Exhibit 2.1
PURCHASE AGREEMENT
By and Among
U.S.A. Floral Products, Inc.,
CFL Acquisition Corp.,
ABCL Acquisition Corp.,
Continental Farms Limited,
Atlantic Bouquet Company Limited,
Continental Farms Management, Inc.
and
The Limited Partners Named Therein
made effective as of January 20, 1998
Table of Contents
Page
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1. SALE................................................................. 1
1.1 Agreement to Sell............................................ 1
1.2 Agreement to Purchase........................................ 2
2. CONSIDERATION AND EXCHANGE........................................... 2
2.1 Consideration................................................ 2
2.2 Exchange of Interests and Payment of Cash.................... 3
3. POST-CLOSING ADJUSTMENT; PLEDGED ASSETS.............................. 4
3.1 Post-Closing Adjustment...................................... 4
3.2 Pledged Assets............................................... 5
3.3 Sellers' Representative...................................... 6
4. CLOSING.............................................................. 7
5. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIPS AND THE SELLERS... 7
5.1 Due Organization............................................ 7
5.2 Authorization; Validity..................................... 8
5.3 No Conflicts................................................ 8
5.4 Interests; Manager Stockholders............................. 8
5.5 Transactions in Partnership Interests....................... 8
5.6 Subsidiaries, Stock, and Notes.............................. 9
5.7 Predecessor Status.......................................... 9
5.8 Absence of Claims Against the Partnerships.................. 9
5.9 Partnerships' Financial Conditions ......................... 9
5.10 Financial Statements........................................ 9
5.11 Liabilities and Obligations................................. 10
5.12 Accounts and Notes Receivable............................... 10
5.13 Books and Records........................................... 11
5.14 Permits..................................................... 11
5.15 Real Property .............................................. 11
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
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5.26 Deposit Accounts; Powers of Attorney....................... 26
5.27 Environmental Matters...................................... 27
5.28 Relations with Governments................................. 28
5.29 Disclosure................................................. 28
5.30 USFloral Prospectus; Securities Representations............ 28
5.31 Affiliates................................................. 29
5.32 Location of Chief Executive Offices........................ 29
5.33 Location of Equipment and Inventory........................ 29
6. REPRESENTATIONS OF USFLORAL AND THE NEWCO........................... 29
6.1 Due Organization........................................... 29
6.2 USFloral Common Stock...................................... 30
6.3 Authorization; Validity of Obligations..................... 30
6.4 No Conflicts............................................... 30
6.5 Capitalization of USFloral and Ownership of
USFloral Stock........................................... 30
6.6 WARN Act................................................... 31
6.7 SEC Filings................................................ 31
7. COVENANTS........................................................... 31
7.1 Tax Matters................................................ 31
7.2 Accounts Receivable ....................................... 32
7.3 Title Insurance and Surveys................................ 32
7.4 Related-Party Agreements................................... 33
7.5 Cooperation................................................ 34
7.6 Conduct of Business Pending Closing........................ 34
7.7 Access to Information...................................... 35
7.8 Prohibited Activities...................................... 35
7.9 Sales of USFloral Common Stock............................. 37
7.10 USFloral Stock Options..................................... 38
7.11 Board of Directors Proposal................................ 38
7.12 Survival of Partnerships................................... 39
7.13 Tax Position............................................... 39
7.14 Announcement............................................... 39
7.15 Bank Approval.............................................. 39
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF USFLORAL AND
THE NEWCOS.......................................................... 39
8.1 Representations and Warranties; Performance
of Obligations........................................... 39
8.2 No Litigation.............................................. 39
8.3 No Material Adverse Change................................. 40
8.4 Consents and Approvals..................................... 40
8.5 Opinion of the Partnerships' Counsel....................... 40
8.6 Opinions of Accountants and Tax Counsel.................... 40
8.7 Opinion of the Trusts' Counsel............................. 40
8.8 Charter Documents.......................................... 40
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8.9 Quarterly Financial Statements............................. 40
8.10 [Intentionally omitted.]................................... 40
8.11 Delivery of Closing Financial Certificate.................. 40
8.12 FIRPTA Compliance.......................................... 42
8.13 Employment Agreements...................................... 42
8.14 Release.................................................... 42
8.15 Related-Party Indebtedness................................. 42
8.16 Flower Supply Agreement.................................... 42
8.17 Tax Escrow Agreement....................................... 42
8.18 Board Approval............................................. 42
8.19 Bank Approval.............................................. 42
8.20 Personal Guaranties........................................ 42
8.21 Promissory Note............................................ 42
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTNERSHIPS AND THE
SELLERS............................................................. 43
9.1 Representations and Warranties; Performance of
Obligations.............................................. 43
9.2 No Litigation.............................................. 43
9.3 Consents and Approvals..................................... 43
9.4 Employment Agreements...................................... 43
9.5 Tax Escrow Agreement....................................... 44
10. INDEMNIFICATION..................................................... 44
10.1 General Indemnification by the Sellers..................... 44
10.2 Limitation and Expiration.................................. 45
10.3 Indemnification Procedures................................. 46
10.4 Survival of Representations Warranties and Covenants....... 48
10.5 Sole Remedy................................................ 48
10.6 Right to Set Off........................................... 48
11. NONCOMPETITION....................................................... 48
11.1 Prohibited Activities....................................... 48
11.2 Damages..................................................... 49
11.3 Reasonable Restraint........................................ 49
11.4 Severability; Reformation................................... 49
11.5 Independent Covenant ....................................... 50
11.6 Materiality ................................................ 50
12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION............................ 50
12.1 Sellers..................................................... 50
12.2 USFloral.................................................... 50
12.3 Damages..................................................... 51
13. GENERAL.............................................................. 51
13.1 Termination................................................. 51
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13.2 Effect of Termination....................................... 51
13.3 Successors and Assigns...................................... 52
13.4 Entire Agreement; Amendment; Waiver......................... 52
13.5 Counterparts................................................ 52
13.6 Brokers and Agents.......................................... 52
13.7 Expenses ................................................... 53
13.8 Specific Performance; Remedies.............................. 53
13.9 Notices..................................................... 53
13.10 Governing Law; Legal Action................................. 54
13.11 Severability................................................ 55
13.12 Absence of Third-Party Beneficiary Rights................... 55
13.13 Further Representations..................................... 55
13.14 Accounting Terms............................................ 55
14. DEFINITIONS.......................................................... 55
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made and entered into this
20th day of January, 1998, by and among U.S.A. Floral Products, Inc., a Delaware
corporation ("USFloral"), CFL Acquisition Corp. and ABCL Acquisition Corp., each
a Delaware corporation and a newly-formed, wholly-owned subsidiary of USFloral
(each a "Newco" and together the "Newcos"), the holders of the limited
partnership interests (the "LP Interests") in both Continental Farms Limited, a
Florida limited partnership ("Continental Farms"), Atlantic Bouquet Company
Limited, a Florida limited partnership ("Atlantic Bouquet" and, together with
Continental Farms, the "Partnerships" and each separately, a "Partnership")
listed as limited partners on the signature page hereto (the holders of the
Class A LP Interests (Fiduciary Trust (Cayman) Limited, as trustee for the Joya
Trust dated November 27, 1995, Fiduciary Trust (Cayman) Limited, as trustee for
the Xxxxxxxxx Trust dated November 27, 1995 and Fiduciary Trust (Cayman)
Limited, as trustee for the Relic Trust dated November 27, 1995) being referred
to collectively as the "Trusts" and the holders of the Class B interests listed
thereon being referred to collectively as "Management") collectively the
"Limited Partners"), and Continental Farms Management, Inc., a Florida
corporation and the general partner of each Partnership (the "Manager" and
together with the Limited Partners, the "Sellers" and each separately, a
"Seller"), which holds all of the general partnership interests ("GP Interests,"
and together with the LP Interests, the "Partnership Interests") in the
Partnerships.
BACKGROUND
WHEREAS, the Boards of Directors of the Newcos deem it advisable and in
the best interest of each Newco and its stockholders that such Newco purchase
from the Sellers all of the Sellers' right, title and interest in and to the
applicable Partnership Interests pursuant to this Agreement; and
WHEREAS, the Sellers desire to sell to the Newcos all of the Sellers'
right, title and interest in and to the Partnership Interests pursuant to this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual benefits to
be derived from this Agreement 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. SALE AND PURCHASE
1.1 Agreement to Sell. On the Closing Date hereunder (as defined in
Article 4), the Sellers shall sell, assign and transfer
(a) to CFL Acquisition Corp., 99% of the Partnership Interests in
Continental Farms (as limited partner) and 1% of the Partnership Interests in
Atlantic Bouquet (as general partner),
(b) to ABCL Acquisition Corp., 1% of the Partnership Interests in
Continental Farms (as general partner),
in each case upon and subject to the terms and conditions of this Agreement,
such that, upon such sale, assignment and transfer, the Newcos shall be the
holder of 100% of the Partnership Interests, free and clear of all liens,
pledges, security interests, charges, claims, restrictions and other
encumbrances of any nature whatsoever.
1.2 Agreement to Purchase. On the Closing Date hereunder, the Newcos
shall purchase the Partnership Interests from the Sellers, as aforesaid, upon
and subject to the terms and conditions of this Agreement and upon the
representations and warranties contained herein, and will deliver the
Consideration defined in Section 2.1.
2. CONSIDERATION AND EXCHANGE
2.1 Consideration.
(a) For purposes of this Agreement, the "Consideration" shall be $55.0
million adjusted pursuant to this Section 2.1 and Section 3.1. Of the
Consideration:
(i) in exchange for the Class A LP Interests in the Partnerships,
(A) $19,186,636 shall be paid pro rata to the Limited Partners who are
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holders of Class A LP Interests in the Partnerships in cash at Closing in
immediately available funds; and
(B) $19,186,636 shall be paid pro rata to the Limited Partners who are
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holders of Class A LP Interests in the Partnerships in 1,146,086 shares of
USFloral common stock, par value $.001 per share ("USFloral Common Stock"),
valued at $16.741 per share (the "Closing Price");
(ii) in exchange for the Class B LP Interests in the Partnerships,
(A) $8,038,364 shall be paid to the Limited Partners who are holders
of Class B LP Interests in the Partnerships in cash at Closing in immediately
available funds in the respective amounts set forth on Schedule 2.1(a)(ii); and
(B) $8,038,364 shall be paid to the Limited Partners who are holders
of Class B LP Interests in the Partnerships in 480,160 shares of USFloral Common
Stock at the Closing Price in the respective amounts set forth on Schedule
2.1(a)(ii); and
(iii) in exchange for the GP Interests in the Partnerships,
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(A) $275,000 shall be paid to the Manager in cash at Closing in
immediately available funds and
(B) $275,000 shall be paid to the Manager in 16,426 shares of USFloral
Common Stock at the Closing Price.
At Closing, the 1,642,672 shares of USFloral Common Stock to be issued to
Sellers (subject to adjustment as provided in this Section 2.1 and Section 3.1)
shall be registered under the Securities Act of 1933, as amended (the "1933
Act"). In reliance upon the opinions to be delivered at Closing pursuant to
Section 8.6 hereof, USFloral shall not withhold any amounts in respect of United
States federal income tax or other tax from the cash to be distributed to the
Sellers at Closing.
(b) The Consideration has been calculated based upon several factors,
including the assumption that the net worth of the Partnerships, calculated in
accordance with generally accepted accounting principles ("GAAP") and the
Partnerships' accounting practices consistently applied, is equal to or greater
than $6,698,000 (the "Net Worth Target") (i) as of the Closing and (ii) as of
December 31, 1997.
(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 Consideration to be delivered to the Sellers 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(b)), 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
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cash and in USFloral Common Stock valued at the Closing Price in the same
proportions as the cash and USFloral Common Stock components of the
Consideration as provided in Section 2.1(a)).
