Exhibit 2.17
AGREEMENT AND PLAN OF REORGANIZATION
By and Among
U.S.A. Floral Products, Inc.,
EFTA Acquisition Corp.,
Elite Farms,
Talent, Inc.,
Anvacu, Inc.,
The Stockholders Named Therein
and
The Beneficial Owners Named Therein
made effective as of April 3, 1998
Table of Contents
Page
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1. THE MERGER............................................................ 1
1.1 The Merger.................................................... 1
1.2 Articles of Incorporation; Bylaws, Directors and Officers..... 1
1.3 Effects of the Merger......................................... 2
2. CONVERSION AND EXCHANGE OF STOCK....................................... 2
2.1 Manner of Conversion........................................... 2
2.2 Merger Consideration........................................... 3
2.3 Exchange of Certificates and Payment of Cash................... 4
3. POST CLOSING ADJUSTMENT; PLEDGED ASSETS................................ 5
3.1 Post-Closing Adjustment........................................ 5
3.2 Pledged Assets................................................. 6
3.3 Stockholders' Representative................................... 7
4. CLOSING................................................................ 8
4.1 Location and Date.............................................. 8
4.2 Effect......................................................... 8
5. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP, THE PARTNERS AND
THE STOCKHOLDERS....................................................... 9
5.1 Due Organization............................................... 9
5.2 Authorization; Validity........................................ 9
5.3 No Conflicts................................................... 10
5.4 Partnership Interests; Capital Stock of the Partners........... 10
5.5 Transactions in Capital Stock and Partnership Interests........ 11
5.6 Subsidiaries, Stock, and Notes................................. 11
5.7 Predecessor Status............................................. 11
5.8 Absence of Claims Against the Partnership and the Partners..... 11
5.9 Partnership Financial Conditions............................... 11
5.10 Financial Statements........................................... 12
5.11 Liabilities and Obligations.................................... 12
5.12 Accounts and Notes Receivable.................................. 13
5.13 Books and Records.............................................. 13
5.14 Permits........................................................ 13
5.15 Real Property.................................................. 14
5.16 Personal Property.............................................. 15
5.17 Intellectual Property.......................................... 15
5.18 Material Contracts and Commitments............................. 17
5.19 Government Contracts........................................... 18
5.20 Insurance...................................................... 19
5.21 Labor and Employment Matters................................... 19
5.22 Employee Benefit Plans......................................... 20
5.23 Conformity with Law; Litigation................................ 22
5.24 Taxes.......................................................... 22
5.25 Absence of Changes............................................. 24
5.26 Deposit Accounts; Powers of Attorney........................... 26
5.27 Environmental Matters.......................................... 26
5.28 Relations with Governments..................................... 28
5.29 Disclosure..................................................... 28
5.30 USFloral Prospectus; Securities Representations................ 28
5.31 Affiliates..................................................... 28
5.32 Location of Chief Executive Offices............................ 29
5.33 Location of Equipment and Inventory............................ 29
6. REPRESENTATIONS OF USFLORAL AND NEWCO.................................. 29
6.1 Due Organization............................................... 29
6.2 USFloral Common Stock.......................................... 29
6.3 Authorization; Validity of Obligations......................... 30
6.4 No Conflicts................................................... 30
6.5 Capitalization of USFloral and Ownership of USFloral Stock..... 30
7. COVENANTS.............................................................. 31
7.1 Tax Matters.................................................... 31
7.2 Reserved....................................................... 32
7.3 Related Party Agreements and Personal Vehicles................. 32
7.4 Cooperation.................................................... 32
7.5 Conduct of Business Pending Closing............................ 33
7.6 Access to Information.......................................... 33
7.7 Prohibited Activities.......................................... 34
7.8 Notice to Bargaining Agents.................................... 35
7.9 Sales of USFloral Common Stock................................. 35
7.10 USFloral Stock Options......................................... 36
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF USFLORAL AND NEWCO.......... 37
8.1 Representations and Warranties; Performance of Obligations..... 37
8.2 No Litigation.................................................. 37
8.3 No Material Adverse Change..................................... 37
8.4 Consents and Approvals......................................... 37
8.5 Opinion of Counsel............................................. 38
8.6 Charter Documents.............................................. 38
8.7 Due Diligence Review........................................... 38
8.8 Delivery of Closing Financial Certificate...................... 38
8.9 FIRPTA Compliance.............................................. 38
8.10 Employment Agreements.......................................... 39
8.11 Stockholders' Release.......................................... 39
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8.12 Related Party Agreements....................................... 39
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTNERSHIP, THE
PARTNERS AND THE STOCKHOLDERS.......................................... 39
9.1 Representations and Warranties; Performance of Obligations..... 39
9.2 No Litigation.................................................. 39
9.3 Consents and Approvals......................................... 40
9.4 Employment Agreements.......................................... 40
10. INDEMNIFICATION........................................................ 40
10.1 General Indemnification by the Beneficial Owners
and the Stockholders........................................... 40
10.2 Limitation and Expiration...................................... 41
10.3 Indemnification Procedures..................................... 42
10.4 Survival of Representations Warranties and Covenants........... 43
10.5 Remedies Cumulative............................................ 44
10.6 Right to Set Off............................................... 44
11. NONCOMPETITION......................................................... 44
11.1 Prohibited Activities.......................................... 44
11.2 Damages........................................................ 45
11.3 Reasonable Restraint........................................... 45
11.4 Severability; Reformation...................................... 45
11.5 Independent Covenant........................................... 45
11.6 Materiality.................................................... 46
12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................. 46
12.1 Stockholders and Beneficial Owners............................. 46
12.2 USFloral....................................................... 46
12.3 Damages........................................................ 46
13. GENERAL................................................................ 47
13.1 Termination.................................................... 47
13.2 Effect of Termination.......................................... 47
13.3 Successors and Assigns......................................... 48
13.4 Entire Agreement; Amendment; Waiver............................ 48
13.5 Counterparts................................................... 48
13.6 Brokers and Agents............................................. 48
13.7 Expenses....................................................... 48
13.8 Specific Performance; Remedies................................. 48
13.9 Notices........................................................ 49
13.10 Governing Law; Legal Action.................................... 50
13.11 Severability................................................... 50
13.12 Absence of Third Party Beneficiary Rights...................... 50
iii
13.13 Further Representations........................................ 50
13.14 Accounting Terms............................................... 50
iv
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into this 3rd day of April, 1998, by and among U.S.A. Floral Products,
Inc., a Delaware corporation ("USFloral"), EFTA Acquisition Corp., a Florida
corporation and a newly-formed, wholly-owned subsidiary of USFloral ("Newco"),
Elite Farms, a Florida general partnership (the "Partnership"), Talent, Inc., a
Florida corporation, Anvacu, Inc. a Florida corporation (each a "Partner" and
together, the "Partners"), Xxxxxxxx Xxxxxxxxx V., Xxxxxx Xxxxxx, Xxxxxx Xxxxxx
S.A., a Colombian corporation, Xxxxxx del Lago Ltda., a Colombian corporation,
Xxxx Asociados Ltda., a Colombian corporation, Los Geranios Ltda., a Colombian
corporation and Xxxxxx de La Xxxx, Ltda., a Colombian corporation (each a
"Stockholder" and collectively, the "Stockholders"); and the beneficial owners
of the corporate Stockholders as set for on the signature page to this Agreement
(each a "Beneficial Owner" and collectively, the "Beneficial Owners").
BACKGROUND
WHEREAS, the respective Boards of Directors of Newco and the Partners
(which together are sometimes referred to as the "Constituent Corporations")
deem it advisable and in the best interests of the Constituent Corporations and
their respective stockholders that the Partners merge with and into Newco (the
"Merger") pursuant to this Agreement, the Plan of Merger (defined below) and the
applicable provisions of the laws of the State of Florida.
WHEREAS, the Boards of Directors of each of the Constituent Corporations
have approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 4.2), the
Partners shall be merged with and into Newco pursuant to this Agreement and a
plan of merger (the "Plan of Merger") substantially in the form attached as
Schedule 1.1 hereto, and the separate corporate existence of each Partner shall
cease. Newco, as it exists from and after the Effective Time, is sometimes
referred to as the "Surviving Corporation."
1.2 Articles of Incorporation; Bylaws, Directors and Officers. At the
Effective Time:
(a) The Articles of Incorporation of the Surviving Corporation from
and after the Effective Time shall be the Articles of Incorporation of Newco
until thereafter amended in accordance with the provisions therein and as
provided by the applicable provisions of the Florida Business Corporation Act.
(b) The Bylaws of the Surviving Corporation from and after the
Effective Time shall be the Bylaws of Newco in effect immediately prior to the
Effective Time, continuing until thereafter amended in accordance with their
terms and the Articles of Incorporation of the Surviving Corporation and as
provided by the Florida Business Corporation Act.
(c) The initial director of the Surviving Corporation shall be Xxxxxx
X. Xxxxxxx until his successor is elected and qualified, and the initial
officers of the Surviving Corporation shall be the officers of the Company
immediately prior to the Effective Time, with the addition of Xxxxxx X. Xxxxxxx
as Vice President and Assistant Secretary of the Surviving Corporation, in each
case until their successors are duly elected and qualified.
1.3 Effects of the Merger. The Merger shall have the effects provided
therefor by the Florida Business Corporation Act. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time (i) all
the rights, privileges, immunities, powers and franchises, of a public as well
as of a private nature, and all property, real, personal and mixed, and all
debts due on whatever account, including without limitation subscriptions to
shares, and all other choses in action, and all and every other interest of or
belonging to or due to the Company or Newco shall be taken and deemed to be
transferred to, and vested in, the Surviving Corporation without further act or
deed; and all property, rights and privileges, immunities, powers and franchises
and all and every other interest shall be thereafter as effectually the property
of the Surviving Corporation, as they were of each Partner and Newco, and (ii)
all debts, liabilities, duties and obligations of each Partner and Newco,
subject to the terms hereof, shall become the debts, liabilities and duties of
the Surviving Corporation and the Surviving Corporation shall thenceforth be
responsible and liable for all the debts, liabilities, duties and obligations of
each Partner and Newco and neither the rights of creditors nor any liens upon
the property of either Partner or Newco shall be impaired by the Merger, and may
be enforced against the Surviving Corporation.
2. CONVERSION AND EXCHANGE OF STOCK
2.1 Manner of Conversion. At the Effective Time, by virtue of the Merger
and without any action on the part of USFloral, Newco, either Partner or any
Stockholder, the shares of capital stock of each of the Constituent Corporations
shall be converted as follows:
(a) Capital Stock of Newco. Each issued and outstanding share of
capital stock of Newco shall continue to be issued and outstanding and shall be
converted into one share of validly issued, fully paid and non-assessable Common
Stock of the Surviving Corporation. Each stock certificate of Newco evidencing
ownership of any such shares shall continue to evidence ownership of such shares
of capital stock of the Surviving Corporation.
(b) Cancellation of Certain Shares of Capital Stock of the Partners.
All shares of capital stock of each Partner that are owned directly or
indirectly by such Partner shall be canceled and no stock of USFloral or other
consideration shall be delivered in exchange therefor.
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(c) Conversion of Capital Stock of the Partners. Subject to Section
2.1(d), and Sections 2.2, 3.1 and 3.2, each issued and outstanding share of
common stock of the Partners ("Partner Common Stock") (other than shares to be
canceled pursuant to Section 2.1(b)), that is issued and outstanding immediately
prior to the Effective Time shall automatically be canceled and extinguished and
converted, without any action on the part of the holder thereof as follows: (1)
each share of outstanding capital stock of Anvacu, Inc. shall be converted into
the right to receive (i) an amount of cash equal to five-sixths (5/6) of the
cash portion of the Merger Consideration divided by the number of shares of
Anvacu, Inc. Common Stock outstanding immediately prior to the Effective Time
and (ii) that number of shares of USFloral common stock, $.001 par value
("USFloral Common Stock"), valued at the Merger Price (as defined in Section
2.2), that is equal in value to the USFloral Common Stock portion of the Merger
Consideration (as defined in Section 2.2) divided by the number of shares of
Anvacu, Inc. Common Stock outstanding immediately prior to the Effective Time;
and (2) each share of outstanding capital stock of Talent, Inc. shall be
converted into the right to receive (i) an amount of cash equal to one-sixth
(1/6) of the cash portion of the Merger Consideration divided by the number of
shares of Talent, Inc. Common Stock outstanding immediately prior to the
Effective Time, and (ii) that number of shares of USA Floral Common Stock,
valued at the Merger Price, that is equal in value to the one-sixth (1/6) of the
USA Floral portion of the Merger Consideration divided by the number of shares
of Talent, Inc. Common Stock outstanding immediately prior to the effective
time. All such shares of Partner Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
the consideration therefor upon the surrender of such certificate in accordance
with Section 2.3 of this Agreement.
(d) Fractional Shares. No fractional shares of USFloral Common Stock
shall be issued, but in lieu thereof each holder of shares of Partner Common
Stock who would otherwise be entitled to receive a fraction of a share of
USFloral Common Stock shall receive from USFloral an amount of cash equal to the
Merger Price, as defined in Section 2.2(a), multiplied by the fraction of a
share of USFloral Common Stock to which such holder would otherwise be entitled.
The fractional share interests of each Stockholder shall be aggregated, so that
no Stockholder shall receive cash in an amount greater than the value of one
full share of USFloral Common Stock.
2.2 Merger Consideration.
(a) For purposes of this Agreement, the "Merger Consideration" shall
be $7,400,000 adjusted pursuant to this Section 2.2 and Section 3.1. Of the
Merger Consideration, $3,700,000 less the aggregate amount of long-term
indebtedness, including any current portion thereof, shall be paid in cash at
Closing in immediately available funds. The remaining $3,700,000 of the Merger
Consideration shall be paid in shares of USFloral Common Stock valued at $20.01
per share (the "Merger Price"). The 184,907 shares of USFloral Common Stock to
be issued (subject to adjustment as provided in this Section 2.2 and Section
3.1) shall be registered under the Securities Act of 1933, as amended (the "1933
Act").
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(b) The Merger Consideration has been calculated based upon several
factors, including the assumption that the net worth of the Partnership,
calculated in accordance with generally accepted accounting principles ("GAAP")
consistently applied, is equal to or greater than $1,000,000 (the "Net Worth
Target") as of the Closing.
(c) If, on the Closing Financial Certificate (as defined in Section
8.9), the Certified Closing Net Worth (as defined in Section 8.9) is less than
the Net Worth Target, then the Merger Consideration to be delivered to the
Stockholders may, at USFloral's election, be reduced either (i) at the Closing,
or (ii) after completion of the Post-Closing Audit (as defined in Section 3.1),
by the difference between the Net Worth Target and the Certified Closing Net
Worth set forth on the Closing Financial Certificate (which reduction shall be
pro rata in cash and in USFloral Common Stock valued at the Merger Price in the
same proportions as the cash and USFloral Common Stock components of the Merger
Consideration as provided in Section 2.2(a)).
2.3 Exchange of Certificates and Payment of Cash.
(a) USFloral to Provide Cash and Common Stock. In exchange for the
outstanding shares of capital stock of the Partners, USFloral shall cause to be
made available to the Stockholders the Merger Consideration (including cash in
an amount sufficient for payment in lieu of fractional shares pursuant to
Section 1.2(d)), as adjusted pursuant to Section 2.2 and Section 3.1. The
certificates evidencing the USFloral Common Stock component of the Merger
Consideration shall bear appropriate legends pursuant to the terms of this
Agreement and the Affiliate Agreement (as described in Section 8.12), and
USFloral shall be entitled to issue appropriate stop transfer instructions to
its transfer agent consistent with the terms of this Agreement.
