EXHIBIT 10.8
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AGREEMENT AND PLAN OF CONTRIBUTION
by and among
USA FLORAL PRODUCTS, INC.
(a Delaware corporation),
FT ACQUISITION CORPORATION
(a Delaware corporation),
FLOWER TRADING CORPORATION
(a Florida corporation),
FLOWTRAD CORPORATION N.V.
(a Delaware corporation),
and
THE STOCKHOLDERS OF FLOWTRAD CORPORATION N.V.
Dated as of August 4, 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 COMPANIES, NEWCO and USFLORAL.......................................................................... -2-
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 COMPANIES...................................................................................... -8-
6.9 Financial Statements........................................................................................... -8-
6.10 Liabilities and Obligations.................................................................................... -9-
6.11 Accounts and Notes Receivable.................................................................................. -9-
6.12 Permits and Intangibles........................................................................................ -9-
6.13 Real and Personal Property.....................................................................................-10-
6.14 Material Contracts and Commitments.............................................................................-10-
6.15 Title to Real Property.........................................................................................-11-
6.16 Insurance......................................................................................................-11-
6.17 Officers, Directors and Employees Compensation.................................................................-11-
6.18 Employee Plans.................................................................................................-11-
6.19 Compliance with ERISA..........................................................................................-11-
6.20 Conformity with Law............................................................................................-13-
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6.21 Taxes..........................................................................................................-14-
6.22 Completeness; No Violations....................................................................................-14-
6.23 Government Contracts...........................................................................................-14-
6.24 Absence of Changes.............................................................................................-14-
6.25 Deposit Accounts; Powers of Attorney...........................................................................-16-
6.26 Environmental Matters..........................................................................................-16-
6.27 Underground Storage Tanks......................................................................................-17-
6.28 Validity of Obligations........................................................................................-17-
6.29 Relations with Governments.....................................................................................-17-
6.30 Disclosure.....................................................................................................-17-
6.31 Ownership......................................................................................................-17-
7. REPRESENTATIONS OF USFLORAL AND NEWCO.................................................................................-18-
7.1 Due Organization...............................................................................................-18-
7.2 USFLORAL Stock.................................................................................................-18-
7.3 Authorization..................................................................................................-18-
7.4 Validity of Obligations........................................................................................-18-
7.5 No Conflicts...................................................................................................-18-
7.6 Other Agreements...............................................................................................-19-
7.7 Reasonable and Adequate Capital................................................................................-19-
8. COVENANTS PRIOR TO CLOSING............................................................................................-19-
8.1 Access and Cooperation.........................................................................................-19-
8.2 Conduct of Business............................................................................................-20-
8.3 Prohibited Activities..........................................................................................-20-
8.4 Supplier Approval..............................................................................................-21-
8.5 UltraFlora Corporation.........................................................................................-21-
8.6 No Shop........................................................................................................-22-
8.7 Notification of Certain Matters................................................................................-22-
8.8 Amendment of Schedules.........................................................................................-22-
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS...................................................................-23-
9.1 Representations and Warranties; Performance of
Obligations...................................................................................................-23-
9.2 No Litigation..................................................................................................-23-
9.3 Employment Agreements..........................................................................................-23-
9.4 Opinion of Counsel.............................................................................................-23-
9.5 Registration Statement.........................................................................................-24-
9.6 Market Capitalization..........................................................................................-24-
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF USFLORAL AND NEWCO.............................................................-24-
10.1 Representations and Warranties; Performance of Obligations.....................................................-24-
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10.2 No Litigation..................................................................................................-25-
10.3 Examination of Financial Statements............................................................................-25-
10.4 No Material Adverse Change.....................................................................................-25-
10.5 Regulatory Review..............................................................................................-25-
10.6 STOCKHOLDERS Release...........................................................................................-25-
10.7 Employment Agreements..........................................................................................-25-
10.8 Opinion of Counsel.............................................................................................-25-
10.9 Consents and Approvals.........................................................................................-27-
10.10 Additional Liabilities and Obligations.........................................................................-27-
10.11 Additional Contracts...........................................................................................-27-
10.12 Good Standing Certificates.....................................................................................-27-
10.13 Registration Statement.........................................................................................-27-
10.14 Repayment of Indebtedness......................................................................................-27-
10.15 Pretax Income..................................................................................................-27-
11. COVENANTS OF USFLORAL.................................................................................................-28-
11.1 Release From Guarantees........................................................................................-28-
11.2 USFLORAL Stock Options.........................................................................................-28-
11.3 Exchange Act Obligations.......................................................................................-28-
11.4 Certain Transactions...........................................................................................-28-
11.5 Piggy-Back Registrations.......................................................................................-28-
12. INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS
AND WARRANTIES........................................................................................................-29-
12.1 General Indemnification by STOCKHOLDERS........................................................................-29-
12.2 Specific Indemnification by STOCKHOLDERS.......................................................................-30-
12.3 Indemnification by USFLORAL and NEWCO..........................................................................-31-
12.4 Third-Person Claims............................................................................................-31-