2.2 Exchange of Interests and Payment of Cash.
(a) In exchange for the Partnership Interests, USFloral shall pay to
the Sellers the Consideration as adjusted pursuant to Section 2.1 and Section
3.1. The certificates evidencing the USFloral Common Stock component of the
Consideration shall bear appropriate legends pursuant to the terms of this
Agreement, and USFloral shall be entitled to issue appropriate stop transfer
instructions to its transfer agent consistent with the terms of this Agreement.
No fractional shares of USFloral Common Stock shall be issued, but in lieu
thereof each Seller 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 Closing Price, 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 Seller shall be aggregated, so that no Seller shall
receive cash in an amount greater than the value of one full share of USFloral
Common Stock.
(b) All USFloral Common Stock and cash to be delivered (including
USFloral Common Stock delivered pursuant to Section 3.2(b) but withheld) on the
Closing Date in accordance with the terms hereof shall be deemed to have been
delivered in full satisfaction of and as full
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payment for all Partnership Interests, and following the Closing Date the
Sellers shall have no further rights to, or ownership in, the Partnerships.
3. POST-CLOSING ADJUSTMENT; PLEDGED ASSETS
3.1 Post-Closing Adjustment.
(a) The Consideration shall be subject to adjustment after the Closing
Date as specified in this Section 3.1.
(b) Following the Closing Date, USFloral shall cause Price Waterhouse
LLP ("USFloral's Accountant") to audit the Partnerships' books to determine the
accuracy of the information set forth on the Closing Financial Certificate (the
"Post-Closing Audit") with the expectation that the Post-Closing Audit shall be
completed by May 15, 1998. The parties acknowledge and agree that for purposes
of determining the net worth of the Partnerships as of the Closing Date, the
value of the assets of the Partnerships shall, except with the prior written
consent of USFloral, be calculated as provided in the last paragraph of Section
8.11. Each Seller shall cooperate and shall use reasonable efforts to cause the
officers and employees of the Partnerships and the Manager 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. Without limiting the generality of the foregoing, within two weeks
after the Closing the Sellers shall provide USFloral's Accountant with the
information and/or documents requested on the Post-Closing Audit Checklist set
forth as Schedule 3.1 hereto. In the event that USFloral's Accountant determines
that the actual Partnerships' 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 Sellers' Representative, as defined in
Section 3.3, setting forth (i) the determination made by USFloral's Accountant
of the actual Partnerships' net worth (the "Actual Partnerships' Net Worth"),
(ii) the amount of the Consideration that would have been payable at Closing
pursuant to Section 2.1(c) had the Actual Partnerships' 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 Consideration
would have been reduced at Closing had the Actual Partnerships' Net Worth been
used in the calculations pursuant to Section 2.1(c) (the "Consideration
Adjustment"). The Consideration Adjustment shall take account of the reduction,
if any, to the Consideration already taken pursuant to Section 2.1(c)(i).
(c) The Sellers' Representative shall have thirty days from the
receipt of the Financial Adjustment Notice to notify USFloral if any Seller
disputes such Financial Adjustment Notice. If USFloral has not received notice
of such a dispute within such thirty-day period, USFloral shall be entitled to
receive from the Sellers the Consideration Adjustment (which USFloral shall be
obligated to take first from the Pledged Assets, as defined in Section 3.2, up
to an amount not to exceed one-half of the Pledged Assets then remaining). If,
however, the Sellers' Representative have delivered notice of such a dispute to
USFloral within such thirty-day period, then Deloitte & Touche
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LLP ("D&T") shall review the Partnerships' books, Closing Financial Certificate
and Financial Adjustment Notice (and related information) to determine the
amount, if any, of the Consideration Adjustment. If D&T has an actual conflict
of interest arising from such appointment or would otherwise fail to be deemed
"independent" with respect to any party hereto, then USFloral's Accountant
shall, with the advice and consent of USFloral and the Sellers (which consent
will not be unreasonably withheld), select an independent accounting firm that
has not represented any of the parties hereto within the preceding two years to
review the Partnerships' books, Closing Financial Certificate and Financial
Adjustment Notice (and related information) to determine the amount, if any, of
the Consideration Adjustment. Such independent accounting firm shall be
confirmed by the Sellers' Representative and USFloral within five days of its
selection, unless there is an actual conflict of interest. Either D&T or the
independent accounting firm, as the case may be, 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
Consideration Adjustment, if any, within thirty days of its selection. The
determination made by the independent accounting firm shall be final and binding
on the parties hereto, absent manifest error, and upon such determination,
USFloral shall be entitled to receive from the Sellers the Consideration
Adjustment (which USFloral shall be obligated to take from the Pledged Assets,
as defined in Section 3.2, up to an amount not to exceed one-half of the Pledged
Assets then remaining). The costs of the independent accounting firm shall be
borne by the party (either USFloral or the Sellers as a group) whose
determination of net worth at Closing was further from the determination of the
independent accounting firm, or equally by USFloral and the Sellers in the event
that the determination by the independent accounting firm is equidistant between
the Certified Closing Net Worth and the Actual Partnerships' Net Worth.
3.2 Pledged Assets.
(a) As collateral security for the payment of any Consideration
Adjustment under Section 3.1, and any indemnification obligations of the Sellers
pursuant to Article 10, the Sellers 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) that number of shares of USFloral Common Stock with a value, based
on the Closing Price equal to ten percent (10%) of each Seller's share of the
Consideration as the same may have been adjusted pursuant to Section 2.1 or
Section 3.1 hereof, and the certificates and instruments, if any, representing
or evidencing each such Seller's Pledged Assets;
(ii) all securities hereafter delivered to such Seller with respect to
or in substitution for such Seller'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 any Seller receives any such property, such Seller shall hold such
property in trust for
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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 issued certificate, if any, evidencing a Seller's Pledged
Assets 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 Seller shall, at
the Closing, deliver to USFloral, for each such certificate, a stock power duly
signed in blank. Any cash comprising a Seller's Pledged Assets shall be
withheld by USFloral from distribution to such Seller.
(c) The Pledged Assets shall be available to satisfy any post-Closing
adjustment to the Consideration pursuant to Section 3.1 and any indemnification
obligations of the Sellers pursuant to Article 10, until the date which is one
year after the Closing Date (the "Release Date"). Promptly following the Release
Date, USFloral shall return or cause to be returned to the Sellers the Pledged
Assets, less Pledged Assets having an aggregate value equal to the amount of (i)
any Consideration Adjustment under Section 3.1, (ii) any pending claim made in
good faith by any Indemnified Party (as defined in Section 10.1) for
indemnification in accordance with the provisions for making claims under
Article 10, and (iii) any amounts paid in satisfaction of indemnification
obligations of the Sellers 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 Closing Price with respect to any Consideration Adjustment
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 ten trading days
prior to the satisfaction of an indemnification obligation (the "Market Value")
with respect to indemnification obligations pursuant to Article 10.
3.3 Sellers' Representative.
(a) Each Seller, by signing this Agreement, designates L. Xxxxx Xxxxx
or, in the event that L. Xxxxx Xxxxx is unable or unwilling to serve, Xxxxxxx X.
Xxxxxxxx to be the Sellers' Representative for purposes of this Agreement. In
the event that neither L. Xxxxx Xxxxx or Xxxxxxx X. Xxxxxxxx is willing or able
to serve, the Sellers may designate a Sellers' Representative by notice sent in
accordance with Section 13.9 hereof. The Sellers shall be bound by any and all
actions taken by the Sellers' Representative on their behalf.
(b) USFloral and the Newcos shall be entitled to rely upon any
communication or writings given or executed by the Sellers' Representative. All
communications or writings to be sent to any Sellers pursuant to this Agreement
may be addressed to the Sellers' Representative and any communication or writing
so sent shall be deemed notice to all Sellers hereunder. The Sellers hereby
consent and agree that the Sellers' Representative is authorized to accept
deliveries, including any notice, on their behalf pursuant hereto.
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(c) The Sellers' Representative is hereby appointed and constituted
the true and lawful attorney-in-fact of each Seller, with full power in his or
her name and on his or her behalf to act according to the terms of this
Agreement in his or her absolute discretion, 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 Sellers 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 Seller, by operation
of law, whether by such Seller's death or any other event.
4. CLOSING
The consummation of this transaction and the other transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx, Xxxxx & Bockius LLP, 5300 First Union Financial Center, 000 Xxxxx
Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx 00000-0000, on January 23, 1998, providing
that all conditions to Closing shall have been satisfied or waived, or at such
other time and date as USFloral, the Partnerships and the Sellers may mutually
agree, which date shall be referred to as the "Closing Date."
5. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIPS AND THE SELLERS
To induce USFloral and the Newcos to enter into this Agreement and
consummate the transactions contemplated hereby, each Partnership and each
Seller (including each stockholder of the Manager), jointly and severally,
represents and warrants to USFloral and the Newcos as follows (for purposes of
this Agreement, the phrases "knowledge of the Partnership" or the "Partnership's
knowledge," or words of similar import, mean the knowledge of any Seller or any
stockholder of the Manager, including facts of which any Seller or any
stockholder of the Manager, in the reasonably prudent exercise of his or its
respective duties, should be aware):
5.1 Due Organization. Each Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of Florida 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 on the business,
operations, properties, assets or condition, financial or otherwise, of either
Partnership ("Material Adverse Effect"). Schedule 5.l hereto contains a list of
all jurisdictions in which each Partnership is authorized or qualified to do
business. Each Partnership is in good standing in each jurisdiction it which it
does business. Each Partnership has delivered to USFloral true, complete and
correct copies of the limited partnership agreement of such Partnership.
Neither Partnership is in violation of its limited partnership agreement.
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5.2 Authorization; Validity. Each Partnership has the full legal right,
requisite power and authority to enter into this Agreement and the transactions
contemplated hereby and to perform the obligations detailed herein. Each Seller
has the full legal right, power and authority to enter into this Agreement and
the transactions contemplated hereby and to perform the obligations detailed
herein. The execution and delivery of this Agreement by each Partnership and
the performance by each Partnership of the transactions contemplated herein has
been duly and validly authorized by its respective Sellers, including all
necessary corporate action by the Board of Directors and stockholders of the
Manager. This Agreement is a legal, valid and binding obligation of each
Partnership and each Seller, 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:
(a) conflict with, or result in a breach or violation of, either
Partnership's limited partnership agreement;
(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 either Partnership
or any Seller is a party or by which either Partnership or any Seller is bound,
or result in the creation or imposition of any lien, charge or encumbrance on
either of the Partnership's properties pursuant to (i) any law or regulation to
which either Partnership or any Seller or any of their respective property is
subject, or (ii) any judgment, order or decree to which either Partnership or
any Seller 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 either Partnership; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which either Partnership or any Seller is subject or by which
either Partnership or any Seller 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 Interests; Manager Stockholders. Schedule 5.4 sets forth (a) all of
the outstanding Partnership Interests of the Partnerships and the holders
thereof and (b) all of the owners of outstanding equity interests of the Manager
and the number of shares and relative percentage ownership held by each.
5.5 Transactions in Partnership Interests. No option, other right or
other contract or commitment of any kind exists of any character, written or
oral, which may obligate either Partnership to issue, sell or otherwise cause to
become outstanding any additional Partnership Interests. The Manager has no
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 transactions
contemplated hereby, the Newcos will
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be the record and beneficial owner of 100% of the Partnership Interests, free
and clear of all liens, pledges, security interests, charges, claims,
restrictions and other encumbrances of any nature whatsoever.
5.6 Subsidiaries, Stock, and Notes.
(a) Except as set forth on Schedule 5.6(a), neither Partnership holds
any interest in any other entity, directly or indirectly.
(b) Except as set forth on Schedule 5.6(b), neither Partnership
presently 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 either
Partnership, directly or indirectly, a participant in any joint venture,
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, either Partnership.
5.7 Predecessor Status. Schedule 5.7 sets forth a list of all names of
all predecessor business entities of each of the Partnerships, including the
names of any entities from which either of the Partnerships' previously acquired
significant assets. Neither Partnership has ever been a subsidiary or division
of another entity, nor has it been a part of an acquisition that was later
rescinded.