(b) Certificate Delivery Requirements. At the Effective Time, the
Stockholders shall deliver to USFloral the certificates (the "Certificates")
representing Partner Common Stock, accompanied by blank stock powers duly
executed by the Stockholders and with all necessary transfer tax and other
revenue stamps, acquired at the Stockholders' expense, affixed and canceled. The
Stockholders shall promptly cure any deficiencies with respect to the stock
powers accompanying such Certificates. The Certificates so delivered shall
forthwith be canceled. Until delivered as contemplated by this Section 2.3(b),
each Certificate shall be deemed at any time after the Effective Time to
represent the right to receive upon such surrender the number of shares of
USFloral Common Stock and the amount of cash as provided by this Article 2 and
the applicable provisions of the State Corporation Laws.
(c) No Further Ownership Rights in Capital Stock of the Company. All
USFloral Common Stock and cash to be delivered (including USFloral Common Stock
delivered pursuant to Section 3.2(b) but withheld) upon the surrender for
exchange of shares of Partner Common Stock in accordance with the terms hereof
shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such shares of Partner Common Stock, and following the Effective
Time the Certificates shall have no further rights to, or ownership in, shares
of capital stock of the Partners. There shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Partner Common Stock which were outstanding immediately prior to
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the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Section 2.3.
(d) Lost, Stolen or Destroyed Certificates. If any certificates
evidencing shares of Partner Common Stock shall have been lost, stolen or
destroyed, then USFloral shall cause payment to be made in exchange for such
lost, stolen or destroyed certificates, upon the making of an affidavit of that
fact by the holder thereof, such shares of USFloral Common Stock and cash as
provided in Section 2.1; provided, however that USFloral may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
USFloral with respect to the certificates alleged to have been lost, stolen or
destroyed.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 2.3, none of the Surviving Corporation or any party hereto shall be
liable to a holder of shares of Partner Common Stock for any amount paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
3. POST CLOSING ADJUSTMENT; PLEDGED ASSETS
3.1 Post-Closing Adjustment.
(a) The Merger Consideration shall be subject to adjustment after the
Closing Date as specified in this Section 3.1.
(b) Within one hundred twenty (120) days following the Effective
Time, USFloral shall cause Price Waterhouse LLP ("USFloral's Accountant") to
audit the Surviving Corporation's books to determine the accuracy of the
information set forth on the Closing Financial Certificate (the "Post-Closing
Audit"). The parties acknowledge and agree that for purposes of determining the
net worth of the Partnership as of the Closing Date, the value of the assets of
the Partnership shall, except with the prior written consent of USFloral, be
calculated as provided in the last paragraph of Section 8.9. The Stockholders
shall cooperate and shall use their reasonable efforts to cause the officers and
employees of the Partnership to cooperate with USFloral and USFloral's
Accountant after the Closing Date in furnishing information, documents, evidence
and other assistance to USFloral's Accountant to facilitate the completion of
the Post-Closing Audit within the aforementioned time period. In the event that
USFloral's Accountant determines that the actual net worth of the Partnership
(the "Actual Partnership Net Worth") as of the Closing Date was less than the
Certified Closing Net Worth, USFloral shall deliver a written notice (the
"Financial Adjustment Notice") to the Stockholders' Representative, as defined
in Section 3.3, setting forth (i) the determination made by USFloral's
Accountant of the Actual Partnership Net Worth, (ii) the amount of the Merger
Consideration that would have been payable at Closing pursuant to Section 2.2(c)
had the Actual Partnership Net Worth been reflected on the Closing Financial
Certificate instead of the Certified Closing Net Worth, and (iii) the amount by
which the number of shares issued as the Merger Consideration would have been
reduced at Closing had the Actual Company Net Worth been
5
used in the calculations pursuant to Section 2.2(c) (the "Merger Consideration
Adjustment"). The Merger Consideration Adjustment shall take account of the
reduction, if any, to the Merger Consideration already taken pursuant to Section
2.2(c)(i).
(c) The Stockholders' Representative shall have thirty (30) days
from the receipt of the Financial Adjustment Notice to notify USFloral if the
Stockholders dispute such Financial Adjustment Notice. If USFloral has not
received notice of such a dispute within such 30-day period, USFloral shall be
entitled to receive from the Stockholders (which may, at USFloral's sole
discretion, be from the Pledged Assets as defined in Section 3.2) the Merger
Consideration Adjustment. If, however, the Stockholders' Representative has
delivered notice of such a dispute to USFloral within such 30-day period, then
USFloral's Accountant shall select an independent "Big Five" accounting firm
that has not represented any of the parties hereto within the preceding two (2)
years to review the Surviving Corporation's books, Closing Financial
Certificate and Financial Adjustment Notice (and related information) to
determine the amount, if any, of the Merger Consideration Adjustment. Such
independent accounting firm shall be confirmed by the Stockholders'
Representative and USFloral within five (5) days of its selection, unless there
is an actual conflict of interest. The independent accounting firm shall be
directed to consider only those agreements, contracts, commitments or other
documents (or summaries thereof) that were either (i) delivered or made
available to USFloral's Accountant in connection with the transactions
contemplated hereby, or (ii) reviewed by USFloral's Accountant during the course
of the Post-Closing Audit. The independent accounting firm shall make its
determination of the Merger Consideration Adjustment, if any, within thirty (30)
days of its selection. The determination made by the independent accounting
firm shall, absent manifest error, be final and binding on the parties hereto,
and upon such determination, USFloral shall be entitled to receive from the
Stockholders (which may, at USFloral's sole discretion, be from the Pledged
Assets as defined in Section 3.2) the Merger Consideration Adjustment. The
costs of the independent accounting firm shall be borne by the party (either
USFloral or the Stockholders as a group) whose determination of the
Partnership's net worth at Closing was further from the determination of the
independent accounting firm, or equally by USFloral and the Stockholders in the
event that the determination by the independent accounting firm is equidistant
between the Certified Closing Net Worth and the Actual Partnership Net Worth.
3.2 Pledged Assets.
(a) As collateral security for the payment of any post-Closing
adjustment to the Merger Consideration under Section 3.1, or any indemnification
obligations of the Stockholders pursuant to Article 10, the Stockholders shall,
and by execution hereof do hereby, transfer, pledge and assign to USFloral, for
the benefit of USFloral, a security interest in the following assets (the
"Pledged Assets"):
(i) [cash][that number of shares of USFloral Common Stock
with a value, based on the Merger Price,] equal to ten percent (10%) of each
Stockholder's share of the Merger Consideration as the same may have been
adjusted pursuant to Section 2.2 or Section 3.1 hereof, and
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the certificates and instruments, if any, representing or evidencing each such
Stockholder's Pledged Assets;
(ii) all securities hereafter delivered to such Stockholder
with respect to or in substitution for such Stockholder's Pledged Assets, all
certificates and instruments representing or evidencing such securities, and all
cash and non-cash dividends and other property at any time received, receivable
or otherwise distributed in respect of or in exchange for any or all thereof;
and in the event such Stockholder receives any such property, such Stockholder
shall hold such property in trust for USFloral and shall immediately deliver
such property to USFloral to be held hereunder as Pledged Assets; and
(iii) all cash and non-cash proceeds of all of the foregoing
property and all rights, titles, interests, privileges and preferences
appertaining or incident to the foregoing property.
(b) Each certificate, if any, evidencing a Stockholder's Pledged
Assets issued in his or her name in the Merger shall be delivered to USFloral
directly by the transfer agent, such certificate bearing no restrictive or
cautionary legend other than those imprinted by the transfer agent at USFloral's
request. Each Stockholder shall, at the Closing, deliver to USFloral, for each
such certificate, a stock power duly signed in blank by him or her. Any cash
comprising a Stockholder's Pledged Assets shall be withheld by USFloral from
distribution to such Stockholder.
(c) The Pledged Assets shall be available to satisfy any post-Closing
adjustment to the Merger Consideration pursuant to Section 3.1 and any
indemnification obligations of the Stockholders pursuant to Article 10 until the
date which is one year after the Effective Time (the "Release Date"). Promptly
following the Release Date, USFloral shall return or cause to be returned to the
Stockholders the Pledged Assets, less Pledged Assets having an aggregate value
equal to the amount of (i) any post-Closing adjustment to the Merger
Consideration under Section 3.1, but only to the extent such adjustment has not
already been paid, (ii) any pending claim for indemnification made by any
Indemnified Party (as defined in Article 10), (iii) any previously applied
indemnification obligations of the Stockholders pursuant to Article 10. For
purposes of the preceding sentence and Article 10, the USFloral Common Stock
held as Pledged Assets shall be valued at (x) the Merger Price with respect to
any post-Closing adjustment to the Merger Consideration under Section 3.1 and
(y) the average of the closing price on the Nasdaq National Market per share of
USFloral Common Stock for the five trading days prior to the satisfaction of an
indemnification obligation (the "Market Value") with respect to indemnification
obligations pursuant to Article 10.
3.3 Stockholders' Representative.
(a) Each holder of Partner Common Stock and each Beneficial Owner,
by signing this Agreement, designates Xxxxxxx Xxxxx Xxxxx or, in the event that
Xxxxxxx Xxxxx Xxxxx is unable or unwilling to serve, Xxxxx Xxxx to be the
Stockholders' Representative for purposes of this Agreement. The Stockholders
and the Beneficial Owners shall be bound by any and all actions taken by the
Stockholders' Representative on their behalf.
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(b) USFloral and Newco shall be entitled to rely upon any
communication or writings given or executed by the Stockholders' Representative.
All communications or writings to be sent to Stockholders pursuant to this
Agreement may be addressed to the Stockholders' Representative and any
communication or writing so sent shall be deemed notice to all of the
Stockholders hereunder. The Stockholders hereby consent and agree that the
Stockholders' Representative is authorized to accept deliveries, including any
notice, on behalf of the Stockholders pursuant hereto.
(c) The Stockholders' Representative is hereby appointed and
constituted the true and lawful attorney-in-fact of each Stockholder, with full
power in his or her name and on his or her behalf to act according to the terms
of this Agreement in the absolute discretion of the Stockholders'
Representative, and in general to do all things and to perform all acts
including, without limitation, executing and delivering all agreements,
certificates, receipts, instructions and other instruments contemplated by or
deemed advisable in connection with Article 10 of this Agreement. This power of
attorney and all authority hereby conferred is granted subject to and coupled
with the interest of the other Stockholders hereunder and in consideration of
the mutual covenants and agreements made herein, and shall be irrevocable and
shall not be terminated by any act of any Stockholder, by operation of law,
whether by such Stockholder's death or any other event.
4. CLOSING
4.1 Location and Date. The consummation of the Merger and the other
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Xxxxxx, Xxxxx & Bockius LLP, on April 3, 1998, providing that all
conditions to Closing shall have been satisfied or waived, or at such other time
and date as USFloral, the Partners and the Stockholders may mutually agree,
which date shall be referred to as the "Closing Date."
4.2 Effect. On the Closing Date, the articles of merger, certificate of
merger, or other appropriate documents executed in accordance with the Florida
Business Corporation Act (the "Merger Documents"), together with any required
officers' certificates, shall be filed with the Secretary of State of the State
of Florida in accordance with the provisions of the Florida Business Corporation
Act. The Merger shall become effective upon such filing or at such later time
as may be specified in such filing (the "Effective Time").
5. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP, THE PARTNERS AND THE
STOCKHOLDERS
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To induce USFloral and Newco to enter into this Agreement and consummate
the transactions contemplated hereby, the Partnership, each Partner, each
Stockholder and each Beneficial Owner, jointly and severally, represents and
warrants to USFloral and Newco as follows (for purposes of this Agreement, the
term "knowledge" means the knowledge of the Stockholders, the Beneficial Owners
and the directors and officers of the Partnership and each Partner, including
facts of which the directors and officers, in the reasonably prudent exercise of
their duties, should be aware):
5.1 Due Organization. The Partnership is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization is
duly authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to own, operate and lease its
properties and to carry on its business in the places and in the manner as now
conducted except where the failure to be so authorized, qualified or licensed
would not have a material adverse effect on the business, operations,
properties, assets or condition, financial or otherwise, of such Partnership
("Material Adverse Effect"). Schedule 5.l hereto contains a list of all
jurisdictions in which the Partnership is authorized or qualified to do
business. The Partnership is in good standing in each jurisdiction it which it
does business. The Partnership has delivered to USFloral true, complete and
correct copies of its organizational documents. Each Partner is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly authorized, qualified and licensed
under all applicable laws, regulations, ordinances and orders of public
authorities to own, operate and lease its properties and to carry on its
business in the places and in the manner as now conducted except where the
failure to be so authorized, qualified or licensed would not have a Material
Adverse Effect. Each Partner has delivered to USFloral true, complete and
correct copies of its Articles of Incorporation and Bylaws Such Articles of
Incorporation and Bylaws are collectively referred to as the "Charter
Documents." Neither Partner is in violation of its Charter Documents. The
minute books of the Partners have been made available to USFloral (and, as of
the Closing, will have been delivered, along with each Partner's original stock
ledger and corporate seal, to USFloral) and are correct and, except as set forth
in Schedule 5.1, complete in all material respects.
5.2 Authorization; Validity. Each of the Partnership and each Partner has
all requisite power, authority and the full legal right to enter into and
perform its obligations pursuant to the terms of this Agreement and the
transactions contemplated hereby. Each Stockholder has the full legal right and
authority to enter into this Agreement and the transactions contemplated hereby.
The execution and delivery of this Agreement by the Partnership and each Partner
and the performance by the Partnership and each Partner of the transactions
contemplated herein have been duly and validly authorized by the Partnership,
the Board of Directors of each Partner and the Stockholders and this Agreement
has been duly and validly authorized by all necessary corporate action. This
Agreement is a legal, valid and binding obligation of the Partnership, each
Partner and each Stockholder, enforceable in accordance with its terms.
5.3 No Conflicts. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby, and the
fulfillment of the terms hereof will not:
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(a) conflict with, or result in a breach or violation of, any of the
Charter Documents;
(b) conflict with, or result in a default (or an event that would
constitute a default but for any requirement of notice or lapse of time or both)
under, any document, agreement or other instrument to which the Partnership, any
Partner or any Stockholder is a party or by which the Partnership, any Partner
or any Stockholder is bound, or result in the creation or imposition of any
lien, charge or encumbrance on any of the Partnership's properties pursuant to
(i) any law or regulation to which the Partnership, any Partner or any
Stockholder or any of their respective property is subject, or (ii) any
judgment, order or decree to which the Partnership, any Partner or any
Stockholder is bound or any of their respective property is subject;
(c) result in termination or any impairment of any permit, license,
franchise, contractual right or other authorization of the Partnership or any
Partner; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which the Partnership, any Partner or any Stockholder is subject or
by which the Company or any Stockholder is bound including, without limitation,
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"),
together with all rules and regulations promulgated thereunder.
