EXHIBIT 10.02
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF CONTRIBUTION
by and among
USA FLORAL PRODUCTS, INC.
(a Delaware corporation),
FLORAL ACQUISITION CORPORATION
(a Florida corporation),
CFX, INC.
(a Florida corporation),
and
THE STOCKHOLDERS OF CFX, INC.
Dated as of August 5, 1997,
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TABLE OF CONTENTS
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Page
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1. THE MERGER.............................................................................. 2
1.1 Delivery and Filing of Articles of Merger......................................... 2
1.2 Merger Effective Date............................................................. 2
1.3 Articles of Incorporation, Bylaws and Board of Directors of Surviving
Corporation....................................................................... 2
1.4 Certain Information with Respect to the Capital Stock of the COMPANY,
NEWCO and USFLORAL................................................................ 2
1.5 AAA Distribution.................................................................. 3
2. CONVERSION AND EXCHANGE OF STOCK........................................................ 3
2.1 Manner of Conversion.............................................................. 3
2.2 Calculation of USFLORAL Shares.................................................... 4
3. DELIVERY OF SHARES; ALLOCATION OF CONSIDERATION......................................... 4
4. POST CLOSING ADJUSTMENT; PLEDGE OF SHARES............................................... 4
5. CLOSING; MERGER EFFECTIVE DATE.......................................................... 6
6. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS.......................................... 7
6.1 Due Organization.................................................................. 7
6.2 Authorization..................................................................... 7
6.3 Capital Stock..................................................................... 7
6.4 Transactions in Capital Stock..................................................... 8
6.5 No Bonus Shares................................................................... 8
6.6 Subsidiaries...................................................................... 8
6.7 Predecessor Status................................................................ 8
6.8 Spin-off by the COMPANY........................................................... 8
6.9 Financial Statements.............................................................. 8
6.10 Liabilities and Obligations....................................................... 8
6.11 Accounts and Notes Receivable..................................................... 9
6.12 Permits and Intangibles........................................................... 9
6.13 Real and Personal Property........................................................ 9
6.14 Material Contracts and Commitments................................................10
6.15 Title to Real Property............................................................10
6.16 Insurance.........................................................................10
6.17 Officers, Directors and Employees Compensation....................................11
6.18 Employee Plans....................................................................11
6.19 Compliance with ERISA.............................................................11
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6.20 Conformity with Law...............................................................13
6.21 Taxes.............................................................................13
6.22 Completeness; No Violations.......................................................14
6.23 Government Contracts..............................................................14
6.24 Absence of Changes................................................................14
6.25 Deposit Accounts; Powers of Attorney..............................................15
6.26 Environmental Matters.............................................................16
6.27 Underground Storage Tanks.........................................................16
6.28 Validity of Obligations...........................................................16
6.29 Relations with Governments........................................................16
6.30 Disclosure........................................................................17
6.31 Ownership.........................................................................17
7. REPRESENTATIONS OF USFLORAL AND NEWCO...................................................17
7.1 Due Organization..................................................................17
7.2 USFLORAL Stock....................................................................17
7.3 Authorization.....................................................................18
7.4 Validity of Obligations...........................................................18
7.5 No Conflicts......................................................................18
7.6 Other Agreements..................................................................18
7.7 Reasonable and Adequate Capital...................................................19
8. COVENANTS PRIOR TO CLOSING..............................................................19
8.1 Access and Cooperation............................................................19
8.2 Conduct of Business...............................................................19
8.3 Prohibited Activities.............................................................20
8.4 Supplier Approval.................................................................21
8.5 [intentionally omitted]...........................................................21
8.6 No Shop...........................................................................21
8.7 Notification of Certain Matters...................................................21
8.8 Amendment of Schedules............................................................22
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS.....................................22
9.1 Representations and Warranties; Performance of Obligations........................22
9.2 No Litigation.....................................................................22
9.3 Employment Agreements.............................................................22
9.4 Opinion of Counsel................................................................22
9.5 Registration Statement............................................................23
9.6 Market Capitalization.............................................................23
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF USFLORAL AND NEWCO...............................23
10.1 Representations and Warranties; Performance of Obligations........................23
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10.2 No Litigation.....................................................................24
10.3 Examination of Financial Statements...............................................24
10.4 No Material Adverse Change........................................................24
10.5 Regulatory Review.................................................................24
10.6 STOCKHOLDERS Release..............................................................24
10.7 Employment Agreements.............................................................24
10.8 Opinion of Counsel................................................................24
10.9 Consents and Approvals............................................................25
10.10 Additional Liabilities and Obligations............................................26
10.11 Additional Contracts..............................................................26
10.12 Good Standing Certificates........................................................26
10.13 Registration Statement............................................................26
10.14 Repayment of Indebtedness.........................................................26
10.15 Pretax Income.....................................................................26
11. COVENANTS OF USFLORAL...................................................................26
11.1 Release From Guarantees...........................................................26
11.2 USFLORAL Stock Options............................................................27
11.3 34 Act Obligations................................................................27
11.4 Certain Transactions..............................................................27
11.5 Piggy-Back Registrations..........................................................27
12. INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.............................28
12.1 General Indemnification by STOCKHOLDERS...........................................28
12.2 Specific Indemnification by the STOCKHOLDERS......................................29
12.3 Indemnification by USFLORAL and NEWCO.............................................29
12.4 Third-Person Claims...............................................................30
12.5 Limitations on Indemnification....................................................31
12.6 Survival of Representations and Warranties........................................31
12.7 Sole Remedies.....................................................................32
13. TERMINATION OF AGREEMENT................................................................32
13.1 Termination by the Parties........................................................32
13.2 Liquidated Damages................................................................32
14. NONCOMPETITION..........................................................................32
14.1 Prohibited Activities.............................................................32
14.2 Damages...........................................................................33
14.3 Reasonable Restraint..............................................................33
14.4 Severability; Reformation.........................................................34
14.5 Independent Covenant..............................................................34
14.6 Materiality.......................................................................34
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15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION...............................................34
15.1 STOCKHOLDERS......................................................................34
15.2 USFLORAL..........................................................................34
15.3 Damages...........................................................................35
16. LOCK-UP AGREEMENTS......................................................................35
17. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON USFLORAL STOCK...................35
17.1 Compliance with Law...............................................................36
17.2 Economic Risk; Sophistication.....................................................36
17.3 Registration Statement............................................................36
18. SECURITIES LEGENDS......................................................................36
19. GENERAL.................................................................................37
19.1 Cooperation.......................................................................37
19.2 Successors and Assigns............................................................37
19.3 Entire Agreement..................................................................37
19.4 Counterparts......................................................................37
19.5 Brokers and Agents................................................................38
19.6 Expenses..........................................................................38
19.7 Notices...........................................................................38
19.8 Governing Law.....................................................................39
19.9 Exercise of Rights and Remedies...................................................39
19.10 Time..............................................................................39
19.11 Reformation and Severability......................................................39
19.12 Remedies Cumulative...............................................................39
19.13 Captions..........................................................................39
ANNEX I Form of Articles of Merger
ANNEX II Calculation and Composition of Consideration
ANNEX III Form of Employment Agreement
SCHEDULES
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AMENDED AND RESTATED AGREEMENT AND PLAN OF CONTRIBUTION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF CONTRIBUTION (the "Agreement")
is made as of the 5th day of August, 1997, between USA FLORAL PRODUCTS, INC., a
Delaware corporation ("USFLORAL"), FLORAL ACQUISITION CORPORATION, a Florida
corporation ("NEWCO"), CFX, INC., a Florida corporation (the "COMPANY"), and
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (collectively referred to as the
"STOCKHOLDERS"), who are all of the stockholders of the COMPANY.
WHEREAS, USFLORAL was incorporated on April 2, 1997 (the "Formation") under
the laws of the State of Delaware for the purpose of acquiring floral products
businesses in different locations; and
WHEREAS, USFLORAL intends to undertake an initial public offering of its stock
(the "IPO") and in connection therewith intends to file a Registration Statement
on Form S-1 with the Securities and Exchange Commission within 30 days of the
execution and delivery of this Agreement; and
WHEREAS, NEWCO has been duly organized and is existing under the laws of the
State of Florida solely for the purpose of completing this transaction, and is a
wholly owned subsidiary of USFLORAL; and
WHEREAS, the COMPANY is a corporation organized and existing under the laws of
the State of Florida; and
WHEREAS, the respective Boards of Directors of USFLORAL, NEWCO and the COMPANY
(all of which companies are hereinafter collectively referred to as the
"Constituent Corporations") deem it advisable and in the best interests of the
Constituent Corporations and their respective stockholders that NEWCO merge with
and into the COMPANY pursuant to this Agreement and the applicable provisions of
the laws of the State of Florida, such transaction being herein called the
"Merger"; and
WHEREAS, the Formation, the IPO and the Merger are being undertaken pursuant
to an integrated transaction intended to qualify under Section 351 of the
Internal Revenue Code of 1986, as amended;
WHEREAS, the parties hereto entered into that certain Agreement and Plan of
Contribution on July 8, 1997 (the "Original Agreement") and now wish to amend
and restate the Original Agreement in its entirety as of August 5, 1997 in order
to achieve conformity with similar agreements USFLORAL has entered into with
other floral products businesses;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements,
representations, warranties, provisions and covenants herein contained, the
parties hereto hereby agree as follows:
1. THE MERGER
1.1 Delivery and Filing of Articles of Merger. The Constituent Corporation
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will cause Articles of Merger in substantially the form of Annex I attached
hereto (the "Articles of Merger") to be signed and delivered to the Secretary of
State of Florida on or before the Merger Effective Date (as defined in Section
5).
1.2 Merger Effective Date. The "Merger Effective Date" shall be the date
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specified in Section 5. At the Merger Effective Date, NEWCO shall be merged
with and into the COMPANY in accordance with the Articles of Merger and the
separate existence of NEWCO shall cease. The COMPANY, as the party surviving
the Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
1.3 Articles of Incorporation, Bylaws and Board of Directors of Surviving
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Corporation. At the Merger Effective Date:
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(i) the Articles of Incorporation of NEWCO shall become the Articles of
Incorporation of the Surviving Corporation; and, subsequent to the Merger
Effective Date, such Articles of Incorporation shall be the Articles of
Incorporation of the Surviving Corporation until changed as provided by law;
(ii) the Bylaws of NEWCO shall become the Bylaws of the Surviving
Corporation; and, subsequent to the Merger Effective Date, such Bylaws shall be
the Bylaws of the Surviving Corporation until they shall thereafter be duly
amended;
(iii) the name of the person who shall serve as the sole member of the
Board of Directors of the Surviving Corporation shall be ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; the
Director of the Surviving Corporation shall hold office subject to the
provisions of the laws of the State of Florida and of the Articles of
Incorporation and Bylaws of the Surviving Corporation.
(iv) the officers of COMPANY immediately prior to the Merger Effective
Date shall continue as the officers of the Surviving Corporation in the same
capacity or capacities, each of such officers to serve, subject to the
provisions of the Articles of Incorporation and Bylaws of the Surviving
Corporation, until his successor is elected and qualified.
1.4 Certain Information with Respect to the Capital Stock of the COMPANY,
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NEWCO and USFLORAL. The respective designations and numbers of outstanding
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shares and voting rights of each class of outstanding capital stock of COMPANY,
NEWCO and USFLORAL as of the date of this Agreement are as follows:
(i) the authorized capital stock of the COMPANY consists of 1,000
shares of common stock, $5.00 par value (the "COMPANY Stock"), of which 600
shares are issued and outstanding;
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(ii) the authorized capital stock of NEWCO consists of 1,000 shares of
common stock, $1.00 par value (the "NEWCO Stock"), of which 1,000 shares are
issued and outstanding; and
(iii) the authorized capital stock of USFLORAL consists of 100,000,000
shares of common stock, $0.01 par value (the "USFLORAL Stock").