5.8 Absence of Claims Against the Partnerships. No Seller has any claims
against either Partnership.
5.9 Partnerships' Financial Conditions. The Partnerships' combined net
worth (i) as of the end of its most recent fiscal year ending prior to December
31, 1997 was not less than $6,698,000, 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.
5.10 Financial Statements. Schedule 5.10 includes (a) true, complete and
correct copies of the Partnerships' combined balance sheet as of its fiscal year
ended December 31, 1996, and combined income statement for the year ended
December 31, 1996 reviewed by Xxxxxxx Xxxxx & Xxxxx, certified public
accountants and consultants (collectively, the "Reviewed Financials") and (b)
true, complete and correct copies of the Partnerships' combined balance sheet
(the "Interim Balance Sheet") as of September 30, 1997 (the "Balance Sheet
Date") and combined income statement, for the nine-month period then ended
(collectively, the "Interim Financials," and together with the Reviewed
Financials, the "Partnerships' Financial Statements"). Except as noted in the
notes to the Reviewed Financials, the Partnerships' Financial Statements have
been prepared in accordance with GAAP consistently applied, subject to, in the
case of the Interim Financials, (i) normal year-end adjustments, which
individually or in the aggregate will not be material, (ii) the exceptions
stated
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on Schedule 5.10, and (iii) the omission of footnote information. Each combined
balance sheet included in the Partnerships' Financial Statements presents fairly
the financial condition of the Partnerships as of the date indicated thereon and
on the basis indicated thereon, and each of the combined income statements
included in the Partnerships' Financial Statements presents fairly the results
of its operations for the periods indicated thereon and on the basis indicated
thereon. Since the dates of the Partnerships' Financial Statements, there have
been no material changes in either Partnership's accounting policies other than
as requested by USFloral to conform each Partnership's accounting policies to
GAAP.
5.11 Liabilities and Obligations.
(a) The Partnerships are 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.
(b) Each 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) 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 either Partnership has made any material expenditure in the
two-year period prior to the date of this Agreement, which if pursued by either
of the Partnerships or the Newcos would require additional material expenditures
of capital.
(d) 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 each Partnership.
5.12 Accounts and Notes Receivable. Each Partnership has delivered to
USFloral a complete and accurate list, as of a date not more than two business
days prior to the date hereof, of the accounts and notes receivable of such
Partnership (including without limitation receivables from
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and advances to employees and the Sellers), 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, each Partnership
will deliver to USFloral a complete and accurate list, as of a date not more
than two 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. The
Accounts Receivable are current and collectible net of any respective reserves
shown on each Partnership's respective books and records (which reserves are
adequate and calculated consistent with past practice). Subject to such
reserves, each of the Accounts Receivable will be collected in full, without any
set-off, within ninety 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. Except as set forth on Schedule 5.13, each
Partnership has made and kept books and records and accounts, which, in
reasonable detail, accurately and fairly reflect its activities. Neither
Partnership has 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. Each 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 neither Partnership has 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 either 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. Each Partnership has
conducted and is conducting its respective business in compliance with the
requirements, standards, criteria and conditions set forth in the Permits and
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 either 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 either Partnership, together with any additions thereto or
replacements thereof.
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(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 each Partnership's knowledge, 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)(collectively, "Liens"). Schedule 5.15(b) indicates whether the
Real Property is owned or leased. The Real Property listed on Schedule 5.15(b)
includes all interests in real property necessary to conduct the business and
operations of the Partnerships.
(c) Except as set forth in Schedule 5.15(c):
(i) Each Partnership has good and marketable undivided and insurable
title to the Real Property free and clear of any Liens other than (A) liens for
current taxes not yet due and payable, (B) easements, covenants, conditions,
restrictions, and title defects that have been approved by USFloral, as set
forth on Schedule 5.15(c)(i), and (C) liens securing indebtedness for borrowed
money having an outstanding principal balance at Closing not in excess of $1.0
million that USFloral or one of its affiliates has elected to assume, as set
forth on Schedule 5.15(c)(i) (collectively, "Permitted Encumbrances").
(ii) The legal descriptions for the Real Property contained in the
respective deeds thereof describe the properties fully and adequately. All
structures, facilities and improvements to the Real Property ("Structures") are
located within the boundary lines of the Real Property and no structures,
facilities or other improvements on any parcel adjacent to the Real Property
encroach onto any portion of the Real Property. The Structures do not encroach
on any easement which burdens any portion of the Real Property, and none of the
Real Property serves any adjacent parcel for any purpose inconsistent with the
use of the Real Property.
(iii) Each Partnership has good and valid rights of ingress and
egress to and from all Real Property from and to the public street systems for
all usual street, road and utility purposes.
(iv) Except as set forth on Schedule 5.15(c)(iv), all structures and
all structural, mechanical and other physical systems thereof that constitute
part of the Real Property, including but not limited to the walls, roofs and
structural elements thereof and the heating, ventilation, air conditioning,
plumbing, electrical, mechanical, sewer, waste water, storm water, paving and
parking equipment, systems and facility included therein, and other material
items at the Real Property (collectively, the "Tangible Assets"), are free of
defects and in good operating condition and repair. For purposes of this
Section, a defect shall mean a condition relating to the structures or any
structural, mechanical or physical system which requires an expenditure of more
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than $2,500 to correct. No maintenance or repair to the Real Property,
Structures or any Tangible Asset has been unreasonably deferred. There is no
water, chemical or gaseous seepage, diffusion or other intrusion into said
buildings, including any subterranean portions, that would impair beneficial use
of the Real Property, Structures or any Tangible Asset. Schedule 5.15(c)(iv)
contains a good faith estimate of the amounts needed to be expended for
corrections hereunder; the cost of corrections undertaken by USFloral or its
designees to the items indicated on such Schedule shall not exceed the
respective estimated expenditures set forth thereon.
(v) All water, sewer, gas, electric, telephone and drainage
facilities, and all other utilities required by any applicable law or by the use
and operation of the Real Property in the conduct of the Partnerships'
businesses are installed to the property lines of the Real Property, enter the
Real Property through adjoining public streets, are connected pursuant to valid
permits to municipal or public utility services or proper drainage facilities,
are fully operable and are adequate to service the Real Property in the
operation of the Partnerships' businesses and to permit full compliance with the
requirements of all laws in the operation of such business. No fact or
condition exists which could result in the termination or material reduction of
the current access from the Real Property to existing roads or to sewer or other
utility services presently serving the Real Property. Each Real Property is an
independent unit which does not rely on any drainage, sewer, access, structural
or other facilities located on any property not included in such Real Property
(A) to fulfill any zoning, building code or other municipal or governmental
requirement, (B) for structural support, (C) to furnish to such Real Property
any essential building systems or utilities or (D) to fulfill the requirements
of any agreement affecting such Real Property. No building or other improvement
not included in any part of such Real Property relies on any part of such Real
Property to fulfill any zoning, building code or other municipal or governmental
requirement or for structural support or the furnishing of any building systems
or utility.
(vi) The Real Property and 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. Each Partnership has obtained all
approvals of governmental authorities (including certificates of use and
occupancy, licenses and permits) required in connection with the construction,
ownership, use, occupation and operation of the Real Property.
(vii) Except as set forth on Schedule 5.15(c)(vii), none of the
Structures, the appurtenances thereto or the equipment therein or the operation
or maintenance thereof, or the conduct of the Partnerships' businesses, violates
any restrictive covenant or encroaches on any property owned by others or any
easement, right of way or other Lien or restriction affecting such Real Property
in any respect. The Real Property and its continued use, occupancy and
operation as used, occupied and operated in the conduct of the Partnerships'
businesses does not constitute a
13
nonconforming use and is not the subject of a special use permit under any
applicable Law. No encroachment described in Schedule 5.15(c)(vii) is material
in extent or effect.
(viii) There are no pending or, to either 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 either Partnership
or any of the Sellers received notice of any pending or threatened special
assessment proceedings affecting any portion of the Real Property.
(ix) No portion of the Real Property or the Structures has suffered
any damage by fire or other casualty which has not heretofore been completely
repaired and restored to its original condition.
(x) There are no parties other than the Partnerships 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.
(xi) There are no outstanding options or rights of first refusal to
purchase the Real Property, or any portion thereof or interest therein. Neither
Partnership has transferred any air rights or development rights relating to the
Real Property.
(xii) There are no service contracts or other agreements relating to
the use or operation of the Real Property.
(xiii) No portion of the Real Property is located in a wetlands area,
as defined by Laws, or in a designated or recognized flood plain, flood plain
district, flood hazard area or area of similar characterization. No commercial
use of any portion of the Real Property will violate any requirement of the
United States Corps of Engineers or Laws relating to wetlands areas.
(xiv) All real property taxes and assessments that are due and
payable with respect to the Real Property have been paid or will be paid at or
prior to Closing.
(xv) All oral or written leases, subleases, licenses, concession
agreements or other use or occupancy agreements pursuant to which either
Partnership leases from any other party any real property, including all
amendments, renewals, extensions, modifications or supplements to any of the
foregoing or substitutions for any of the foregoing (collectively, the "Leases")
are valid and in full force and effect. Each 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 each Partnership's interests thereunder are free of all Liens.
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(xvi) None of the Leases requires the consent or approval of any
party thereto in connection with the consummation of the transactions
contemplated hereby and there exist no uncured defaults under any Lease.
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 either 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 Seller or business or personal
affiliates of any Seller or of either of the Partnerships.
(b) Each Partnership currently owns or leases all personal property
necessary to conduct the business and operations of such Partnership as it is
currently being conducted.
(c) All of the trucks and other material machinery and equipment of
the Partnerships, 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 Partnerships, and the Partnerships are not in breach
of any of their terms. All fixed assets used by the Partnerships that are
material to the operation of its business are either owned by the Partnerships
or leased under an agreement listed on Schedule 5.16(a).
5.17 Intellectual Property.
(a) The Partnerships are the true and lawful owner of, or are licensed
or otherwise possess 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 Partnerships now own
or use in connection with their business. Except with respect to those Marks
shown as licensed on Schedule 5.17(a), the Partnerships own all of the
registered and unregistered trademarks, service marks, and trade names that they
use. The Marks listed on Schedule 5.17(a) will not cease to be valid rights of
the Partnerships 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 all right, title and
interest in and to any United States or foreign trademarks, service marks and
trade names now held by the Partnerships, including any registration or
application for registration of any trademarks and service 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 Partnerships, and any
trade dress (including logos, designs, company names, business names, fictitious
names and other business identifiers) used by the Partnerships in the United
States or any foreign country.
15
(b) The Partnerships are the true and lawful owner of, or are licensed
or otherwise possess 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 Partnerships now own or are licensed to use.
The Partnerships own or are licensed to practice under all patents and copyright
registrations that the Partnerships now own or use in connection with their
businesses. For purposes of this Section 5.17, the term "Patent" shall mean any
United States or foreign patent to which either Partnership has title as of the
date of this Agreement, as well as any application for a United States or
foreign patent made by either Partnership; the term "Copyright" shall mean any
United States or foreign copyright owned by either 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 either
Partnership.
(c) The Partnerships are the true and lawful owner of, or are licensed
or otherwise possess 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 Partnerships now own or are licensed to use. The Partnerships own or are
licensed to practice under all trade secrets, franchises or similar rights that
they own, use or practice 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 Partnerships 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 Partnerships have no obligations to compensate any person
for the use of any Intellectual Property nor have the Partnerships 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 Partnerships have not, nor will they 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 either
Partnership, are threatened by any person, nor, to either 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 either Partnership infringes on any
copyright, patent, trademark, service xxxx or trade secret; (ii) against the use
by either Partnership of any trademarks, trade names, trade secrets, copyrights,
patents, technology, know-how or computer software programs and applications
used in either Partnership's business as currently conducted by either
Partnership; (iii) challenging the ownership, validity or effectiveness of any
of the Partnership Intellectual Property or other trade secret material to
either Partnership; or (iv) challenging either Partnership's license or legally
enforceable right to use of the Third-Party Intellectual Property. To each
Partnership's knowledge,
16
there is no unauthorized use, infringement or misappropriation of any of the
Partnership Intellectual Property by any third party. Neither of the
Partnerships nor any of their 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 such Partnership may be engaged in such
infringement or (y) has knowledge of any infringement liability with respect to,
or infringement by, such 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 Partnerships in the operation of their businesses is capable of
processing date data between and within the twentieth and twenty-first
centuries, or can be made so capable within 30 days and at an aggregate cost not
in excess of $2,500.