5.4 Partnership Interests; Capital Stock of the Partners. Talent, Inc.
and Anvacu, Inc. are all of the partners of the Partnership. The authorized
capital stock of Talent, Inc. consists of 100,000 shares of common stock, $1.00
par value, of which 1,000 shares are issued and outstanding. The authorized
capital stock of Anvacu, Inc. consists of 450,000 shares of common stock, $1.00
par value, of which 375,000 shares are issued and outstanding. All of the
issued and outstanding shares of the capital stock of each Partner have been
duly authorized and validly issued, are fully paid and nonassessable and are
owned of record and beneficially by the Stockholders in the amounts set forth in
Schedule 5.4 free and clear of all Liens (defined below), except restrictions on
transfer contained in the Elite Farms Partnership Agreement, which restrictions
shall be canceled as of Closing. All of the issued and outstanding shares of
the capital stock of each Partner Company were offered, issued, sold and
delivered by such Partner in compliance with all applicable state and federal
laws concerning the issuance of securities. Further, none of such shares was
issued in violation of any preemptive rights. There are no voting agreements or
voting trusts with respect to any of the outstanding shares of the capital stock
of any Partner. For purposes of this Agreement, "Lien" means any mortgage,
security interest, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or otherwise), charge, preference, priority or
other security agreement, option, warrant, attachment, right of first refusal,
preemptive, conversion, put, call or other claim or right, restriction on
transfer (other than restrictions imposed by federal and state securities laws),
or preferential arrangement of any kind or nature whatsoever (including any
restriction on the transfer of any assets, any conditional sale or other title
retention agreement, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
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5.5 Transactions in Capital Stock and Partnership Interests. No option,
warrant, call, subscription right, conversion right or other contract or
commitment of any kind exists of any character, written or oral, which may
obligate (i) the Partnership to issue, sell or otherwise cause to became
outstanding any interests in the Partnership, or (ii) any Partner to issue, sell
or otherwise cause to become outstanding any shares of capital stock. Neither
Partner has an obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. As a result of
the Merger, USFloral will be the record and beneficial owner of all outstanding
capital stock of each Partner and rights to acquire capital stock of the
Company. The Partnership has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any interests in the Partnership or make
any distribution in respect thereof.
5.6 Subsidiaries, Stock, and Notes.
(a) Except as set forth on Schedule 5.6(a), neither Partner has any
subsidiaries.
(b) Except as set forth on Schedule 5.6(b), neither the Partnership
nor any Partner owns, of record or beneficially, or controls, directly or
indirectly, any capital stock, securities convertible into capital stock or any
other equity interest in any corporation, association or business entity, nor is
the Partnership or any Partner, directly or indirectly, a participant in any
joint venture, partnership (other than the Partnership) or other noncorporate
entity.
(c) Except as set forth on Schedule 5.6(c), there are no promissory
notes that have been issued to, or are held by, the Partnership or any Partner.
5.7 Predecessor Status. Schedule 5.7 sets forth a list of all names of
all predecessor companies of the Partnership, including the names of any
entities from which the Partnership previously acquired significant assets. The
Partnership has never been a subsidiary or division of a corporation, nor has it
been a part of an acquisition that was later rescinded.
5.8 Absence of Claims Against the Partnership and the Partners. Except as
set forth on Schedule 5.8, no Partner has any claims against the Partnership.
No Stockholder has any claims against any Partner.
5.9 Partnership Financial Conditions.
(a) The Partnership's net worth (i) as of the end of its most recent
fiscal year was not less than $1,000,000, and (ii) as of the Closing will not be
less than the Net Worth Target. For purposes of this Section 5.9(a),
calculation of amounts as of the Closing shall be made in accordance with the
last paragraph of Section 8.9.
(b) The Partnership's earnings before interest and taxes (after the
addition of "add-backs" set forth on Schedule 5.9(b)) for (i) its most recent
fiscal year was not less than $1,236,000.
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5.10 Financial Statements. Schedule 5.10 includes (a) true, complete and
correct copies of the Partnership's audited balance sheet as of December 31,
1997 and income statement for the year then ended (collectively, the "Audited
Financials") and (b) true, complete and correct copies of the Partnership's
unaudited balance sheet (the "Interim Balance Sheet") as of February 28, 1998
(the "Balance Sheet Date") and income statement, for the two-month period then
ended (collectively, the "Interim Financials," and together with the Audited
Financials, the "Partnership Financial Statements"). Except as noted on the
auditors' report accompanying the Audited Financials, the Partnership Financial
Statements have been prepared in accordance with GAAP consistently applied,
subject to, in the case of the Interim Financials, (i) normal year-end audit
adjustments, which individually or in the aggregate will not be material, (ii)
the exceptions stated on Schedule 5.10, and (iii) the omission of footnote
information. Each balance sheet included in the Partnership Financial
Statements presents fairly the financial condition of the Partnership as of the
date indicated thereon, and each of the income statements included in the
Partnership Financial Statements presents fairly the results of its operations
for the periods indicated thereon. Since the dates of the Partnership Financial
Statements, there have been no material changes in the Partnership's accounting
policies other than as requested by USFloral to conform the Partnership's
accounting policies to GAAP.
5.11 Liabilities and Obligations.
(a) The Partnership is not liable for or subject to any liabilities
except for:
(i) those liabilities reflected on the Interim Balance Sheet
and not previously paid or discharged;
(ii) those liabilities arising in the ordinary course of its
business consistent with past practice under any contract, commitment or
agreement specifically disclosed on any Schedule to this Agreement or not
required to be disclosed thereon because of the term or amount involved or
otherwise; and
(iii) those liabilities incurred since the Balance Sheet Date in
the ordinary course of business consistent with past practice, which liabilities
are not, individually or in the aggregate, material.
(b) The Partnership has delivered to USFloral, in the case of those
liabilities which are not fixed or are contested, a reasonable estimate of the
maximum amount which may be payable.
(c) Schedule 5.11(c) also includes a summary description of all plans
or projects involving the opening of new operations, expansion of any existing
operations or the acquisition of any real property or existing business, to
which management of the Partnership has made any material expenditure in the
two-year period prior to the date of this Agreement, which if pursued by the
Partnership or the Surviving Corporation would require additional material
expenditures of capital.
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(d) Neither Partner is liable for or subject to any liabilities for
any liabilities other than the liabilities of the Partnership.
(e) For purposes of this Section 5.11, the term "liabilities" shall
include without limitation any direct or indirect liability, indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, either accrued, absolute, contingent, mature,
unmatured or otherwise and whether known or unknown, fixed or unfixed, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured. Schedule 5.11(d)
contains a complete list of all indebtedness of the Partnership.
5.12 Accounts and Notes Receivable. The Partnership has delivered to
USFloral a complete and accurate list, as of a date not more than two (2)
business days prior to the date hereof, of the accounts and notes receivable of
the Partnership (including without limitation receivables from and advances to
employees, Partners and the Stockholders), which includes an aging of all
accounts and notes receivable showing amounts due in 30-day aging categories
(collectively, the "Accounts Receivable"). On the Closing Date, the Partnership
will deliver to USFloral a complete and accurate list, as of a date not more
than two (2) business days prior to the Closing Date, of the Accounts
Receivable. All Accounts Receivable represent valid obligations arising from
sales actually made or services actually performed in the ordinary course of
business. Except as disclosed in Schedule 5.12, (i) the Accounts Receivable are
current and collectible net of any respective reserves shown on the
Partnership's books and records (which reserves are adequate and calculated
consistent with past practice); and (ii) subject to such reserves, each of the
Accounts Receivable will be collected in full, without any set-off, within
ninety (90) days after the day on which it first became due and payable. There
is no contest, claim, or right of set-off, other than rebates and returns in the
ordinary course of business, under any contract with any obligor of an Account
Receivable relating to the amount or validity of such Account Receivable.
5.13 Books and Records. The Partnership has made and kept books and
records and accounts, which, in reasonable detail, accurately and fairly reflect
the activities of the Partnership. The Partnership has not engaged in any
transaction, maintained any bank account, or used any partnership funds except
for transactions, bank accounts, and funds which have been and are reflected in
its normally maintained books and records.
5.14 Permits. The Partnership owns or holds all licenses, franchises,
permits and other governmental authorizations, including without limitation
permits, titles (including without limitation motor vehicle titles and current
registrations), fuel permits, licenses and franchises necessary for the
continued operation of its business as it is currently being conducted (the
"Permits"). The Permits are valid, and the Partnership has not received any
notice that any governmental authority intends to modify, cancel, terminate or
fail to renew any Permit. No present or former officer, manager, member or
employee of the Partnership or any affiliate thereof, or any other person, firm,
corporation or other entity, owns or has any proprietary, financial or other
interest (direct or indirect) in any Permits. The Partnership has conducted and
is conducting its business in compliance with the requirements, standards,
criteria and conditions set forth in the Permits and
13
other applicable orders, approvals, variances, rules and regulations and is not
in violation of any of the foregoing. The transactions contemplated by this
Agreement will not result in a default under, or a breach or violation of, or
adversely affect the rights and benefits afforded to the Partnership by, any
Permit.
5.15 Real Property.
(a) For purposes of this Agreement, "Real Property" means all
interests in real property including, without limitation, fee estates,
leaseholds and subleaseholds, purchase options, easements, licenses, rights to
access, and rights of way, and all buildings and other improvements thereon,
owned or used by the Company, together with any additions thereto or
replacements thereof.
(b) Schedule 5.15(b) contains a complete and accurate description of
all Real Property (including street address, legal description (where known),
owner, and Partnership's use thereof) and, to the Partnership's knowledge, any
Liens. Schedule 5.15(b) indicates whether the Real Property is owned or leased.
The Real Property listed on Schedule 5.15 includes all interests in real
property necessary to conduct the business and operations of the Partnership.
(c) Except as set forth in Schedule 5.15(c):
(i) All present uses and operations of the Real Property
comply with all applicable statutes, rules, regulations, ordinances, orders,
writs, injunctions, judgments, decrees, awards or restrictions of any government
entity having jurisdiction over any portion of the Real Property (including,
without limitation, applicable statutes, rules, regulations, orders and
restrictions relating to zoning, land use, safety, health, employment and
employment practices and access by the handicapped) (collectively, "Laws"),
covenants, conditions, restrictions, easements, disposition agreements and
similar matters affecting the Real Property. The Partnership has obtained all
approvals of governmental authorities (including certificates of use and
occupancy, licenses and permits) required in connection with the use, occupation
and operation of the Real Property.
(ii) There are no pending or, to the Partnership's knowledge,
threatened condemnation, fire, health, safety, building, zoning or other land
use regulatory proceedings, lawsuits or administrative actions relating to any
portion of the Real Property or any other matters which do or may adversely
effect the current use, occupancy or value thereof, nor has the Partnership, any
Partner or any of the Stockholders received notice of any pending or threatened
special assessment proceedings affecting any portion of the Real Property.
(iii) Except as set forth in Schedule 5.15(c), there are no
parties other than the Partnership in possession of any of the Real Property or
any portion thereof, and there are no leases, subleases, licenses, concessions
or other agreements, written or oral, granting to any party or parties the right
of use or occupancy of any portion of the Real Property or any portion thereof.
(iv) All oral or written leases, subleases, licenses,
concession agreements or other use or occupancy agreements pursuant to which the
Partnership leases from any other party any real property, including all
amendments, renewals, extensions, modifications or supplements to
14
any of the foregoing or substitutions for any of the foregoing (collectively,
the "Leases") are valid and in full force and effect. The Partnership has
provided USFloral with true and complete copies of all of the Leases, all
amendments, renewals, extensions, modifications or supplements thereto, and all
material correspondence related thereto, including all correspondence pursuant
to which any party to any of the Leases declared a default thereunder or
provided notice of the exercise of any operation granted to such party under
such Lease. The Leases and the Partnership's interests thereunder are free of
all Liens.
(v) None of the Leases requires the consent or approval of
any party thereto in connection with the consummation of the transactions
contemplated hereby.
5.16 Personal Property.
(a) Schedule 5.16(a) sets forth a complete and accurate list of all
personal property included on the Interim Balance Sheet and all other personal
property owned or leased by the Partnership with a current book value in excess
of $10,000 both (i) as of the Balance Sheet Date and (ii) acquired since the
Balance Sheet Date, including in each case true, complete and correct copies of
leases for material equipment and an indication as to which assets are currently
owned, or were formerly owned, by any Stockholder or business or personal
affiliates of any Stockholder or of the Partnership.
(b) The Partnership currently owns or leases all personal property
necessary to conduct the business and operations of the Partnership as they are
currently being conducted.
(c) All of the trucks and other material machinery and equipment of
the Partnership, including those listed on Schedule 5.16(a), are in good working
order and condition, ordinary wear and tear excepted. All leases set forth on
Schedule 5.16(a) are in full force and effect and constitute valid and binding
agreements of the Partnership, and the Partnership is not in breach of any of
their terms. All fixed assets used by the Partnership that are material to the
operation of its business are either owned by the Partnership or leased under an
agreement listed on Schedule 5.16(a).
5.17 Intellectual Property.
(a) The Partnership is the true and lawful owner of, or is licensed
or otherwise possesses legally enforceable rights to use, the registered and
unregistered Marks listed on Schedule 5.17(a). Such schedule lists (i) all of
the Marks registered in the United States Patent and Trademark Office ("PTO") or
the equivalent thereof in any state of the United States or in any foreign
country, and (ii) all of the unregistered Marks, that the Partnership now owns
or uses in connection with its business. Except with respect to those Marks
shown as licensed on Schedule 5.17(a), the Partnership owns all of the
registered and unregistered trademarks, service marks, and trade names that it
uses. The Marks listed on Schedule 5.17(a) will not cease to be valid rights of
the Partnership by reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby. For
purposes of this Section 5.17, the term "Xxxx" shall mean
15
all right, title and interest in and to any United States or foreign trademarks,
service marks and trade names now held by the Partnership, including any
registration or application for registration of any trademarks and services
marks in the PTO or the equivalent thereof in any state of the United States or
in any foreign country, as well as any unregistered marks used by the
Partnership, and any trade dress (including logos, designs, Partnership names,
business names, fictitious names and other business identifiers) used by the
Partnership in the United States or any foreign country.
(b) The Partnership is the true and lawful owner of, or is licensed
or otherwise possesses legally enforceable rights to use, all rights in the
Patents listed on Schedule 5.17(b)(i) and in the Copyright registrations listed
on Schedule 5.17(b)(ii). Such Patents and Copyrights constitute all of the
Patents and Copyrights that the Partnership now owns or is licensed to use. The
Partnership owns or is licensed to practice under all patents and copyright
registrations that the Partnership now owns or uses in connection with its
business. For purposes of this Section 5.17, the term "Patent" shall mean any
United States or foreign patent to which the Partnership has title as of the
date of this Agreement, as well as any application for a United States or
foreign patent made by the Partnership; the term "Copyright" shall mean any
United States or foreign copyright owned by the Partnership as of the date of
this Agreement, including any registration of copyrights, in the United States
Copyright Office or the equivalent thereof in any foreign county, as well as any
application for a United States or foreign copyright registration made by the
Partnership.
(c) The Partnership is the true and lawful owner of, or is licensed
or otherwise possesses legally enforceable rights to use, all rights in the
trade secrets, franchises, or similar rights (collectively, "Other Rights")
listed on Schedule 5.17(c). Those Other Rights constitute all of the Other
Rights that the Partnership now owns or is licensed to use. The Partnership owns
or is licensed to practice under all trade secrets, franchises or similar rights
that it owns, uses or practices under.
(d) The Marks, Patents, Copyrights, and Other Rights listed on
Schedules 5.17(a), 5.17(b)(i), 5.17(b)(ii), and 5.17(c) are referred to
collectively herein as the "Intellectual Property." The Intellectual Property
owned by the Partnership is referred to herein collectively as the "Partnership
Intellectual Property." All other Intellectual Property is referred to herein
collectively as the "Third Party Intellectual Property." Except as indicated on
Schedule 5.17(d), the Partnership has no obligations to compensate any person
for the use of any Intellectual Property nor has the Partnership granted to any
person any license, option or other rights to use in any manner any Intellectual
Property, whether requiring the payment of royalties or not.