1.5 AAA Distribution. The parties agree that, immediately prior to the
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Closing, the COMPANY shall distribute to its stockholders the amount of the
COMPANY's accumulated adjustments account (the "AAA Distribution"). The AAA
Distribution may be paid in whole or in part in cash, to the extent the COMPANY
has cash on hand or available to it under lines of credit, and/or by delivery of
the COMPANY's promissory note (which shall not bear interest), which note shall
be due and payable on the Merger Effective Date. On the Merger Effective Date,
USFLORAL agrees to provide sufficient cash to the COMPANY to enable it to pay
said note. Notwithstanding any provision of this Agreement to the contrary,
payment of the AAA Distribution and the resulting decrease in the COMPANY's net
worth and adverse change in the COMPANY's financial position are expressly
consented to and shall not constitute a default by the COMPANY or the
STOCKHOLDERS hereunder or excuse performance by USFLORAL or NEWCO of their
respective obligations.
2. CONVERSION AND EXCHANGE OF STOCK
2.1 Manner of Conversion. The manner of converting the shares of COMPANY
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Stock issued and outstanding immediately prior to the Merger Effective Date into
cash and shares of common stock of USFLORAL, $0.01 par value ("USFLORAL Stock"),
shall be as follows:
As of the Merger Effective Date:
(i) all of the shares of COMPANY Stock issued and outstanding
immediately prior to the Merger Effective Date shall, by virtue of the Merger
and without any action on the part of the holder thereof, automatically be
converted into that number of shares of USFLORAL Stock and the right to receive
cash from USFLORAL as determined pursuant to Section 2.2 below, all to be
distributed to STOCKHOLDERS in the percentages set forth on Annex II and at the
times specified in Section 5 hereof; and
(ii) each share of NEWCO Stock issued and outstanding immediately prior
to the Effective Time of the Merger Effective Date shall, by virtue of the
Merger and without any action on the part of the holder thereof, automatically
be converted into one fully paid and non-assessable share of stock of the
Surviving Corporation which shall constitute all of the outstanding shares of
said Surviving Corporation immediately after the Merger Effective Date.
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All USFLORAL Stock to be received by STOCKHOLDERS as a result of the Merger
shall, except for restrictions on resale or transfer described in Section 16
hereof, have the same rights as the majority of outstanding USFLORAL Stock. All
voting rights are fully exercisable by STOCKHOLDERS and STOCKHOLDERS are neither
deprived nor restricted in exercising those rights. At the Merger Effective
Date, USFLORAL shall have no class of capital stock issued and outstanding which
shall have any rights or preferences senior to the shares of USFLORAL Stock,
including, without limitation, any rights or preferences as to dividends or as
to the assets of USFLORAL upon liquidation or dissolution or as to voting
rights.
2.2 Calculation of USFLORAL Shares. The COMPANY Stock shall be converted, as
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a result of the Merger, into such number of shares of USFLORAL Stock and the
amount of cash set forth on Annex II attached hereto.
3. DELIVERY OF SHARES; ALLOCATION OF CONSIDERATION
3.1 At the Merger Effective Date:
(i) STOCKHOLDERS, as the holders of all outstanding certificates
representing shares of COMPANY Stock, shall, upon surrender of such
certificates, be entitled to receive the number of shares of USFLORAL Stock set
forth on Annex II opposite the name of each STOCKHOLDER; and
(ii) until the certificates representing the COMPANY Stock have been
surrendered by STOCKHOLDERS and replaced by certificates representing the
USFLORAL Stock, the certificates for the COMPANY Stock shall, for all corporate
purposes be deemed to evidence ownership of the USFLORAL Stock notwithstanding
the number of shares of COMPANY Stock such certificates represent.
3.2 The STOCKHOLDERS shall deliver at the Closing (as defined in Section 5
hereof) the certificates representing the respective shares of COMPANY Stock,
duly endorsed in blank by the STOCKHOLDERS or accompanied by blank stock powers,
with signatures guaranteed by a national bank. The STOCKHOLDERS agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such COMPANY Stock or with respect to
the stock powers accompanying any COMPANY Stock.
4. POST CLOSING ADJUSTMENT; PLEDGE OF SHARES
4.1 As soon as practicable, but in any event within 30 days after the Closing,
USFLORAL shall engage Price Waterhouse to prepare, in accordance with GAAP, a
balance sheet of the COMPANY (the "Closing Date Balance Sheet") as of the end of
business on the day prior to the Closing Date, adding back to shareholders'
equity for purposes of the Closing Date Balance Sheet the amount of the AAA
Distribution. If the aggregate shareholders' equity as shown on the Closing Date
Balance Sheet is less than the aggregate shareholders' equity as shown on the
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COMPANY's Balance Sheet as at December 31, 1996, within 30 business days after
delivery of the Closing Date Balance Sheet to USFLORAL and the STOCKHOLDERS, the
STOCKHOLDERS shall pay USFLORAL by wire transfer of immediately available funds
an amount equal to the net worth deficiency. Notwithstanding anything in this
Article 4 to the contrary, if there is any net worth deficiency and the
STOCKHOLDERS dispute any item contained on the Closing Date Balance Sheet, the
STOCKHOLDERS shall notify USFLORAL in writing of each disputed item
(collectively, the "Disputed Amounts"), and specify the amount thereof in
dispute within thirty business days after the delivery of the Closing Date
Balance Sheet. If USFLORAL and the STOCKHOLDERS cannot resolve any such dispute
which would eliminate or reduce the amount of the net worth deficiency, then
such dispute shall be resolved by an independent nationally recognized
accounting firm which is reasonably acceptable to USFLORAL and the STOCKHOLDERS
(the "Independent Accounting Firm"). The determination of the Independent
Accounting Firm shall be made as promptly as practical and shall be final and
binding on the parties, absent manifest error which error may only be corrected
by such Independent Accounting Firm. Any expenses relating to the engagement of
the Independent Accounting Firm shall be allocated between USFLORAL and the
STOCKHOLDERS so that the STOCKHOLDERS' aggregate share of such costs shall bear
the same proportion to the total costs that the Disputed Amounts unsuccessfully
contested by the STOCKHOLDERS (as finally determined by the Independent
Accounting Firm) bear to the total of the Disputed Amounts so submitted to the
Independent Accounting Firm.
4.2 (a) As collateral security for the payment of any indemnification
obligations of the STOCKHOLDERS pursuant to Sections 12.1 and 12.2 hereof and
for the payment of amounts pursuant to Section 4.1 hereof, at the Closing each
Stockholder shall, and by execution hereof does hereby, transfer, pledge and
assign to USFLORAL, for the benefit of USFLORAL, a security interest in the
following assets:
(i) the number of shares of USFLORAL Stock set forth beside such
Stockholder's name in the column entitled "Number of Shares Pledged"
(collectively with respect to all STOCKHOLDERS, the "Pledged Securities") on
Annex II, the certificates and instruments representing or evidencing such
Stockholder's Pledged Securities, and all cash and non-cash dividends and other
property at any time received or otherwise distributed in respect of or in
exchange for any or all of such Stockholder's Pledged Securities; and in the
event such Stockholder receives any such certificates or property, such
Stockholder shall immediately deliver such certificates or property to USFLORAL
to be held hereunder as Pledged Securities;
(ii) all securities hereafter delivered to such Stockholder in
substitution for any of the foregoing, all certificates and instruments
representing or evidencing such securities, and all cash and non-cash dividends
and other property at any time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof; and in the event such
Stockholder receives any such property, such Stockholder shall immediately
deliver such property to USFLORAL to be held hereunder as Pledged Securities;
and
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(iii) all cash and non-cash proceeds of all of the foregoing property
and all rights, titles, interests, privileges and preferences appertaining or
incident to the foregoing property.
(b) Each certificate evidencing a Stockholder's Pledged Securities
issued in his, her or its name in the Merger, shall, at the Closing, be
delivered to USFLORAL, together with a stock power duly signed in blank by him,
her or it, such certificate bearing no restrictive or cautionary legend other
than those imprinted by USFLORAL's transfer agent at USFLORAL's request.
(c) The STOCKHOLDERS shall be entitled to exercise any voting powers
incident to the Pledged Securities and to receive and retain all cash dividends
paid thereon.
(d) In the event that STOCKHOLDERS fail to timely pay USFLORAL any
amount which it is due pursuant to Sections 12.1 or 12.2 hereof, USFLORAL shall
have all the rights of a secured party under the Uniform Commercial Code as in
effect in Florida with respect to the unpaid amount; provided, however, that
prior to exercising such remedies USFLORAL shall give STOCKHOLDERS 10 days'
prior notice of the unpaid amount and a description of the determination
thereof. During such 10-day period, STOCKHOLDERS shall have the right to object
to such unpaid amount. If STOCKHOLDERS do not object by delivering written
notice to USFLORAL within such 10-day period, STOCKHOLDERS shall be deemed to
have irrevocably agreed to the validity of such unpaid amount. If STOCKHOLDERS
do so object, USFLORAL shall review the objections and respond to the
STOCKHOLDERS. If the parties do not resolve the dispute within 30 days of the
date of the STOCKHOLDERS' objection, the parties agree to submit the dispute for
binding arbitration with a panel of three arbitrators appointed by the American
Arbitration Association under the Commercial Arbitration Rules of such
Association then in effect using the Federal Rules of Civil Procedure.
(e) The remaining Pledged Securities shall be returned to the holders
thereof on the one-year anniversary of the Merger Effective Date.
5. CLOSING; MERGER EFFECTIVE DATE
Within two business days following the date on which the price of the shares
of USFLORAL Stock in the IPO described in Section 9.5 shall have been
determined, the parties shall take all actions necessary to effect the Merger
(including the filing of the Articles of Merger which shall become effective on
the Merger Effective Date) and to effect the conversion and delivery of shares
referred to in Section 3 hereof (hereinafter referred to as the "Closing");
provided, that such actions shall not include the actual completion of the
Merger or the conversion and delivery of the shares referred to in Section 3
hereof, which actions shall only be taken on the Merger Effective Date as herein
provided. The Closing shall take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, 5300 First Union Financial Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇. The date on which the Closing shall occur shall be referred to
as the "Closing Date." Concurrently with the closing in
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respect of the IPO, the Merger shall become effective and all transactions
contemplated by this Agreement, including the conversion and delivery of shares
and the delivery of a check or checks in an amount equal to the cash which the
STOCKHOLDERS shall be entitled to receive pursuant to the Merger referred to in
Section 3 hereof, shall occur and be deemed to be completed. The date on which
the Merger is effected shall be referred to as the "Merger Effective Date."
During the period from the Closing Date to the Merger Effective Date, this
Agreement may only be terminated by the parties if the underwriting agreement in
respect of the initial public offering of USFLORAL Stock is terminated pursuant
to the terms of such agreement. This Agreement shall in any event terminate if
the Merger Effective Date has not occurred within 10 business days of the
Closing Date.
6. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
As of the date hereof and as of each of the Closing Date and the Merger
Effective Date, each STOCKHOLDER, jointly and severally, represents and
warrants, as follows:
6.1 Due Organization. The COMPANY is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Florida, and is
duly authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted except (i) as set forth on Schedule
6.1 or (ii) 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) (a "Material Adverse Effect"), of
the COMPANY. True, complete and correct copies of the Articles of Incorporation
(certified by the Secretary of State of Florida) and Bylaws (certified by the
Secretary of the COMPANY) of the COMPANY have heretofore been delivered to
USFLORAL. The stock records and minute books of the COMPANY, as heretofore made
available to USFLORAL, are correct and complete.
6.2 Authorization. STOCKHOLDERS and the COMPANY have full legal right, power
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and authority to enter into this Agreement and have the full legal right, power
and authority to enter into the Merger.
6.3 Capital Stock. The authorized capital stock of the COMPANY consists
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solely of the shares as shown on Schedule 6.3, of which the shares issued and
outstanding are shown. Except as set forth on Schedule 6.3, all of the issued
and outstanding shares of the capital stock of the COMPANY are owned by the
STOCKHOLDERS free and clear of all liens, security interests, pledges, charges,
voting trusts, restrictions, encumbrances and claims of every kind. All of the
issued and outstanding shares of COMPANY Stock have been duly authorized and
validly issued, are fully paid and nonassessable, are owned of record and
beneficially by the STOCKHOLDERS and in the amounts set forth in Annex II and
further, such shares were offered, issued, sold and delivered by the COMPANY in
compliance with all applicable state and federal laws concerning the issuance of
securities. Further, none of such shares were issued in violation of the
preemptive rights of any past or present stockholder.