12.5 Limitations on Indemnification.................................................................................-32-
12.6 Survival of Representations and Warranties.....................................................................-32-
12.7 Sole Remedies..................................................................................................-33-
13. TERMINATION OF AGREEMENT..............................................................................................-33-
13.1 Termination by the Parties.....................................................................................-33-
13.2 Liquidated Damages.............................................................................................-33-
14. NONCOMPETITION........................................................................................................-34-
14.1 Prohibited Activities..........................................................................................-34-
14.2 Damages........................................................................................................-35-
14.3 Reasonable Restraint...........................................................................................-35-
14.4 Severability; Reformation......................................................................................-35-
14.5 Independent Covenant...........................................................................................-35-
14.6 Materiality....................................................................................................-36-
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15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................................................................-36-
15.1 STOCKHOLDERS...................................................................................................-36-
15.2 USFLORAL.......................................................................................................-36-
15.3 Damages........................................................................................................-36-
16. LOCK-UP AGREEMENTS....................................................................................................-37-
17. FEDERAL SECURITIES ACT AND CONTRACTUAL
RESTRICTIONS ON USFLORAL STOCK........................................................................................-37-
17.1 Compliance with Law............................................................................................-37-
17.2 Economic Risk; Sophistication..................................................................................-37-
18. SECURITIES LEGENDS....................................................................................................-38-
19. GENERAL -38-
19.1 Cooperation....................................................................................................-38-
19.2 Successors and Assigns.........................................................................................-39-
19.3 Entire Agreement...............................................................................................-39-
19.4 Counterparts...................................................................................................-39-
19.5 Brokers and Agents.............................................................................................-39-
19.6 Expenses.......................................................................................................-39-
19.7 Notices........................................................................................................-39-
19.8 Governing Law..................................................................................................-40-
19.9 Exercise of Rights and Remedies................................................................................-40-
19.10 Time...........................................................................................................-40-
19.11 Reformation and Severability...................................................................................-40-
19.12 Remedies Cumulative............................................................................................-41-
19.13 Captions.......................................................................................................-41-
ANNEX I
CERTIFICATE OF MERGER................................................................................................. I-1
ANNEX II
CALCULATION AND COMPOSITION OF CONSIDERATION..........................................................................II-1
ANNEX III
EMPLOYMENT AGREEMENT.................................................................................................III-1
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AGREEMENT AND PLAN OF CONTRIBUTION
THIS AGREEMENT AND PLAN OF CONTRIBUTION (the "Agreement") is made as of the
4th day of August, 1997, among USA FLORAL PRODUCTS, INC., a Delaware corporation
("USFLORAL"), FT ACQUISITION CORPORATION, a Delaware corporation ("NEWCO"),
FLOWER TRADING CORPORATION, a Florida corporation ("FT"), FLOWTRAD CORPORATION
N.V., a Delaware corporation ("FLOWTRAD") (FT and FLOWTRAD are hereinafter
collectively referred to as the "COMPANIES") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Seacross
Trading, Inc., a corporation organized under the laws of the British Virgin
Islands ("Seacross"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (collectively referred to as the
"STOCKHOLDERS"), who directly or indirectly own all the shares of FLOWTRAD.
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 Delaware solely for the purpose of completing this transaction, and is
a wholly owned subsidiary of USFLORAL; and
WHEREAS, the COMPANIES are corporations organized and existing under the laws
of the States of Florida and Delaware; and
WHEREAS, FLOWTRAD owns all the outstanding common stock of FT; and
WHEREAS, the respective Boards of Directors of USFLORAL, NEWCO and FLOWTRAD
(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 FLOWTRAD pursuant to this Agreement and the applicable provisions of
the laws of the State of Delaware, 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 (the "Code");
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 Corporations
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will cause a Certificate of Merger in substantially the form of Annex I attached
hereto (the "Certificate of Merger") to be signed and delivered to the Secretary
of State of Delaware on or before the Merger Effective Date (as defined in
Section 5).
1.2 Merger Effective Date. At the Merger Effective Date, NEWCO shall be
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merged with and into FLOWTRAD in accordance with the Certificate of Merger and
the separate existence of NEWCO shall cease. FLOWTRAD, 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 Certificate of Incorporation of NEWCO shall become the Certificate
of Incorporation of the Surviving Corporation; and, subsequent to the Merger
Effective Date, such Certificate of Incorporation shall be the Certificate 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 Delaware and of the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
(iv) the officers of FLOWTRAD 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 Certificate of Incorporation and Bylaws of the Surviving
Corporation, until their successor is elected and qualified.
1.4 Certain Information with Respect to the Capital Stock of the COMPANIES,
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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 the
COMPANIES, NEWCO and USFLORAL as of the date of this Agreement are as follows:
(i) the authorized capital stock of FLOWTRAD consists of 150,000 shares of
common stock, $1.00 par value (the "FLOWTRAD Stock"), of which 150,000 shares
are issued and outstanding;
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(ii) the authorized capital stock of FT consists of 10,000 shares of
common stock, $1.00 par value (the "FT Stock"), of which 10,000 shares are
issued and outstanding (the FT Stock and FLOWTRAD Stock are hereinafter
collectively referred to as the "COMPANIES' Stock");
(iii) the authorized capital stock of NEWCO consists of 100 shares of
common stock, $0.01 par value (the "NEWCO Stock"), of which 100 shares are
issued and outstanding; and
(iv) the authorized capital stock of USFLORAL consists of 100,000,000
shares of common stock, $0.01 par value (the "USFLORAL Stock"), of which
2,400,000 shares are issued and outstanding.
2. CONVERSION AND EXCHANGE OF STOCK
2.1 Manner of Conversion. The manner of converting the shares of FLOWTRAD
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Stock issued and outstanding immediately prior to the Merger Effective Date into
cash and shares of USFLORAL Stock shall be as follows:
As of the Merger Effective Date:
(i) all of the shares of FLOWTRAD 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.
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 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.
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2.2 Calculation of USFLORAL Shares. The FLOWTRAD 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, directly or indirectly, of all
outstanding certificates representing shares of FLOWTRAD Stock, shall, upon
surrender of such certificates, be entitled to receive the number of shares of
USFLORAL Stock and the amount of cash set forth on Annex II opposite the name
of the STOCKHOLDERS; and
(ii) until the certificates representing the FLOWTRAD Stock have been
surrendered by STOCKHOLDERS and replaced by certificates representing the
USFLORAL Stock, the certificates for the FLOWTRAD Stock shall, for all
corporate purposes be deemed to evidence ownership of the USFLORAL Stock
notwithstanding the number of shares of FLOWTRAD Stock such certificates
represent.