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 either 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 either Partnership and any affiliate of either
Partnership or any Seller are parties ("Related-Party Agreements"); or (ii) that
may give rise to obligations or liabilities exceeding, during the current term
thereof, $50,000, or that may generate revenues or income exceeding, during the
current term thereof, $50,000 (collectively with the Related-Party Agreements,
the "Material Contracts"). Each Partnership has delivered to USFloral true,
complete and correct copies of the Material Contracts. Each 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. Each Partnership is a party to all contracts,
commitments, leases, instruments, agreements, licenses or permits, written or
oral, which are necessary for the continued operation of its business as it is
currently being conducted.
(b) Each Material Contract, except those terminated pursuant to
Section 7.4, is valid and binding on the Partnership which is a signatory
thereto and is in full force and effect and currently is not subject to any
default thereunder by any party obligated to the Partnership which is a
signatory thereto. To each Partnership's knowledge, no basis for assertion of
default exists under any Material Contract, except those terminated pursuant to
Section 7.4, against any party obligated to the Partnership which is a signatory
thereto. Each Partnership 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 consummation of the underlying transaction and
17
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 either Partnership and any entity in which any of the Sellers own a
material interest, or (ii) guaranteed by either Partnership for the benefit of
any entity in which any of the Sellers own a material interest, are set forth in
Schedule 5.18(c).
(d) The pledge, hypothecation or mortgage of the Partnership Interests
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
Partnerships (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 either Partnership is a
party or by which the property of either Partnership is bound.
5.19 Government Contracts.
(a) Neither Partnership is a party to any government contracts.
(b) Neither Partnership has 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 either
Partnership, has any suspension or debarment action been threatened or
commenced. There is no valid basis for either 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) Neither Partnership has been, or is 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 either Partnership, has such audit or investigation been
threatened.
(d) Neither Partnership has any 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) Neither Partnership has, with respect to any government contract,
received a cure notice advising such Partnership that it is or was in default or
would, if it failed to take remedial action, be in default under such contract.
(f) Neither Partnership has submitted any inaccurate, untruthful, or
misleading cost or pricing data, certification, bid, proposal, report, claim, or
any other information relating to
18
a contract to any agency or instrumentality of the United States Government or
any state or local government.
(g) No Seller, employee, agent, consultant, representative, or
affiliate of either Partnership is in receipt or possession of any competitor or
government proprietary or procurement sensitive information related to such
Partnership's business under circumstances where there is reason to believe that
such receipt or possession is unlawful or unauthorized.
(h) Each Partnership's government contracts has been issued, awarded
or novated to such Partnership in that Partnership's name.
5.20 Insurance. Schedule 5.20 sets forth a complete and accurate list of
all insurance policies carried by the Partnerships and all insurance loss runs
or workmen's compensation claims received for the past two policy years. The
Partnerships have 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 each Partnership is
otherwise in full compliance with the terms of such policies. Such policies of
insurance are of the type and in amounts that are adequate for the conduct of
the Partnerships' businesses. To the knowledge of each Partnership, there have
been no threatened terminations of, or oral or written notice of pending or
anticipated 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 each Partnership:
(a) each 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 either Partnership pending or, to
either 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 either
Partnership's knowledge, threatened, against or directly affecting either
Partnership;
(d) to each Partnership's knowledge, no labor representation
organization effort exists nor has there been any such activity within the past
three years;
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(e) no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending and, to each Partnership's
knowledge, no claims therefor exist or have been threatened;
(f) the employees of the each Partnership are not and have never been
represented by any labor union, and no collective bargaining agreement is
binding and in force against either Partnership or currently being negotiated by
either Partnership; and
(g) all persons classified by either Partnership as independent
contractors do satisfy and have satisfied the requirements of law to be so
classified, and each 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
either Partnership, or to which either 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. Except as
set forth on Schedule 5.22, 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 Sellers; (ii) any
Plan; or (iii) the Partnerships 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 in Section 412(a) of the
Code and Section 302(1) of ERISA; and each 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),
20
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 Partnerships 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 Partnerships and the Partners 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 neither Partnership has any (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 such Partnership or the Sellers, 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 such Partnership or the Sellers with respect to
such group health plans;
(f) Both Partnerships are now and have been within the past five years
a member of a "controlled group" as defined in ERISA Section 4001(a)(14), the
only members of which are the Partnerships;
(g) there is no pending litigation, arbitration, or disputed claim,
settlement or adjudication proceeding, and to each 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) neither Partnership has incurred liability under Section 4062 of
ERISA.
5.23 Conformity with Law; Litigation.
(a) Except as set forth on Schedule 5.23(a), neither Partnership is 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 on such Partnership. Each 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
could reasonably be expected to have a Material Adverse Effect on such
Partnership.
(b) Notwithstanding the joint and several nature of the
representations and warranties set forth in this Article 5, each Seller
severally and not jointly represents and warrants that neither such Seller nor,
if applicable, any partner, officer, director or other controlling person of
such Seller, 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 a partner,
officer, director, manager, trustee or controlling shareholder of a business
entity 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 each Partnership,
threatened against or affecting either Partnership 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 either Partnership or against any of their
properties or businesses.
5.24 Taxes.
(a)
(i) The Manager, each Partnership and each Seller with respect to the
Partnerships 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.
22
(ii) The Manager, each Partnership and each Seller with respect to the
Partnerships has paid in full on a timely basis all Taxes owed by it, whether or
not shown on any Tax Return.
(iii) The amount of the Sellers' liability with respect to the
Partnerships 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
Sellers' 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 each Partnership on the
Closing Date.
(iv) Except as set forth on Schedule 5.24(a)(iv), there are no ongoing
examinations or claims against any Seller for Taxes with respect to the
Partnerships, and no notice of any audit, examination or claim for Taxes,
whether pending or threatened, has been received.
(v) Each Partnership has a taxable year ended on December 31, in each
year commencing January 1, 1996.
(vi) Each Partnership currently utilizes the accrual method of
accounting for income Tax purposes and such method of accounting has not changed
since the Partnerships' inception. Neither Partnership has 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) Each 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 each 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 either Partnership relating to or attributable to
Taxes.
(x) Except as set forth on Schedule 5.24(a)(x), to each 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 either Partnership or otherwise have an adverse effect on
either 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
23
either 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) Except as set forth on Schedule 5.24(a)(xii), neither
Partnership is, or has at any time been, a party to a tax sharing, tax indemnity
or tax allocation agreement, and neither Partnership has assumed the tax
liability of any other person under contract.
(xiii) Each 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) 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.
(c) For the purposes of this Section 5.24, each representation or
warranty made by any "Seller with respect to the Partnerships" shall be deemed
to have been made severally and not jointly by each such Seller (notwithstanding
the joint and several nature of the representations and warranties set forth in
this Section 5); provided, however, that the Trusts shall be jointly and
--------
severally liable for any breach of any representation or warranty set forth in
this Section 5.24 made by the Trusts.
5.25 Absence of Changes. Since the Balance Sheet Date, each of the
Partnerships and the Manager have conducted their businesses consistent with the
ordinary course of business and past actions and practices in the nine months
prior to the Balance Sheet Date (or, to the extent not inconsistent with such
nine-month period, in periods prior thereto) 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 either of the
Partnerships or the Manager;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties or business of either of the
Partnerships or the Manager;
24
(c) any declaration or payment of any distribution of either of the
Partnerships or the Manager other than up to $6.0 million in cash permitted to
be distributed to the Partners, prior to Closing, other than ordinary and
customary distributions to the Partners through Closing for the payment of
income taxes by the Partners which distributions are made in the ordinary course
of the Partnerships' business and in amounts not materially in excess of the tax
liabilities of the Partners subsequent to September 30, 1997, and other than the
payment of fees and expenses actually incurred by the Partnerships and the
Manager in connection with the subject matter of this Agreement made prior to or
at Closing (it being understood that no distribution or payment under this
subparagraph (c) or otherwise shall in any way vitiate or reduce the minimum net
worth requirements set forth in Section 3.1);
(d) any increase in the compensation, bonus, sales commissions or fee
arrangements payable or to become payable by either of the Partnerships or the
Manager to any of their respective partners, officers, directors, stockholders,
employees, consultants or agents, except for ordinary and customary bonuses and
salary or wage increases for employees in accordance with past practice and
other than the raise of approximately $100,000 received by Xxxxxx Xxxxxxxxx on
November 1, 1997;
(e) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, which has had a Material Adverse
Effect;
(f) any sale or transfer, or any agreement to sell or transfer, any
material assets property or rights of either of the Partnerships (including, but
not limited to Partnership Interests) or the Manager to any person, including
without limitation the Sellers and their affiliates;
(g) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to either of the Partnerships or the Manager, including
without limitation any indebtedness or obligation of the Sellers or their
stockholders and their respective affiliates, provided that either of the
Partnerships or the Manager may negotiate and adjust bills in the course of good
faith disputes with customers in a manner consistent with past practice;
(h) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of either of the Partnerships or the Manager or requiring consent of any
party to the transfer and assignment of any such assets, property or rights;
(i) 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 either of the Partnerships or the Manager;
(j) any waiver of any material rights or claims of either of the
Partnerships or the Manager;
25
(k) any breach, amendment or termination of any material contract,
agreement, license, permit or other right to which either of the Partnerships or
the Manager is a party;
(l) any transaction by either of the Partnerships or the Manager
outside the ordinary course of business;
(m) any capital commitment by either of the Partnerships or the
Manager, either individually or in the aggregate, exceeding $50,000;
(n) any creation or assumption by either of the Partnerships or the
Manager 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);
(o) any entry into, amendment of, relinquishment, termination or non-
renewal by either of the Partnerships or the Manager of any contract, lease
transaction, commitment or other right or obligation requiring aggregate
payments by either of the Partnerships or the Manager in excess of $50,000;
(p) any loan by either of the Partnerships or the Manager to any
person or entity, incurring by either of the Partnerships or the Manager, of any
indebtedness, guaranteeing by either of the Partnerships or the Manager of any
indebtedness, issuance or sale of any debt securities of either of the
Partnerships or the Manager or guaranteeing of any debt securities of others;
(q) the commencement or notice or, to the knowledge of either of the
Partnerships or the Manager, threat of commencement, of any lawsuit or
proceeding against, or investigation of, either of the Partnerships or the
Manager or any of its affairs; or
(r) negotiation or agreement by either of the Partnerships or the
Manager or any officer, director or employee thereof to do any of the things
described in the preceding clauses (a) through (q) (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 each Partnership
has any account or safe deposit box;
(b) the names in which the accounts or boxes are held;
(c) the type of account;
26
(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 each 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, 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 either 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 either Partnership.
(b) Hazardous Materials Activities. Neither Partnership has
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 either Partnership disposed of, transported,
sold, or manufactured any product containing a Hazardous Material (collectively,
"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. Each Partnership currently holds all environmental
approvals, permits, licenses, clearances and consents (the "Environmental
Permits") necessary for the conduct of the Partnership Hazardous Material
Activities and other business of each Partnership as such activities and
business are currently being conducted. All Environmental Permits are in full
force and effect. Each 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 each Partnership's knowledge, there are
no circumstances that may prevent or interfere with such compliance in the
future. Schedule 5.27(c) includes a listing and description of all
Environmental Permits currently held by each Partnership.