(e) The Partnership is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any Third Party Intellectual Property license,
sublicense or agreement described in Schedule 5.17(a), (b), or (c). No claims
with respect to the Partnership Intellectual Property or Third Party
Intellectual Property are currently pending or, to the knowledge of the
Partnership, are threatened by any person, nor, to the Partnership's knowledge,
do any grounds for any claims exist: (i) to the effect that the manufacture,
sale, licensing or use of any product as now used, sold or licensed or proposed
for use, sale or license by the Partnership infringes on any copyright, patent,
trademark, service xxxx or trade secret; (ii)
16
against the use by the Partnership of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the Partnership's business as currently conducted by
the Partnership; (iii) challenging the ownership, validity or effectiveness of
any of the Partnership Intellectual Property or other trade secret material to
the Partnership; or (iv) challenging the Partnership's license or legally
enforceable right to use of the Third Party Intellectual Property. To the
Partnership's knowledge, there is no unauthorized use, infringement or
misappropriation of any of the Partnership Intellectual Property by any third
party. Neither the Partnership nor any of its subsidiaries (x) has been sued or
charged in writing as a defendant in any claim, suit, action or proceeding which
involves a claim or infringement of trade secrets, any patents, trademarks,
service marks, or copyrights and which has not been finally terminated or been
informed or notified by any third party that the Partnership may be engaged in
such infringement or (y) has knowledge of any infringement liability with
respect to, or infringement by, the Partnership or any of its subsidiaries of
any trade secret, patent, trademark, service xxxx, or copyright of another.
(f) All Intellectual Property in the form of computer software that
is utilized by the Partnership in the operation of its business is capable of
processing date data between and within the twentieth and twenty-first
centuries.
5.18 Material Contracts and Commitments.
(a) Schedule 5.18(a) contains a complete and accurate list of all
contracts, commitments, leases, instruments, agreements, licenses or permits,
written or oral, to which the Partnership is a party or by which it or its
properties are bound (including without limitation, joint venture or partnership
agreements, contracts with any labor organizations, employment agreements,
consulting agreements, loan agreements, indemnity or guaranty agreements, bonds,
mortgages, options to purchase land, liens, pledges or other security
agreements) (i) to which the Partnership and any affiliate of the Partnership or
any officer, director or stockholder of the Partnership are parties ("Related
Party Agreements"); or (ii) that may give rise to obligations or liabilities
exceeding, during the current term thereof, $10,000, or that may generate
revenues or income exceeding, during the current term thereof, $10,000
(collectively with the Related Party Agreements, the "Material Contracts"). The
Partnership has delivered to USFloral true, complete and correct copies of the
Material Contracts. The Partnership has complied with all of its commitments and
obligations and is not in default under any of the Material Contracts, and no
notice of default has been received with respect to any thereof, and there are
no Material Contracts that were not negotiated at arm's length.
(b) Each Material Contract, except those terminated pursuant to
Section 7.4, is valid and binding on the Partnership and is in full force and
effect and is not subject to any default thereunder by any party obligated to
the Partnership pursuant thereto. The Partnership [has obtained/will obtain
prior to the Closing Date] all necessary consents, waivers and approvals of
parties to any Material Contracts that are required in connection with any of
the transactions contemplated hereby, or are required by any governmental agency
or other third party or are advisable in order that any such Material Contract
remain in effect without modification after the
17
Merger and without giving rise to any right to termination, cancellation or
acceleration or loss of any right or benefit ("Third Party Consents"). All Third
Party Consents are listed on Schedule 5.18(b).
(c) The outstanding balance on all loans or credit agreements
either (i) between the Partnership and any Person in which any Partner or any
Stockholder owns a material interest, (ii) between any Partner and any Person in
which any Stockholder owns a material interest, or (iii) guaranteed by the
Partnership or any Partner for the benefit of any Person in which any of the
Stockholders owns a material interest, are set forth in Schedule 5.18(c).
(d) The pledge, hypothecation or mortgage of all or substantially
all of the Partnership's assets (including, without limitation, a pledge of the
Partnership's contract rights under any Material Contract) will not, except as
set forth on Schedule 5.18(d), (i) result in the breach or violation of, (ii)
constitute a default under, (iii) create a right of termination under, or (iv)
result in the creation or imposition of (or the obligation to create or impose)
any lien upon any of the assets of the Partnership (other than a lien created
pursuant to the pledge, hypothecation or mortgage described at the start of this
Section 5.18(d)) pursuant to any of the terms and provisions of, any Material
Contract to which the Partnership is a party or by which the property of the
Partnership is bound.
5.19 Government Contracts.
(a) Except as set forth on Schedule 5.19, the Partnership is not a
party to any government contracts.
(b) The Partnership has not been suspended or debarred from bidding
on contracts or subcontracts for any agency or instrumentality of the United
States Government or any state or local government, nor, to the knowledge of the
Partnership, has any suspension or debarment action been threatened or
commenced. There is no valid basis for the Partnership's suspension or debarment
from bidding on contracts or subcontracts for any agency of the United States
Government or any state or local government.
(c) Except as set forth in Schedule 5.19, the Partnership has not
been, nor is it now being, audited, or investigated by any government agency, or
the inspector general or auditor general or similar functionary of any agency or
instrumentality, nor, to the knowledge of the Partnership, has such audit or
investigation been threatened.
(d) The Partnership has no dispute pending before a contracting
office of, nor any current claim (other than the Accounts Receivable) pending
against, any agency or instrumentality of the United States Government or any
state or local government, relating to a contract.
(e) The Partnership has not, with respect to any government
contract, received a cure notice advising the Partnership that it is or was in
default or would, if it failed to take remedial action, be in default under such
contract.
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(f) The Partnership has not submitted any inaccurate, untruthful, or
misleading cost or pricing data, certification, bid, proposal, report, claim, or
any other information relating to a contract to any agency or instrumentality of
the United States Government or any state or local government.
(g) No employee, agent, consultant, representative, or affiliate of
the Partnership or any Partner is in receipt or possession of any competitor or
government proprietary or procurement sensitive information related to the
Partnership's business under circumstances where there is reason to believe that
such receipt or possession is unlawful or unauthorized.
(h) Each of the Partnership's government contracts has been issued,
awarded or novated to the Partnership in the Partnership's name.
5.20 Insurance. Schedule 5.20 sets forth a complete and accurate list of
all insurance policies carried by the Partnership and all insurance loss runs or
workmen's compensation claims received for the past two policy years. The
Partnership has delivered to USFloral true, complete and correct copies of all
current insurance policies, all of which are in full force and effect. All
premiums payable under all such policies have been paid and the Partnership is
otherwise in full compliance with the terms of such policies. Such policies of
insurance are of the type and in amounts customarily carried by persons
conducting businesses similar to that of the Partnership. The insurance carried
by the Partnership with respect to its properties, assets and business is, to
the Partnership's knowledge, with financially sound insurers. To the knowledge
of the Partnership, there have been no threatened terminations of, or material
premium increases with respect to, any of such policies.
5.21 Labor and Employment Matters. With respect to employees of and
service providers to the Partnership, and except as otherwise provided in
Schedule 5.21:
(a) the Partnership is and has been in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation any such laws respecting employment discrimination, workers'
compensation, family and medical leave, the Immigration Reform and Control Act,
and occupational safety and health requirements, and has not and is not engaged
in any unfair labor practice;
(b) there is not now, nor within the past three years has there
been, any unfair labor practice complaint against the Partnership pending or, to
the Partnership's knowledge, threatened, before the National Labor Relations
Board or any other comparable authority;
(c) there is not now, nor within the past three years has there
been, any labor strike, slowdown or stoppage actually pending or, to the
Partnership's knowledge, threatened, against or directly affecting the
Partnership;
19
(d) to the Partnership's knowledge, no labor representation
organization effort exists nor has there been any such activity within the past
three years;
(e) no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending and, to the Partnership's knowledge,
no claims therefor exist or have been threatened;
(f) the employees of the Partnership are not and have never been
represented by any labor union, and no collective bargaining agreement is
binding and in force against the Partnership or currently being negotiated by
the Partnership; and
(g) all persons classified by the Partnership as independent
contractors do satisfy and have satisfied the requirements of law to be so
classified, and the Partnership has fully and accurately reported their
compensation on IRS Forms 1099 when required to do so.
5.22 Employee Benefit Plans. Attached hereto as Schedule 5.22 are
complete and accurate copies of all employee benefit plans, all employee welfare
benefit plans, all employee pension benefit plans, all multi-employer plans and
all multi-employer welfare arrangements (as defined in Sections 3(3), (1), (2),
(37) and (40), respectively, of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), which are currently maintained and/or sponsored by
the Partnership, or to which the Partnership currently contributes, or has an
obligation to contribute in the future (including, without limitation,
employment agreements and any other agreements containing "golden parachute"
provisions and deferred compensation agreements), together with copies of any
trusts related thereto and a classification of employees covered thereby
(collectively, the "Plans"). Schedule 5.22 sets forth all of the Plans that have
been terminated within the past three years.
All Plans are in substantial compliance with all applicable provisions of
ERISA and the regulations issued thereunder, as well as with all other
applicable laws, and, in all material respects, have been administered, operated
and managed in substantial accordance with the governing documents. All Plans
that are intended to qualify (the "Qualified Plans") under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") have been determined by
the Internal Revenue Service to be so qualified, and copies of the current plan
determination letters, most recent actuarial valuation reports, if any, most
recent Form 5500, or, as applicable, Form 5500-C/R filed with respect to each
such Qualified Plan or employee welfare benefit plan and most recent trustee or
custodian report, are included as part of Schedule 5.22. To the extent that any
Qualified Plans have not been amended to comply with applicable law, the
remedial amendment period permitting retroactive amendment of such Qualified
Plans has not expired and will not expire within 120 days after the Closing
Date. All reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, annual reports, summary annual reports,
actuarial reports, PBGC-1 Forms, audits or tax returns) have been timely filed
or distributed. None of: (i) the Stockholders; (ii) the Partners; (iii) any
Plan; or (iv) the Partnership has engaged in any transaction prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No Plan has
incurred an accumulated funding deficiency, as defined
20
in Section 412(a) of the Code and Section 302(1) of ERISA; and the Partnership
does not currently have (nor at the Closing Date will have) any direct or
indirect liability whatsoever (including being subject to any statutory lien to
secure payment of any such liability), to the Pension Benefit Guaranty
Corporation ("PBGC") with respect to any such Plan under Title IV of ERISA or to
the Internal Revenue Service for any excise tax or penalty; and neither the
Partnership nor any member of a "controlled group" (as defined in ERISA Section
4001(a)(14)) currently has (or at the Closing Date will have) any obligation
whatsoever to contribute to any "multi-employer pension plan" (as defined in
ERISA Section 4001(a)(14), nor has any withdrawal liability whatsoever (whether
or not yet assessed) arising under or capable of assertion under Title IV of
ERISA (including, but not limited to, Sections 4201, 4202, 4203, 4204, or 4205
thereof) been incurred by any Plan. Further:
(a) there have been no terminations, partial terminations or
discontinuance of contributions to any Qualified Plan without notice to and
approval by the Internal Revenue Service;
(b) no Plan which is subject to the provisions of Title IV of ERISA
has been terminated;
(c) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any Plan which were not
properly reported;
(d) the valuation of assets of any Qualified Plan, as of the Closing
Date, shall exceed the actuarial present value of all accrued pension benefits
under any such Qualified Plan in accordance with the assumptions contained in
the Regulations of the PBGC governing the funding of terminated defined benefit
plans;
(e) with respect to Plans which qualify as "group health plans" under
Section 4980B of the Internal Revenue Code and Section 607(1) of ERISA and
related regulations (relating to the benefit continuation rights imposed by
"COBRA"), the Company and the Stockholders have complied (and on the Closing
Date will have complied), in all respects with all reporting, disclosure,
notice, election and other benefit continuation requirements imposed thereunder
as and when applicable to such plans, and the Partnership has no (and will incur
no) direct or indirect liability and is not (and will not be) subject to any
loss, assessment, excise tax penalty, loss of federal income tax deduction or
other sanction, arising on account of or in respect of any direct or indirect
failure by the Partnership, the Partners or the Stockholders, at any time prior
to the Closing Date, to comply with any such federal or state benefit
continuation requirement, which is capable of being assessed or asserted before
or after the Closing Date directly or indirectly against the Partnership, the
Partners or the Stockholders with respect to such group health plans;
(f) the Partnership is not now nor has it been within the past five
years a member of a "controlled group" as defined in ERISA Section 4001(a)(14);
(g) there is no pending litigation, arbitration, or disputed claim,
settlement or adjudication proceeding, and to the Partnership's knowledge, there
is no threatened litigation, arbitration or disputed claim, settlement or
adjudication proceeding, or any governmental or other
21
proceeding, or investigation with respect to any Plan, or with respect to any
fiduciary, administrator, or sponsor thereof (in their capacities as such), or
any party in interest thereof;
(h) the Financial Statements as of the Balance Sheet Date reflect
the approximate total pension, medical and other benefit expense for all Plans,
and no material funding changes or irregularities are reflected thereon which
would cause such Financial Statements to be not representative of most prior
periods; and
(i) the Partnership has not incurred liability under Section 4062
of ERISA.
5.23 Conformity with Law; Litigation.
(a) Except as set forth on Schedule 5.23(a), the Partnership is not
in violation of any law or regulation or under any order of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction which would have a
Material Adverse Effect. The Partnership has conducted and is conducting its
business in substantial compliance with the requirements, standards, criteria
and conditions set forth in applicable federal, state and local statutes,
ordinances, permits, licenses, orders, approvals, variances, rules and
regulations and is not in violation of any of the foregoing which might have a
Material Adverse Effect.
(b) No Stockholder has, at any time: (i) committed any criminal
act (except for minor traffic violations); (ii) engaged in acts of fraud,
dishonesty, gross negligence or moral turpitude; (iii) filed for personal
bankruptcy; or (iv) been an officer, director, manager, trustee or controlling
shareholder of a company that filed for bankruptcy or Chapter 11 protection.
(c) Except as set forth on Schedule 5.23(c), there are no claims,
actions, suits or proceedings, pending or, to the knowledge of the Partners,
threatened against or affecting the Partnership or the Partners at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over it and no notice of any claim, action, suit or proceeding,
whether pending or threatened, has been received. There are no judgments,
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration) against the Partnership or
against any of its properties or business.
5.24 Taxes.
(a)
(i) The Partnership has timely filed all Tax Returns due
on or before the Closing Date and all such Tax Returns are true, correct and
complete in all respects.
(ii) The Partnership has paid in full on a timely basis all
Taxes owed by it, whether or not shown on any Tax Return.
22
(iii) The amount of the Partnership's liability for unpaid
Taxes as of the Balance Sheet Date did not exceed the amount of the current
liability accruals for Taxes (excluding reserves for deferred Taxes) shown on
the Interim Balance Sheet, and the amount of the Partnership's liability for
unpaid Taxes for all periods or portions thereof ending on or before the Closing
Date will not exceed the amount of the current liability accruals for Taxes
(excluding reserves for Deferred Taxes) as such accruals are reflected on the
books and records of the Partnership on the Closing Date.
(iv) There are no ongoing examinations or claims against the
Company for Taxes, and no notice of any audit, examination or claim for Taxes,
whether pending or threatened, has been received.