3.2 The STOCKHOLDERS shall deliver at the Closing (as defined in Section 5
hereof) the certificates representing their shares of FLOWTRAD Stock, duly
endorsed in blank by the STOCKHOLDERS or accompanied by blank stock powers. The
STOCKHOLDERS agree to cure any deficiencies with respect to the endorsement of
the certificates or other documents of conveyance with respect to the FLOWTRAD
Stock or with respect to the stock powers accompanying the FLOWTRAD 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 generally
accepted accounting principles ("GAAP"), a Consolidated FLOWTRAD Balance Sheet
(the "Closing Date Balance Sheet") as of the close of business on the day prior
to the Closing Date. If the aggregate shareholders' equity as shown on the
Closing Date Balance Sheet is less than $2,000,000 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 shareholders' equity deficiency. Notwithstanding
anything in this Article 4 to the contrary, if there is any shareholders' equity
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 30 business days after the delivery of the Closing
Date Balance Sheet. If USFLORAL and STOCKHOLDERS cannot resolve any such
dispute which would eliminate or reduce the amount of the shareholders' equity
deficiency, then such dispute shall be resolved by an independent nationally
recognized accounting firm which
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is reasonably acceptable to USFLORAL and 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 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 and USFLORAL'S aggregate share of such costs shall bear the same proportion
to the total costs that the Disputed Amounts successfully contested by the
STOCKHOLDERS (as finally determined by the Independent Accounting Firm) bear to
the total of the Disputed Amounts as submitted to the Independent Accounting
Firm. STOCKHOLDERS shall have the right to examine, upon written demand, in
person or by agent or attorney, at any reasonable time or times, all the books
and records of accounts of the COMPANIES to determine if there are any Disputed
Amounts and in connection with any resolution thereof.
4.2 (a) As collateral security for the payment of any indemnification
obligations of 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 of
the STOCKHOLDERS 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 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 non-cash dividends or property with
respect to such Pledged Securities, such STOCKHOLDER shall immediately deliver
such non-cash dividends 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 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
(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.
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(b) Each certificate evidencing a STOCKHOLDER'S Pledged Securities issued
in his 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 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, each STOCKHOLDER shall have the right to object to such
unpaid amount. If a STOCKHOLDER does 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 any STOCKHOLDER
does so object, USFLORAL shall review the objections and respond to such
STOCKHOLDER. If the parties do not resolve the dispute within 30 days of the
date of the STOCKHOLDER'S 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 Pledged Securities or any remaining Pledged Securities shall be
returned to the respective STOCKHOLDER on the one-year anniversary of the Merger
Effective Date and all rights of USFLORAL with regard to such Pledged Securities
will cease.
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 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 wire transfer
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
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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 IPO 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 of the STOCKHOLDERS, jointly and severally, represents and
warrants, as follows (provided, however, that for purposes of the following
representations and warranties, it shall be assumed that the shares of
UltraFlora Corporation ("UltraFlora") shall have been transferred by FT prior to
the date hereof):
6.1 Due Organization. The COMPANIES are corporations duly organized, validly
----------------
existing and in good standing under the laws of the States of Florida and
Delaware, as the case may be, and are duly authorized, qualified and licensed
under all applicable laws, regulations, ordinances and orders of public
authorities to carry on their respective businesses in the places and in the
manner as now conducted except (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 COMPANIES taken
as a whole. True, complete and correct copies of the Articles and Certificate
of Incorporation and Bylaws (certified by the Secretary of the respective
COMPANIES) of the COMPANIES have heretofore been delivered to USFLORAL. The
stock records and minute books of the COMPANIES, as heretofore made available to
USFLORAL, are correct and complete.
6.2 Authorization. STOCKHOLDERS and each of the COMPANIES have full legal
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right, power 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 each of the COMPANIES
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consists 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 COMPANIES is
owned, directly or indirectly, 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
COMPANIES' 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 COMPANIES 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. Neither of the COMPANIES has ever
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acquired any treasury stock. No option, warrant, call, conversion right or
commitment of any kind exists which obligates the COMPANIES to issue any of
their authorized but unissued capital stock. In addition, the COMPANIES do not
have any obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of their equity securities or any interests therein or to pay any
dividend or make any distribution in respect thereof.
6.5 No Bonus Shares. None of the shares of the COMPANIES' 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 COMPANIES
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presently own, of record or beneficially, or control, directly or indirectly, no
capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity (except FT). The
COMPANIES are not, directly or indirectly, participants 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
------------------
of all predecessor companies of each of the COMPANIES, including the names of
any entities from whom each of the COMPANIES previously acquired significant
assets (other than in the ordinary course of business). FLOWTRAD has never been
a subsidiary or division of another corporation and neither of the Companies has
ever been a part of an acquisition which was later rescinded.
6.8 Spin-off by the COMPANIES. The COMPANIES have never effected any sale or
-------------------------
spin-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
--------------------
following financial statements (the "Financial Statements") of each of the
COMPANIES: Balance Sheets as of December 31, 1996, 1995 and 1994 and
Comparative Income Statements and Shareholders' Equity for each of the years in
the three-year period ended December 31, 1996, and the unaudited Balance Sheets
as of March 31, 1997, March 31, 1996 and June 30, 1997 (June 30, 1997 being
hereinafter referred to as the "Balance Sheet Date"), and Balance Sheets and
Shareholders' Equity for the three-month and six-month periods then ended. Such
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated (except as noted on Schedule
6.9). Except as set forth on Schedule 6.9, such Balance Sheets present fairly
in all material respects the financial position of each of the COMPANIES as of
the dates indicated thereon, and such Comparative Income Statements present
fairly in all material respects the results of their operations for the periods
indicated thereon.