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6.4 Transactions in Capital Stock. The COMPANY has never acquired
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any treasury stock. No option, warrant, call, conversion right or commitment of
any kind exists which obligates the COMPANY to issue any of its authorized but
unissued capital stock. In addition, the COMPANY has no obligation (contingent
or otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or, except as set forth in Section 1.5
hereof, to pay any dividend or make any distribution in respect thereof.
6.5 No Bonus Shares. None of the shares of the COMPANY Stock was issued
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pursuant to awards, grants or bonuses.
6.6 Subsidiaries. Except as set forth on Schedule 6.6, the COMPANY presently
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owns, of record or beneficially, or controls, directly or indirectly, no capital
stock, securities convertible into capital stock or any other equity interest in
any corporation, association or business entity. The COMPANY is not, directly
or indirectly, a participant in any joint venture, partnership or other
noncorporate entity.
6.7 Predecessor Status. Set forth in Schedule 6.7 is a listing of all names
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of all predecessor companies of the COMPANY, including the names of any entities
from whom the COMPANY previously acquired significant assets. The COMPANY has
never been a subsidiary or division of another corporation nor been a part of an
acquisition which was later rescinded.
6.8 Spin-off by the COMPANY. The COMPANY has never effected any sale or spin-
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off of significant assets other than in the ordinary course of business.
6.9 Financial Statements. Attached hereto as Schedule 6.9 are copies of the
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following audited financial statements (the "Financial Statements") of the
COMPANY: Statement of Financial Condition as of December 31, 1996, 1995 and
1994 and Statements of Incomes, Cash Flows and Shareholders Equity for each of
the years in the three-year period ended December 31, 1996, and the COMPANY's
unaudited Statement of Financial Condition as of March 31, 1997 and March 31,
1996 (March 31, 1997 being hereinafter referred to as the "Balance Sheet Date"),
and Statements of Incomes, Cash Flows and Shareholders Equity for the five-month
periods then ended. Such Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as noted). Except as set forth on
Schedule 6.9, such Statements of Financial Condition present fairly the
financial position of the COMPANY as of the dates indicated thereon, and such
Statements of Incomes, Cash Flows and Shareholders Equity present fairly the
results of its operations for the periods indicated thereon.
6.10 Liabilities and Obligations. Attached hereto as Schedule 6.10 is
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an accurate list, as of the Balance Sheet Date, of all material liabilities of
the COMPANY, which are reflected in the Statement of Financial Condition as of
March 31, 1997 and any material liabilities incurred thereafter in the ordinary
course of business, or material liabilities which are not reflected in the
balance sheet or the notes thereof, of any kind, character and description,
whether accrued, absolute,
-8-
secured or unsecured, contingent or otherwise, together with, in the case of
those liabilities which are not fixed, an estimate of the maximum amount which
may be payable. For each such liability for which the amount is not fixed or is
contested, STOCKHOLDERS shall provide to USFLORAL the following information:
(i) a summary description of the liability together with the following:
(a) copies of all relevant documentation relating thereto;
(b) amounts claimed and any other action or relief sought;
(c) names of claimant and all other parties to the claim, suit or
proceeding.
(ii) the name of each court or agency before which such claim, suit or
proceeding is pending;
(iii) the date such claim, suit or proceeding was instituted;
(iv) a best estimate by the STOCKHOLDERS of the maximum amount, if any,
which is likely to become payable with respect to each such liability (exclusive
of the costs of defense thereof). If no estimate is provided, the STOCKHOLDERS'
best estimate shall for purposes of this Agreement be deemed to be zero.
6.11 Accounts and Notes Receivable. Attached hereto as Schedule 6.11 is
-----------------------------
an accurate list as of the Balance Sheet Date of the accounts and notes
receivable of the COMPANY, including receivables from and advances to employees
and STOCKHOLDERS. STOCKHOLDERS shall provide USFLORAL with an aging of all
accounts and notes receivable showing amounts due in 30 day aging categories.
Except as set forth on Schedule 6.11, such accounts and notes are collectible in
the amount shown on Schedule 6.11 net of the allowance for doubtful accounts as
shown on such balance sheet.
6.12 Permits and Intangibles. Attached hereto as Schedule 6.12 is an
-----------------------
accurate list and summary description, as of the Balance Sheet Date, of all
permits, licenses, franchises, certificates, trademarks, trade names, service
marks, patents, patent applications and copyrights owned or held by the COMPANY
all of which are now valid, in good standing and in full force and effect.
Except as set forth on Schedule 6.12, such permits, licenses, orders, approvals,
franchises, etc. are adequate for the operation of the COMPANY's business as
presently constituted.
6.13 Real and Personal Property. Attached hereto as Schedule 6.13 is an
--------------------------
accurate list, including substantially complete descriptions as of the Balance
Sheet Date, of all the real and personal property (which in the case of personal
property had an original cost in excess of $50,000 or in the case of leased
property requires annual rental payments in excess of $5,000) owned or
-9-
leased by the COMPANY, including true and correct copies of leases for equipment
and properties on which are situated buildings, warehouses and other structures
used in the operation of the busi ness of the COMPANY and including an
indication as to which assets were formerly owned by the STOCKHOLDERS or
affiliates (which term, as used herein, shall have the meaning ascribed thereto
in Rule 144(a)(1) under the Securities Act of 1933, as amended) of the COMPANY.
Except as set forth on Schedule 6.13, substantially all of the trucks, machinery
and equipment of the COMPANY are in good working order and condition, ordinary
wear and tear excepted. All leases set forth on Schedule 6.13 have been duly
authorized, executed and delivered and constitute the legal, valid and binding
obligations of the COMPANY and, except as set forth on Schedule 6.13, to the
knowledge of the STOCKHOLDERS, no other party to any such lease is in default
thereunder and such leases constitute the legal, valid and binding obligations
of such other parties. All fixed assets used by the COMPANY in the operation of
its business are either owned by the COMPANY or leased.
6.14 Material Contracts and Commitments. Attached hereto as Schedule
----------------------------------
6.14 is an accurate list, as of the Balance Sheet Date, of all material
contracts, commitments and similar agreements to which the COMPANY is a party or
by which it or any of its properties are bound (including, but not limited to,
joint venture or partnership agreements, contracts with any labor organizations,
loan agreements, indemnity or guaranty agreements, bonds, mortgages, options to
purchase land, liens, pledges or other security agreements). STOCKHOLDERS have
heretofore delivered to USFLORAL true copies of such agreements. Except as set
forth on Schedule 6.14, the COMPANY has complied with all material commitments
and obligations pertaining to it and is not in material default under any such
agreement and no notice of default has been received. Except as set forth on
Schedule 6.14, the COMPANY is not a party to any contract, agreement or other
instrument or commitment which cannot be terminated by the COMPANY on 30 days'
notice without any liability to the COMPANY which would have a Material Adverse
Effect on the COMPANY taken as a whole. Except as set forth on Schedule 6.14,
the COMPANY is not bound by or subject to (and none of its assets or properties
is bound by or subject to) any arrangement with any labor union. Except as set
forth on Schedule 6.14, no employees of the COMPANY are represented by any labor
union or covered by any collective bargaining agreement nor, to the best of
STOCKHOLDERS' knowledge, is any organization campaign to establish such
representation in progress. There is no pending or, to the best of
STOCKHOLDERS' knowledge, threatened labor dispute involving the COMPANY and any
group of its employees nor has the COMPANY experienced any labor interruptions
over the past three years and the COMPANY considers its relationship with
employees to be good.
6.15 Title to Real Property. The COMPANY does not own any real property.
----------------------
6.16 Insurance. Attached hereto as Schedule 6.16 is an accurate list, as
---------
of the Balance Sheet Date, of all insurance policies carried by the COMPANY and
an accurate list of all insurance loss runs or worker's compensation claims
received for the past three policy years. STOCKHOLDERS have heretofore delivered
to USFLORAL complete copies of all policies currently in effect. The insurance
carried by the COMPANY with respect to its properties, assets and business is
with financially sound insurers. Such insurance policies are currently in full
force
-10-
and effect and shall remain in full force and effect, or comparable policies
substituted therefor, through the Merger Effective Date. The COMPANY's
insurance has never been canceled nor has the COMPANY ever been denied coverage.
6.17 Officers, Directors and Employees Compensation. Attached hereto as
----------------------------------------------
Schedule 6.17 is an accurate schedule showing all officers, directors and
employees of the COMPANY. The COMPANY has delivered to USFLORAL a true and
complete schedule of the rate of compensation (and the portions thereof
attributable to salary, bonus and other compensation, respectively) of
directors, officers and key employees, as of the Balance Sheet Date.
STOCKHOLDERS have heretofore delivered to USFLORAL copies of the payroll lists
covering all employees of the COMPANY as of a recent date. Since the Balance
Sheet Date in the case of Schedule 6.17, and since the date of such payroll list
in the case of all other employees, there have been no increases in the
compensation payable to any officer, director, key employee or other employee,
except ordinary salary increases and tax payment distributions implemented on a
basis consistent with past practices.
6.18 Employee Plans. Attached hereto as Schedule 6.18 is a list, as of
--------------
the Balance Sheet Date, of all employee benefit plans, all employee welfare
benefit plans, all employee pension benefit plans, all multi-employer plans and
all multi-employer welfare arrangements (as defined in Sections 3(3), (1), (2),
(37) and (40), respectively, of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), which are currently maintained and/or sponsored by
the COMPANY or to which the COMPANY 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), including any trusts related thereto and a
classification of employees covered thereby (collectively, the "Plans").
Schedule 6.18 sets forth all of the Plans that have been terminated within the
past three years.
6.19 Compliance with ERISA. All Plans are in substantial compliance with
---------------------
all applicable provisions of ERISA and the regulations issued thereunder, as
well as with all other applicable laws, and, in all material respects, have been
administered, operated and managed in substantial accordance with the governing
documents. All Plans that are intended to qualify (the "Qualified Plans") under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code")
have been determined by the Internal Revenue Service to be so qualified, and
copies of the current plan determination letters, most recent actuarial
valuation reports, if any, most recent Form 5500, or, as applicable, Form 5500-
C/R filed with respect to each such Qualified Plan or employee welfare benefit
plan and most recent trustee or custodian report, have been delivered to
USFLORAL. To the extent that any Qualified Plans have not been amended to comply
with applicable law, the remedial amendment period permitting retroactive
amendment of such Qualified Plans has not expired and will not expire within 120
days after the Closing Date. All reports and other documents required to be
filed with any governmental agency or distributed to plan participants or
beneficiaries (including, but not limited to, annual reports, summary annual
reports, actuarial reports, PBGC-1 Forms, audits or tax returns) have been
timely filed or distributed. None of: (i) the STOCKHOLDERS; (ii) any Plan; or
(iii) the COMPANY has engaged in any transaction prohibited under the provisions
of Section 4975 of the Code or Section 406 of ERISA, except for transactions
-11-
for which an individual class exemption exists under Section 4975 of the Code or
Section 408 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 the
COMPANY currently has no (and at the Closing Date will not have) direct or
indirect liability whatsoever (including being subject to any statutory lien to
secure payment of any such liability), to the Pension Benefit Guaranty
Corporation ("PBGC") with respect to any such Plan under Title IV of ERISA or to
the Internal Revenue Service for any excise tax or penalty; and neither the
COMPANY nor any member of a "controlled group" (as defined in ERISA Section
4001(a)(14)) currently have (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:
(i) there have been no terminations or partial terminations of any
Qualified Plan without notice to and approval by the Internal Revenue Service;
(ii) no Plan which is subject to the provisions of Title IV of ERISA
has been terminated;
(iii) there have been no "reportable events" (as that phrase is defined
in Section 4043 of ERISA) with respect to any Plan which were required to be
reported and were not properly reported;
(iv) 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;
(v) with respect to Plans which qualify as "group health plans" under
Section 4980B of the Internal Revenue Code and Section 607(1) of ERISA and
related regulations (relating to the benefit continuation rights imposed by
"COBRA"), the COMPANY has complied (and on the Closing Date will have complied),
in all respects with all reporting, disclosure, notice, election and other
benefit continuation requirements imposed thereunder as and when applicable to
such plans, and the COMPANY has (and will incur) no direct or indirect liability
and is not (and will not be) subject to any loss, assessment, excise tax
penalty, loss of federal income tax deduction or other sanction, arising on
account of or in respect of any direct or indirect failure by the COMPANY at any
time prior to the Closing Date, to comply with any such federal or state benefit
continuation requirement, which is capable of being assessed or asserted before
or after the Closing Date directly or indirectly against the COMPANY with
respect to such group health plans;
(vi) the COMPANY is a member of a "controlled group" as defined in
ERISA Section 4001(a)(14) which is described on Schedule 6.19 attached hereto;
-12-
(vii) there is no pending litigation, arbitration, or disputed claim,
settlement or adjudication proceeding, and to the best of STOCKHOLDERS'
knowledge, there is no threatened litigation, arbitration or disputed claim,
settlement or adjudication proceeding, or any governmental or other 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, except routine claims for benefits;
(viii) 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 not to be representative of the expense of
such Plans as of the Balance Sheet Date; and
(ix) the COMPANY has never incurred liability under Section 4062 of
ERISA.