(v) The Partnership has a taxable year ended on December 31.
(vi) The Partnership currently utilizes the accrual method of
accounting for income Tax purposes and such method of accounting has not changed
in the past six years. The Partnership has not agreed to, and is not and will
not be required to, make any adjustments under Code Section 481(a) as a result
of a change in accounting methods.
(vii) The Partnership has withheld and paid over to the proper
governmental authorities all Taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding requirements,
including maintenance of required records with respect thereto, in connection
with amounts paid to any employee, independent contractor, creditor or third
party.
(viii) Copies of (A) any Tax examinations, (B) extensions of
statutory limitations for the collection or assessment of Taxes and (C) the Tax
Returns of the Partnership for the last five fiscal years have been delivered to
USFloral.
(ix) There are (and as of immediately following the Closing
there will be) no Liens on the assets of the Partnership relating to or
attributable to Taxes.
(x) To the Partnership's knowledge, there is no basis for
the assertion of any claim relating to or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of the Partnership
or otherwise have an adverse effect on the Partnership or its business.
(xi) There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this Agreement,
covering any employee or former employee of the Partnership that, individually
or collectively, could give rise to any payment (or portion thereof) that would
not be deductible pursuant to Sections 280G, 404 or 162 of the Code.
(xii) The Partnership is not, and has not been at any time,
a party to a tax sharing, tax indemnity or tax allocation agreement, and the
Partnership has not assumed the tax liability of any other person under
contract.
23
(xiii) The Partnership's tax basis in its assets for purposes
of determining its future amortization, depreciation and other federal income
tax deductions is accurately reflected on the Partnership's tax books and
records.
(b)
(i) Talent, Inc. has, since August 17, 1992, been an S
corporation within the meaning of Section 1361 of the Code.
(ii) Talent, Inc. does not have a net recognized built-in
gain within the meaning of Section 1374 of the Code
(c) For purposes of this Agreement:
(i) the term "Tax" shall include any tax or similar
governmental charge, impost or levy (including without limitation income taxes,
franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross receipt
taxes, value added taxes, employment taxes, excise taxes, ad valorem taxes,
property taxes, withholding taxes, payroll taxes, minimum taxes or windfall
profit taxes) together with any related penalties, fines, additions to tax or
interest imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof; and
(ii) the term "Tax Return" shall mean any return (including
any information return), report, statement, schedule, notice, form, estimate or
declaration of estimated tax relating to or required to be filed with any
governmental authority in connection with the determination, assessment,
collection or payment of any tax.
(d) The Merger qualifies as a reorganization pursuant to the
provisions of Section 368(a)(2)(D) of the Code.
5.25 Absence of Changes. Since the Balance Sheet Date, the Partnership
has conducted its business in the ordinary course and, except as contemplated
herein or as set forth on Schedule 5.25, there has not been:
(a) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of the Partnership;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties or business of the Partnership;
(c) any change in the ownership interests of the Partnership or any
grant of any options, rights or commitments; any change in the authorized
capital of any Partner or in any Partner's outstanding securities or any change
in any Partner's ownership interests or any grant of any options, warrants,
calls, conversion rights or commitments;
24
(d) any distribution in respect of the ownership interests of the
Partnership, or any direct or indirect redemption, purchase or other acquisition
of any of ownership interests of the Partnership;
(e) any increase in the compensation, bonus, sales commissions or
fee arrangements payable or to become payable by the Partnership to any of its
Partners, officers, directors, employees, consultants or agents, or the
Stockholders, except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice;
(f) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, which has had a Material Adverse
Effect;
(g) any sale or transfer, or any agreement to sell or transfer, any
material assets property or rights of the Partnership to any person, including
without limitation the Partners, the Stockholders and their affiliates (except
for sales of inventory in the ordinary course of business);
(h) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Partnership, including without limitation any
indebtedness or obligation of the Partners, the Stockholders and their
affiliates, provided that the Partnership may negotiate and adjust bills in the
course of good faith disputes with customers in a manner consistent with past
practice;
(i) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of the Partnership or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside of
the ordinary course of business of the Partnership;
(k) any waiver of any material rights or claims of the Partnership;
(l) any breach, amendment or termination of any material contract,
agreement, license, permit or other right to which the Partnership is a party;
(m) any transaction by the Partnership outside the ordinary course
of business;
(n) any capital commitment by the Partnership, either individually
or in the aggregate, exceeding $25,000;
(o) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Partnership or
the revaluation by the Partnership of any of its assets;
25
(p) any creation or assumption by the Partnership of any mortgage,
pledge, security interest or lien or other encumbrance on any asset (other than
liens arising under existing lease financing arrangements which are not material
and liens for Taxes not yet due and payable);
(q) any entry into, amendment of, relinquishment, termination or
non-renewal by the Partnership of any contract, lease transaction, commitment or
other right or obligation requiring aggregate payments by the Partnership in
excess of $25,000;
(r) any loan by the Partnership to any person or entity, incurring
by the Partnership, of any indebtedness, guaranteeing by the Partnership of any
indebtedness, issuance or sale of any debt securities of the Partnership or
guaranteeing of any debt securities of others;
(s) the commencement or notice or, to the knowledge of the
Partnership, threat of commencement, of any lawsuit or proceeding against, or
investigation of, the Partnership or any of its affairs; or
(t) negotiation or agreement by the Partnership or any officer or
employee thereof to do any of the things described in the preceding clauses (a)
through (s) (other than negotiations with USFloral and its representatives
regarding the transactions contemplated by this Agreement).
5.26 Deposit Accounts; Powers of Attorney. Schedule 5.26 sets forth a
complete and accurate list as of the date of this Agreement, of:
(a) the name of each financial institution in which the Partnership
has any account or safe deposit box;
(b) the names in which the accounts or boxes are held;
(c) the type of account;
(d) the name of each person authorized to draw thereon or have
access thereto; and
(e) the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the Partnership and a
description of the terms of such power.
5.27 Environmental Matters.
(a) Hazardous Material. Other than as set forth on Schedule
5.27(a), no underground storage tanks and no amount of any substance that has
been designated by any Governmental Entity or by applicable federal, state,
local or other applicable law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including, without limitation, PCBs,
asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980,
26
as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
properly and safely maintained (a "Hazardous Material"), are present in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that the Partnership has at any time owned, operated,
occupied or leased. Schedule 5.27(a) identifies all underground and aboveground
storage tanks, and the capacity, age, and contents of such tanks, located on
Real Property owned or leased by the Partnership.
(b) Hazardous Materials Activities. The Partnership has not
transported, stored, used, manufactured, disposed of or released, or exposed its
employees or others to, Hazardous Materials in violation of any law in effect on
or before the Closing Date, nor has the Partnership disposed of, transported,
sold, or manufactured any product containing a Hazardous Material (collectively,
"Partnership Hazardous Materials Activities") in violation of any rule,
regulation, treaty or statute promulgated by any Governmental Entity in effect
prior to or as of the date hereof to prohibit, regulate or control Hazardous
Materials or any Hazardous Material Activity.
(c) Permits. The Partnership currently holds all environmental
approvals, permits, licenses, clearances and consents (the "Environmental
Permits") necessary for the conduct of the Partnership's Hazardous Material
Activities and other business of the Partnership as such activities and business
are currently being conducted. All Environmental Permits are in full force and
effect. The Partnership (A) is in compliance in all material respects with all
terms and conditions of the Environmental Permits and (B) is in compliance in
all material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the laws of all Governmental Entities relating to pollution or
protection of the environment or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder. To the Partnership's knowledge, there are no circumstances
that may prevent or interfere with such compliance in the future. Schedule
5.27(d) includes a listing and description of all Environmental Permits
currently held by the Partnership.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
knowledge of the Partnership, threatened concerning any Environmental Permit,
Hazardous Material or any Partnership Hazardous Materials Activity. There are no
past or present actions, activities, circumstances, conditions, events, or
incidents that could involve the Partnership (or any person or entity whose
liability the Partnership has retained or assumed, either by contract or
operation of law) in any environmental litigation, or impose upon the
Partnership (or any person or entity whose liability the Partnership has
retained or assumed, either by contract or operation of law) any environmental
liability including, without limitation, common law tort liability.
5.28 Relations with Governments. Neither the Partnership nor any Partner
has made, offered or agreed to offer anything of value to any governmental
official, political party or candidate for government office, nor has the
Partnership or any Partner otherwise taken any action that would
27
cause the Partnership or any Partner to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any law of similar effect.
5.29 Disclosure. The Partnership has delivered to USFloral and Newco true
and complete copies of each agreement, contract, commitment or other document
(or summaries thereof) that is referred to in the Schedules or that has been
requested by USFloral. Without limiting any exclusion, exception or other
limitation contained in any of the representations and warranties made herein,
this Agreement, the schedules hereto and all other documents and information
furnished to USFloral and its representatives pursuant hereto do not and will
not include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading. If any
Stockholder becomes aware of any fact or circumstance which would change a
representation or warranty of any Stockholder in this Agreement or any
representation made on behalf of the Partnership, the Stockholder shall
immediately give notice of such fact or circumstance to USFloral. However, such
notification shall not relieve the Partnership, the Partners or the Stockholder
of their respective obligations under this Agreement, and at the sole option of
USFloral, the truth and accuracy of any and all warranties and representations
of the Stockholders, at the date of this Agreement and as of the Closing date,
shall be a precondition to the consummation of this transaction.
5.30 USFloral Prospectus; Securities Representations. Each Stockholder
has received and reviewed a copy of the prospectus dated March 18, 1998
including all supplements thereto (as supplemented, the "USFloral Prospectus")
contained in USFloral's shelf registration statement on Form S-1 (File No. 333-
39969). Each Stockholder (a) has such knowledge, sophistication and experience
in business and financial matters that they are capable of evaluating the merits
and risks of an investment in the shares of USFloral Common Stock, (b) fully
understands the nature, scope, and duration of the limitations on transfer
contained herein, in the Affiliate Agreement (if applicable), and under
applicable law, and (c) can bear the economic risk of any investment in the
shares of USFloral Common Stock and can afford a complete loss of such
investment. Each Stockholder has had an adequate opportunity to ask questions
and receive answers (and has asked such questions and received answers to its
satisfaction) from the officers of USFloral concerning the business, operations
and financial condition of USFloral. None of the Stockholders has any contract,
undertaking, agreement or arrangement, written or oral, with any other person to
sell, transfer or grant participation in any shares of USFloral Common Stock to
be acquired by such Stockholder in the Merger. Each Stockholder acknowledges and
agrees that USFloral has not and will not provide such Stockholder or any other
party with a prospectus for such Stockholder's use in selling USFloral Common
Stock.
5.31 Affiliates. The Stockholders are the only persons who are, in
the reasonable judgment of the Partnership, the Partners and each of the
Stockholders, affiliates of the Partnership within the meaning of Rule 145
(each such person an "Affiliate") promulgated under the 1933 Act.
5.32 Location of Chief Executive Offices. Schedule 5.32 sets forth the
location of the Company's chief executive offices.
28
5.33 Location of Equipment and Inventory. All Inventory and Equipment
held on the date hereof by the Partnership is located at one of the locations
shown on Schedule 5.33. For purposes of this Agreement, (a) the term "Inventory"
shall mean any "inventory" as such term is defined in the Uniform Commercial
Code as in effect on October 16, 1997 in the State of New York (the
"N.Y.U.C.C.") owned by the Partnership as of the date hereof, and, in any event,
shall include, but shall not be limited to, all merchandise, inventory and
goods, and all additions, substitutions and replacements thereof, wherever
located, together with all goods, supplies, incidentals, packaging materials,
labels, materials and any other items used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production, and all
proceeds therefrom; and (b) the term "Equipment" shall mean any "equipment" as
such term is defined in the N.Y.U.C.C. owned by the Partnership as of October
16, 1997, and, in any event, shall include, but shall not be limited to, all
machinery, equipment, furnishings, fixtures and vehicles owned by the
Partnership, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
6. REPRESENTATIONS OF USFLORAL AND NEWCO
To induce the Partnership, the Partners the Stockholders and the Beneficial
Owners to enter into this Agreement and consummate the transactions contemplated
hereby, each of USFloral and Newco represents and warrants to the Partnership,
the Partners the Stockholders and the Beneficial Owners as follows:
6.1 Due Organization. Each of USFloral and Newco is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and each is duly authorized and qualified to
do business under all applicable laws, regulations, ordinances and orders of
public authorities to carry on their respective businesses in the places and in
the manner as now conducted, except where the failure to be so authorized,
qualified or licensed would not have a Material Adverse Effect. Copies of the
Certificate of Incorporation and the Bylaws, each as amended, of USFloral and
Newco (collectively, the "USFloral Charter Documents") have been made available
to the Company. Neither USFloral nor Newco is in violation of any USFloral
Charter Document.
6.2 USFloral Common Stock. The shares of USFloral Common Stock to be
delivered to the Stockholders at the Effective Time shall be registered under
the 1933 Act and, when delivered in accordance with the terms of this Agreement,
will be valid and legally issued shares of USFloral capital stock, fully paid
and nonassessable, and prior to the time such shares may be transferred in
accordance with the provisions of Section 7.9 hereof, will be approved for
quotation on the Nasdaq National Market.
6.3 Authorization; Validity of Obligations. The representatives of
USFloral and Newco executing this Agreement have all requisite corporate power
and authority to enter into and bind USFloral and Newco to the terms of this
Agreement. USFloral and Newco have the full legal right, power and corporate
authority to enter into this Agreement and the transactions contemplated
29
hereby. The execution and delivery of this Agreement by USFloral and Newco and
the performance by each of USFloral and Newco of the transactions contemplated
herein have been duly and validly authorized by the respective Boards of
Directors of USFloral and Newco, and this Agreement has been duly and validly
authorized by all necessary corporate action. This Agreement is a legal, valid
and binding obligation of each of USFloral and Newco enforceable in accordance
with its terms.
6.4 No Conflicts. The execution, delivery and performance of this
Agreement, the consummation of the transactions herein contemplated hereby and
the fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of the USFloral
Charter Documents;
(b) subject to compliance with any agreements between USFloral and
its lenders, conflict with, or result in a default (or would constitute a
default but for a requirement of notice or lapse of time or both) under any
document, agreement or other instrument to which either USFloral or Newco is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any of USFloral's or Newco's properties pursuant to (i) any law
or regulation to which either USFloral or Newco or any of their respective
property is subject, or (ii) any judgment, order or decree to which USFloral or
Newco is bound or any of their respective property is subject;
(c) result in termination or any impairment of any material permit,
license, franchise, contractual right or other authorization of USFloral or
Newco; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which USFloral or Newco is subject, or by which USFloral or Newco
is bound, (including, without limitation, the HSR Act, together with all rules
and regulations promulgated thereunder).
6.5 Capitalization of USFloral and Ownership of USFloral Stock. The
authorized capital stock of USFloral consists of 100,000,000 shares of Common
Stock, of which 12,924,193 shares were outstanding on February 27, 1998. The
authorized capital stock of Newco consists of 1,000 shares of Common Stock, of
which 100 shares are outstanding. All of the issued and outstanding shares of
Newco are owned beneficially, and of record, by USFloral. All of the shares of
USFloral Common Stock to be issued to the Stockholders in accordance herewith
will be offered, issued, sold and delivered by USFloral in compliance with all
applicable state and federal laws concerning the issuance of securities and none
of such shares was or will be issued in violation of the preemptive rights of
any stockholder of USFloral.