-8-
6.10 Liabilities and Obligations. Attached hereto as Schedule 6.10 is
---------------------------
an accurate list, as of the Balance Sheet Date, of all material liabilities of
each the COMPANIES, which are reflected in the COMPANIES' Statement of Financial
Condition as of June 30, 1997 and any material liabilities incurred thereafter
through the date hereof in the ordinary course of business, or material
liabilities which are not reflected in their balance sheet or the notes thereof,
of any kind, character and description, whether accrued, absolute, secured or
unsecured, contingent or otherwise. 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; and
(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; and
(iv) a best estimate by 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, 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 each of the COMPANIES, including receivables from and advances to
employees and STOCKHOLDERS. STOCKHOLDERS have provided 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 each of the
COMPANIES 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,
franchises, certificates, trademarks, trade names, service marks, patents,
patent applications and copyrights owned or held
-9-
by each of the COMPANIES are adequate for the operation of the COMPANIES
business as presently conducted.
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 leased
by each of the COMPANIES. The STOCKHOLDERS have provided USFLORAL 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 business
of each of the COMPANIES 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 (the "1933 Act")) of the COMPANIES. Except as set forth
on Schedule 6.13, substantially all of the trucks, machinery and equipment of
the COMPANIES 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 COMPANIES 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 COMPANIES in the operation of their
respective businesses are either owned by the COMPANIES or leased under an
agreement set forth on Schedule 6.13.
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 each of the COMPANIES is
a party or by which it or any of their 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, each of the COMPANIES
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 COMPANIES are not a
party to any contract, agreement or other instrument or commitment which cannot
be terminated by the COMPANIES on 30 days' notice without any liability to the
COMPANIES which would have a Material Adverse Effect on the COMPANIES taken as a
whole. Except as set forth on Schedule 6.14, the COMPANIES are not bound by or
subject to (and none of their assets or properties are bound by or subject to)
any arrangement with any labor union. Except as set forth on Schedule 6.14, no
employees of the COMPANIES are represented by any labor union or covered by any
collective bargaining agreement nor, to the best of STOCKHOLDER'S 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 COMPANIES and any group of their employees nor have the
COMPANIES experienced any labor interruptions over the past three years and the
COMPANIES consider their relationship with employees to be good.
-10-
6.15 Title to Real Property. As of the date hereof, the COMPANIES do 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 COMPANIES
and an accurate list of all worker's compensation claims received for the past
three policy years. There have been no other insurance claims in excess of
$10,000 in the last three years. STOCKHOLDERS have heretofore delivered to
USFLORAL complete copies of all such policies. To the best of the STOCKHOLDERS'
knowledge, the insurance carried by the COMPANIES with respect to their
properties, assets and business is with financially sound insurers. Such
insurance policies are currently in full force and effect and shall remain in
full force and effect, or comparable policies substituted therefor, through the
Merger Effective Date. The insurance of the COMPANIES has never been canceled
nor have either of the COMPANIES 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 each of the COMPANIES. Each of the COMPANIES 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 COMPANIES as of a recent date. Since the
Balance Sheet Date other than as described in 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 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 COMPANIES or to which the COMPANIES currently contribute, or have 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 Code have been determined by the Internal Revenue Service
to be so qualified, and copies of the current plan determination letters, most
recent actuarial
-11-
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 COMPANIES has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA, except for
transactions 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 COMPANIES 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 COMPANIES 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) prior to the Closing Date, 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 Code and Section 607(1) of ERISA and related regulations
(relating to the benefit continuation rights imposed by "COBRA"), the
COMPANIES have complied (and on the Closing Date will have complied), in all
respects with all reporting, disclosure, notice,
-12-
election and other benefit continuation requirements imposed thereunder as and
when applicable to such plans, and the COMPANIES have (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 COMPANIES 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 COMPANIES with respect to such group health plans;
(vi) the COMPANIES are a member of a "controlled group" as defined in ERISA
Section 4001(a)(14) which is described on Schedule 6.19 attached hereto;
(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 COMPANIES have never incurred liability under Section 4062 of
ERISA.
6.20 Conformity with Law. Except as set forth on Schedule 6.20, neither
-------------------
of the COMPANIES is in violation of any law or regulation or under any order of
any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction which
would have a Material Adverse Effect on the COMPANIES taken as a whole; and
except as set forth on Schedule 6.20, there are no claims, actions, suits or
proceedings, pending or threatened to the STOCKHOLDERS' knowledge, against or
affecting the COMPANIES 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. Each of the
COMPANIES has conducted and is conducting its business in all material respects
in 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 COMPANIES taken as a whole.
-13-
6.21 Taxes. Each of the COMPANIES 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
COMPANIES 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 pending 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 each of the COMPANIES, (ii) extensions of statutory
limitations and (iii) the federal and local income tax returns and franchise tax
returns of the COMPANIES 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. Each of the COMPANIES 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 Code. Each of the COMPANIES currently
utilizes the accrual method of accounting for income tax purposes and have not
changed their method of accounting in the past five years.
6.22 Completeness; No Violations. The certified copies of the Articles
---------------------------
and Certificate of Incorporation and Bylaws, all as amended to date, of the
COMPANIES, and the copies of all leases, instruments, agreements, licenses,
permits, certificates or other documents of each of COMPANIES 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 of
the COMPANIES 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 either of the COMPANIES 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 COMPANIES are not now nor have they ever
--------------------
been a party to any governmental contracts subject to price redetermination or
renegotiation.
