing, as follows (or to such other address
as any party may from time to time specify in writing pursuant to the notice
provisions hereof):
(i) if to the Sellers or the ▇▇▇▇ Entities to:
▇▇▇▇ Summit Hotel Management Group
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & Shohl
1900 Chemed Center
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
31
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Janus to:
Janus American Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Del Deo, Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.4. Entire Agreement. This Agreement (including all Exhibits, and the
▇▇▇▇ Disclosure Letters) contains the entire agreement among the parties with
respect to the Transactions and all transactions related thereto, and supersedes
all prior agreements or understandings, written or oral, with respect thereto.
9.5. Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived only by a written instrument signed by all parties or, in the case
of a waiver, signed by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity.
9.6. Expenses. All expenses (including, without limitation, legal fees and
expenses, fees of brokers and advisors and investment bankers and fees and
expenses of accountants) incurred in connection with the transactions
contemplated hereby will be borne by the party incurring such expenses.
9.7. Governing Law. Except insofar as the Ohio General Corporation Law
shall apply to the ▇▇▇▇ II Merger, this Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the choice of law principles thereof.
32
9.8. No Assignment. This Agreement is not assignable except by operation
of law.
9.9. Variations in Pronouns. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
9.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
9.11. Arbitration. The parties hereby agree that any dispute regarding the
rights and obligations of any party under this Agreement must be resolved by
arbitration pursuant to this Section 9.11 Within seven (7) days of any party's
written notice to the other of its desire to submit any dispute to arbitration,
the parties will meet to attempt to amicably resolve their differences and,
failing such resolution, the parties may submit the matter to mandatory and
binding arbitration with the Center for Public Resources ("CPR"). The issue(s)
in dispute shall be settled by arbitration in accordance with the Center for
Public Resources Rules for Non-Administered Arbitration of Business Disputes, by
a panel of three arbitrators (the "Panel"). The only issue(s) to be determined
by the Panel will be those issues specifically submitted to the Panel. The Panel
will not extend, modify or suspend any of the terms of this Agreement. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
ss.1-16, and judgment upon the award rendered by the Panel may be entered by any
court having jurisdiction thereof. A determination of the Panel shall be by
majority vote.
Promptly following receipt of the request for arbitration, CPR shall
convene the parties in person or by telephone to attempt to select the
arbitrators by agreement of the parties. If agreement is not reached, Janus
shall select one arbitrator and the Sellers shall select one other arbitrator.
These two arbitrators shall select a third arbitrator. If these two arbitrators
are unable to select the third arbitrator by mutual agreement, CPR shall submit
to the parties a list of not less than eleven (11) candidates. Such list shall
include a brief statement of each candidate's qualifications. Each party shall
number the candidates in order of preference, shall note any objection they may
have to any candidate, and shall deliver the list so marked back to CPR. Any
party failing without good cause to return the candidate list so marked within
ten (10) days after receipt shall be deemed to have assented to all candidates
listed thereon. CPR shall designate the arbitrator willing to serve for whom the
parties collectively have indicated the highest preference and who does not
appear to have a conflict of interest. If a tie should result between two
candidates, CPR may designate either candidate.
This agreement to arbitrate is specifically enforceable. Judgment upon any
award rendered by the Panel may be entered in any court having jurisdiction. The
decision of the Panel within the scope of the submission is final and binding on
all parties, and any right to judicial action on any matter subject to
arbitration hereunder hereby is waived (unless otherwise provided by applicable
law), except suit to enforce this arbitration award or in the event arbitration
is not available for any reason. If the rules of the CPR differ from those of
this Section 9.11, the provisions of this Section 9.11 will control. The costs
of arbitration shall be shared by the parties.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
each of the parties by duly authorized representatives, on the date first above
written.
JANUS AMERICAN GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇ HOSPITALITY INC. II
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
▇▇▇▇ HOSPITALITY INC. III
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
▇▇▇▇▇ ▇▇▇▇▇▇
34
Schedule I
[Description of Restructuring Transactions]