30
7. COVENANTS
7.1 Tax Matters.
(a) The following provisions shall govern the allocation of
responsibility as between the Stockholders, on the one hand, and the Surviving
Corporation, on the other, for certain tax matters following the Closing Date:
(i) The Stockholders shall prepare or cause to be prepared
and file or cause to be filed, within the time and in the manner provided by
law, all Tax Returns of the Partnership and the Partners for all periods ending
on or before the Closing Date that are due after the Closing Date. The
Stockholders shall pay to the Surviving Corporation on or before the due date of
such Tax Returns the amount of all Taxes shown as due on such Tax Returns to the
extent that such Taxes are not reflected in the current liability accruals for
Taxes (excluding reserves for deferred Taxes) shown on the Partnership's or the
Partners' books and records, as the case may be, as of the Closing Date. Such
Returns shall be prepared and filed in accordance with applicable law and in a
manner consistent with past practices and shall be subject to review and
approval by USFloral. To the extent reasonably requested by the Stockholders or
required by law, USFloral and the Surviving Corporation shall participate in the
filing of any Tax Returns filed pursuant to this paragraph.
(ii) The Surviving Corporation shall prepare or cause to be
prepared and file or cause to be filed any Tax Returns for Tax periods which
begin before the Closing Date and end after the Closing Date. The Stockholders
shall pay to the Surviving Corporation within fifteen (15) days after the date
on which Taxes are paid with respect to such periods an amount equal to the
portion of such Taxes which relates to the portion of such taxable period ending
on the Closing Date to the extent such Taxes are not reflected in the current
liability accruals for Taxes (excluding reserves for deferred Taxes) shown on
the Partnership's books and records as of the Closing Date. For purposes of this
Section 7.1, in the case of any Taxes that are imposed on a periodic basis and
are payable for a taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such taxable
period ending on the Closing Date shall (x) in the case of any Taxes other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire taxable period multiplied by a fraction the numerator of
which is the number of days in the taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire taxable period, and
(y) in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant taxable period ended
on the Closing Date. Any credits relating to a taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of the Surviving Corporation.
(iii) USFloral and the Surviving Corporation on one hand and
the Stockholders on the other hand shall (A) cooperate fully, as reasonably
requested, in connection with
31
the preparation and filing of Tax Returns pursuant to this Section 7.1 and any
audit, litigation or other proceeding with respect to Taxes; (B) make available
to the other, as reasonably requested, all information, records or documents
with respect to Tax matters pertinent to the Partnership or the Partners for all
periods ending prior to or including the Closing Date; and (C) preserve
information, records or documents relating Tax matters pertinent to the
Partnership or the Partners that is in their possession or under their control
until the expiration of any applicable statute of limitations or extensions
thereof.
(iv) The Stockholders shall timely pay all transfer,
documentary, sales, use, stamp, registration and other Taxes and fees arising
from or relating to the transactions contemplated by this Agreement, and the
Stockholders shall, at their own expense, file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration, and other Taxes and fees. If required by applicable law,
USFloral and the Surviving Corporation will join in the execution of any such
Tax Returns and other documentation.
(b) Talent, Inc. shall, prior to the Closing, maintain its status
as an S Corporation for federal and state income tax purposes.
7.2 Reserved.
7.3 Related Party Agreements and Personal Vehicles. The Partnership,
the Partners and/or the Stockholders, as the case may be, shall terminate any
Related Party Agreements which USFloral requests the Partnership, the Partners
or Stockholders to terminate, except for those Related Party Agreements listed
in Schedule 7.3. The Stockholders shall also purchase any personal vehicles
owned by either Company at a value equal to the greater of such vehicles net
book value or the outstanding indebtedness against such vehicle.
7.4 Cooperation.
(a) The Partnership, the Partners, the Stockholders, USFloral and
Newco shall each deliver or cause to be delivered to the other on the Closing
Date, and at such other times and places as shall be reasonably agreed to, such
instruments as the other may reasonably request for the purpose of carrying out
this Agreement. In connection therewith, if required, the president or chief
financial officer of the Partnership or the Partners shall execute any
documentation reasonably required by USFloral's independent public accountants
(in connection with such accountants' audit of the Company) or the Nasdaq
National Market.
(b) The Stockholders, the Partners and the Partnership shall
cooperate and use their reasonable efforts to have the present officers,
directors and employees of the Partnership cooperate with USFloral on and after
the Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Closing Date.
32
(c) Each party hereto shall cooperate in obtaining all consents and
approvals required under this Agreement to effect the transactions contemplated
hereby
(d) The Partnership, the Partners, the Stockholders and USFloral
shall file all notices and other information and documents required under the
HSR Act (as defined in Section 5.3) as promptly as practicable after the date
hereof.
7.5 Conduct of Business Pending Closing. Between the date hereof and the
Effective Time, the Partnership will (except as requested or agreed by
USFloral):
(a) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management, operation or
accounting;
(b) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
(c) perform all of its obligations under agreements relating to or
affecting its respective assets, properties or rights;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(e) use all commercially reasonable efforts to maintain and preserve
its business organization intact, retain its present officers and key employees
and maintain its relationships with suppliers, vendors, customers, creditors and
others having business relations with it;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities;
(g) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments; and
(h) maintain present salaries and commission levels for all
officers, directors, employees, agents, representatives and independent
contractors, except for ordinary and customary bonuses and salary increases for
employees (other than employees who are also Stockholders) in accordance with
past practice.
7.6 Access to Information. Between the date of this Agreement and the
Closing Date, the Partnership will afford to the officers and authorized
representatives of USFloral access to (i) all of the sites, properties, books
and records of the Partnership and (ii) such additional financial and operating
data and other information as to the business and properties of the Partnership
as USFloral may from time to time reasonably request, including without
limitation, access upon reasonable request to the Partnership's employees,
customers, vendors, suppliers and creditors for due diligence inquiry. No
information or knowledge obtained in any investigation pursuant to this Section
7.7 shall
33
affect or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate the
Merger.
7.7 Prohibited Activities. Between the date hereof and the Effective
Time, the Partnership will not, without the prior written consent of USFloral:
(a) make any change in its Articles of Incorporation or Bylaws, or
authorize or propose the same;
(b) issue, deliver or sell, authorize or propose the issuance,
delivery or sale of any securities, options, warrants, calls, conversion rights
or commitments relating to its securities of any kind, or authorize or propose
any change in its equity capitalization, or issue or authorize the issuance of
any debt securities;
(c) make any distribution (whether in cash, stock or property) in
respect of the ownership interests of the Partnership; nor shall any Partner
declare or pay any dividend or make any distribution in respect of such
Partner's stock whether now or hereafter outstanding, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or purchase, redeem or otherwise acquire or retire for value any
shares of its stock;
(d) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures, or guarantee any indebtedness,
except in the ordinary course of business and consistent with past practice in
an amount in excess of $25,000, including contracts to provide services to
customers;
(e) increase the compensation payable or to become payable to any
officer, director, Partner, Stockholder, employee, agent, representative or
independent contractor; make any bonus or management fee payment to any such
person; make any loans or advances; adopt or amend any Company Plan or Company
Benefit Arrangement; or grant any severance or termination pay;
(f) create or assume any mortgage, pledge or other lien or
encumbrance upon any assets or properties whether now owned or hereafter
acquired;
(g) sell, assign, lease, pledge or otherwise transfer or dispose of
any property or equipment except in the ordinary course of business consistent
with past practice;
(h) acquire or negotiate for the acquisition of (by merger,
consolidation, purchase of a substantial portion of assets or otherwise) any
business or the start-up of any new business, or otherwise acquire or agree to
acquire any assets that are material, individually or in the aggregate, to the
Partnership;
(i) merge or consolidate or agree to merge or consolidate with or
into any other entity;
34
(j) waive any material rights or claims of the Partnership, provided
that the Partnership may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(k) commit a breach of or amend or terminate any material agreement,
permit, license or other right;
(l) enter into any other transaction that is (i) not negotiated at
arm's length with a third party not affiliated with the Partnership, the
Partners or any officer, director or Partner of the Partnership or any
Stockholder of any Partner or (ii) outside the ordinary course of business
consistent with past practice or (iii) prohibited hereunder;
(m) commence a lawsuit other than for routine collection of bills;
(n) revalue any of its assets, including without limitation, writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business consistent with past practice;
(o) make any tax election other than in the ordinary course of
business and consistent with past practice, change any tax election, adopt any
tax accounting method other than in the ordinary course of business and
consistent with past practice, change any tax accounting method, file any Tax
Return (other than any estimated tax returns, payroll tax returns or sales tax
returns) or any amendment to a Tax Return, enter into any closing agreement,
settle any tax claim or assessment, or consent to any tax claim or assessment,
without the prior written consent of USFloral; or
(p) take, or agree (in writing or otherwise) to take, any of the
actions described in Sections 7.8(a) through (o) above, or any action which
would make any of the representations and warranties of the Partnership, the
Partners and the Stockholders contained in this Agreement untrue or result in
any of the conditions set forth in Articles 8 and 9 not being satisfied.
7.8 Notice to Bargaining Agents. Prior to the Closing Date, the
Partnership shall satisfy any requirement for notice of the transactions
contemplated by this Agreement under applicable collective bargaining
agreements, if requested by USFloral, and shall provide USFloral with proof that
any required notice has been sent.
7.9 Sales of USFloral Common Stock.
(a) No Stockholder will, directly or indirectly, offer, sell,
contract to sell, pledge or otherwise dispose of the shares of USFloral Common
Stock to be received by such Stockholder in the Merger prior to the date that
is, (i) with respect to one-third of the shares, eighteen months from the
Closing Date, (ii) with respect to two-thirds of the shares, twelve months from
the Closing Date and (iii) with respect to all of the shares, six months from
the Closing Date.
35
(b) Each Stockholder acknowledges and agrees that USFloral will not
provide such Stockholder with a prospectus for such Stockholder's use in selling
the shares of USFloral Common Stock to be received by such Stockholder in the
Merger, and agrees to sell such shares only in accordance with the requirements,
if any, of Rule 145(d) promulgated under the 1933 Act. USFloral acknowledges
that the provisions of this Section 7.9(b) will be satisfied as to any sale by a
Stockholder of the USFloral Common Stock Stockholder may acquire pursuant to the
Merger pursuant to Rule 145(d) under the Securities Act, by a broker's letter
and a letter from the Stockholder with respect to that sale stating that the
applicable requirements of Rule 145(d)(1) have been met or are inapplicable by
virtue of Rule 145(d)(2) or Rule 145(d)(3) provided, however, that USFloral has
no reasonable basis to believe that such sales were not made in compliance with
such provisions of Rule 145(d) and subject to any changes in Rule 145 after the
date of this Agreement.
(c) The certificate or certificates evidencing the shares of
USFloral Common Stock to be delivered to the Stockholders in the Merger will
bear restrictive legends substantially in the following forms:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
APPLIES. THESE SHARES MAY ONLY BE TRANSFERRED PURSUANT TO A REGISTRATION
STATEMENT COVERING THE TRANSFER OF SUCH SHARES OR A VALID EXEMPTION FROM
REGISTRATION.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
HOLDING PERIOD EXPIRING ON ***, PURSUANT TO THAT CERTAIN AGREEMENT AND PLAN
OF REORGANIZATION, DATED AS OF APRIL 3, 1998, AMONG THE ISSUER AND THE
STOCKHOLDERS OF TALENT, INC. AND ANVACU, INC. PRIOR TO THE EXPIRATION OF
SUCH HOLDING PERIOD, SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
TRANSFER OR ASSIGNMENT. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY
STOP ORDER PLACED WITH THE TRANSFER AGENT) WHEN THE HOLDING PERIOD HAS
EXPIRED.
*** Certificates representing one-third of the shares of USFloral Common Stock
issued will read "October 3, 1998," one-third will read "April 3, 1999" and one-
third will read "October 3, 1999."
7.10 USFloral Stock Options. As soon as practicable after the Closing,
options to purchase such number of shares of USFloral Common Stock as shall have
a fair market value as of the Closing Date equal to 6.25% of the Merger
Consideration provided for in Section 2.2 above shall be available for issuance
to the key employees of the Surviving Corporation after the Closing, as
36
determined by the Surviving Corporation's President (or other officer or
director designated by the Surviving Corporation and acceptable to USFloral) in
accordance with USFloral's policies, and authorized and issued under the terms
of USFloral's 1997 Long-Term Incentive Plan.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF USFLORAL AND NEWCO
The obligation of USFloral and Newco to effect the Merger is subject to the
satisfaction or waiver, at or before the Effective Time, of the following
conditions and deliveries:
8.1 Representations and Warranties; Performance of Obligations. All of
the representations and warranties of the Beneficial Owners, Stockholders, the
Partners and the Partnership contained in this Agreement shall be true, correct
and complete on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date; all of the
terms, covenants, agreements and conditions of this Agreement to be complied
with, performed or satisfied by the Partnership, the Partners the Stockholders
and the Beneficial Owners on or before the Closing Date shall have been duly
complied with, performed or satisfied; and a certificate to the foregoing
effects dated the Closing Date and signed on behalf of the Partnership, on
behalf of each Partner and by each of the Stockholders shall have been delivered
to USFloral.
8.2 No Litigation. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
USFloral's proposed acquisition of the Partnership, or limiting or restricting
USFloral's conduct or operation of the business of the Partnership (or its own
business) following the Merger shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending. There shall be no action, suit claim or proceeding of any nature
pending or threatened against USFloral, Newco, the Partnership or any Partner,
their respective properties or any of their officers or directors, that could
materially and adversely affect the business, assets, liabilities, financial
condition, results of operations or prospects of the Partnership.
8.3 No Material Adverse Change. There shall have been no material
adverse changes in the business, operations, affairs, prospects, properties,
assets, existing and potential liabilities, obligations, profits or condition
(financial or otherwise) of the Partnership, taken as a whole, since the Balance
Sheet Date; and USFloral shall have received a certificate signed by each
Stockholder dated the Closing Date to such effect.
8.4 Consents and Approvals. All necessary consents of, and filings
with, any governmental authority or agency or third party, relating to the
consummation by the Partnership, the Partners and the Stockholders of the
transactions contemplated hereby, shall have been obtained and made. Any
waiting period applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated, and no action by the Department of
Justice or Federal Trade
37
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby shall be pending.
8.5 Opinion of Counsel. USFloral shall have received an opinion from
counsel to the Partnership, the Partners the Stockholders and the Beneficial
Owners, dated the Closing Date, in a form reasonably satisfactory to USFloral.
8.6 Charter Documents. USFloral shall have received (a) a copy of the
Articles of Incorporation of each Partner certified by an appropriate authority
in the state of its incorporation and (b) a copy of the Bylaws of each Partner
certified by the Secretary of the Company, and such documents shall be in form
and substance reasonably acceptable to USFloral.
8.7 Due Diligence Review. The Partnership shall have made such
deliveries as are called for by this Agreement. USFloral shall be fully
satisfied in its sole discretion with the results of its review of all of the
Schedules, whether delivered before or after the execution hereof, and such
deliveries, and its review of, and other due diligence investigations with
respect to, the business, operations, affairs, prospects, properties, assets,
existing and potential liabilities, obligations, profits and condition
(financial or otherwise) of the Partnership.