27
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
knowledge of either 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 either Partnership (or any person or entity whose
liability either Partnership has retained or assumed, either by contract or
operation of law) in any environmental litigation, or impose upon either
Partnership (or any person or entity whose liability either 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. Each Partnership has not made, offered
or agreed to offer anything of value to any governmental official, political
party or candidate for government office, nor has it otherwise taken any action
that would cause either Partnership to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any law of similar effect.
5.29 Disclosure. Each Partnership has delivered to USFloral and the
Newcos 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, prior to
Closing, any Seller becomes aware of any fact or circumstance which would change
a representation or warranty of any Seller in this Agreement or any
representation made on behalf of either Partnership, the Seller shall
immediately give notice of such fact or circumstance to USFloral. However, such
notification shall not relieve either Partnership or the Sellers 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
Partnerships and Sellers, 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 Seller has
received and reviewed a copy of the prospectus dated November 18, 1997 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 Seller (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
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 Seller 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 Sellers 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
28
acquired by such Seller in the underlying transaction. Each Seller acknowledges
and agrees that USFloral has not and will not provide such Seller or any other
party with a prospectus for such Seller's use in selling USFloral Common Stock.
5.31 Affiliates. The Sellers are the only persons who are, in the
reasonable judgment of each of the Partnerships and each of the Sellers,
affiliates of the Partnerships 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 each of the Partnership's chief executive offices.
5.33 Location of Equipment and Inventory. All Inventory and Equipment
held on the date hereof by each of the Partnerships 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 either of the Partnerships 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 either of the
Partnerships 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 each of the Partnerships, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.
6. REPRESENTATIONS OF USFLORAL AND THE NEWCOS
To induce the Partnerships and the Sellers to enter into this Agreement and
consummate the transactions contemplated hereby, each of USFloral and each
Newco, jointly and severally, represents and warrants to the Partnerships and
the Sellers as follows:
6.1 Due Organization. Each of USFloral and each Newco is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and each is duly authorized, qualified and licensed to do
business and is in good standing under all applicable laws, regulations,
ordinances and orders of public authorities to own, operate and lease its
properties and to carry on its respective 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
entity. Copies of the Certificate of Incorporation and the Bylaws, each as
amended, of USFloral and each Newco (collectively, the "USFloral Charter
Documents") have been made available to the Partnerships. Neither USFloral nor
either Newco is in violation of any USFloral Charter Document.
29
6.2 USFloral Common Stock. The shares of USFloral Common Stock to be
delivered to the Sellers at the Closing Date, 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.
6.3 Authorization; Validity of Obligations. The representatives of USFloral
and the Newcos executing this Agreement have all requisite corporate power and
authority to enter into and bind USFloral and the Newcos to the terms of this
Agreement. USFloral and the Newcos have the full legal right, power and
corporate authority to enter into this Agreement and the transactions
contemplated hereby and to perform the obligations detailed herein. The
execution and delivery of this Agreement by USFloral and the Newcos and the
performance by each of USFloral and each Newco of the transactions contemplated
herein have been duly and validly authorized by the respective Boards of
Directors of USFloral and each 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 each 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 either Newco is a
party or by which either USFloral or either Newco is bound, 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 either Newco or any of their respective property is subject, or (ii)
any judgment, order or decree to which USFloral or either 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
either Newco; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which USFloral or either Newco is subject, or by which USFloral or
either 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 9,594,050 shares were outstanding on November 19, 1997. The
authorized capital stock of each Newco consists of 1,000 shares of Common Stock,
of which 100 shares are outstanding. All of the issued and outstanding shares
of each Newco are owned beneficially, and of record by USFloral. All of the
30
shares of USFloral Common Stock to be issued to the Sellers 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.
6.6 WARN Act. The consummation of the transactions contemplated hereby
will not give rise to any requirement of notification by USFloral or any Newco
under the Worker Adjustment Retraining Notification Act.
6.7 SEC Filings. USFloral has delivered to the Sellers a copy of each
registration statement or report filed by USFloral with the Securities and
Exchange Commission since October 9, 1997 (the "USFloral SEC Filings"). As of
their respective dates, the USFloral SEC Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
7. COVENANTS
7.1 Tax Matters.
(a) The following provisions shall govern the allocation of
responsibility as between the Sellers, on the one hand, and the Newcos, on the
other, for certain tax matters following the Closing Date:
(i) The Sellers 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 Sellers with respect to the Partnerships for all periods ending
on or before the Closing Date that are due after the Closing Date. Sellers
shall pay on or before the due date of such Tax Returns the amount of all Taxes
shown as due on such Tax Returns. Such Tax 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, which approval shall
not be unreasonably withheld.
(ii) The Newcos shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Partnerships for all periods which end
after 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
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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 the Newcos'
reasonable judgment.
(iii) USFloral and the Newcos on the one hand and the Sellers on the
other hand shall (A) cooperate fully, as reasonably requested, in connection
with the preparation and filing of Tax Returns of the Partnerships 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
Partnerships for all periods ending prior to or including the Closing Date; and
(C) preserve information, records or documents relating to Tax matters pertinent
to the Partnerships that is in their possession or under their control until the
expiration of any applicable statute of limitations or extensions thereof, at
which time USFloral and the Newcos shall provide copies of all such records or
documents relating to the Partnerships for all periods ending prior to or
including the Closing Date to the Sellers.
(iv) The Sellers 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 Sellers 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 Newcos will
join in the execution of any such Tax Returns and other documentation.
7.2 Accounts Receivable. In the event that all Accounts Receivable are
not collected in full (net of reserves specified in Section 5.12) within ninety
days after the Closing then, at the request of the Newcos, the Sellers shall pay
(based on their percentage interest in the aggregate Consideration) the Newcos
an amount equal to the Accounts Receivable not so collected, and upon receipt of
such payment the Newcos shall assign to the Sellers making the payment all of
the Newcos' rights with respect to the uncollected Accounts Receivable giving
rise to the payment and shall also thereafter promptly remit any excess
collections received by them with respect to such assigned Accounts Receivable.
7.3 Title Insurance and Surveys.
(a) With respect to each fee estate included in the Real Property, the
Sellers will obtain and deliver to USFloral (i) as soon as practicable after the
date of this Agreement, a title commitment disclosing the condition of title to
such fee estate and all easements, rights of way, and restrictions of record
with respect thereto, as of a date not earlier than the date of this Agreement,
accompanied by copies of all instruments evidencing the scope and extent of all
such easements, rights of way, and restrictions of record (the "Title
Commitment"), and (ii) at or prior to Closing, an ALTA Owner's Policy of Title
Insurance on a form customarily used in the state in which the Real Property is
located, issued by a title insurer satisfactory to USFloral, in an amount equal
to the fair market value of the Real Property (as reasonably determined by
USFloral), insuring title to such property to be in the name of the party
designated by USFloral on Schedule 7.3, subject only to Permitted Encumbrances
(each a "Title Policy").
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(b) Each Title Policy obtained and delivered to USFloral pursuant to
this Agreement shall, except to the extent that title insurers in the state in
which the applicable property is located are not lawfully permitted to issue
such policies, (i) insure title to the property described in the policy and all
recorded easements benefitting such property, (ii) contain an "extended coverage
endorsement" or similar modification insuring over or otherwise eliminating the
general exceptions customarily contained in title policies, (iii) contain an
endorsement insuring that the property described in the policy is the same real
estate shown in the survey delivered with respect to such property, (iv) contain
a "contiguity" endorsement with respect to any property consisting of more than
one record parcel, (v) provide full coverage against mechanics' and
materialmen's liens arising out of the construction, repair or alteration of any
of the Real Property, (vi) contain any special endorsements reasonably required
by USFloral, including, without limitation, an endorsement insuring that the
improvements included in the Real Property are a permitted use under the zoning
designation applicable to the Real Property, and (vii) not be subject to any
survey exception.
(c) With respect to each Real Property interest as to which a Title
Policy is to be procured pursuant to this Agreement, the Sellers will obtain and
deliver to USFloral as soon as practicable after the date of this Agreement a
current survey of the relevant parcel, prepared and certified to USFloral and to
the title insurer of such Real Property interest by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for Land Title Surveys,
disclosing the location of all improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters customarily shown on such surveys,
and showing access affirmatively to public streets and roads.
(d) The Sellers shall be responsible for all costs associated with
obtaining the title commitments and surveys described above, and USFloral shall
be responsible for the costs of purchasing the Title Policies described above.
7.4 Related-Party Agreements. At Closing, the Partnerships and/or the
Sellers, as the case may be, shall terminate any Related-Party Agreements which
USFloral requests the Partnerships or Sellers to terminate. Any Related-Party
Agreements not so terminated shall be renegotiated, subject to USFloral's
approval, effective not later than the Closing Date to provide that transactions
between USFloral, either Newco or any subsidiary of either of them, on the one
hand, and the other parties thereto, on the other hand, shall from and after the
Closing Date be on terms no less favorable to USFloral, such Newco or any such
subsidiary of either of them than those that they would obtain in arm's-length
transactions. At the Closing, USFloral and Xxxxx Marketing Ltd. (the
obligations of which will be guaranteed by Xxxxxx de los Andes Ltda., Cultivos
Buena Vista Ltda., Inversiones Penas Xxxxxxx Ltda. and Xxxxxx Horizonte Ltda.)
shall enter into a Flower Supply Agreement in the form of Exhibit A attached
hereto, in replacement of any Related-Party Agreement between either
Partnership and any of the entities named in this sentence (the "Related-Party
Suppliers").
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7.5 Cooperation.
(a) The Partnerships, the Sellers, USFloral and the Newcos 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, Manager as general partner of the
Partnerships shall execute any documentation required by USFloral's independent
public accountants (in connection with such accountants' audit of the Company)
or the Nasdaq National Market.
(b) The Sellers and the Partnerships shall cooperate and use their
reasonable efforts to have the Sellers and employees and agents of the
Partnerships 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.
(c) Each party hereto shall cooperate in obtaining all consents and
approvals required under this Agreement to effect the transactions contemplated
hereby
(d) At or prior to the Closing, the Partnerships, the Sellers and
USFloral have filed all notices and other information and documents required
under the HSR Act and have used their best efforts to seek early termination of
the waiting period related thereto at a time mutually agreeable to them.
7.6 Conduct of Business Pending Closing. Between the date hereof and the
Closing Date, each of the Partnerships and the Manager 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 material obligations under debt and lease
instruments and other agreements relating to or affecting its assets, properties
equipment or rights;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its relationships
and present agreements with suppliers, customers and others having business
relations with the Partnerships or either of them;
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(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 any and all
employees and agents;
7.7 Access to Information. Between the date of this Agreement and the
Closing Date, the Partnerships will afford to the officers and authorized
representatives of USFloral access to (i) all of the sites, properties, books
and records of the Partnerships and (ii) such additional financial and operating
data and other information as to the business and properties of the Partnerships
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 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 transaction.
7.8 Prohibited Activities. Between the date hereof and the Closing Date,
each of the Partnerships and the Manager will not, without the prior written
consent of USFloral:
(a) make any change to its limited partnership agreement, or authorize
or propose the same;
(b) not, without the knowledge and consent of USFloral, declare any
unusual partnership distributions nor pay out any extraordinary bonuses, fees,
commissions or any other unusual distributions to the Partners or the Manager,
or directors, management or other personnel prior to the Closing, other than up
to $6.0 million in cash permitted to be distributed to the Partners, prior to
Closing, and other than ordinary and customary distributions to the Partners
subsequent to September 30, 1997 for the payment of income taxes by the Partners
which distributions are made in the ordinary course of the Partnerships'
businesses and in amounts not materially in excess of the tax liabilities of the
Partners, and other than the payment of fees and expenses actually incurred by
the Partnerships and the Manager in connection with the subject matter of this
Agreement made prior to or at Closing (it being understood that no distribution
or payment under this subparagraph (b) or otherwise shall in any way vitiate or
reduce the minimum net worth requirements set forth in Section 3.1);
(c) not make expenditures outside the normal course of business,
except with respect to this transaction, and not make capital expenditures in
excess of $100,000;
(d) not effect any change in the ownership structure of the
Partnerships or the Manager, including, but not limited to, the issuance of any
option, warrant, call, conversion right or commitment of any kind with respect
to the Partnership Interests or any equity interests in the
35
Manager or the purchase or other reacquisition of any outstanding Partnership
Interests or any equity interests in the Manager.