6.24 Absence of Changes. Except as set forth in Schedule 6.24, since the
------------------
Balance Sheet Date, except in connection with this Agreement and the
transactions contemplated hereby:
-14-
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of either of the
COMPANIES;
(ii) any damage, destruction or loss (whether or not covered by insurance)
which has had a Material Adverse Effect on the COMPANIES taken as a whole;
(iii) any change in the authorized capital of either of the COMPANIES or
in their securities outstanding or any change in their ownership interests or
any grant of any options, warrants, calls, conversion rights or commitments;
(iv) 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 either of the COMPANIES;
(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 COMPANIES taken as a whole;
(vi) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of either of the COMPANIES 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 either of the COMPANIES, including without limitation any
indebtedness or obligation of any STOCKHOLDERS 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 either of the COMPANIES 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 COMPANIES other
than in the ordinary course of business;
(x) any waiver of any material rights or claims of either of the COMPANIES;
(xi) any breach, amendment or termination of any material contract,
agreement, license, permit or other right to which either of the COMPANIES is
a party; or
(xii) any transaction by either of the COMPANIES outside the ordinary
course of their business.
-15-
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 each of the COMPANIES
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.
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 either of the
COMPANIES and a description of the terms of such power.
6.26 Environmental Matters. Each of the COMPANIES has materially
---------------------
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 their
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
COMPANIES taken as a whole. The COMPANIES have 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
have reported, to the extent required by all Environmental Laws, all past and
present sites owned and operated by either of the COMPANIES 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 COMPANIES except as permitted by Environmental Laws. STOCKHOLDERS do not
know of any on-site location to which either of the COMPANIES 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 COMPANIES, 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. Neither of the COMPANIES has any contingent liability in connection
with any release of any Hazardous Waste or Hazardous Substance into the
environment.
-16-
6.27 Underground Storage Tanks. Neither of the COMPANIES has ever 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 COMPANIES and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of each
of the COMPANIES and Seacross and the stockholders of each of the COMPANIES, and
this Agreement has been duly and validly authorized by all necessary corporate
action and is a legal, valid and binding obligation of each of the COMPANIES and
Seacross.
6.29 Relations with Governments. Neither of the COMPANIES has made,
--------------------------
offered or agreed to offer anything of value to any governmental official,
political party or candidate for government office nor has either of the
COMPANIES otherwise taken any action which would cause either of the COMPANIES
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 STOCKHOLDERS
become aware of any fact or circumstance which would change a representation or
warranty of STOCKHOLDERS in this Agreement or any representation made on behalf
of either of the COMPANIES, STOCKHOLDERS shall promptly give notice of such fact
or circumstance to USFLORAL. However, such notification shall not relieve either
of the COMPANIES 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 STOCKHOLDERS, at the date of this
Agreement and at the closing, shall be a precondition to the consummation of
this transaction.
6.31 Ownership. The STOCKHOLDERS own beneficially and of record all of
---------
the shares of FLOWTRAD Stock identified on Annex II as being owned by such
STOCKHOLDERS. Further, FLOWTRAD owns all of the FT Stock. The conversion of
FLOWTRAD Stock into USFLORAL Stock and cash pursuant to the provisions of this
Agreement will transfer to USFLORAL valid title in the shares of FLOWTRAD Stock
owned by such STOCKHOLDERS, free and clear of all liens, encumbrances and claims
of every kind.
-17-
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
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 State of Delaware,
respectively, and are duly authorized, qualified and licensed under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on their respective businesses in the places and in the manner as now
conducted except 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 State of Delaware) 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 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 set forth in Section 16, will be legally equivalent in all respects to
the USFLORAL Stock issued and outstanding as of the date hereof or to be issued
in the IPO. 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (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 each of USFLORAL and NEWCO.
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:
-18-
(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, certain of the
STOCKHOLDERS and the COMPANIES, certain employment agreements with officers of
USFLORAL and those agreements and letters of intent listed on Schedule 7.6
hereof.
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 COMPANIES will afford to the officers and authorized
representatives of USFLORAL access during normal business hours to all of the
COMPANIES' 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 COMPANIES as USFLORAL may from time to time
reasonably request in writing. The COMPANIES 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.
-19-
8.2 Conduct of Business. Between the Balance Sheet Date and the Merger
-------------------
Effective Date, STOCKHOLDERS will cause each of the COMPANIES to:
(i) carry on their business in substantially the same manner as they have
heretofore and not introduce any material new method of management, operation
or accounting;
(ii) maintain their 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 their material obligations under agreements relating
to or affecting their assets, properties or rights;
(iv) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(v) use their best efforts to maintain and preserve their business
organization intact, retain their present employees and maintain their
relationships with suppliers, customers and others having business relations
with either of the COMPANIES;
(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
(vii) maintain present debt and lease instruments and not enter into new
or amended debt or lease instruments without the written consent of USFLORAL.