8.8 Delivery of Closing Financial Certificate. USFloral shall have
received a certificate (the "Closing Financial Certificate"), dated as of the
Closing Date, signed on behalf of the Partnership and each Partner and by each
of the Stockholders, setting forth:
(a) the net worth of the Partnership as of the last day of its most
recent fiscal year (the "Certified Year-End Net Worth");
(b) the net worth of the Partnership as of the Closing Date (the
"Certified Closing Net Worth");
(c) the earnings of the Partnership before interest and taxes (after
the addition of "add-backs" set forth on Schedule 5.9(b)) for the most recent
fiscal year preceding the Closing Date (the "Certified Year-End EBIT"); and
(d) a statement that all of the Company financial conditions set
forth in Section 5.9 of the Agreement are satisfied as of the Closing Date.
The parties acknowledge and agree that for purposes of determining the Certified
Closing Net Worth and the Certified Closing EBIT, the Partnership shall not take
account of any increase in intangible assets (including without limitation
goodwill, franchises and intellectual property) accounted for after December 31,
1997.
8.9 FIRPTA Compliance. Each of the Stockholders shall have delivered
to USFloral a properly executed statement in a form reasonably acceptable
to USFloral for purposes of satisfying USFloral's obligations under Treas.
Reg. (S) 1.1445-2(b).
38
8.10 Employment Agreements. Xxxxxxxx Xxxxxxxxx shall have entered into
an employment agreement with the Company in the form of Schedule 8.9.
8.11 Stockholders' Release. The Stockholders shall each have delivered to
USFloral an instrument dated the Closing Date releasing the Partnership and each
Partner from any and all claims of such Stockholder against the Partnership and
each Partner.
8.12 Related Party Agreements. The Company shall have delivered to
USFloral:
(a) an executed Flower Supply Agreement, in the form of Annex I
-------
attached hereto, between the Company and those farms in which the Stockholders
have an interest which are listed on Schedule 8.12(a) attached hereto; and
----------------
(b) evidence of repayment of all amounts due from the Partners, the
Stockholders and all entities in which the Stockholders have an interest.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTNERSHIP, THE PARTNERS
AND THE STOCKHOLDERS
The obligation of the Beneficial Owners, the Stockholders, the Partners and
the Partnership to effect the Merger are subject to the satisfaction or waiver,
at or before the Effective Time, of the following conditions and deliveries:
9.1 Representations and Warranties; Performance of Obligations. All of
the representations and warranties of USFloral and Newco contained in this
Agreement shall be true, correct and complete on and as of the Closing Date with
the same effect as though such representations and warranties had been made as
of such date; all of the terms, covenants, agreements and conditions of this
Agreement to be complied with, performed or satisfied by USFloral and Newco on
or before the Closing Date shall have been duly complied with, performed or
satisfied; and a certificate to the foregoing effects dated the Closing Date and
signed by the President or any Vice President of USFloral shall have been
delivered to the Partnership and the Stockholders.
9.2 No Litigation. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
USFloral's proposed acquisition of the Partnership, or limiting or restricting
USFloral's conduct or operation of the business of the Partnership (or its own
business) following the Merger shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending. There shall be no action, suit, claim or proceeding of any nature
pending or threatened, against USFloral, Newco, the Partnership or the Partners,
their respective properties or any of their officers or directors, that could
materially and adversely affect the business,
39
assets, liabilities, financial condition, results of operations or prospects of
the USFloral and its subsidiaries taken as a whole.
9.3 Consents and Approvals. All necessary consents of, and filings with,
any governmental authority or agency or third party relating to the consummation
by USFloral and Newco of the transactions contemplated herein, shall have been
obtained and made. Any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated, and no action by
the Department of Justice or Federal Trade Commission challenging or seeking to
enjoin the consummation of the transactions contemplated hereby shall be
pending.
9.4 Employment Agreements. The Company shall have afforded Xxxxxxxx
Xxxxxxxxx an opportunity to enter into an employment agreement with the Company
in the form of Schedule 8.9.
10. INDEMNIFICATION
10.1 General Indemnification by the Beneficial Owners and the
Stockholders. Subject to Section 10.2, each Beneficial Owner and each
Stockholder, jointly and severally, covenants and agrees to indemnify, defend,
protect and hold harmless USFloral, Newco and the Surviving Corporation and
their respective officers, directors, employees, stockholders, assigns,
successors and affiliates (individually, an "Indemnified Party" and
collectively, "Indemnified Parties") from, against and in respect of:
(a) all liabilities, losses, claims, damages, punitive damages,
causes of action, lawsuits, administrative proceedings (including informal
proceedings), investigations, audits, demands, assessments, adjustments,
judgments, settlement payments, deficiencies, penalties, fines, interest
(including interest from the date of such damages) and costs and expenses
(including without limitation reasonable attorneys' fees and disbursements of
every kind, nature and description) (collectively, "Damages") suffered,
sustained, incurred or paid by the Indemnified Parties in connection with,
resulting from or arising out of, directly or indirectly:
(i) any breach of any representation or warranty of the
Beneficial Owners, the Stockholders, the Partners or the Partnership set forth
in this Agreement or any Schedule or certificate, delivered by or on behalf of
any Beneficial Owner, any Stockholder, any Partner or the Partnership in
connection herewith; or
(ii) any nonfulfillment of any covenant or agreement by the
Beneficial Owners, the Stockholders or, prior to the Effective Time, the
Partnership or the Partners, under this Agreement; or
(iii) the business, operations or assets of the Partnership
prior to the Closing Date or the actions or omissions of the Partnership's
directors, officers, partners, employees
40
or agents prior to the Closing Date, other than Damages arising from matters
expressly disclosed in the Partnership Financial Statements, this Agreement or
the Schedules to this Agreement; or
(iv) the matters disclosed on Schedules 5.8 (Absence of Claims
Against the Partnership and the Partners), 5.21 (Labor and Employment Matters),
5.23 (conformity with law; litigation), and 5.27 (environmental matters); and
(b) any and all Damages incident to any of the foregoing or to the
enforcement of this Section 10.1.
10.2 Limitation and Expiration. Notwithstanding the above:
(a) there shall be no liability for indemnification under Section
10.1 unless, and solely to the extent that, the aggregate amount of Damages
exceeds $125,000 (the "Indemnification Threshold"); provided, however, that the
Indemnification Threshold shall not apply to (i) adjustments to the Merger
Consideration as set forth in Sections 2.2 and 3.1; (ii) Damages arising out of
any breaches of the covenants of the Beneficial Owners or the Stockholders set
forth in this Agreement or representations and warranties made in Sections 5.4
(capital stock of the Company), 5.5 (transactions in capital stock), 5.8
(Absence of Claims Against the Partnership and the Partners), 5.9 (Company
financial conditions), 5.18 (material contracts and commitments), 5.21 (Labor
and Employment Matters) 5.23 (conformity with law; litigation), 5.24 (taxes),
5.27 (environmental matters), or (iii) Damages described in Section 10.1(a)(iv),
or (iv) Damages for liability for anti-dumping duties in excess of reserves
therefor on the balance sheets of the Partnership as of the Closing Date
(regardless of whether or not disclosed on any schedule to this Agreement);
(b) the aggregate amount of liability of the Stockholders of
Talent, Inc. under this Article 10 shall not exceed the aggregate amount of
Merger Consideration received by the Stockholders of Talent, Inc., and the
aggregate amount of liability of the Stockholders of Anvacu, Inc. and the
Beneficial Owners under this Article 10 shall not exceed the aggregate amount of
Merger Consideration received by the Stockholders of Anvacu, Inc.; provided,
however, that the Partners', Stockholders' and Beneficial Owners' liability for
Damages arising out of any breaches of the representations made in Sections 5.24
(taxes) or 5.27 (environmental matters) or Damages described in Section
10.1(a)(ii) and Section 10.1(a)(iv) shall not be subject to such limitation;
(c) the indemnification obligations under this Article 10, or under
any certificate or writing furnished in connection herewith, shall terminate at
the date that is the later of clause (i) or (ii) of this Section 10.2(c):
(i)
(1) except as to representations, warranties, and
covenants specified in clause (i)(2) of this Section 10.2(c), the first
anniversary of the Closing Date, or
(2) with respect to representations and warranties
contained in Sections 5.22 (employee benefit plans), 5.24 (taxes), 5.27
(environmental matters), and the
41
indemnification set forth in Section 10.1(a)(ii), (iii) or (iv), on (A) the date
that is six (6) months after the expiration of the longest applicable federal or
state statute of limitation (including extensions thereof), or (B) if there is
no applicable statute of limitation, (x) ten (10) years after the Closing Date
if the Claim is related to the cost of investigating, containing, removing, or
remediating a release of Hazardous Material into the environment, or (y) five
(5) years after the Closing Date for any other Claim covered by clause (i)(2)(B)
of this Section 10.2(c); or
(ii) the final resolution of claims or demands pending as of
the relevant dates described in clause (i) of this Section 10.2(c) (such claims
referred to as "Pending Claims").
10.3 Indemnification Procedures. All claims or demands for
indemnification under this Article 10 ("Claims") shall be asserted and resolved
as follows:
(a) In the event that any Indemnified Party has a Claim against any
party obligated to provide indemnification pursuant to Section 10.1 hereof (the
"Indemnifying Party") which does not involve a Claim being asserted against or
sought to be collected by a third party, the Indemnified Party shall with
reasonable promptness notify the Stockholders' Representative of such Claim,
specifying the nature of such Claim and the amount or the estimated amount
thereof to the extent then feasible (the "Claim Notice"). If the Stockholders'
Representative does not notify the Indemnified Party within thirty days after
the date of delivery of the Claim Notice that the Indemnifying Party disputes
such Claim, with a detailed statement of the basis of such position, the amount
of such Claim shall be conclusively deemed a liability of the Indemnifying Party
hereunder. In case an objection is made in writing in accordance with this
Section 10.3(a), the Indemnified Party shall respond in a written statement to
the objection within thirty days and, for sixty days thereafter, attempt in good
faith to agree upon the rights of the respective parties with respect to each of
such Claims (and, if the parties should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties).
(b)
(i) In the event that any Claim for which the Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against an
Indemnified Party by a third party (a "Third Party Claim"), the Indemnified
Party shall deliver a Claim Notice to the Stockholders' Representative. The
Stockholders' Representative shall have thirty days from the date of delivery of
the Claim Notice to notify the Indemnified Party (A) whether the Indemnifying
Party disputes liability to the Indemnified Party hereunder with respect to the
Third Party Claim, and, if so, the basis for such a dispute, and (B) if such
party does not dispute liability, whether or not the Indemnifying Party desires,
at the sole cost and expense of the Indemnifying Party, to defend against the
Third Party Claim, provided that the Indemnified Party is hereby authorized (but
not obligated) to file any motion, answer or other pleading and to take any
other action which the Indemnified Party shall deem necessary or appropriate to
protect the Indemnified Party's interests.
(ii) In the event that Stockholders' Representative timely
notifies the Indemnified Party that the Indemnifying Party does not dispute the
Indemnifying Party's obligation to indemnify with respect to the Third Party
Claim, the Indemnifying Party shall defend
42
the Indemnified Party against such Third Party Claim by appropriate proceedings,
provided that, unless the Indemnified Party otherwise agrees in writing, the
Indemnifying Party may not settle any Third Party Claim (in whole or in part) if
such settlement does not include a complete and unconditional release of the
Indemnified Party. If the Indemnified Party desires to participate in, but not
control, any such defense or settlement the Indemnified Party may do so at its
sole cost and expense. If the Indemnifying Party elects not to defend the
Indemnified Party against a Third Party Claim, whether by failure of such party
to give the Indemnified Party timely notice as provided herein or otherwise,
then the Indemnified Party, without waiving any rights against such party, may
settle or defend against such Third Party Claim in the Indemnified Party's sole
discretion and the Indemnified Party shall be entitled to recover from the
Indemnifying Party the amount of any settlement or judgment and, on an ongoing
basis, all indemnifiable costs and expenses of the Indemnified Party with
respect thereto, including interest from the date such costs and expenses were
incurred.
(iii) If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given in writing to the
Stockholders' Representative, any Third Party Claim seeks material prospective
relief which could have an adverse effect on any Indemnified Party or the
Surviving Corporation or any subsidiary, the Indemnified Party shall have the
right to control or assume (as the case may be) the defense of any such Third
Party Claim and the amount of any judgment or settlement and the reasonable
costs and expenses of defense shall be included as part of the indemnification
obligations of the Indemnifying Party hereunder. If the Indemnified Party elects
to exercise such right, the Indemnifying Party shall have the right to
participate in, but not control, the defense of such Third Party Claim at the
sole cost and expense of the Indemnifying Party.
(c) Nothing herein shall be deemed to prevent the Indemnified Party
from making a Claim, and an Indemnified Party may make a Claim hereunder, for
potential or contingent Damages provided the Claim Notice sets forth the
specific basis for any such potential or contingent claim or demand to the
extent then feasible and the Indemnified Party has reasonable grounds to believe
that such Claim may be made.
(d) Subject to the provisions of Section 10.2, the Indemnified
Party's failure to give reasonably prompt notice as required by this Section
10.3 of any actual, threatened or possible claim or demand which may give rise
to a right of indemnification hereunder shall not relieve the Indemnifying Party
of any liability which the Indemnifying Party may have to the Indemnified Party
unless the failure to give such notice materially and adversely prejudiced the
Indemnifying Party.
(e) The parties will make appropriate adjustments for any Tax
benefits, Tax detriments or insurance proceeds in determining the amount of any
indemnification obligation under this Article 10, provided that no Indemnified
Party shall be obligated to continue pursuing any payment pursuant to the terms
of any insurance policy.
10.4 Survival of Representations Warranties and Covenants. All
representations, warranties and covenants made by the Partnership, the Partners,
the Stockholders, the Beneficial Owners, USFloral and Newco in or pursuant to
this Agreement or in any document delivered
43
pursuant hereto shall be deemed to have been made on the date of this Agreement
(except as otherwise provided herein) and, if a Closing occurs, as of the
Closing Date. The representations of the Partnership, the Partners the
Stockholders and the Beneficial Owners will survive the Closing and will remain
in effect until, and will expire upon, the termination of the indemnification
obligations as provided in Section 10.2. The representations of USFloral and
Newco will survive the Closing and will remain in effect until, and will expire
upon the first anniversary of the Closing date.
10.5 Remedies Cumulative. The remedies set forth in this Article 10 are
cumulative and shall not be construed to restrict or otherwise affect any other
remedies that may be available to the Indemnified Parties under any other
agreement or pursuant to statutory or common law except that the indemnification
obligations set forth in this Article 10 shall be the sole and exclusive remedy
of USFloral and Newco for claims based upon breach of contract or breach of
representation or warranty, unless such claim is founded in fraud.
10.6 Right to Set Off. USFloral shall have the right, but not the
obligation, to set off, in whole or in part, against the Pledged Assets, amounts
finally determined under Section 10.3 to be owed to USFloral by the Stockholders
or Beneficial Owners under Section 10.1 hereof.