(e) enter into any contract or commitment, including contracts to
provide services to customers, 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;
(f) materially increase present salaries and commission levels for any
or all officers, directors, employees and agents or pay any bonus compensation
other than (i) bonus compensation accrued on the balance sheets of the
Partnerships as of the Balance Sheet Date and (ii) bonus compensation accrued on
the balance sheets of the Partnerships between the Balance Sheet Date and the
Closing Date (but not in excess of the amount so accrued in the corresponding
period of the immediately preceding year).
(g) create or assume any mortgage, pledge or other lien or encumbrance
upon any assets or properties whether now owned or hereafter acquired;
(h) 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;
(i) 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
Partnerships;
(j) be acquired or agree to be acquired by any other entity;
(k) waive any material rights or claims of either of the Partnerships,
provided that either of the Partnerships may negotiate and adjust bills in the
course of good faith disputes with customers in a manner consistent with past
practice;
(l) commit a breach of or amend or terminate any material agreement,
permit, license or other right;
(m) enter into any other transaction (i) that is not negotiated at
arm's length with a third party not affiliated with either of the Partnerships
or any employee or partner of either of the Partnerships or (ii) outside the
ordinary course of business consistent with past practice or (iii) prohibited
hereunder;
(n) commence a lawsuit other than for routine collection of bills;
(o) 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;
36
(p) 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
(q) take, or agree (in writing or otherwise) to take, any of the
actions described in Sections 7.8(a) through (p) above, or any action which
would make any of the representations and warranties of the Partnerships and the
Sellers contained in this Agreement untrue or result in any of the conditions
set forth in Articles 8 and 9 not being satisfied.
7.9 Sales of USFloral Common Stock.
(a) No Seller will, directly or indirectly, offer, sell, contract to
sell, pledge or otherwise dispose of: (i) any of the shares of USFloral Common
Stock to be received by such Seller pursuant to this Agreement prior to six
months after the Closing Date; or (ii) more than one-half of the shares of
USFloral Common Stock to be received by such Seller pursuant to this Agreement
prior to the first anniversary of the Closing Date; provided, however, that bona
fide transfers for estate planning purposes to persons or entities who or which
agree to be bound by such restrictions on transfer shall be deemed not to
violate this Section 7.9(a); and provided, however, that the Trusts shall
collectively be permitted to sell, in brokers' transactions (as defined in Rule
144 promulgated under the 1933 Act), within the first 90 days after the Closing
Date, shares having an aggregate value (as reflected by gross sale proceeds) not
in excess of $1,750,000; and provided further, however, that if the last sale
price per share of USFloral Common Stock on any date from December 15, 1998 to
and including December 30, 1998 (a "Sale Date") is less than the Closing Price,
then each Seller who is a member of Management (and not the Trusts) shall be
granted the ability to sell, contract to sell, offer, pledge or otherwise
dispose of (the "Tax Proceeds Sale") between the period commencing on the day
immediately after the earliest Sale Date and terminating on December 31, 1998,
up to that number of shares of USFloral Common Stock in the aggregate that
yields a capital loss up to the capital gain incurred by such Seller with
respect to the sale of the Partnership Interests hereunder.
(b) Each Seller acknowledges and agrees that USFloral will not provide
such Seller with a prospectus for such Seller's use in selling the shares of
USFloral Common Stock to be received by such Seller pursuant to this Agreement,
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 Seller
of the USFloral Common Stock that Seller may acquire pursuant to this Agreement
pursuant to Rule 145(d) under the 1933 Act, by a broker's letter and a letter
from the Seller 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.
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(c) The certificate or certificates evidencing the shares of USFloral
Common Stock to be delivered to the Sellers pursuant to this Agreement 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 JULY 20, 1998 WITH RESPECT TO ONE-HALF OF SUCH
SHARES; JANUARY 20, 1999 WITH RESPECT TO THE BALANCE OF THE SHARES.
PURSUANT TO THAT CERTAIN PURCHASE AGREEMENT, DATED AS OF JANUARY 20, 1998,
AMONG THE ISSUER, THE HOLDER AND OTHER PARTIES. 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 EXCEPT AS PROVIDED IN SUCH PURCHASE AGREEMENT. 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.
7.10 USFloral Stock Options. As of the Closing, options to purchase such
number of shares of USFloral Common Stock as shall have a fair market value as
of the date of issuance equal to 6.25% of the Consideration provided for in
Section 2.1 above shall be issued to the key employees of the Newcos after the
Closing who were not Limited Partners (provided, however, that options to
purchase up to an aggregate of 50% of the options available in such pool may be
granted to L. Xxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxx Xxxxxxxx and Xxxxxx
Xxxxxxxxx), as determined by L. Xxxxx Xxxxx (or other officer designated by L.
Xxxxx Xxxxx and acceptable to USFloral) in accordance with USFloral's policies,
and authorized and issued under and subject to the terms of USFloral's 1997
Long-Term Incentive Plan.
7.11 Board of Directors Proposal. Promptly following consummation of the
transactions contemplated hereby, USFloral shall use its best efforts to cause
its Board of Directors to consider and approve a proposal to (a) increase the
number of members of its Board of Directors (and specifically of Class II
thereof, the directors in which Class have terms expiring in USFloral's 1999
Annual Meeting of Stockholders) by one, and (b) designate one individual
acceptable to the Sellers and USFloral to fill the vacancy created thereby.
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7.12 Survival of Partnerships. From the Closing Date until at least the
first anniversary thereof, USFloral shall cause the ownership structure of the
Partnerships set forth in Section 1.1 to be maintained.
7.13 Tax Position. Neither USFloral nor its affiliates will take a tax
position on any federal tax return filed by the Partnerships after the Closing
Date with respect to periods prior to and including the Closing Date that is
inconsistent with that position taken by the Partnerships with respect to
periods prior to the Closing Date without the consent of the Sellers'
Representative (which shall not be unreasonably withheld).
7.14 Announcement. Unless required to do so by law, based upon the advice
of its counsel, USFloral shall not announce the underlying transaction prior to
the approval and adoption of this Agreement by the Board of Directors of
USFloral in accordance with the Delaware General Corporation Law, as amended,
and the bylaws of USFloral. USFloral shall provide to the Manager a draft of
those portions of said announcement applicable to the transactions contemplated
hereby prior to its release.
7.15 Bank Approval. USFloral shall promptly and diligently seek the
approval of its lenders for the underlying transaction in accordance with its
existing credit facility.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF USFLORAL AND THE NEWCOS
The obligation of USFloral and the Newcos to effect the transactions
contemplated hereby is subject to the satisfaction or waiver, at or before the
Closing Date, of the following conditions and deliveries:
8.1 Representations and Warranties; Performance of Obligations. All of
the representations and warranties of the Sellers and the Partnerships 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
Partnerships and the Sellers 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 each Partnership and by
each Seller 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 Interests, or limiting or
restricting USFloral's conduct or operation of the business of the Partnerships
(or its own business) following the consummation of the transactions
contemplated hereby 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
39
action, suit claim or proceeding of any nature pending or threatened against
USFloral, either Newco, Manager or either Partnership, their respective
properties or any of their stockholders, officers or directors, or the Sellers,
that could materially and adversely affect the business, assets, liabilities,
financial condition, results of operations or prospects of the Partnerships.
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 either of the Partnerships, taken as a whole, since the Balance
Sheet Date; and USFloral shall have received a certificate signed on behalf of
each Partnership and by each Seller 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 Partnerships and the Sellers of the transactions
contemplated hereby, shall have been obtained and made. Any waiting period
applicable to the consummation of the transactions contemplated hereby 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.
8.5 Opinion of the Partnerships' Counsel. USFloral shall have received an
opinion from Xxxxxxxx, P.A. as counsel to the Partnerships and the Sellers,
addressed to USFloral and dated the Closing Date, in a form reasonably
satisfactory to USFloral.
8.6 Opinions of Accountants and Tax Counsel. USFloral shall have received
opinions from Xxxxxx Xxxxxxxx LLP and Xxxxxxxxx Traurig Xxxxxxx Xxxxxx Xxxxx &
Xxxxxxx, P.A., addressed to USFloral and dated the Closing Date, in the forms
respectively attached hereto as Exhibit A and Exhibit B.
8.7 Opinion of the Trusts' Counsel. USFloral shall have received an
opinion from X.X. Xxxxxx & Company, as counsel to the Trusts, addressed to
USFloral and dated the Closing Date, in the form attached hereto as Exhibit C.
8.8 Charter Documents. USFloral shall have received a copy of the limited
partnership agreements of each of the Partnerships certified by the Manager.
8.9 Quarterly Financial Statements. USFloral shall have received from the
Partnerships completed quarterly financial statements for the fourth quarter of
1997 in a form reasonably satisfactory to USFloral.
8.10 [Intentionally omitted.]
8.11 Delivery of Closing Financial Certificate. USFloral shall have
received from the Partnerships a certificate (the "Closing Financial
Certificate"), dated as of the Closing Date, signed
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by the Manager as general partner on behalf of each Partnership and by each of
the respective Limited Partners of each Partnership, setting forth:
(a) the combined net worth of the Partnerships as of the last day of
its most recent fiscal year (the "Certified Year-End Net Worth");
(b) the combined net worth of the Partnerships as of the Closing Date
(the "Certified Closing Net Worth");
(c) the combined earnings of the Partnerships before interest and
taxes (after the addition of "add-backs" set forth on Schedule 8.11(c)) for the
nine-month period ending on September 30, 1997 (the "Certified Closing EBIT");
(d) a statement that all of the Partnerships' financial conditions set
forth in Section 5.9 of the Agreement are satisfied as of the Closing Date; and
(e) a representation and warranty (which shall be deemed to have been
made pursuant to this Agreement) that the Partnerships have neither:
(i) made any declaration or payment of any unusual partnership
distributions nor payed out any extraordinary bonuses, fees, commissions or any
other unusual distributions to the Partners or the Manager, or directors,
management or other personnel prior to the Closing, other than up to $6.0
million in cash permitted to be distributed to the Partners, prior to Closing,
and other than ordinary and customary distributions to the Partners subsequent
to September 30, 1997 for the payment of income taxes by the Partners which
distributions were made in the ordinary course of the Partnerships' businesses
and in amounts not materially in excess of the tax liabilities of the Partners,
and other than the payment of fees and expenses actually incurred by the
Partnerships and the Manager in connection with the subject matter of this
Agreement made prior to or at Closing, all in accordance with Section 7.8(b) of
this Agreement; nor
(ii) materially increased present salaries and commission levels for
any or all officers, directors, employees and agents or paid any bonus
compensation other than (A) bonus compensation accrued on the balance sheets of
the Partnerships as the Balance Sheet Date and (B) bonus compensation accrued on
the balance sheets of the Partnerships between the Balance Sheet Date and the
Closing Date (but not in excess of the amount so accrued in the corresponding
period of the immediately preceding year), all in accordance with Section 7.8(f)
of this Agreement.
The parties acknowledge and agree that for purposes of determining the Certified
Closing Net Worth and the Certified Closing EBIT, neither Partnership shall take
account of any increase in intangible assets (including without limitation
goodwill, franchises and intellectual property) accounted for after December 31,
1997.
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8.12 FIRPTA Compliance. Each of the Sellers 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).
8.13 Employment Agreements. Each of L. Xxxxx Xxxxx, Xxxxxxxx Xxxxxxx,
Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxxxx shall have entered into an employment
agreement with a Newco in a form reasonably satisfactory to USFloral.
8.14 Release. Each Seller shall have delivered to USFloral an instrument
dated the Closing Date releasing the Partnerships, USFloral and the Newcos from
any and all claims of such Seller.