8.3 Prohibited Activities. Between the Balance Sheet Date and the Merger
---------------------
Effective Date, neither of the COMPANIES will, without prior written consent of
USFLORAL:
(i) make any change in their Articles or Certificate of Incorporation or
Bylaws;
(ii) issue any securities, options, warrants, calls, conversion rights or
commitments relating to their securities of any kind;
(iii) declare or pay any dividend or make any distribution in respect of
their stock whether now or hereafter outstanding, or purchase, redeem or
otherwise acquire or retire for value any shares of their 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, except as
contemplated by this Agreement;
-20-
(v) increase the compensation payable or to become payable to any officer,
director, employee, agent or the STOCKHOLDERS 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, other than those in existence on the date hereof;
(vii) sell, assign, lease or otherwise transfer or dispose of any property
or equipment, except in the normal course of business and except for the
disposition of UltraFlora in accordance with Section 8.5 hereof;
(viii) negotiate for the acquisition of any business 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
(xii) enter into any other transaction outside the ordinary course of their
business or prohibited hereunder except for the disposition of UltraFlora and
except as set forth in the agreements to be executed prior to the Closing Date
(with the prior consent of USFLORAL) with UltraFlora for the conduct of its
business upon the premises of FT including, but not limited to, the sharing of
assets, facilities and personnel at no greater than the current allocation of
expenses.
8.4 Supplier Approval. Prior to the Closing Date, each of the COMPANIES 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 UltraFlora Corporation. Immediately prior to the Closing, FT agrees to
----------------------
sell all of its shares of UltraFlora to Seacross (or its assigns), and Seacross
agrees to purchase such shares, for an aggregate purchase price of $2,052,632,
payable in the form of a promissory note which shall be due and payable in full
immediately after the Closing. Seacross agrees that $2,052,632 of the cash
portion of the Consideration received by it in the Merger shall be held in
escrow for payment of such note (in the manner as FT and Seacross shall mutually
agree). Seacross agrees to reimburse FT the amount, if any, of capital gains
tax liability incurred by FT with respect to such sale of
-21-
UltraFlora in excess of $478,714. The parties agree that on the two-year
anniversary of the Closing Date (i) Multiflora C.I., S.A. ("Multiflora") may
increase its charges to FT for administrative, quality control and public
relations services in Colombia from $0.50 per box by the percentage increase, if
any, of the Consumers Price Index for all Urban Consumers, U.S. City Average,
for All Items, as published in the Bureau of Labor Statistics of the Department
of Labor (the "CPI"), from the Closing Date; and (ii) FT may increase its
charges for services provided to UltraFlora (and its subsidiary) in the United
States by the percentage increase, if any, in the CPI from the Closing Date.
8.6 No Shop. None of the STOCKHOLDERS, the COMPANIES 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, either of the COMPANIES or a merger, consolidation or
business combination of the COMPANIES.
8.7 Notification of Certain Matters. Each of the STOCKHOLDERS and each of the
-------------------------------
COMPANIES shall give prompt notice to USFLORAL of (i) the occurrence or non-
occurrence of any event known to such STOCKHOLDERS or such COMPANIES 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 STOCKHOLDERS or either of the COMPANIES 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 of the STOCKHOLDERS 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.
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
-22-
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 Effect to the COMPANIES taken as a whole may be made unless USFLORAL
consents to such amendment to 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 he or it 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 FLOWTRAD Stock and no
governmental agency or body shall have taken any other action or made any
request of the COMPANIES as a result of which the management of either of the
COMPANIES 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
------------------
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, counsel for USFLORAL, dated the Closing Date, in
form and substance satisfactory to STOCKHOLDERS, to the effect that:
-23-
(i) USFLORAL and NEWCO have been duly organized and are validly existing
in good standing under the laws of the State of Delaware;
(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
COMPANIES 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. The
----------------------------------------------------------
representations and warranties of the STOCKHOLDERS contained in Section 6 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 the COMPANIES and each of
the STOCKHOLDERS 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 STOCKHOLDERS and the President or any Vice
President of each of the COMPANIES and Seacross shall have been delivered to
USFLORAL.
-24-
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 FLOWTRAD 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 each of the COMPANIES as of the month ended immediately prior to the Closing
Date and the unaudited statements of income, cash flow and stockholder's equity
of each of the COMPANIES for the periods then ended, disclosing no material
adverse change in the financial condition of the COMPANIES taken as a whole or
the results of their operations from the financial statements originally
furnished by the COMPANIES as set forth in Schedule 6.9.
10.4 No Material Adverse Change. There shall not have been any Material
--------------------------
Adverse Effect on the COMPANIES taken as a whole, and neither of the COMPANIES
shall have suffered any material loss or damages to any of their 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 either of
the COMPANIES to conduct their 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 each of the COMPANIES 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 each
of the COMPANIES; which review reflects compliance in all material respects with
all applicable laws governing the COMPANIES, 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 each of the COMPANIES from any and all claims of STOCKHOLDERS against
the COMPANIES, exclusive of continuing indemnification rights which STOCKHOLDERS
may have for third-party claims against them (other than claims in connection
with which STOCKHOLDERS is 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.
-25-
10.8 Opinion of Counsel. USFLORAL shall have received an opinion from
------------------
Holland & Knight LLP, counsel to the STOCKHOLDERS, dated the Closing Date, in
form and substance satisfactory to USFLORAL, to the effect that with respect to
each of the COMPANIES:
(i) the COMPANIES have been duly organized and are validly existing in good
standing under the laws of the States of Delaware and Florida;
(ii) the authorized and outstanding capital stock of the COMPANIES 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 the
STOCKHOLDERS;
(iii) to the knowledge of such counsel, neither of the COMPANIES has any
outstanding options, warrants, calls, conversion rights or other commitments
of any kind to issue or sell any of their capital stock;
(iv) this Agreement has been duly authorized, executed and delivered by
each of the COMPANIES and the STOCKHOLDERS and constitutes a valid and binding
agreement of each of the COMPANIES and the STOCKHOLDERS 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;
(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 either the COMPANIES, 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 the STOCKHOLDERS or for the
transfer to USFLORAL of the FLOWTRAD 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 either the COMPANIES' Articles
or Certificates of Incorporation or the Bylaws of the COMPANIES or of any
lease, instrument, license, permit or any other agreement to which either of
the COMPANIES is a party or by which the COMPANIES or any STOCKHOLDERS are
bound.