6.20 Conformity with Law. Except as set forth on Schedule 6.20, the
-------------------
COMPANY is not in violation of any law or regulation or under any order of any
court or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction which would have a
Material Adverse Effect on the COMPANY; and except as set forth on Schedule
6.20, there are no claims, actions, suits or proceedings, pending or threatened,
against or affecting the COMPANY 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 and no notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received. The COMPANY 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 would have a Material Adverse Effect on
the COMPANY.
6.21 Taxes. The COMPANY has filed or will file in a timely manner all
-----
requisite federal, state, local and other tax returns for all tax years ended on
or before the Closing Date. To the best of STOCKHOLDERS' knowledge, there are
no examinations in progress or claims asserted against the COMPANY for federal
and other taxes (including penalties and interest) for any period or periods
prior to and including the Balance Sheet Date and no notice of any claim,
whether pend ing or threatened, for taxes has been received. The amounts shown
as accruals for taxes on the Financial Statements, as of the Balance Sheet Date,
are sufficient for the payment of all taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that date.
Correct and complete copies of (i) all revenue agent reports which have been
delivered to the COMPANY, (ii) extensions of statutory limitations and (iii) the
federal and local income tax returns and franchise tax returns of the COMPANY
for the last three fiscal years, or such shorter period of time as any of them
shall have existed, have heretofore been delivered by STOCKHOLDERS to USFLORAL.
The COMPANY made an election to be taxed under the provisions of Subchapter S of
the Internal Revenue Code. The amount of the accumulated adjustments account as
of March 31,
-13-
1997 was $3,709,099. The COMPANY has a taxable year ended December 31 and has
not made an election to retain a fiscal year other than December 31 under
Section 444 of the Internal Revenue Code. The COMPANY currently utilizes the
accrual method of accounting for income tax purposes and has not changed its
method of accounting in the past five years.
6.22 Completeness; No Violations. The certified copies of the Articles
---------------------------
of Incorporation and Bylaws, both as amended to date, of the COMPANY, and the
copies of all leases, instruments, agreements, licenses, permits, certificates
or other documents which are included on schedules attached hereto or have been
delivered to USFLORAL in connection with the transactions contemplated hereby
are complete and correct; neither the COMPANY nor, to the knowledge of the
STOCKHOLDERS, any other party thereto, is in material default thereunder; and,
except as set forth in the schedules and documents attached to this Agreement,
(i) the rights and benefits of the COMPANY thereunder will not be materially and
adversely affected by the transactions contemplated hereby; and (ii) the
execution of this Agreement and the performance of the obligations hereunder
will not result in a material violation or breach or constitute a material
default under any of the terms or provisions thereof. Except as set forth on
Schedule 6.22, none of such leases, instruments, agreements, contracts,
licenses, permits, certificates or other documents requires notice to, or the
consent or approval of, any governmental agency or other third party to any of
the transactions contemplated hereby to remain in full force and effect. Except
as set forth on Schedule 6.22, the consummation of the transactions contemplated
hereby will not give rise to any right of termination, cancellation or
acceleration or result in the loss of any right or benefit thereunder.
6.23 Government Contracts. The COMPANY is not now nor has it ever been a
--------------------
party to any governmental contracts subject to price redetermination or
renegotiation.
6.24 Absence of Changes. Since the Balance Sheet Date, except for
------------------
transactions contemplated by this Agreement, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of the COMPANY;
(ii) any damage, destruction or loss (whether or not covered by
insurance) which has had a Material Adverse Effect on the COMPANY, taken as a
whole;
(iii) any change in the authorized capital of the COMPANY or in its
securities outstanding or any change in its ownership interests or any grant of
any options, warrants, calls, conversion rights or commitments;
(iv) subject to Section 1.5 and except for tax payment distributions,
any declaration or payment of any dividend or distribution in respect of the
capital stock or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of the COMPANY;
-14-
(v) any work interruptions, labor grievances or claims filed, or any
proposed law or regulation or any event or condition of any character, which has
had a Material Adverse Effect on the COMPANY, taken as a whole;
(vi) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of the COMPANY to any person, including,
without limitation, the STOCKHOLDERS and their affiliates, other than in the
ordinary course of business;
(vii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the COMPANY, including without limitation any
indebtedness or obligation of any STOCKHOLDER or any affiliate thereof;
(viii) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, properties or
rights of the COMPANY or requiring consent of any party to the transfer and
assignment of any such assets, properties or rights;
(ix) any purchase or acquisition, or agreement, plan or arrangement to
purchase or acquire, any properties, rights or assets of the COMPANY other than
in the ordinary course of business;
(x) any waiver of any material rights or claims of the COMPANY;
(xi) any breach, amendment or termination of any material contract,
agreement, license, permit or other right to which the COMPANY is a party; or
(xii) any transaction by the COMPANY outside the ordinary course of its
business, except in connection with this Agreement and the transactions
contemplated hereby.
6.25 Deposit Accounts; Powers of Attorney. Attached hereto as Schedule
------------------------------------
6.25 is an accurate list, as of the date of this Agreement, of:
(i) the name of each financial institution in which the COMPANY has
accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account; and
(iv) the name of each person authorized to draw thereon or have access
thereto.
-15-
Schedule 6.25 also sets forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from the COMPANY and
a description of the terms of such power.
6.26 Environmental Matters. To the knowledge of the STOCKHOLDERS, the
---------------------
COMPANY has complied with and is in material compliance with all federal, state,
local and foreign statutes (civil and criminal), laws, ordinances, regulations,
rules, notices, permits, judgments, orders and decrees applicable to it or any
of its properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes and
Hazardous Substances (as such terms are defined in any applicable Environmental
Law) except to the extent that noncompliance with any Environmental Law, either
singly or in the aggregate, would not have a Material Adverse Effect on the
COMPANY. The COMPANY has obtained and adhered to all necessary permits and
other approvals necessary to treat, transport, store, dispose of and otherwise
handle Hazardous Wastes and Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned and
operated by the COMPANY where Hazardous Wastes or Hazardous Substances have been
treated, stored, disposed of or otherwise handled. There have been no releases
or threats of releases (as defined in Environmental Laws) at, from, in or on any
property owned or operated by the COMPANY except as permitted by Environmental
Laws. STOCKHOLDERS know of no on-site location to which the COMPANY has
transported or disposed of Hazardous Wastes and Hazardous Substances or arranged
for the transportation of Hazardous Wastes and Hazardous Substances, which site
is the subject of any federal, state, local or foreign enforcement action or any
other investigation which could lead to any claim against the COMPANY, USFLORAL
or NEWCO for any clean-up cost, remedial work, damage to natural resources or
personal injury, including, but not limited to, any claim under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended. The COMPANY has no contingent liability in connection with any release
of any Hazardous Waste or Hazardous Substance into the environment.
6.27 Underground Storage Tanks. The COMPANY has never owned or leased
-------------------------
any real estate having any underground storage tanks containing petroleum
products or wastes or other hazardous substances regulated by 40 CFR 280 and/or
other applicable federal, state or local laws, rules and regulations and
requirements.
6.28 Validity of Obligations. The execution and delivery of this
-----------------------
Agreement by the COMPANY and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of the
COMPANY and the STOCKHOLDERS of the COMPANY, and this Agreement has been duly
and validly authorized by all necessary corporate action and is a legal, valid
and binding obligation of the COMPANY.
6.29 Relations with Governments. The COMPANY has not made, offered or
--------------------------
agreed to offer anything of value to any governmental official, political party
or candidate for government
-16-
office nor has the COMPANY otherwise taken any action which would cause the
COMPANY to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended or any law of similar effect.
6.30 Disclosure. Without limiting any exclusion, exception or other
----------
limitation contained in any of the representations and warranties made herein,
this Agreement and the schedules hereto and all other documents and information
furnished to USFLORAL and its representatives pursuant hereto do not and will
not include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading. If any
STOCKHOLDERS become aware of any fact or circumstance which would change a
representation or warranty of any STOCKHOLDER in this Agreement or any
representation made on behalf of the COMPANY, the STOCKHOLDERS shall promptly
give notice of such fact or circumstance to USFLORAL. However, such notification
shall not relieve the COMPANY or STOCKHOLDERS of their respective obligations
under this Agreement, and, at the sole option of USFLORAL, the truth and
accuracy of any and all warranties and representations of the STOCKHOLDERS, at
the date of this Agreement and at the closing, shall be a precondition to the
consummation of this transaction.
6.31 Ownership. Each STOCKHOLDER owns beneficially and of record all of
---------
the shares of COMPANY Stock identified on Annex II as being owned by such
STOCKHOLDER.
7. REPRESENTATIONS OF USFLORAL AND NEWCO
As of the date hereof and as of each of the Closing Date and the Merger
Effective Date, USFLORAL and NEWCO, jointly and severally, represent to the
STOCKHOLDERS as follows:
7.1 Due Organization. USFLORAL and NEWCO are corporations duly organized,
----------------
validly existing and in good standing under the laws of the States of Delaware
and Florida, respectively, and are duly authorized, qualified and licensed under
all applicable laws, regulations, and ordinances of public authorities to carry
on their respective businesses in the places and in the manner as now conducted
except the states where the failure to be so authorized, qualified or licensed
would not have a Material Adverse Effect on their respective businesses. True,
complete and correct copies of the Certificates of Incorporation (certified by
the Secretary of State of the States of Delaware and Florida, respectively) and
the Bylaws, as amended, of USFLORAL and NEWCO (certified by the Secretary of the
respective corporations) have heretofore been delivered by USFLORAL to
STOCKHOLDERS.
7.2 USFLORAL Stock. The USFLORAL Stock to be delivered to the STOCKHOLDERS at
--------------
the Merger Effective Date, when delivered in accordance with the terms of this
Agreement, will constitute valid and legally issued shares of USFLORAL capital
stock, fully paid and nonassessable, and with the exception of restrictions upon
resale, will be legally equivalent in all respects to the majority of USFLORAL
Stock issued and outstanding as of the date hereof. The restrictions on resale
imposed on the STOCKHOLDERS are no more restrictive than those imposed on the
stockholders of the other companies being acquired by USFLORAL prior to the IPO
("Founding Stockholders"). Furthermore, neither the Founding Stockholders nor
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
-17-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (i) have registration rights with respect to USFLORAL Stock
that are superior to registration rights that the STOCKHOLDERS have, or (ii)
will have the right to include any USFLORAL Stock in the IPO.
7.3 Authorization. The representatives of USFLORAL and NEWCO executing this
-------------
Agreement have the corporate authority to enter into and bind USFLORAL and NEWCO
by the terms of this Agreement. USFLORAL and NEWCO have full legal right, power
and authority to enter into this Agreement and have the full legal right, power
and authority to enter into the Merger.