8.15 Related-Party Indebtedness. All notes receivable by the Partnerships
from the Limited Partners, the Manager, employees and/or affiliates shall have
been repaid in full in accordance with their terms.
8.16 Flower Supply Agreement. The Related-Party Suppliers shall have
executed and delivered a Flower Supply Agreement with USFloral in the form
attached hereto as Exhibit D.
8.17 Tax Escrow Agreement. The Trusts shall have executed and delivered a
Tax Escrow Agreement with USFloral and an escrow agent in the form attached
hereto as Exhibit E.
8.18 Board Approval. This Agreement shall have been approved and adopted
by the Board of Directors of USFloral in accordance with the Delaware General
Corporation Law, as amended, and the bylaws of USFloral.
8.19 Bank Approval. The consent of USFloral's lenders under its existing
credit facility shall have been received. In the event that such approval is
not received and the transactions contemplated hereby are not consummated as a
result of the failure of USFloral's lenders to provide such consent, USFloral
shall provide to the Manager, for its review and comment, a draft of any
announcement disclosing such failure prior to its release. USFloral agrees to
revise such announcement to reflect the Manager's comments to the reasonable
satisfaction of both USFloral and the Manager, provided, however, that USFloral
shall be entitled to make such revisions thereto as it reasonably believes,
based upon the advice of its counsel, to be necessary or appropriate to comply
with law or the rules of the Nasdaq Stock Market, Inc.
8.20 Personal Guaranties. Each of the settlors of the Trusts shall have
executed and delivered to USFloral a personal guaranty of the obligations of the
Trusts under this Agreement, which guaranty shall be in the form attached hereto
as Exhibit F.
8.21 Promissory Note. Flores Timana S.A. shall have executed and delivered
a Promissory Note as maker thereunder payable in the amount of US$30,000 to
Continental Farms in the form attached hereto as Exhibit G. In the event that
Flores Timana S.A. shall not have
42
executed such Promissory Note, the Sellers shall deliver US$30,000 to USFloral
on the Closing Date in immediately available funds.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTNERSHIPS AND THE SELLERS
The obligation of the Sellers and the Partnerships to effect the
transactions contemplated hereby are subject to the satisfaction or waiver, at
or before the Closing Date, of the following conditions and deliveries:
9.1 Representations and Warranties; Performance of Obligations. All of
the representations and warranties of USFloral and the Newcos 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 the Newcos
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 Partnerships and the Sellers.
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 Interests, or limiting or
restricting USFloral's conduct or operation of the business of the Partnerships
(or its own business) following the consummation of the transactions
contemplated hereby 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, either Newco or either Partnership, their
respective properties or any of their officers, directors, or Sellers that could
materially and adversely affect the business, assets, liabilities, financial
condition, results of operations or prospects of 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 the Newcos of the transactions contemplated herein, shall have
been obtained and made. Any waiting period applicable to the consummation of
the transactions contemplated hereby 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. USFloral or its affiliate shall have afforded:
(i) each of L. Xxxxx Xxxxx, Xxxxxxxx Xxxxxxx and Xxxxx Xxxxxxxx an opportunity
to enter into an employment agreement with Continental Farms and (ii) Xxxxxx
Xxxxxxxxx an opportunity to enter into an employment agreement with Atlantic
Bouquet.
43
9.5 Tax Escrow Agreement. USFloral shall have executed and delivered a
Tax Escrow Agreement with the Trusts and an escrow agent in the form attached
hereto as Exhibit E.
10. INDEMNIFICATION
10.1 General Indemnification by the Sellers. Each Seller, jointly and
severally, covenants and agrees to indemnify, defend, protect and hold harmless
USFloral and the Newcos 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 any Seller or
either Partnership set forth in this Agreement or any Schedule or certificate,
delivered by or on behalf of any Seller or either Partnership in connection
herewith; or
(ii) any nonfulfillment of any covenant or agreement by any Seller or,
prior to the Closing Date, either Partnership, under this Agreement; or
(iii) the business, operations or assets of each of the Partnerships
prior to the Closing Date or the actions or omissions of the Sellers, employees
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;
(iv) the matters disclosed on Schedules 5.22 (employee benefit plans)
pursuant to the second paragraph of Section 5.22, 5.23 (conformity with law;
litigation) after taking into account reserves therefor on the balance sheets of
the Partnerships as of the Closing Date, 5.24 (taxes) and 5.27 (environmental
matters); or
(v) the allocation of Consideration among or between the Sellers in
any manner other than pro rata among all Partnership Interests without regard to
--- ----
class or any other factor; or
(vi) any breach of the representation and warranty set forth in the
Closing Financial Certificate in compliance with Section 8.9(f) of this
Agreement; and
44
(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
$750,000 (the "Indemnification Threshold"); provided, however, that the
Indemnification Threshold shall not apply to (i) adjustments to the
Consideration as set forth in Sections 2.1 and 3.1; (ii) Damages arising out of
any breaches of the covenants of the Sellers set forth in this Agreement or
representations and warranties made in Sections 5.4 (ownership interests), 5.5
(transactions in partnership interests), 5.9 (Partnerships' financial
conditions), 5.18 (material contracts and commitments), 5.23 (conformity with
law; litigation) after taking into account reserves therefor on the balance
sheets of the Partnerships as of the Closing Date, 5.24 (taxes), 5.27
(environmental matters), (iii) Damages described in Section 10.1(a)(iv), (v) or
(vi) or (iv) Damages for liability for anti-dumping duties in excess of reserves
therefor on the balance sheets of the Partnerships as of the Closing Date
(regardless of whether or not disclosed on any schedule to this Agreement);
(b) the aggregate amount of the Sellers' liability under this Article
10 shall not exceed the Consideration; provided, however, that: (i) the
Sellers' liability for Damages arising out of any breaches of the
representations and warranties made in Sections 5.24 (taxes), without giving
effect to the qualifications thereof contained in any Schedule to such Section
5.24 or any subsection thereof, or 5.27 (environmental matters) or Damages
described in Section 10.1(a)(ii), Section 10.1(a)(iv) , Section 10.1(a)(v)
and/or Section 10.1(a)(vi) shall not be subject to such limitation; (ii) the
aggregate liability under this Article 10 of each of Xxxxxxxx Xxxxxxx, Xxxxx
Xxxxxxxx and Xxxxxx Xxxxxxxxx shall (A) not exceed the Consideration received by
such person under this Agreement, (B) be several only and not joint, and (C) be
in proportion to their relative interest in the Consideration; (iii) the
liability of L. Xxxxx Xxxxx under this Article 10 shall (a) be in proportion to
his relative percentage interest in the Consideration, (B) not exceed the
Consideration received by him under this Agreement, and (C) be several only and
not joint; and (iv) the liability of each Trust shall (A) be in proportion to
its respective percentage interest in its share of the Consideration, provided
that each Trust shall be liable for its pro rata share (defined as its
--- ----
percentage interest in the Consideration over the aggregate percentage of the
total Consideration received by the Trusts as a group) of any liability that
would otherwise have been attributable to L. Xxxxx Xxxxx but for the limitation
contained in Section 10.2(b)(iii)(B) and only after such limitation shall in
fact have been reached, and (B) be several only and not joint.
(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
45
(2) with respect to representations and warranties contained in
Sections 5.22 (employee benefit plans), 5.24 (taxes), 5.27 (environmental
matters), and the indemnification set forth in Section 10.1(a)(ii), (iii) or
(iv), on (A) the date that is six 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 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 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 Agreement ("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 Sellers' 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 Sellers'
Representative does not notify the Indemnified Party within thirty (30) 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 Sellers' Representative within ten days of receipt
of such Third-Party Claim. The Sellers' 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.
46
(ii) In the event that Sellers' 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 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 Sellers'
Representative, any Third-Party Claim seeks material prospective relief which
could have an adverse effect on any Indemnified Party or any Newco 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.
47
10.4 Survival of Representations Warranties and Covenants. All
representations, warranties and covenants made by the Partnerships, the Sellers,
USFloral and the Newcos in or pursuant to this Agreement or in any document
delivered 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 Partnerships and the Sellers 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 the Newcos will survive the Closing and will
remain in effect until, and will expire upon the first anniversary of the
Closing Date.
10.5 Sole Remedy. The remedies set forth in this Article 10 shall be the
sole and exclusive remedies with respect to monetary damages for matters other
than fraud. With respect to monetary damages for fraud and with respect to any
non-monetary damages or relief, 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.
10.6 Right to Set Off. USFloral shall be obligated first to set off
against the Pledged Assets, up to an amount not to exceed one-half of the
Pledged Assets then remaining, amounts finally determined under Section 10.3 to
be owed to USFloral by the Sellers under Section 10.1 hereof; provided, however,
that Sellers have the right, after 10 business days' prior notice of USFloral's
intent so to set off, to pay such amounts, in whole or in part, in cash to
USFloral.
11. NONCOMPETITION
11.1 Prohibited Activities. The Sellers agree that for a period of four
years following the Closing 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 USFloral or either
Newco, 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, or the
48
Partnerships within the Territory for the purpose of soliciting or selling
floral products within the Territory;
(d) except for those persons or entities set forth on Schedule 11.1(d)
or as otherwise approved by USFloral or its designated representative in
writing, 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 of them made an acquisition analysis for themselves or
USFloral or any subsidiaries of USFloral, the Partnerships; or
(e) disclose customers, whether in existence or proposed, of the
Partnerships to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
Notwithstanding subsections (a) through (e) above, the foregoing covenant
shall not be deemed to prohibit Sellers from (i) acquiring as an investment not
more than two 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) engaging in any activity to which USFloral shall have provided its prior
written consent; or (iii) retaining interests in floral cultivation companies
located outside of the Territory owned by them on the Closing Date ("Foreign
Companies"). Notwithstanding subsections (a) through (e) above, the Limited
Partners shall not be required to restrict or limit the businesses or operations
of any such Foreign Companies; provided, however, that any transactions between
USFloral, either Newco or any subsidiary of either of them and any Foreign
Company shall be on terms no less favorable to USFloral, such Newco or such
subsidiary than those that would obtain in arm's-length transactions.
11.2 Damages. Because of the difficulty of measuring economic losses to
USFloral and the Newcos 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 Newcos for which they would have no other adequate remedy, the Sellers
agree that, in the event of a breach by any of them of the foregoing covenant,
the covenant may be enforced by USFloral or either Newco 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 Sellers 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 Newcos (as
successors to the businesses of the Partnerships).
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.
49
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 Sellers
against the Partnerships, the Newcos 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 two years stated
above, shall be computed by excluding from such computation any time during
which any Seller 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 (including any appeal from any judgment) brought by any person, whether
or not a party to this Agreement, in which action USFloral or either Newco seeks
to enforce the agreements and covenants of the Sellers 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 Seller 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 Partnerships and each Seller 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 Sellers. The Sellers 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 Partnerships, such as information or material
generated or collected or utilized in the operations of the Partnerships that
relates to the actual or anticipated business, products, prospects, customers or
research and development of the Partnerships, including, but not limited to,
lists of customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Partnerships and the Partnerships'
businesses, know-how, designs, reports, data bases, data files, marketing and
selling information, business plans, budgets and financial statements
(collectively, the "Confidential Information"). The Sellers 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 Sellers can show that such
Confidential Information has become known to the public generally through no
fault of the Sellers or is required to disclose such Confidential Information by
law, legal process or any order or mandate of court or government authority. In
the event of a breach or threatened breach by the Sellers of the provisions of
this Article 12, USFloral and the Newcos shall be entitled to an injunction
restraining the Sellers from disclosing, in whole or in part, such Confidential
Information. Nothing herein shall be construed as prohibiting USFloral and the
Newcos 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 Partnerships, such as lists of customers,
operational policies, pricing and cost policies that are
50
valuable, special and unique assets of the Partnerships and the Partnerships'
businesses. 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 Sellers. In the event of a breach or threatened breach by
USFloral of the provisions of this Article 12, the Sellers 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 Sellers from pursuing any other available remedy for such breach
or threatened breach, including the recovery of damages.