-26-
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 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 FLOWTRAD 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 material liabilities and obligations of each of the COMPANIES
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 each of
the COMPANIES 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 Delaware and,
unless waived by USFLORAL, in each state in which the COMPANIES are authorized
to do business, showing that each of the COMPANIES is in good standing and
authorized to do business and that all state franchise and/or income tax returns
and taxes for the COMPANIES 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
agreed to acquire the shares of USFLORAL Stock covered thereby.
10.14 Repayment of Indebtedness. Prior to the Closing Date, the
-------------------------
STOCKHOLDERS shall have repaid the COMPANIES in full all amounts owing by the
STOCKHOLDERS.
10.15 Pretax Income. FLOWTRAD, on a consolidated basis with FT, shall
-------------
have had auditable adjusted average yearly pretax income of $1,200,000 for the
three fiscal years ending December 31, 1994, 1995 and 1996, and the pretax
income of FLOWTRAD, on a consolidated basis with FT, for the year ending
December 31, 1997 shall be projected to be at least $1,200,000 based on
annualization of the pretax income of FLOWTRAD 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.
-27-
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 COMPANIES, 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
indebtedness to which such guarantee relates together with all interest and
prepayment penalties, if any, then due and owing. In the event any of the
STOCKHOLDERS are called upon to make any payment under any such guarantee after
the Merger Effective Date, USFLORAL will promptly reimburse such STOCKHOLDER the
amount of any such payment.
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) 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's President 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. USFLORAL will cause its Amended and Restated 1997 Long-Term Incentive
Plan to be in effect on the Closing Date. The USFLORAL stock options shall be
offered to the key employees of such Surviving Corporation on the same terms
offered to the key employees of the surviving corporations in the other
concurrent mergers of USFLORAL.
11.3 Exchange 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, as amended (the "Exchange Act").
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.
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
-28-
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 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's 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 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 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 of the STOCKHOLDERS, jointly and
severally, covenants and agrees that they will indemnify, defend, protect and
hold harmless USFLORAL, NEWCO and the Surviving Corporation and their respective
officers, stockholders, directors, 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 COMPANIES
under this Agreement prior to the Merger Effective Date or (iii) 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 relating to the
COMPANIES or STOCKHOLDERS, and provided to USFLORAL or its counsel by the
COMPANIES 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
-29-
of or based upon any omission or alleged omission to state therein a material
fact relating to the COMPANIES 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 COMPANIES or STOCKHOLDERS, provided, however,
that such indemnity shall not inure to the benefit of USFLORAL, NEWCO or the
Surviving Corporation to the extent that (i) 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 or (ii) such untrue statement (or alleged untrue
statement) or omission (or alleged omission) was corrected in writing by the
STOCKHOLDERS prior to the effectiveness of the Registration Statement and such
correction was not made in any preliminary prospectus, the Registration
Statement or any prospectus forming a part thereof, or any amendment thereof or
supplement thereto.
12.2 Specific Indemnification by STOCKHOLDERS. Subject to the
----------------------------------------
limitations contained in Section 12.5 hereof, notwithstanding any disclosure
made in this Agreement or in the Schedules or Exhibits, and notwithstanding any
investigation by USFLORAL or NEWCO, each of the STOCKHOLDERS, jointly and
severally, covenants and agrees 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 either of the COMPANIES in excess of the liabilities
set forth on Schedule 6.10, but only to the extent of such excess (the duties
referred to in 12.2(c) shall not be deemed liabilities subject to this clause
12.2(a)), with the parties acknowledging and agreeing (i) that the existence of
liabilities (such as accounts payable) of the COMPANIES on the Merger Effective
Date that are different (but not in the aggregate greater) than the liabilities
of the COMPANIES 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 COMPANIES that do not arise as a result of a breach by the
STOCKHOLDERS of any of his or its 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; and (c) amounts due and payable for anti-
dumping duties for periods prior to March 1,1997 (if the aggregate amount of all
prior periods is finally determined prior to the third anniversary of the Merger
Effective Date) in amounts in excess of (i) the amount, if any, by which the
aggregate shareholders' equity of FLOWTRAD (on a consolidated basis with FT as
determined in accordance with GAAP) as of the Merger Effective Date exceeds
$2,000,000, (ii) the amount accrued on the balance sheet of FT as an accounts
payable for anti-dumping duties as of the Merger Effective Date and (iii) any
refunds of anti-dumping duties received from the U.S. Customs Service.
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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 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
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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 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. Any final
and complete settlement of a Third-Person claim accepted by the Indemnifying
Party shall include a release of the Indemnified Party from all Third-Person
claims and actions or proceedings by the Third Person.
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 the
STOCKHOLDERS 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 the STOCKHOLDERS under this Agreement.
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
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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 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 COMPANIES 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 expressly provided for in this
Agreement, STOCKHOLDERS shall pay to USFLORAL the sum of $500,000 as liquidated
damages; or, in the
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event of (ii) or (iv), in addition to the other remedies available to the
STOCKHOLDERS in equity or expressly provided for in 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:
(i) except as otherwise provided in this Section 14, engage, as an officer,
director, shareholder, owner, partner, joint venturer, or in a managerial
capacity, whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, in any business selling any products or
services in direct competition with the Surviving Corporation or USFLORAL that
involves the importing, brokerage, shipping or marketing of floral products,
or any business engaging in the consolidation of the floral industry within
the United States;
(ii) call upon any person who is, at that time within the United States, 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) except as otherwise provided in this Section 14, 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, either of
the COMPANIES or either of the COMPANIES' subsidiaries within the United
States for the purpose of soliciting or selling floral products within the
United States;
(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, either of the COMPANIES or either
of the COMPANIES' Subsidiaries; or
(v) disclose customers, whether in existence or proposed, of either the
COMPANIES (or either the COMPANIES' Subsidiaries) to any person, firm,
partnership, corporation or business (other than UltraFlora, Multiflora or
Artistry in Bloom, Inc.) for any reason or purpose whatsoever.
