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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 10, 1998 (May 29, 1998)
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Florafax International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-5531 41-0719035
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(State or other jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
8075 20th Street, Vero Beach, Florida 32966
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 561/563-0263
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On May 29, 1998, Florafax International, Inc. (the "Company") acquired
substantially all the assets of Marketing Projects, Inc. ("MPI"), a California
corporation, pursuant to the terms of an Asset Purchase and Sale Agreement,
dated effective May 1, 1998, by and between the Company and MPI ("Agreement").
MPI is in the business of marketing floral and gift products to large United
States corporations. The acquired assets consist primarily of the Proprietary
System and Know-How (as such term is defined in the Agreement) pertaining to the
relationships with the Company's primary corporate business partners. The
purchase price for the assets (which was determined by arms-length negotiations
between the parties) was $3,600,000, which was funded via a $2,500,000 loan from
First Union National Bank and $1,100,000 from cash on hand. In addition to the
purchase price the Company may pay up to $125,000 in each of the next eight
fiscal quarters contingent upon the performance of the business acquired.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The Company is unable to provide the required financial information at the time
of filing this report. The required financial information will be filed by
amendment to this Form 8-K not later than August 12, 1998.
(b) Pro Forma Information
The Company is unable to provide the required pro forma financial information at
the time of filing this report. The required pro forma financial information
will be filed by amendment to this Form 8-K not later than August 12, 1998.
(c) Exhibits
Exhibit Number Description
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10.1 Asset Purchase and Sale Agreement
10.2 Escrow Agreement
10.3 First Amendment to Escrow Agreement
10.4 Bill of Sale, Assignment and Assumption
10.5 Noncompetition and Nondisclosure Agreement
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Florafax International, Inc.
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(Registrant)
Date June 10, 1998 James H. West
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James H. West
Chief Financial Officer
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Exhibit 10.1
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (the "Agreement") is entered
into to be effective as of the 1st day of May, 1998, by and between MARKETING
PROJECTS, INC., a California corporation ("MPI" or "Seller") and FLORAFAX
INTERNATIONAL, INC., a Delaware corporation ("Florafax" or "Buyer"), with
reference to the following facts:
A. MPI is in the business of soliciting floral and gift orders through
mass marketing to, among others, Soliciting Entities listed on EXHIBIT "B"
hereto (the "Business");
B. In connection with operating the Business, MPI has developed and
maintains certain creative specifications, artwork, design concepts,
presentation materials, electronic and other files, historical records and
processes (collectively, the "Proprietary System and Know-How"), all as more
specifically set forth in the Bill of Sale attached hereto as EXHIBIT "A" and
incorporated herein by this reference;
C. Florafax operates a system through which floral and gift orders may
be fulfilled and also owns certain trade names, trademarks and telephone numbers
used in the Business and certain computer technology and assets used in
conjunction with the Business that facilitate and assist MPI in the Business;
D. MPI and Florafax have for years worked together to generate and fill
floral and gift orders;
E. MPI and Florafax entered into a written agreement memorializing
their arrangement dated as of July 29, 1994 (the "Servicing Agreement"),
pursuant to which (A) Florafax agreed, in general, to (i) pay for printing of
all soliciting materials for the Business, (ii) pay for and arrange all shipping
of soliciting materials for the Business, (iii) reconcile and handle all credit
card clearing transactions for the Business and (iv) fill and complete all
orders through the "Floranet" network or otherwise; (B) MPI agreed, in general,
to solicit certain orders for the Business by (i) creating the design of all
advertisements and solicitations and coordinating the scheduling, delivery,
proof approval, quality check and all other matters relating to the printing,
(ii) developing relationships with third parties through which solicitations are
made, (iii) developing mailings and advertising campaigns; and (iv) providing
customer relations, servicing, maintaining contacts, customer service, renewing
agreements and being responsible for maintaining and continuing relationships
with the Soliciting Entities; and (C) MPI and Florafax agreed to share the
revenue from the Business in the manner set forth in the Servicing Agreement;
F. By letters dated September 11, 1997 and September 28, 1997, MPI and
Florafax agreed to terminate the Servicing Agreement as of September 24, 1997,
but to continue conducting the Business with each other on a non-exclusive
basis;
G. Florafax now wishes to purchase from MPI and MPI wishes to sell to
Florafax its portion of the Business, including, but not limited to all of its
right, title and interest in and to the Proprietary System and Know-How, which
is essential for Florafax
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to operate the Business, and its right, title and interest in and to the
Servicing Agreement, on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual premises, covenants and
representations made in this Agreement, the receipt and sufficiency of which are
hereby acknowledged and accepted, the parties agree as follows:
1. RECITALS. The parties acknowledge and agree that the recitals set
forth above are true and correct.
2. DESCRIPTION OF ASSETS. Subject to the terms and conditions set forth
in this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from
Seller all of Seller's right, title, and interest in and to the Proprietary
System and Know-How, and the Servicing Agreement and all right, title and
interest which Seller may have, or hereafter acquire, or hereafter be entitled
to acquire, in and to the Business (hereinafter referred to as the "Acquired
Assets") as the same shall exist as of the Closing Date (defined below):
3. NO ASSUMED LIABILITIES. Buyer shall assume no liabilities of Seller,
other than the obligations imposed upon Seller to service the Acquired Assets,
as described in the Servicing Agreement.