7.4 Validity of Obligations. The execution and delivery of this Agreement by
-----------------------
USFLORAL and NEWCO and the performance of the transactions contemplated herein
have been duly and validly authorized by the Board of Directors of USFLORAL and
by the Board of Directors and the stockholder of NEWCO, and this Agreement has
been duly and validly authorized by all necessary corporate action and is a
legal, valid and binding obligation of USFLORAL and NEWCO, respectively.
7.5 No Conflicts. The execution, delivery and performance of this Agreement,
------------
the consummation of any transactions herein referred to or contemplated by and
the fulfillment of the terms hereof and thereof will not:
(i) conflict with, or result in a breach or violation of, the
Certificate of Incorporation or Bylaws of either USFLORAL or NEWCO,
(ii) materially conflict with, or result in a material default (or
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 USFLORAL or
NEWCO is a party, or result in the creation or imposition of any lien, charge or
encumbrance on any of USFLORAL's or NEWCO's properties pursuant to (A) any law
or regulation to which USFLORAL or NEWCO, or any of their property is subject,
or (B) any judgment, order or decree to which USFLORAL or NEWCO is bound or any
of their property is subject;
(iii) result in termination or any impairment of any material permit,
license, franchise, contractual right or other authorization of USFLORAL or
NEWCO; or
(iv) require any filing or other notice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvement Act.
7.6 Other Agreements. Prior to the consummation of the Merger, USFLORAL and
----------------
NEWCO have no material properties or assets and are not party to any contracts
other than this Agreement, the letter of intent between USFLORAL and certain of
the STOCKHOLDERS, certain employment agreements with officers of USFLORAL and
those agreements and letters of intent listed on Schedule 7.5 hereof.
-18-
7.7 Reasonable and Adequate Capital. On the Merger Effective Date, the
-------------------------------
Surviving Corporation will have an amount of capital which is reasonable in
light of the business purposes of the Surviving Corporation and adequate to
enable the Surviving Corporation to achieve its business purposes.
8. COVENANTS PRIOR TO CLOSING
8.1 Access and Cooperation. Between the date of this Agreement and the
----------------------
Closing Date, the COMPANY will afford to the officers and authorized
representatives of USFLORAL access during normal business hours to all of the
COMPANY's sites, properties, books and records and will furnish USFLORAL with
such additional financial and operating data and other information as to the
business and properties of the COMPANY as USFLORAL may from time to time
reasonably request in writing. The COMPANY will cooperate with the reasonable
requests of USFLORAL, its representatives, engineers, auditors and counsel in
the preparation of any documents or other material which may be required in
connection with any documents or materials required by any governmental agency.
USFLORAL will cause all information obtained in connection with the negotiation
and performance of this Agreement to be treated as confidential in accordance
with the provisions of Section 15 hereof.
8.2 Conduct of Business. Between the Balance Sheet Date and the Merger
-------------------
Effective Date, STOCKHOLDERS will cause the COMPANY to:
(i) 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;
(ii) 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;
(iii) perform all of its material obligations under agreements relating
to or affecting its assets, properties or rights;
(iv) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(v) use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its relationships
with suppliers, customers and others having business relations with the COMPANY;
(vi) maintain compliance with all material permits, laws, rules and
regulations and any consent orders of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction; and
-19-
(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments, without the knowledge and written
consent of USFLORAL (USFLORAL specifically consents to the COMPANY renewing its
line of credit with First Union).
8.3 Prohibited Activities. Between the Balance Sheet Date and the Merger
---------------------
Effective Date, the COMPANY will not, without prior written consent of USFLORAL:
(i) make any change in its Articles of Incorporation or Bylaws;
(ii) issue any securities, options, warrants, calls, conversion rights
or commitments relating to its securities of any kind;
(iii) declare or pay any dividend or make any distribution in respect
of its stock whether now or hereafter outstanding, except for the AAA
Distribution, or purchase, redeem or otherwise acquire or retire for value any
shares of its stock;
(iv) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures in excess of $200,000;
(v) increase the compensation payable or to become payable to any
officer, director, STOCKHOLDERS, employee or agent other than ordinary salary
increases (and tax payment distribution) implemented on a basis consistent with
past practices, or make any bonus or management fee payment to any such person;
(vi) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or hereafter
acquired, except as set forth in Schedule 8.3(vi);
(vii) sell, assign, lease or otherwise transfer or dispose of any
property or equipment, except in the normal course of business;
(viii) negotiate for the acquisition of any business other than
Floraltech, Inc. or the start-up of any new business;
(ix) merge or consolidate or agree to merge or consolidate with or into
any other corporation;
(x) waive any material rights or claims;
(xi) breach or permit a breach, amend or terminate any material
agreement or any permit, license or other right; or
-20-
(xii) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
8.4 Supplier Approval. Prior to the Closing Date, the COMPANY shall satisfy
-----------------
any requirement for notice and approval of the transactions contemplated by this
Agreement under applicable supplier agreements, and shall provide USFLORAL with
satisfactory evidence of such approvals.
8.5 [intentionally omitted]
8.6 No Shop. None of the STOCKHOLDERS, the COMPANY nor any agent, officer,
-------
director or any representative of any of the foregoing will, during the period
commencing on the date of this Agreement and ending with the earlier to occur of
the Merger Effective Date or the termination of this Agreement in accordance
with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers from any
person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than USFLORAL or
NEWCO relating to,
any acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, the COMPANY or a merger, consolidation or business
combination of the COMPANY.
8.7 Notification of Certain Matters. STOCKHOLDERS and the COMPANY shall give
-------------------------------
prompt notice to USFLORAL of (i) the occurrence or non-occurrence of any event
known to any STOCKHOLDER or the COMPANY the occurrence or non-occurrence of
which would be likely to cause any representation or warranty contained in
Section 6 to be untrue or inaccurate in any material respect at or prior to the
Closing Date or Merger Effective Date and (ii) any material failure of any
STOCKHOLDER or the COMPANY to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by such person hereunder. USFLORAL
shall give prompt notice to each STOCKHOLDER of (i) the occurrence or non-
occurrence of any event known to USFLORAL the occurrence of non-occurrence of
which would be likely to cause any representation or warranty contained in
Section 7 to be untrue or inaccurate in any material respect at or prior to the
Closing Date or Merger Effective Date and (ii) any material failure of USFLORAL
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder. The delivery of any notice pursuant to this
Section 8.7 shall not be deemed to (i) modify the representations or warranties
hereunder of the party delivering such notice, which modification may only be
made pursuant to Section 8.8, (ii) modify the conditions set forth in Sections 9
and 10 or (iii) limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
-21-
8.8 Amendment of Schedules. Each party hereto agrees that, with respect
----------------------
to the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Merger Effective Date
to supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules, provided that no amendment or supplement to a Schedule that
constitutes or reflects a material adverse change to the COMPANY may be made
unless USFLORAL consents to such amendment or supplement; and provided further,
however, that USFLORAL may not withhold consent to such amendment or supplement
if the same relates to (i) changes in facts or circumstances occurring
subsequent to the date hereof, or (ii) facts and circumstances existing as of
the date hereof that were not disclosed by the STOCKHOLDERS because they did not
have knowledge of them (but, with respect to facts and circumstances described
in (ii) only to the extent that the omission thereof from the Schedules attached
hereto as of the date hereof was not the result of a lack of good faith
diligence on the part of the STOCKHOLDERS). No amendment of or supplement to a
Schedule shall be made later than 48 hours prior to the anticipated
effectiveness of the Registration Statement defined in Section 9.5.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
The obligations of STOCKHOLDERS hereunder are subject to the satisfaction on
or prior to the Closing Date (or such earlier date specified below) of the
following conditions:
9.1 Representations and Warranties; Performance of Obligations. The
----------------------------------------------------------
representations and warranties of USFLORAL and NEWCO contained in Section 7
shall be accurate as of the Closing Date as though such representations and
warranties had been made as of such times; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by USFLORAL and
NEWCO on or before the Closing Date shall have been duly complied with and
performed; and a certificate to the foregoing effect dated the Merger Effective
Date and signed by the President or any Vice President of USFLORAL shall have
been delivered to STOCKHOLDERS.
9.2 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the acquisition by USFLORAL of the COMPANY Stock and no governmental
agency or body shall have taken any other action or made any request of the
COMPANY as a result of which the management of the COMPANY deems it inadvisable
to proceed with the transactions hereunder.
9.3 Employment Agreements. The COMPANY shall have executed and delivered an
---------------------
Employment Agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇ in the form of Annex III attached
hereto.
9.4 Opinion of Counsel. STOCKHOLDERS shall have received an opinion from
------------------
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for USFLORAL, dated the Closing Date, in
form and substance satisfactory to STOCKHOLDERS, to the effect that:
-22-
(i) USFLORAL and NEWCO have been duly organized and are validly
existing in good standing under the laws of the States of Delaware and Florida,
respectively;
(ii) this Agreement has been duly authorized, executed and delivered by
USFLORAL and NEWCO and constitutes a valid and binding agreement of USFLORAL and
NEWCO enforceable in accordance with its terms, except as such enforceability
may be subject to bankruptcy, moratorium, insolvency, reorganization,
arrangement and other similar laws relating to or affecting the rights of
creditors and except (X) as the same may be subject to the effect of general
principles of equity and (Y) that no opinion need be expressed as to the
enforceability of indemnification provisions included herein; and
(iii) the shares of USFLORAL Stock to be received by the STOCKHOLDERS
on the Merger Effective Date shall be duly authorized, fully paid and
nonassessable.
9.5 Registration Statement. USFLORAL shall have filed with the Securities and
----------------------
Exchange Commission ("SEC") a registration statement on Form S-1 covering the
offer and sale of shares of USFLORAL Stock (the "Registration Statement"). The
Registration Statement shall have been declared effective by the SEC not later
than December 24, 1997 and the underwriters named therein shall have agreed to
acquire, subject to the conditions set forth in the underwriting agreement, the
shares of USFLORAL Stock covered by such Registration Statement. Prior to
effectiveness, STOCKHOLDERS shall have the right to review and comment upon the
Registration Statement for accuracy with respect to disclosures concerning the
COMPANY and the STOCKHOLDERS.
9.6 Market Capitalization. The aggregate post closing market capitalization
---------------------
of USFLORAL (determined by multiplying the number of shares of USFLORAL Stock
outstanding immediately subsequent to the Merger Effective Date by the initial
price to the public in the IPO) shall be not less than $50 million.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF USFLORAL AND NEWCO
The obligations of USFLORAL and NEWCO hereunder are, at their option, subject
to the satisfaction, on or prior to the Closing Date (or such earlier date
specified below), of the following conditions:
10.1 Representations and Warranties; Performance of Obligations.
----------------------------------------------------------
STOCKHOLDERS shall have delivered to USFLORAL a certificate dated the Closing
Date and signed by them to the effect that all the representations and
warranties of STOCKHOLDERS contained in this Agreement shall be true 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 dates, except for matters expressly
disclosed in the certificate or a schedule thereto; each and all of the
agreements of STOCKHOLDERS and the COMPANY to be performed on or before the
Closing Date pursuant to the terms hereof shall have been performed.
-23-
10.2 No Litigation. No action or proceeding before a court or any other
-------------
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the acquisition by USFLORAL of the COMPANY Stock and no governmental
agency or body shall have taken any other action or made any request of USFLORAL
as a result of which the management of USFLORAL deems it inadvisable to proceed
with the transactions hereunder.
10.3 Examination of Financial Statements. Prior to the Closing Date,
-----------------------------------
USFLORAL shall have had sufficient time to review the unaudited balance sheets
of the COMPANY as of the month ended immediately prior to the Closing Date and
the unaudited statements of income, cash flow and stockholder's equity of the
COMPANY for the periods then ended, disclosing no material adverse change in the
financial condition of the COMPANY or the results of its operations from the
financial statements originally furnished by the COMPANY as set forth in
Schedule 6.9
10.4 No Material Adverse Change. No material adverse change in the
--------------------------
results of operations, financial position or business of the COMPANY shall have
occurred, other than the AAA Distribution, and the COMPANY shall not have
suffered any material loss or damages to any of its properties or assets,
whether or not covered by insurance, since the Balance Sheet Date, which change,
loss or damage materially affects or impairs the ability of the COMPANY to
conduct its business; and USFLORAL shall have received on the Closing Date a
certificate signed by STOCKHOLDERS to such effect.