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 Newcos and the Sellers 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
13.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(a) by mutual consent of the board of directors of USFloral and the
Sellers; or
(b) by the Sellers and the Partnerships as a group, on the one hand,
or by USFloral, on the other hand, if the Closing shall not have occurred on or
before the later of January 31, 1998 or the expiration of any applicable waiting
period (including extensions thereof and requests for further information in
connection therewith) under the HSR Act, provided that the right to terminate
this Agreement under this Section 13.1(b) shall not be available to either party
(with the Sellers and the Partnerships 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 Closing Date; or
(c) by the Sellers and the Partnerships 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 Sellers
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 Sellers and the Partnerships 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
transactions contemplated hereby; or there shall be any action taken, or any
statute, rule regulation or order enacted, promulgated or issued or deemed
51
applicable to the transactions contemplated hereby by any governmental entity
which would make the consummation of the transactions contemplated hereby
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 partners, 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 below, the breaching party (with the Sellers and the
Partnerships 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 Sellers.
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 the Newcos (as a group) and the
Partnerships and Sellers (as a group) each represent and warrant 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.
52
13.7 Expenses. USFloral has and will pay the fees, expenses and
disbursements of USFloral and the Newcos and their agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement. The Partners (and not the Partnerships or the Manager) shall be
responsible for the fees, expenses and disbursements of the Sellers, the
Partnerships, and their agents, representatives, financial advisers, accountants
and counsel incurred in connection with the subject matter of this Agreement (it
being understood that (a) the Partnerships may pay any such fees and expenses
actually incurred by them and the Manager in connection with the subject matter
of this Agreement at or prior to Closing and (b) such payment shall be deemed to
have been made immediately prior to the time to which the audited balance sheet
as of the Closing relates, so that to the extent that any such payment or any
other factor results in the inability of the Partnerships to satisfy any minimum
net worth requirement contained herein, the Consideration shall be adjusted
downward on a dollar-for-dollar basis); provided, however, that any fees, costs
and expenses incurred in connection with the audit of the financial statements
with respect to the Partnerships (as may be required by applicable federal
securities laws or rules or regulations promulgated thereunder as they relate to
USFloral upon or following the acquisition of the Partnerships pursuant to this
Agreement) shall be borne and paid solely by USFloral.
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 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 or a Newco 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)
53
with a required copy to:
Xxxxx X. Xxxxxx, Esquire
Xxxxxx, Xxxxx & Bockius LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx-Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
(Telefax: (000) 000-0000)
If to Sellers' Representative:
L. Xxxxx Xxxxx
c/o Continental Farms Limited
0000 X.X. 00xx Xxxxx
Xxxxx, XX 00000
(Telefax: (000) 000-0000)
with a required copy to:
Xxxxxxx X. Xxxxxxxx, Esquire
Xxxxxxxx, a Professional Association
Xxxxx Xxx Xxxxx, Xxxxx 000
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, XX 00000
(Telefax: (000) 000-0000)
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.
54
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.
14. DEFINITIONS.
14.1 "1933 Act" is defined in section 2.1(a).
14.2 "Accounts Receivable" are defined in Section 5.12.
14.3 "Actual Partnerships Net Worth" is defined in Section 3.1(b).
14.4 "Affiliate" is defined in Section 5.31.
14.5 "Agreement" is defined in the preamble to this Agreement.
14.6 "Atlantic Bouquet" is defined in the preamble to this Agreement.
14.7 "Balance Sheet Date" is defined in Section 5.10.
14.8 "Certified Closing EBIT" is defined in Section 8.11(c).
14.9 "Certified Closing Net Worth" is defined in Section 8.11(b).
55
14.10 "Certified Year-End Net Worth" is defined in Section 8.11(a).
14.11 "Claim Notice" is defined in Section 10.3(a).
14.12 "Claims" are defined in Section 10.3.
14.13 "Closing" is defined in Article 4.
14.14 "Closing Date" is defined in Article 4.
14.15 "Closing Financial Certificate" is defined in Section 8.11.
14.16 "Closing Price" is defined in Section 2.1(a)(i)(B).
14.17 "Code" is defined in Section 5.22.
14.18 "Confidential Information" is defined in Section 12.1.
14.19 "Consideration" is defined in Section 2.1.
14.20 "Consideration Adjustment" is defined in Section 3.1(b).
14.21 "Continental Farms" is defined in the preamble to this Agreement.
14.22 "Copyright" is defined in Section 5.17(b).
14.23 "D&T" is defined in Section 3.1(c).
14.24 "Damages" are defined in Section 10.1(a).
14.25 "Environmental Permits" are defined in Section 5.27(c).
14.26 "ERISA" is defined in Section 5.22.
14.27 "Financial Adjustment Notice" is defined in Section 3.1(b).
14.28 "Foreign Companies" are defined in Section 11.1.
14.29 "GAAP" is defined in Section 2.1(b)
14.30 "GP Interests" are defined in the preamble to this Agreement.
14.31 "Hazardous Material" is defined in Section 5.27(a).
14.32 "Hazardous Materials Activities" are defined in Section 5.27(b)
56
14.33 "HSR Act" is defined in Section 5.3(d).
14.34 "Indemnification Threshold" is defined in Section 10.2(a).
14.35 "Indemnified Party" is defined in Section 10.1.
14.36 "Indemnified Parties" are defined in Section 10.1.
14.37 "Intellectual Property" is defined in Section 5.17(d).
14.38 "Interim Financials" is defined in Section 5.10.
14.39 "Interim Balance Sheet" is defined in Section 5.10.
14.40 "Knowledge of the Partnership" is defined in Article 5.
14.41 "Laws" are defined in Section 5.15(c)(vi).
14.42 "Leases" are defined in Section 5.15(c)(xv).
14.43 "Liens" are defined in Section 5.15(b).
14.44 "Limited Partners" are defined in the preamble to this Agreement.
14.45 "LP Interests" are defined in the preamble to this Agreement.
14.46 "Management" is defined in the preamble to this Agreement.
14.47 "Manager" is defined in the preamble to this Agreement.
14.48 "Market Value" is defined in Section 3.2(c).
14.49 "Material Adverse Effect" is defined in Section 5.1.
14.50 "Material Contracts" are defined in Section 5.18(a).
14.51 "Net Worth Target" is defined in Section 2.1(b).
14.52 "Newco" is defined in the preamble to this Agreement.
14.53 "Newcos" are defined in the preamble to this Agreement.
14.54 "Other Rights" are defined in Section 5.17(c).
14.55 "Partnership" is defined in the preamble to this Agreement.
57
14.56 "Partnership's knowledge" is defined in Article 5.
14.57 "Partnerships" are defined in the preamble to this Agreement.
14.58 "Partnerships' Financial Statements" are defined in Section 5.10.
14.59 "Partnership Intellectual Property" is defined in Section
5.17(d).
14.60 "Partnership Interests" are defined in the preamble to this
Agreement.
14.61 "Patent" is defined in Section 5.17(b).
14.62 "PBGC" is defined in Section 5.22.
14.63 "Pending Claims" are defined in Section 10.2(c)(ii).
14.64 "Permits" are defined in Section 5.14.
14.65 "Permitted Encumbrances" are defined in Section 5.15(c)(i)
14.66 "Plans" are defined in Section 5.22.
14.67 "Pledged Assets" are defined in Section 3.2(a).
14.68 "Post-Closing Audit" is defined in Section 3.1(b).
14.69 "PTO" is defined in Section 5.17(a).
14.70 "Qualified Plans" are defined in Section 5.22.
14.71 "Related-Party Agreements" are defined in Section 5.18(a).
14.72 "Related-Party Suppliers" are defined in Section 7.4.
14.73 "Real Property" is defined in Section 5.15(a).
14.74 "Release Date" is defined in Section 3.2(c).
14.75 "Reviewed Financials" is defined in Section 5.10.
14.76 "Seller" is defined in the preamble to this Agreement.
14.77 "Sellers" are defined in the preamble to this Agreement.
14.78 "Structures" are defined in Section 5.15(c)(ii).
58
14.79 "Tangible Assets" are defined in Section 5.15(c)(iv).
14.80 "Tax" is defined in Section 5.24(b)(i).
14.81 "Tax Returns" are defined in Section 5.24(b)(ii).
14.82 "Territory" is defined in Section 11.1(a).
14.83 "Third-Party Claim" is defined in Section 10.3(b).
14.84 "Third-Party Consents" are defined in Section 5.18(b).
14.85 "Third-Party Intellectual Property" is defined in Section
5.17(d).
14.86 "Title Commitment" is defined in Section 7.3(a).
14.87 "Title Policy" is defined in Section 7.3(a).
14.88 "Trusts" are defined in the preamble to this Agreement.
14.89 "USFloral" is defined in the preamble to this Agreement.
14.90 "USFloral SEC Filings" are defined in Section 6.7.
14.91 "USFloral Charter Documents" are defined in Section 6.1.
14.92 "USFloral's Accountant" is defined in Section 3.1(b).
14.93 "USFloral Common Stock" is defined in Section 2.1(a)(i)(B).
14.94 "USFloral Prospectus" is defined in Section 5.30.
[Execution Pages Follow]
59
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.
/s/ Xxxxxx X. Xxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxx
Chairman, President & CEO
CFL ACQUISITION CORP.
/s/ Xxxxxx X. Xxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxx
President
ABCL ACQUISITION CORP.
/s/ Xxxxxx X. Xxxxxxx
By:__________________________________
Xxxxxx X. Xxxxxxx
President
THE SELLERS:
CONTINENTAL FARMS LIMITED
a Florida limited partnership
General Partner:
CONTINENTAL FARMS MANAGEMENT, INC.
a Florida corporation, the General Partner
/s/ L. Xxxxx Xxxxx
By:___________________________________
L. Xxxxx Xxxxx
President
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
60
Limited Partners:
FIDUCIARY TRUST (CAYMAN) LIMITED,
as Trustee for the JOYA TRUST dated
November 27, 1995
/s/ K. M. Xxxx (Director)
By:__________________________________
FIDUCIARY TRUST (CAYMAN) LIMITED,
as Trustee for XXXXXXXXX TRUST, dated
November 27, 1995
/s/ K. M. Xxxx (Director)
By:__________________________________
FIDUCIARY TRUST (CAYMAN) LIMITED,
as Trustee for RELIC TRUST, dated
November 27, 1995
/s/ K. M. Xxxx (Director)
By:__________________________________
/s/ L. Xxxxx Xxxxx
_____________________________________
L. Xxxxx Xxxxx
/s/ Xxxxxxxx X. Xxxxxxx
_____________________________________
Xxxxxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxxxx
_____________________________________
Xxxxx Xxxxxxxx
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
61
ATLANTIC BOUQUET COMPANY, LIMITED,
a Florida limited partnership
General Partner:
CONTINENTAL FARMS MANAGEMENT, INC.
a Florida corporation, the General Partner
/s/ L. Xxxxx Xxxxx
By:___________________________________
L. Xxxxx Xxxxx
President
Limited Partner:
CONTINENTAL FARMS LIMITED
a Florida limited partnership
/s/ L. Xxxxx Xxxxx
By:__________________________________
L. Xxxxx Xxxxx
President of General Partner
CONTINENTAL FARMS
MANAGEMENT, INC.
a Florida corporation, the General Partner
62
ATLANTIC BOUQUET COMPANY, LIMITED,
a Florida limited partnership
General Partner:
CONTINENTAL FARMS MANAGEMENT, INC.
a Florida corporation, the General Partner
/s/ Xxxxxxxx X. Xxxxxxx
By:___________________________________
Xxxxxxxx X. Xxxxxxx
Vice President
Limited Partner:
CONTINENTAL FARMS LIMITED
a Florida limited partnership
/s/ Xxxxxxxx X. Xxxxxxx
By:__________________________________
Xxxxxxxx X. Xxxxxxx
Vice President of General Partner
CONTINENTAL FARMS
MANAGEMENT, INC.
a Florida corporation, the General Partner
63