11. NONCOMPETITION
11.1 Prohibited Activities. The Stockholders and Beneficial Owners agree
that for a period of three years following the Merger Effective Date, they shall
not:
(a) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, in any business
selling any products or services in direct competition with the Surviving
Corporation or USFloral, including without limitation the importing, brokerage,
manufacture, assembly, packaging, distribution, shipping or marketing of floral
products (including, without limitation, hardgoods), or any business engaging in
the consolidation of the floral industry within the United States of America
(the "Territory");
(b) call upon any person who is, at that time, within the Territory,
an employee of USFloral or any subsidiary of USFloral in a managerial capacity
for the purpose or with the intent of enticing such employee away from or out of
the employ of USFloral or such subsidiary;
(c) call upon any person or entity which is, at that time, or which
has been, within one year prior to that time, a customer of USFloral or any
subsidiaries of USFloral, the Partnership within the Territory for the purpose
of soliciting or selling floral products within the Territory;
(d) call upon any prospective acquisition candidate, on their own
behalf or on behalf of any competitor, which candidate was either called upon by
any of them or for which any
44
of them made an acquisition analysis for themselves or USFloral or any
subsidiaries of USFloral, the Partnership; or
(e) disclose customers, whether in existence or proposed, of the
Partnership to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Stockholders and Beneficial Owners (i) from acquiring as an investment
not more than one percent of the capital stock of a competing business, whose
stock is traded on a national securities exchange or in the over-the-counter
market, (ii) from engaging in any activity to which USFloral shall have provided
its prior written consent or (iii) with respect only to the Stockholders of
Anvacu, Inc., and only if each of such Stockholders is not in breach of the
Flower Supply Agreements such Stockholders entered into pursuant to Section 8.12
of this Agreement, from selling to their current customers that percentage of
such Stockholders' production of flowers which such Stockholders currently sell
to customers other than the Partnership.
11.2 Damages. Because of the difficulty of measuring economic losses
to USFloral and the Surviving Corporation as a result of the breach of the
foregoing covenant, and because of the immediate and irreparable damage that
would be caused to USFloral and the Surviving Corporation for which they would
have no other adequate remedy, the Stockholders and Beneficial Owners agree
that, in the event of a breach by them of the foregoing covenant, the covenant
may be enforced by USFloral or the Surviving Corporation by, without limitation,
injunctions and restraining orders.
11.3 Reasonable Restraint. It is agreed by the parties that the foregoing
covenants in this Article 11 impose a reasonable restraint on the Stockholders
and Beneficial Owners in light of the activities and business of USFloral on the
date of the execution of this Agreement and the current and future plans of
USFloral and the Surviving Corporation (as successors to the businesses of the
Partnership).
11.4 Severability; Reformation. The covenants in this Article 11 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
11.5 Independent Covenant. All of the covenants in this Article 11 shall
be construed as an agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of the Stockholders
and the Beneficial Owners against the Partnership, the Partners, the Surviving
Corporation or USFloral, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement of such covenants. It is
specifically agreed that the period of three years stated above, shall be
computed by excluding from such computation any time during which any
Stockholder or any Beneficial Owner is in violation of any provision of this
Article 11 and any time during which there is pending in any court of competent
jurisdiction any action
45
(including any appeal from any judgment) brought by any person, whether or not a
party to this Agreement, in which action USFloral or the Surviving Corporation
seeks to enforce the agreements and covenants of the Stockholders and the
Beneficial Owners or in which any person contests the validity of such
agreements and covenants or their enforceability or seeks to avoid their
performance or enforcement; provided, however, that if any Stockholder or any
Beneficial Owner is found not to be in violation of the agreements or covenants
in any such activity the period during which the action was pending shall not be
excluded from such computation.
11.6 Materiality. The Partnership, each Partner, each Stockholder and
each Beneficial Owner hereby agree that the covenants set forth in this Article
11 are a material and substantial part of the transactions contemplated by this
Agreement, supported by adequate consideration.
12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
12.1 Stockholders and Beneficial Owners. The Stockholders and Beneficial
Owners recognize and acknowledge that they have in the past, currently have, and
in the future may possibly have, access to certain confidential information of
the Partnership, such as lists of customers, operational policies, and pricing
and cost policies that are valuable, special and unique assets of the
Partnership and the Partnership's business. The Stockholders and Beneficial
Owners agree that they will not disclose any confidential information to any
person, firm, corporation, association or other entity for any purpose or reason
whatsoever, except to authorized representatives of USFloral, unless the
Stockholders or Beneficial Owner can show that such information has become known
to the public generally through no fault of the Stockholders or the Beneficial
Owners. In the event of a breach or threatened breach by the Stockholders or
Beneficial Owners of the provisions of this Article 12, USFloral and the
Surviving Corporation shall be entitled to an injunction restraining the
Stockholders or Beneficial Owners from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
USFloral and the Surviving Corporation from pursuing any other available remedy
for such breach or threatened breach, including the recovery of damages.
12.2 USFloral. USFloral recognizes and acknowledges that it has in the
past, currently has, and prior to the Closing Date will have, access to certain
confidential information of the Partnership, such as lists of customers,
operational policies, pricing and cost policies that are valuable, special and
unique assets of the Partnership and the Partnership's business. USFloral
agrees that it will not disclose any confidential information to any person,
firm, corporation, association, or other entity for any purpose or reason
whatsoever, prior to the Closing Date without prior written consent of the
Stockholders. In the event of a breach or threatened breach by USFloral of the
provisions of this Article 12, the Stockholders shall be entitled to an
injunction restraining USFloral from disclosing, in whole or in part, such
confidential information. Nothing contained herein shall be construed as
prohibiting the Stockholders from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
46
12.3 Damages. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants, and because of the immediate
and irreparable damage that would be caused for which they would have no other
adequate remedy, USFloral, the Surviving Corporation the Stockholders and the
Beneficial Owners agree that, in the event of a breach by any of them of the
foregoing covenant, the covenant may be enforced against them by injunctions and
restraining orders.
13. GENERAL
13. Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(a) by mutual consent of the boards of directors of USFloral and the
Partners; or
(b) by the Stockholders, the Partners and the Partnership as a
group, on the one hand, or by USFloral, on the other hand, if the Closing shall
not have occurred on or before April 30, 1998, provided that the right to
terminate this Agreement under this Section 13.1(b) shall not be available to
either party (with the Stockholders, the Partners and the Partnership deemed to
be a single party for this purpose) whose material misrepresentation, breach of
warranty or failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before such
date; or
(c) by the Stockholders, the Partners and the Partnership as a
group, on the one hand, or by USFloral, on the other hand, if there is or has
been a material breach, failure to fulfill or default on the part of the other
party (with the Stockholders, the Partners and the Partnership deemed to be a
single party for this purpose) of any of the representations and warranties
contained herein or in the due and timely performance and satisfaction of any of
the covenants, agreements or conditions contained herein, and the curing of such
default shall not have been made or shall not reasonably be expected to occur
before the Closing Date; or
(d) by the Stockholders, the Partners and the Partnership as a
group, on the one hand, or by USFloral, on the other hand, if there shall be a
final nonappealable order of a federal or state court in effect preventing
consummation of the Merger; or there shall be any action taken, or any statute,
rule regulation or order enacted, promulgated or issued or deemed applicable to
the Merger by any governmental entity which would make the consummation of the
Merger illegal.
13.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 13.1, this Agreement shall forthwith become
ineffective, and there shall be no liability or obligation on the part of any
party hereto or its officers, directors or shareholders. Notwithstanding the
foregoing sentence, (i) the provisions of this Article 13 shall remain in full
force and effect and survive any termination of this Agreement; (ii) each party
shall remain liable for any breach of this Agreement prior to its termination;
and (iii) in the event of termination of this Agreement pursuant to Section
13.1(c) above, then notwithstanding the provisions of Section 13.7
47
below, the breaching party (with the Stockholders, the Partners and the
Partnership deemed to be a single party for purposes of this Article 13), shall
be liable to the other party to the extent of the expenses incurred by such
other party in connection with this Agreement and the transactions contemplated
hereby, as well as any damages in accordance with applicable law.
13.3 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
USFloral, and the heirs and legal representatives of the Stockholders.
13.4 Entire Agreement; Amendment; Waiver. This Agreement sets forth the
entire understanding of the parties hereto with respect to the transactions
contemplated hereby. Each of the Schedules to this Agreement is incorporated
herein by this reference and expressly made a part hereof. Any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement. This
Agreement shall not be amended or modified except by a written instrument duly
executed by each of the parties hereto, or in accordance with Section 11.4. Any
extension or waiver by any party of any provision hereto shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
13.5 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original, and all of
which counterparts taken together shall constitute but one and the same
instrument.
13.6 Brokers and Agents. USFloral and Newco (as a group) and the
Partnership, each Partner and each Stockholder (as a group) each represents and
warrants to the other that it has not employed any broker or agent in connection
with the transactions contemplated by this Agreement and agrees to indemnify the
other against all losses, damages or expenses relating to or arising out of
claims for fees or commission of any broker or agent employed or alleged to have
been employed by such party.
13.7 Expenses. USFloral has and will pay the fees, expenses and
disbursements of USFloral and Newco and their agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement. The Stockholders (and neither the Partnership nor the Partners) have
and will pay the fees, expenses and disbursements of the Stockholders, the
Partners, the Partnership, and their agents, representatives, financial
advisers, accountants and counsel incurred in connection with the subject matter
of this Agreement.
13.8 Specific Performance; Remedies. Each party hereto acknowledges that
the other parties will be irreparably harmed and that there will be no adequate
remedy at law for any violation by any of them of any of the covenants or
agreements contained in this Agreement, including without limitation, the
noncompetition provisions set forth in Article 11 and the confidentiality
obligations set forth in Article 12. It is accordingly agreed that, in addition
to any other remedies
48
which may be available upon the breach of any such covenants or agreements, each
party hereto shall have the right to obtain injunctive relief to restrain a
breach or threatened breach of, or otherwise to obtain specific performance of,
the other parties, covenants and agreements contained in this Agreement.
13.9 Notices. Any notice, request, claim, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
telefax (with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
If to USFloral, Newco or the Surviving Corporation to:
U.S.A. Floral Products, Inc.
0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxx
Xxxxxxxxxx XX 00000
Attn: Xxxxxx X. Xxxxxxx
Chairman, President and Chief Executive Officer
(Telefax: (000) 000-0000)
with a required copy to:
Xxxxx X. Xxxxxx, Esquire
Xxxxxx, Xxxxx & Bockius LLP
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
(Telefax: (000) 000-0000)
If to any Stockholder or any Beneficial Owner to:
c/o Xxxxxxxx Xxxxxxxxx
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
(Telefax: (000) 000-0000)
with a required copy to:
Xxxxxx & Xxxxx
0000 Xxxxx Xxxxxx
000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
(Telefax: (000) 000-0000)
49
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
13.10 Governing Law; Legal Action. This Agreement shall be governed by
and construed, interpreted and enforced in accordance with the laws of the
State of Delaware, without giving effect to any of the conflicts of laws
provisions thereof that would require the application of the substantive laws of
any other jurisdiction. All parties hereto: agree that any legal action or
proceeding under this Agreement may be brought in the courts of the State of
Florida located in Dade County or in the United States District Court for the
Southern District of Florida; (b) irrevocably submit to the jurisdiction of such
courts; (c) agree not to assert any claim or defense that it is not personally
subject to the jurisdiction of such courts, and that any such forum is not
convenient or the venue thereof is improper, or that this Agreement or the
subject matter hereof may not be enforced in such courts; and (d) agree to
accept service of process on it by certified or registered mail or by any other
method authorized by law.
13.11 Severability. If any provision of this Agreement or the application
thereof to any person or circumstances is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such person or circumstances in any other jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.
The preceding sentence is in addition to and not in place of the severability
provisions in Section 11.4.
13.12 Absence of Third Party Beneficiary Rights. No provision of this
Agreement is intended, nor will any provision be interpreted, to provide or to
create any third party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, shareholder, employee or partner of any party
hereto or any other person or entity.
13.13 Further Representations. Each party to this Agreement acknowledges
and represents that it has been represented by its own legal counsel in
connection with the transactions contemplated by this Agreement, with the
opportunity to seek advice as to its legal rights from such counsel. Each party
further represents that it is being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences.
13.14 Accounting Terms. Except as otherwise expressly provided herein
or in the Schedules, all accounting terms used in this Agreement shall be
interpreted, and all financial statements, Schedules, certificates and reports
as to financial matters required to be delivered hereunder shall be prepared, in
accordance with GAAP consistently applied.
[Execution Pages Following]
50
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
U.S.A. FLORAL PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxxx
Chairman, President & Chief Executive Officer
EFTA ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxxx
President
[Signatures Continued on Following Page]
51
ELITE FARMS, A GENERAL PARTNERSHIP
By Talent, Inc., a general partner
By: /s/ Xxxxxxxx Jaramllo V.
-----------------------------------------------
Xxxxxxxx Xxxxxxxxx V.
President
By Anvacu, Inc., a general partner
By: /s/ Xxxxxxxx Jaramllo V.
-----------------------------------------------
Xxxxxxxx Xxxxxxxxx V.
Vice President
TALENT, INC.
By: /s/ Xxxxxxxx Jaramllo V.
-----------------------------------------------
Xxxxxxxx Xxxxxxxxx V.
President
ANVACU, INC.
By: /s/ Xxxxxxxx Jaramllo V.
-----------------------------------------------
Xxxxxxxx Xxxxxxxxx V.
Vice President
[Signatures Continued on Following Page]
52
STOCKHOLDERS:
/s/ Xxxxxxxx Jaramllo V.
--------------------------------------------------
Xxxxxxxx Xxxxxxxxx V.
/s/ Xxxxxx Xxxxxx
--------------------------------------------------
Xxxxxx Xxxxxx
XXXXXX XXXXXX S.A.
By: /s/ Xxxxx Xxxxxxxx Xxxxxxxx
--------------------------------------------------
Name: Xxxxx Xxxxxxxx Xxxxxxxx
Title:
XXXXXX DEL LAGO LTDA.
By: /s/ Xxxxx Xxxx
--------------------------------------------------
Name: Xxxxx Xxxx
Title: Legal Representative
XXXX ASOCIADOS LTDA.
By: /s/ Xxxxxxx Xxxxx
--------------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Manager
LOS GERANIOS LTDA.
By: /s/ Xxxx Xxxxxxx Xxxx
--------------------------------------------------
Name: Xxxx Xxxxxxx Xxxx
Title: Legal Representative
XXXXXX DE LA XXXX LTDA.
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Legal Representative
[Signatures Continued on Following Page]
53
BENEFICIAL OWNERS:
/s/ Xxxx Xxxxxxx Xxxxxxxx
---------------------------------
Xxxx Xxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx Xxxxxxxx
---------------------------------
Xxxxx Xxxxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx
/s/ Xxxxx Xxxx
---------------------------------
Xxxxx Xxxx
/s/ Efraun Xxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx Xxxxx
/s/ Xxxxxx Xxxxx xx Xxxxx
---------------------------------
Xxxxxx Xxxxx xx Xxxxx
/s/ Xxxxxxxx Xxxxxxx xx Xxxxx
---------------------------------
Xxxxxxxx Xxxxxxx xx Xxxxx
/s/ Xxxxxxx Xxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxx Xxxxx
/s/ Xxxx Xxxxxx Xxxxx
---------------------------------
Xxxx Xxxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxx
/s/ Xxxx Xxxxxxx Mesa
---------------------------------
Xxxx Xxxxxxx Mesa
/s/ Xxxxxxxx Xxxx
---------------------------------
Xxxxxxxx Xxxx
[Signatures Continued on Following Page]
54
/s/ Xxxx Xxxxxxx Xxxxxxxx
---------------------------------
Xxxx Xxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxxx
---------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxx
55
SCHEDULES
SCHEDULE 1.1 [Form of Plan of Merger]
SCHEDULES TO ARTICLE 5 [Schedules of exceptions to the representations and
warranties]
SCHEDULE 7.3 [Related Party Agreements]
SCHEDULE 8.9 [Form of Employment Agreement]
SCHEDULE 8.12 [List of Farms]
ANNEXES
ANNEX I [Form of Flower Supply Agreement]
The Schedules and Annexes to this Agreement will be provided to the Commission
supplementally upon request.
56