10.5 Regulatory Review. USFLORAL, through its authorized
-----------------
representatives, shall have completed a satisfactory review of the practices and
procedures of the COMPANY including, but not limited to, environmental and land
use practices, import and export laws, compliance with contracts and federal,
state and local laws and regulations governing the operations of the COMPANY;
which review reflects compliance with all applicable laws governing the COMPANY,
disclosing no material actual or probable violations, compliance problems,
required capital expenditures or other substantive environmental, real estate
and land use related concerns and which review is otherwise satisfactory in all
respects to USFLORAL, in its sole discretion.
10.6 STOCKHOLDERS Release. At the Closing Date, the STOCKHOLDERS shall
--------------------
have delivered to USFLORAL an instrument dated the Merger Effective Date
releasing the COMPANY from any and all claims of STOCKHOLDERS against the
COMPANY, exclusive of continuing indemnification rights which STOCKHOLDERS may
have for third-party claims against them (other than claims in connection with
which STOCKHOLDERS are obligated to indemnify USFLORAL or the Surviving
Corporation pursuant to Article 12 hereof).
10.7 Employment Agreements. ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have executed and
---------------------
delivered an Employment Agreement in the form of Annex III attached hereto.
10.8 Opinion of Counsel. USFLORAL shall have received an opinion from
------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇, counsel to the STOCKHOLDERS, dated the
Closing Date, in form and substance satisfactory to USFLORAL, to the effect that
with respect to the COMPANY:
-24-
(i) the COMPANY has been duly organized and is validly subsisting in
good standing under the laws of the State of Florida;
(ii) the authorized and outstanding capital stock of the COMPANY is as
represented by the STOCKHOLDERS in this Agreement and each share of such stock
has been duly and validly authorized and issued, is fully paid and nonassessable
and was not issued in violation of the preemptive rights of any stockholder;
(iii) to the knowledge of such counsel, the COMPANY does not have any
outstanding options, warrants, calls, conversion rights or other commitments of
any kind to issue or sell any of its capital stock;
(iv) this Agreement has been duly authorized, executed and delivered by
the COMPANY and the STOCKHOLDERS and constitutes a valid and binding agreement
of the COMPANY and the STOCKHOLDERS enforceable against them in accordance with
its terms except as such enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement and other similar laws
relating to or affecting the rights of creditors and except (X) as the same may
be subject to the effect of general principles of equity and (Y) that no opinion
need be expressed as to the enforceability of indemnification provisions
included herein;
(v) except to the extent set forth on Schedules 6.10 and 6.20, to the
knowledge of such counsel, there are no claims, actions, suits or proceedings
pending, or threatened against or affecting the COMPANY, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality wherever located;
(vi) to the knowledge of such counsel, no notice to, consent,
authorization, approval or order of any court or governmental agency or body or
of any other third party is required in connection with the execution, delivery
or consummation of this Agreement by any STOCKHOLDERS or for the transfer to
USFLORAL of the COMPANY Stock; and
(vii) the execution of this Agreement and the performance of the
obligations hereunder will not violate or result in a breach or constitute a
default under any of the terms or provisions of the COMPANY's Articles of
Incorporation or the Bylaws of the COMPANY or of any lease, instrument, license,
permit or any other agreement to which the COMPANY is a party or by which the
COMPANY or any STOCKHOLDER is bound.
Such opinion shall include any other matters incident to the matters set forth
herein as agreed to by the parties and their respective counsel.
10.9 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency relating to the consummation of the
transactions contemplated
-25-
herein shall have been obtained and made and no action or proceeding shall have
been instituted or threatened to restrain or prohibit USFLORAL's acquisition of
the COMPANY Stock and no governmental agency or body shall have taken any other
action or made any request of USFLORAL as a result of which USFLORAL deems it
inadvisable to proceed with the transactions hereunder.
10.10 Additional Liabilities and Obligations. STOCKHOLDERS shall have
--------------------------------------
delivered to USFLORAL a schedule (Schedule 10.10), dated the Closing Date,
setting forth all liabilities and obligations of the COMPANY arising since the
Balance Sheet Date.
10.11 Additional Contracts. STOCKHOLDERS shall have delivered to USFLORAL
--------------------
a schedule (Schedule 10.11), dated the Closing Date, showing all material
contracts and agreements, together with copies thereof, entered into by the
COMPANY since the Balance Sheet Date.
10.12 Good Standing Certificates. STOCKHOLDERS shall have delivered to
--------------------------
USFLORAL certificates, dated as of a date no earlier than five days prior to the
Closing Date, duly issued by the Secretary of State of Florida and, unless
waived by USFLORAL, in each state in which the COMPANY is authorized to do
business, showing that the COMPANY is in good standing and authorized to do
business and that all state franchise and/or income tax returns and taxes for
the COMPANY for all periods prior to the dates of such certificates have been
filed and paid.
10.13 Registration Statement. The Registration Statement shall have been
----------------------
declared effective by the SEC, and the underwriters named therein shall have
acquired the shares of USFLORAL Stock covered thereby.
10.14 Repayment of Indebtedness. Prior to the Closing Date, the
-------------------------
STOCKHOLDERS shall have repaid the COMPANY in full all amounts owing by the
STOCKHOLDERS.
10.15 Pretax Income. The COMPANY shall have had auditable adjusted
-------------
average yearly pretax income of $1,500,000 for the three fiscal years ending
December 31, 1994, 1995 and 1996, and the pretax income of the COMPANY for the
year ending December 31, 1997 shall be projected to be at least $1,500,000 based
on annualization of the pretax income of the COMPANY for the year to date as of
the month ended immediately prior to the Closing Date. For purposes of this
Section 10.15, the amount of bonuses paid in excess of base salaries shall be
added back to pretax net income.
11. COVENANTS OF USFLORAL
11.1 Release From Guarantees. Not later than 120 days following the
-----------------------
Merger Effective Date, USFLORAL shall cause the STOCKHOLDERS to be released from
any and all guarantees of any indebtedness set forth on Schedule 11.1 that they
personally guaranteed for the benefit of the COMPANY, with all such guarantees
on indebtedness being assumed by USFLORAL; provided, that, in the event that the
beneficiary of any such guarantee is unwilling to permit the assumption by
USFLORAL of the obligations under such guarantee, USFLORAL shall repay the
-26-
indebtedness to which such guarantee relates together with all interest and
prepayment penalties, if any, then due and owing.
11.2 USFLORAL Stock Options. As soon as practicable after the Closing,
----------------------
options to purchase such number of shares of USFLORAL Stock as shall have a fair
market value on the Closing Date equal to 6.25% of the sum of the Consideration
(as such term is defined in Annex II of this Agreement), including the AAA
Distribution, shall be available for issuance to the key employees of the
Surviving Corporation after the Closing, as determined by the Surviving
Corporation's President (or other officer or director designated by the
Surviving Corporation and acceptable to USFLORAL) in accordance with USFLORAL's
policies, and authorized and issued under the terms of USFLORAL's Amended and
Restated 1997 Long-Term Incentive Plan.
11.3 34 Act Obligations. For at least two years subsequent to the Merger
------------------
Effective Date, USFLORAL agrees to timely file all documents required to be
filed with the Securities and Exchange Commission pursuant to Sections 13 and 14
of the Securities Exchange Act of 1934.
11.4 Certain Transactions. USFLORAL will cause its existing stockholders
--------------------
to participate, within the standards established by Rev. Pro. 77-37, in the
transactions contemplated by this Agreement to the extent necessary to cause the
group consisting of (i) those existing stockholders who purchase USFLORAL Stock
from USFLORAL at the time of the IPO, (ii) other persons acquiring stock in the
IPO and (iii) the persons acquiring stock as a result of the Merger and other
concurrent mergers to possess at least 80% of the outstanding stock of USFLORAL.
Each of the concurrent mergers will be a reverse triangular merger in which not
more than 60% of the consideration being transferred to each stockholder of the
target corporations shall consist of USFLORAL Stock.
11.5 Piggy-Back Registrations. If at any time after the expiration of
------------------------
the restrictions contained in Section 16 USFLORAL shall determine to register
shares of USFLORAL Stock for its own account or the account of others under the
1933 Act (other than on Form S-8 or Form S-4 or their then equivalents relating
to shares of USFLORAL Stock to be issued solely in connection with any
acquisition of any entity or business or shares of USFLORAL Stock issuable in
connection with stock option or other employee benefit plans, and other than any
"shelf" registration statement relating to securities to be issued by USFLORAL),
then it shall send to each holder of shares of USFLORAL Stock issued in the
Merger ("Registrable Shares") (all such security holders and being referred to
as "Holders") written notice of such determination. If, within 15 days after
receipt of such notice, such Holder shall so request in writing, then USFLORAL
shall use its best efforts to include in such registration statement all or any
part of the Registrable Shares such Holder requests to be registered, except
that if, in connection with any offering involving an underwriting of USFLORAL
Stock to be issued by USFLORAL, the managing underwriter shall impose a
limitation on the number of shares of such USFLORAL Stock which may be included
in the registration statement because, in its judgment, such limitation is
necessary to effect an orderly public distribution, then USFLORAL shall be
obligated to include in such registration statement only such limited portion of
the Registrable Shares with respect to which such Holder has requested inclusion
-27-
hereunder; provided, however, that USFLORAL shall not so exclude any Registrable
-------- -------
Shares unless it has first excluded all securities to be offered and sold by
directors, officers or other employees of USFLORAL who are not Holders or by
shareholders who do not have contractual, incidental rights to include such
securities. Except as provided in the previous sentence of this Section 11.5
any exclusion of Registrable Shares shall be made pro rata among the Holders of
--- ----
Registrable Shares seeking to include such shares, in proportion to the number
of such shares sought to be included by such Holders. The obligations of
USFLORAL under this Section 11.5 may be waived at any time upon the written
consent of Holders of a majority-in-interest of the Registrable Shares and shall
expire as to each Holder immediately upon all of such Holder's Registrable
Shares being capable of sale within a three-month period in accordance with the
volume and manner-of-sale limitations of Rule 144 under the 1933 Act.
12. INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 General Indemnification by STOCKHOLDERS. Subject to the limitations
---------------------------------------
contained in Section 12.5 hereof, each STOCKHOLDER, jointly and severally,
covenant and agree that they will indemnify, defend, protect and hold harmless
USFLORAL, NEWCO and the Surviving Corporation and their respective officers,
stockholders, directors, divisions, subdivisions, affiliates, subsidiaries,
parents, agents, employees, successors and assigns at all times from and after
the date of this Agreement until the Expiration Date (as defined in Section
12.6) from and against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by USFLORAL, NEWCO or the Surviving Corporation as a
result of or arising from (i) any breach of the representations and warranties
made by STOCKHOLDERS set forth herein or on the schedules or certificates
delivered in connection herewith, (ii) any nonfulfillment of any agreement on
the part of STOCKHOLDERS or the COMPANY under this Agreement or (iii) any
liability under the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or other
federal or state law or regulation, at common law or otherwise, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact relating to the COMPANY or STOCKHOLDERS, and provided to USFLORAL or its
counsel by the COMPANY or STOCKHOLDERS, contained in any preliminary prospectus,
the Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to the
COMPANY or STOCKHOLDERS required to be stated therein or necessary to make the
statements therein not misleading, and not provided to USFLORAL or its counsel
by the COMPANY or STOCKHOLDERS, provided, however, that such indemnity shall not
inure to the benefit of USFLORAL, NEWCO or the Surviving Corporation to the
extent that such untrue statement (or alleged untrue statement) was made in, or
omission (or alleged omission) occurred in, any preliminary prospectus and
STOCKHOLDERS provided, in writing, corrected information to USFLORAL for
inclusion in the final prospectus, and such information was not so included.