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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 or (ii) engaging
in any activity to which USFLORAL shall have provided its prior written consent.
In addition, the foregoing covenants in this Section 14 shall not be deemed to
prohibit any of the STOCKHOLDERS, who, as of the date hereof, has an interest,
as an owner, operator, creditor, employee or otherwise, in (i) a retail floral
business independent (except as a customer) of the COMPANIES or (ii) in
UltraFlora, Artistry in Bloom, Inc. (or a new entity which replaces Artistry in
Bloom, Inc. and conducts the same type of business as Artistry in Bloom, Inc.,
herein called the "Replacer") and Multiflora, as presently conducted (or to be
conducted by the Replacer), from continuing to maintain such interest. However,
the STOCKHOLDERS may not maintain any interest in UltraFlora, Artistry in Bloom
Company or Multiflora if any such company is in direct competition with the
COMPANIES in the importation of flowers into the United States (other than
UltraFlora's activities as an importer of record for distribution to
supermarkets, convenience stores and mass market retailers).
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 COMPANIES).
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 either of the COMPANIES, any COMPANIES' Subsidiary, the Surviving
Corporation or USFLORAL, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement of such covenants. It is
specifically agreed that the period of two years stated above, shall be computed
by excluding from such computation any time during which the STOCKHOLDERS are in
violation of any provision
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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 seeks 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, unless in each such case the STOCKHOLDER prevails in
such action.
14.6 Materiality. STOCKHOLDERS hereby agree that this covenant contained
-----------
in this Article 14 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 COMPANIES, such as lists of customers,
operational policies, and pricing and cost policies that are valuable, special
and unique assets of the COMPANIES and the COMPANIES' 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 COMPANIES, such as lists of customers, operational
policies, pricing and cost policies that are valuable, special and unique assets
of the COMPANIES and the COMPANIES' business. USFLORAL agrees that it will not
disclose any confidential information to any person, firm, corporation,
association, or other entity for any purpose or reason whatsoever, prior to the
Closing Date without prior written consent of the STOCKHOLDERS. In the event of
a breach or threatened breach by USFLORAL of the provisions of this 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 in this Article 15, 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
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of any such 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 (the "Effective Date") 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 received as a result of the Merger or
any securities received as a result of the Merger 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 received as a result of the
Merger, whether or not any such transaction described in clause (i) or (ii)
above is to be settled by delivery of USFLORAL Stock received as a result of the
Merger or such other securities, in cash or otherwise without the prior written
consent of the lead underwriter of the IPO. Each of the STOCKHOLDERS agrees
that the foregoing shall be binding upon their 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 1933 Act and therefore may not be resold without
compliance with the 1933 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 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. Each of the STOCKHOLDERS covenants, warrants
-------------------
and represents that none of the shares of USFLORAL Stock issued to such
STOCKHOLDER 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 and except
as contemplated by Section 4.2 hereof.
17.2 Economic Risk; Sophistication. Each of the STOCKHOLDERS represents
-----------------------------
and warrants that he or it is 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. Each of the STOCKHOLDERS further represents and
warrants that he or it (i) fully understands the
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nature, scope and duration of the limitations on transfer contained in this
Agreement and (ii) has such knowledge and experience in financial and business
matters that he or it is capable of evaluating the merits and risks of the
proposed investment and therefore has the capacity to protect his or its own
interests in connection with the acquisition of the USFLORAL Stock. Each
STOCKHOLDER represents and warrants that he or it has 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. Each STOCKHOLDER has asked any and all questions in
the nature described in the preceding sentence and all questions have been
answered to his or its satisfaction.
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 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 each of the COMPANIES 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.
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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 the 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 among STOCKHOLDERS, the
COMPANIES, 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, the COMPANIES and the STOCKHOLDERS
dated July 23, 1997 which remains in full force and effect). This Agreement,
upon execution, constitutes a valid and binding agreement on the parties hereto
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 COMPANIES, 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 FLOWTRAD 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.
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
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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 COMPANIES 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 COMPANIES
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 as follows:
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(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:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a required copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Holland & Knight LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
19.8 Governing Law. This Agreement shall be construed in accordance with the
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laws of the State of Delaware.
19.9 Exercise of Rights and Remedies. Except as otherwise provided herein, no
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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.
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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.
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"
FT ACQUISITION CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
"COMPANIES"
FLOWER TRADING CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
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FLOWTRAD CORPORATION N.V.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
"STOCKHOLDERS"
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
SEACROSS TRADING, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
-42-
ANNEXES
ANNEX I [Certificate of Merger]
ANNEX II [Calculation and Composition of Consideration]
ANNEX III [Employment Agreement]
SCHEDULES
Schedule 6.1 [Due Organization]
Schedule 6.3 [Capitalization]
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 Matters]
Schedule 6.20 [Conformity with Law]
Schedule 6.22 [Required Consents]
Schedule 6.24 [Changes Since Balance Sheet Date]
Schedule 6.25 [Deposit Accounts; Powers of Attorney]
Schedule 7.6 [Other Agreements]
Schedule 10.10 [Additional Liabilities and Obligations]
Schedule 10.11 [Additional Contracts]
Schedule 11.1 [Guarantees to be Released]