-28-
12.2 Specific Indemnification by the STOCKHOLDERS. Subject to the
--------------------------------------------
limitations contained in Section 12.5 hereof, notwithstanding any disclosure
made in this Agreement or in the Schedules or Exhibits hereto, and
notwithstanding any investigation by USFLORAL or NEWCO, the STOCKHOLDERS
covenant and agree that they will indemnify, defend, protect and hold harmless
USFLORAL, NEWCO and the Surviving Corporation and their respective officers,
stockholders, directors, divisions, subdivisions, affiliates, subsidiaries,
parents, agents, employees, successors and assigns at all times from and after
the date of this Agreement, from and against all claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, penalties, costs and
expenses whatsoever (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by USFLORAL, NEWCO or
the Surviving Corporation as a result of or incident to: (a) the existence of
liabilities of the COMPANY in excess of the liabilities set forth on Schedule
6.10, but only to the extent of such excess, with the parties acknowledging and
agreeing that (i) the existence of liabilities (such as accounts payable) of the
COMPANY on the Merger Effective Date that are different (but not in the
aggregate greater) than the liabilities of the COMPANY set forth on Schedule
6.10 on the date hereof shall not give rise to any obligations of the
STOCKHOLDERS under the provisions of this Section 12 and (ii) the existence of
liabilities that arise in the ordinary course of business of the COMPANY that do
not arise as a result of a breach by the STOCKHOLDERS of any of their
obligations set forth in Sections 8.2 or 8.3 hereof shall not give rise to any
obligations of the STOCKHOLDERS under the provisions of this Section 12; (b) all
liability resulting from the litigation matters listed on Schedule 6.20 (except
for item 2 on Schedule 6.20); and (c) amounts due and payable for anti-dumping
duties for periods prior to March 1, 1997 in amounts in excess of the amount
shown on Schedule 6.10.
12.3 Indemnification by USFLORAL and NEWCO. Subject to the limitations
-------------------------------------
contained in Section 12.5 hereof, USFLORAL and NEWCO, jointly and severally,
covenant and agree that they will indemnify, defend, protect and hold harmless
STOCKHOLDERS and their respective heirs, executors, personal representatives and
assigns at all times from and after the date of this Agreement from and against
all claims, damages actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by
STOCKHOLDERS and their respective heirs, executors, personal representatives and
assigns as a result of or arising from (i) any breach of the representations and
warranties made by USFLORAL and NEWCO set forth herein or on the schedules or
certificates attached hereto, (ii) any nonfulfillment of any agreement on the
part of USFLORAL or NEWCO under this Agreement, (iii) any liabilities which
STOCKHOLDERS may incur due to USFLORAL's failure to be responsible for the
liabilities and obligations of the Surviving Corporation (except to the extent
that USFLORAL has claims against STOCKHOLDERS by reason of such liabilities); or
(iv) any liability under the 1933 Act, the Exchange Act or other federal or
state law or regulation, at common law or otherwise, arising out of or based
upon any untrue statement or alleged untrue statement of a material fact (other
than those referred to in clause (iii) of Section 12.1) contained in any
preliminary prospectus, the Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a material fact
(other than those
-29-
referred to in clause (iii) of Section 12.1) required to be stated therein or
necessary to make the statements therein not misleading.
12.4 Third-Person Claims. Promptly after any party hereto (hereinafter
-------------------
the "Indemnified Party") has received notice of or has knowledge of any claim by
a person not a party to this Agreement (a "Third Person") or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 12.1, 12.2, or 12.3
hereof (hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or proceeding.
Such notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently.
If the Indemnifying Party undertakes to defend or settle, it shall promptly
notify the Indemnified Party of its intention to do so, and the Indemnified
Party shall cooperate with the Indemnifying Party and its counsel in the defense
thereof and in any settlement thereof. Such cooperation shall include, but
shall not be limited to, furnishing the Indemnifying Party with any books,
records or information reasonably requested by the Indemnifying Party that are
in the Indemnified Party's possession or control. Notwithstanding the foregoing,
the Indemnified Party shall have the right to participate in any matter through
counsel of its own choosing at its own expense (unless there is a conflict of
interest that prevents counsel for the Indemnifying Party from representing the
Indemnified Party, in which case the Indemnifying Party will reimburse the
Indemnified Party for the expenses of its counsel); provided that the
Indemnifying Party's counsel shall always be lead counsel and shall determine
all litigation and settlement steps, strategy and the like. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except to the extent such participation is requested by the
Indemnifying Party, in which event the Indemnified Party shall be reimbursed by
the Indemnifying Party for reasonable additional legal expenses and out-of-
pocket expenses and except as provided in the immediately preceding sentence.
If the Indemnifying Party desires to accept a final and complete settlement of
any such Third-Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section 12 with
respect to such Third-Person claim shall be limited to the amount so offered in
settlement by said Third Person and the Indemnified Party shall reimburse the
Indemnifying Party for any additional costs of defense which it subsequently
incurs with respect to such claim. If the Indemnifying Party does not undertake
to defend such matter to which the Indemnified Party is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnified Party may undertake such defense through counsel of its choice, at
the cost and expense of the Indemnifying Party, and the Indemnified Party may
settle such matter, and the Indemnifying Party shall reimburse the Indemnified
Party for the amount paid in such settlement and any other liabilities or
expenses incurred by the Indemnified Party in connection therewith, provided,
however, that under no
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circumstances shall the Indemnified Party settle any Third-Person claim without
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.
12.5 Limitations on Indemnification. No Indemnified Party shall assert
------------------------------
any claim (other than a Third Person claim) for indemnification hereunder until
such time as the aggregate of all claims which such Indemnified Party may have
against an Indemnifying Party shall exceed the amount equal to 2% of the market
value of the Consideration described on Annex II hereto (USFLORAL Stock being
valued for this purpose at the Price to Public of such shares in the IPO), at
which time an Indemnified Party shall be entitled to seek indemnification for
all claims not previously asserted pursuant to this Section. For purposes of
the preceding sentence, USFLORAL, NEWCO and the Surviving Corporation shall be
considered to be a single Indemnifying and Indemnified Party and STOCKHOLDERS
shall be considered to be a single Indemnifying and Indemnified Party.
Notwithstanding any other term of this Agreement, in no event shall any
STOCKHOLDER be liable under this Section 12 for an amount which exceeds the
aggregate value (determined at the Merger Effective Date) of the consideration
received by such STOCKHOLDER under this Agreement. "Excess Net Worth" shall
mean the amount, if any, by which the sum of (i) aggregate shareholders' equity
as shown on the Closing Date Balance Sheet and (ii) the AAA Distribution is
greater than the aggregate shareholders' equity as shown on the Balance Sheet of
the COMPANY as at December 31, 1996. All indemnification obligations of the
STOCKHOLDERS with respect to unpaid accounts receivable pursuant to Section 6.11
hereof shall be reduced by the amount of any Excess Net Worth (but only to the
extent such Excess Net Worth has not previously been utilized to reduce an
indemnification obligation pursuant to this sentence).
12.6 Survival of Representations and Warranties. The parties agree that
------------------------------------------
representations and warranties made by the parties in this Agreement, or in any
certificate or other instrument delivered pursuant to this Agreement, shall
survive for a period of 12 months from the Merger Effective Date (which date is
hereinafter called the "Expiration Date"), except that (i) the representations
and warranties contained in Section 6.21 hereof shall survive until such time as
the limitations period has run for all tax periods ended prior to the Merger
Effective Date, which shall be deemed to be the Expiration Date for purposes of
this clause (i); (ii) the representations and warranties contained in Sections
6.26 and 6.27 hereof shall survive for a period of three years from the Merger
Effective Date, which shall be deemed the Expiration Date for purposes of this
clause (ii); (iii) solely for the purposes of Section 12.1(iii) hereof, and
solely to the extent that USFLORAL actually incurs liability under the 1933 Act,
the Exchange Act or any other federal or state securities laws, the
representations and warranties set forth herein shall survive for a period of
three years from the Merger Effective Date, which shall be deemed to be the
Expiration Date for purposes of this clause (iii); (iv) the representations and
warranties which serve as a basis for the indemnity obligations of STOCKHOLDERS
under Sections 12.2(a) and (b) shall survive the Merger Effective Date, without
limitation; (v) the indemnity obligations of the STOCKHOLDERS under Section
12.2(c) shall survive for a period of three years from the Merger Effective
Date; and (vi) solely for the purposes of Section 12.3(iv) hereof, and solely to
the extent that STOCKHOLDERS actually incur liability under the 1933 Act the
Exchange Act or any other federal or state securities laws, the representations
and warranties set forth herein shall survive for a period of three years from
the
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Merger Effective Date, which shall be deemed to be the Expiration Date for
purposes of this clause (vi).
12.7 Sole Remedies. The provisions of this Section 12 shall be the
-------------
exclusive basis for assertion of claims against, or the imposition of liability
on, the STOCKHOLDERS in connection with this Agreement and/or the transactions
contemplated hereby, whether based on contract, tort, statute, or otherwise,
except to the extent that any such claim or liability is based on intentional
misstatement, fraud or misrepresentation by the STOCKHOLDERS.
13. TERMINATION OF AGREEMENT
13.1 Termination by the Parties. USFLORAL or STOCKHOLDERS may, by notice
--------------------------
in the manner hereinafter provided on or before the Closing Date, terminate this
Agreement if (i) a material default shall be made by the other party in the
observance or in the due and timely performance of any of the covenants,
agreements or conditions contained herein, and the curing of such default shall
not have been made on or before the Closing Date and shall not reasonably be
expected to occur; (ii) the Registration Statement has not been declared
effective by December 24, 1997; or (iii) the Merger has not been consummated on
or prior to December 31, 1997. During the period from the Closing Date to the
Merger Effective Date, this Agreement may only be terminated by the parties as
provided in Section 5 hereof.
13.2 Liquidated Damages. If (i) the STOCKHOLDERS terminate this
------------------
Agreement after the satisfaction of the conditions set forth in Article 9, (ii)
USFLORAL terminates this Agreement after the satisfaction of the conditions set
forth in Article 10, (iii) the Merger fails to occur because of the default of
the COMPANY or the STOCKHOLDERS or (iv) the Merger fails to occur because of the
default of USFLORAL, then, in the event of (i) or (iii), in addition to the
other remedies available to USFLORAL in equity or pursuant to this Agreement,
STOCKHOLDERS shall pay to USFLORAL the sum of $500,000 as liquidated damages;
or, in the event of (ii) or (iv), in addition to the other remedies available to
the STOCKHOLDERS in equity or pursuant to this Agreement, USFLORAL shall pay to
the STOCKHOLDERS the aggregate sum of $500,000 as liquidated damages. It is
hereby agreed that the damaged party's damages in the event of a termination or
default by the other party hereunder are uncertain and impossible to ascertain
and that the foregoing constitutes a reasonable liquidation of such damages and
is intended not as a penalty but as liquidated damages.
14. NONCOMPETITION
14.1 Prohibited Activities. STOCKHOLDERS agree that for a period of two
---------------------
years following the Merger Effective Date, they shall not in the United States:
(i) 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
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competition with the Surviving Corporation or USFLORAL that involves the
importing, brokerage, shipping or marketing of floral products, or any business
engaging in the consolidation of the floral industry with the United States;
(ii) call upon any person who is, at that time, 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;
(iii) call upon any person or entity which is, at that time, or which
has been, within one year prior to that time, a customer of USFLORAL or any
subsidiaries of USFLORAL, the COMPANY for the purpose of soliciting or selling
floral products;
(iv) 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 or the COMPANY; or
(v) disclose customers, whether in existence or proposed, of the
COMPANY to any person, firm, partnership, corporation or business for any reason
or purpose whatsoever.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit STOCKHOLDERS from (i) acquiring as an investment not more than one
percent of the capital stock of a competing business, whose stock is traded on a
national securities exchange or in the over-the-counter market, (ii) engaging in
any activity to which USFLORAL shall have provided its prior written consent or
(iii) owning or engaging in any business, acting in any capacity for, or
otherwise operating H&H Flowers, Inc., d/b/a LaFleurette, Flying High Venture,
Floraltech, Inc., Day One Fresh, LLC, Cultivitos Miramonte and its subsidiaries,
C.I. Colombiana De Bouquets or Agropecuaria Pamputik, S.A. and its subsidiaries.
14.2 Damages. Because of the difficulty of measuring economic losses to
-------
USFLORAL and the Surviving Corporation as a result of the breach of the
foregoing covenant, and because of the immediate and irreparable damage that
would be caused to USFLORAL and the Surviving Corporation for which they would
have no other adequate remedy, STOCKHOLDERS agree that, in the event of a breach
by them of the foregoing covenant, the covenant may be enforced by USFLORAL or
the Surviving Corporation by, without limitation, injunctions and restraining
orders.
14.3 Reasonable Restraint. It is agreed by the parties that the
--------------------
foregoing covenants in this Section 14 impose a reasonable restraint on
STOCKHOLDERS in light of the activities and business of USFLORAL on the date of
the execution of this Agreement and the current and future plans of USFLORAL and
the Surviving Corporation (as successor to the business of the COMPANY).
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14.4 Severability; Reformation. The covenants in this Section 14 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.
14.5 Independent Covenant. All of the covenants in this Section 14 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 STOCKHOLDERS
against the COMPANY 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
STOCKHOLDER is in violation of any provision of this Section 14 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 the Surviving Corporation
seek to enforce the agreements and covenants of STOCKHOLDERS or in which any
person contests the validity of such agreements and covenants or their
enforceability or seeks to avoid their performance or enforcement.
14.6 Materiality. STOCKHOLDERS hereby agree that this covenant is a
-----------
material and substantial part of this transaction.
15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
15.1 STOCKHOLDERS. STOCKHOLDERS 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 COMPANY, such as lists of customers,
operational policies, and pricing and cost policies that are valuable, special
and unique assets of the COMPANY and the COMPANY's business. Subject to the
last sentence of Section 14.1, STOCKHOLDERS 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 such information becomes known to the public
generally through no fault of STOCKHOLDERS. In the event of a breach or
threatened breach by STOCKHOLDERS of the provisions of this Section 15, USFLORAL
and the Surviving Corporation shall be entitled to an injunction restraining
STOCKHOLDERS from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting USFLORAL and the
Surviving Corporation from pursuing any other available remedy for such breach
or threatened breach, including the recovery of damages.
15.2 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 COMPANY, such as lists of customers, operational
policies, pricing and cost policies that are valuable, special and unique assets
of the COMPANY and the COMPANY's business. USFLORAL
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agrees that it will not disclose any confidential information to any person,
firm, corporation, association, or other entity for any purpose or reason
whatsoever, prior to the Closing Date without prior written consent of the
STOCKHOLDERS. In the event of a breach or threatened breach by USFLORAL of the
provisions of this Section, STOCKHOLDERS shall be entitled to an injunction
restraining USFLORAL from disclosing, in whole or in part, such confidential
information. Nothing contained herein shall be construed as prohibiting
STOCKHOLDERS from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
15.3 Damages. Because of the difficulty of measuring economic losses as
-------
a result of the breach of the foregoing covenants, and because of the immediate
and irreparable damage that would be caused for which they would have no other
adequate remedy, USFLORAL, the Surviving Corporation and STOCKHOLDERS 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.
16. LOCK-UP AGREEMENTS
In connection with the IPO, for good and valuable consideration, the
STOCKHOLDERS hereby irrevocably agree that for a period of 180 days after the
date of the effectiveness of the Registration Statement, as the same may be
amended, not to (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of (except as
contemplated in Section 4.2 hereof), directly or indirectly, any shares of
USFLORAL Stock or any securities convertible into or exercisable or exchangeable
for shares of USFLORAL Stock, or (ii) enter into any swap or other agreement
that transfers, in whole or in part, any of the economic consequences of
ownership of the USFLORAL Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of USFLORAL Stock or such
other securities, in cash or otherwise without the prior written consent of the
managing underwriters in the IPO. The STOCKHOLDERS agree that the foregoing
shall be binding upon the STOCKHOLDERS' transferees, successors, assigns, heirs,
and personal representatives and shall benefit and be enforceable by the
underwriters in the IPO. In furtherance of the foregoing, USFLORAL and its
transfer agent are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Article 16.
17. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON USFLORAL STOCK
The STOCKHOLDERS acknowledge and agree that the shares of USFLORAL Stock to be
delivered to the STOCKHOLDERS pursuant to this Agreement have not been and will
not be registered under the Act and therefore may not be resold without
compliance with the Act. The STOCKHOLDERS represent and warrant that the
USFLORAL Stock to be acquired by STOCKHOLDERS pursuant to this Agreement is
being acquired solely for their own account, for
-35-
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of it in connection with a distribution.
17.1 Compliance with Law. The STOCKHOLDERS covenant, warrant and
-------------------
represent that none of the shares of USFLORAL Stock issued to such STOCKHOLDERS
will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the 1933 Act and the rules and regulations of the SEC.
17.2 Economic Risk; Sophistication. STOCKHOLDERS represent and warrant
-----------------------------
that they are able to bear the economic risk of an investment in USFLORAL Stock
acquired pursuant to this Agreement and can afford to sustain a total loss of
such investment. They further represent and warrant that they (i) fully
understand the nature, scope and duration of the limitations on transfer
contained in this Agreement and (ii) have such knowledge and experience in
financial and business matters that they are capable of evaluating the merits
and risks of the proposed investment and therefore have the capacity to protect
their own interests in connection with the acquisition of the USFLORAL Stock.
STOCKHOLDERS represent and warrant that they have had an adequate opportunity to
ask questions and receive answers from the officers of USFLORAL concerning any
and all matters relating to the acquisition of USFLORAL Stock as contemplated by
this Agreement including, without limitation, the background and experience of
the officers and directors of USFLORAL, the plans for the operations of the
business of USFLORAL, and any plans for additional acquisitions and the like.
STOCKHOLDERS have asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to their satisfaction.
17.3 Registration Statement. Each STOCKHOLDER has received the
----------------------
prospectus included in the draft Registration Statement delivered to him on or
about August 2, 1997 that describes, among other things, the Merger, the other
acquisitions proposed to be undertaken by USFLORAL and the target companies of
the other acquisitions. Each STOCKHOLDER has had an adequate opportunity to ask
questions and receive answers to his satisfaction from the officers of USFLORAL
concerning the business, operations and financial condition of USFLORAL.
18. SECURITIES LEGENDS
The certificates evidencing the USFLORAL Stock to be received by the
STOCKHOLDERS hereunder will bear a legend substantially in the form set forth
below and containing such other information as USFLORAL may deem appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR ANY STATE
SECURITIES OR BLUE SKY LAWS. SUCH SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES
-36-
UNDER THE 1933 ACT AND ANY STATE SECURITIES OR BLUE SKY LAWS, UNLESS, IN
THE OPINION (WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO USFLORAL)
OF COUNSEL SATISFACTORY TO USFLORAL, SUCH REGISTRATION IS NOT REQUIRED.
In addition, such certificates shall also bear such other legends as counsel for
USFLORAL reasonably determines are required under the applicable laws of any
state.
19. GENERAL
19.1 Cooperation. STOCKHOLDERS and USFLORAL 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 additional instruments as the
other may reasonably request for the purpose of carrying out this Agreement.
STOCKHOLDERS will cooperate and use their best efforts to have the present
officers, directors and employees of the COMPANY cooperate with USFLORAL on and
after the Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to all periods prior to the
Closing Date.
19.2 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 STOCKHOLDERS.
19.3 Entire Agreement. This Agreement (including the schedules, exhibits
----------------
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding between STOCKHOLDERS, the
COMPANY, USFLORAL and NEWCO and supersede any prior agreement and understanding
relating to the subject matter of this Agreement (other than that certain letter
agreement among USFLORAL and the STOCKHOLDERS dated July 3, 1997 which remains
in full force and effect). This Agreement, upon execution, constitutes a valid
and binding agreement on the parties thereto enforceable in accordance with its
terms and may be modified or amended only by a written instrument executed by
STOCKHOLDERS (subject to the limitations set forth below), the COMPANY, USFLORAL
and NEWCO acting through their respective officers, duly authorized by their
respective Boards of Directors; provided, that the STOCKHOLDER who owns a
majority of the outstanding shares of capital stock of the COMPANY shall have
the authority to approve and execute any amendment to this Agreement on behalf
of all of the STOCKHOLDERS and without the necessity of such majority
STOCKHOLDER obtaining consent or authorization from any other STOCKHOLDER,
unless such amendment relates to any representation of warranty made by a
STOCKHOLDER other than such majority STOCKHOLDER which may only be amended by
the written agreement of such person.
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19.4 Counterparts. This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
19.5 Brokers and Agents. Each party represents and warrants that it
------------------
employed no broker or agent in connection with this transaction and agrees to
indemnify the other against all loss, cost, damages or expense arising out of
claims for fees or commissions of brokers employed or alleged to have been
employed by such indemnifying party.
19.6 Expenses. Whether or not the transactions herein contemplated shall
--------
be consummated, USFLORAL will pay the fees, expenses and disbursements of
USFLORAL and NEWCO and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments thereto. Whether or not the transactions herein contemplated shall
be consummated, the COMPANY will pay the fees, expenses and disbursements of
STOCKHOLDERS and their agents, representatives, accountants and counsel incurred
in connection with the subject matter of this Agreement and any amendments
hereto and all other costs and expenses incurred in the performance and
compliance with all conditions to be performed by STOCKHOLDERS and the COMPANY
under this Agreement.
19.7 Notices. All notices of communication required or permitted
-------
hereunder shall be in writing and shall be given by overnight courier service or
by delivering the same in person to an officer or agent of such party.
(a) If to USFLORAL or NEWCO, addressed to them at:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a required copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
5300 First Union Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) If to STOCKHOLDERS, addressed to them at:
▇▇▇▇ ▇.▇. ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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with a required copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
19.8 Governing Law. This Agreement shall be construed in accordance with the
-------------
laws of the State of Florida.
19.9 Exercise of Rights and Remedies. Except as otherwise provided herein, no
-------------------------------
delay of or omission in the exercise of any right, power or remedy accruing to
any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
19.10 Time. Time is of the essence with respect to this Agreement.
----
19.11 Reformation and Severability. In case any provision of this Agreement
----------------------------
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
19.12 Remedies Cumulative. No right, remedy or election given by any term of
-------------------
this Agreement shall be deemed exclusive but each shall be cumulative with all
other rights, remedies and elections available at law or in equity.
19.13 Captions. The headings of this Agreement are inserted for convenience
--------
only and shall not constitute a part of this Agreement or be used to construe or
interpret any provision hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
"USFLORAL"
USA FLORAL PRODUCTS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President/CEO
"NEWCO"
FLORAL ACQUISITION CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
"COMPANY"
CFX, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
"STOCKHOLDERS"
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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ANNEXES
ANNEX I [Form of Articles of Merger]
ANNEX II [Calculation and Composition of Consideration]
ANNEX III [Form of Employment Agreement]
SCHEDULES
Schedule 6.1 [Due Organization]
Schedule 6.3 [Capital Stock]
Schedule 6.6 [Subsidiaries]
Schedule 6.7 [Predecessor Status]
Schedule 6.9 [Financial Statements]
Schedule 6.10 [Liabilities and Obligations]
Schedule 6.11 [Accounts and Notes Receivable]
Schedule 6.12 [Permits and Intangibles]
Schedule 6.13 [Real and Personal Property]
Schedule 6.14 [Material Contracts and Commitments]
Schedule 6.16 [Insurance]
Schedule 6.17 [Officers, Directors and Employees Compensation]
Schedule 6.18 [Employee Plans]
Schedule 6.19 [ERISA]
Schedule 6.20 [Conformity with Law]
Schedule 6.22 [Required Consents]
Schedule 6.25 [Deposit Accounts; Powers of Attorney]
Schedule 6.27 [Environmental Matters]
Schedule 6.28 [Underground Storage Tanks]
Schedule 7.5 [Other Agreements]
Schedule 8.3(vi) [Permitted Liens]
Schedule 10.10 [Additional Liabilities and Obligations]
Schedule 10.11 [Additional Contracts]
Schedule 11.1 [Guarantees]