4. PURCHASE PRICE.
a) Buyer shall purchase all of Seller's
right, title and interest in and to the Proprietary
System and Know-How for $2,450,000, payable in cash
on the Closing Date as set forth below in Section 5.
b) Buyer shall pay $100,000 in cash on the
Closing Date, as set forth below in Section 5, for
delivery of a fully-executed Noncompetition and
Nondisclosure Agreement in the form attached hereto
as EXHIBIT "C".
c) Buyer shall purchase all of Seller's
right, title and interest in and to the Servicing
Agreement for $1,150,000 in cash on the Closing Date,
as set forth below in Section 5, plus contingent
payments that may total up to $1,000,000, as
described in Section 6(a)(ii) hereof.
d) Buyer and Seller agree that they shall
each file Internal Revenue Service Form 8594 with
their respective income tax returns, reflecting the
acquisition and sale of assets for the prices set
forth above.
5. CLOSING DATE. The closing of the sale and purchase of the Acquired
Assets shall occur on May 29, 1998, unless otherwise agreed in writing by the
parties (the "Closing Date").
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a) On the Closing Date, Three Million Seven
Hundred Thousand Dollars ($3,700,000.00) shall be
payable (for the portions of the Purchase Price
described in Section 4. above) by transfer and
deposited in an escrow account in accordance with the
terms of the Escrow Agreement (defined below).
b) On the Closing Date, Seller shall deliver
or cause to be delivered to Buyer the following:
i) A duly executed bill of sale and
assignment ("Bill of Sale") for the Acquired
Assets in the form of EXHIBIT "A", attached
hereto and incorporated herein;
ii) All of Seller's records which
establish rights relating to the Acquired
Assets to be transferred hereby;
iii) Certified resolution of the
stockholders and board of directors of
Seller approving the transaction
contemplated by this Agreement;
iv) A duly executed noncompetition
and nondisclosure agreement ("Noncompetition
Agreement"), in the form attached hereto and
incorporated herein as EXHIBIT "C", executed
by Seller, Buyer, David Appell, Robert
Bourdon, Randolph Commans and Phyllis
Hooker;
v) A duly executed escrow agreement
("Escrow Agreement"), in the form attached
hereto and incorporated herein as EXHIBIT
"D", executed by Seller, Buyer and First
Union National Bank of Florida, Escrow
Agent.
c) On the Closing Date, Buyer shall deliver
the following:
i) To Escrow Agent, a transfer in
the amount of $3,700,000.00;
ii) To Seller, a duly executed,
countersigned Noncompetition Agreement; and
iii) To Seller, a duly executed
Escrow Agreement.
6. POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE BASED UPON EARN OUT
AGREEMENT.
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a) Provided Buyer does not exercise its cancellation right
described in Section 7 below:
(i) on June 30, 1998, or earlier if
directed by Buyer, the Escrow Agent shall
deliver to Seller from the escrow account
the sum of Three Million Seven Hundred
Thousand Dollars ($3,700,000.00) less the
payments previously paid to Seller after the
effective date hereof;
(ii) (A) Each month for 24 months
after the Closing Date, Buyer shall provide
Seller with a copy of that month's "Daily
Sale by Campaign" report (the "Report"), as
it did before the Closing Date. The report
shall accurately display Buyer's gross
monthly revenues from Buyer's floral and
gift sales (or such sales of Buyer's
subsidiaries or affiliates) to the
Soliciting Entities listed on EXHIBIT "B"
hereto.
(B) Based upon the Report,
within 10 days of each quarter ending August
31, November 30, February 29, and May 31,
Buyer shall make the following calculations
and deliver to Seller a written copy of the
calculations, together with money owed, if
any:
(1) Buyer shall calculate
a fraction, the numerator of which
is the respective quarter's gross
revenue, as indicated in the
Reports and the denominator of
which is $3,229,946 for August 31,
$3,941,468 for November 30,
$6,916,655 for February 29 and
$6,025,181.59 for May 31,
(respectively, the "Quarterly
Fractions").
(2) For each quarter,
Buyer shall multiply the Quarterly
Fraction by $125,000. The product
of that calculation (the "Quarterly
Product") shall be paid to Seller;
provided that Seller shall never
receive more than $125,000 in any
quarter, except as provided below
in subparagraph (3).
(3) For the fourth and
eight quarters after the Closing
Date (the "Anniversary Quarters"),
Buyer
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shall calculate a fraction, the
numerator of which is that year's
gross revenue, as indicated in the
Reports, and the denominator of
which is $20,113,302.35 (the
"Yearly Fraction"). Buyer shall
then multiply the Yearly Fraction
by $500,000 and subtract from the
resulting product the sum of the
three previous Quarterly Products.
The difference, if a positive
number, shall be paid by Buyer to
Seller; if the difference is a
negative number, be paid by Seller
to Buyer.
b) In no event shall the total amount payable to Seller, if
any, under the terms of Sections 6(a)(ii) exceed Five Hundred Thousand
Dollars ($500,000.00) for each of the annual periods (i.e., May 31,
1998 - May 31, 1999, and June 1, 1999 - May 31, 2000) covered by such
subsections. With respect to all reports and calculations, Seller will
promptly review and promptly advise Buyer of whether it agrees or
disagrees (and if it disagrees, a specific reason why) with the Report
and calculations contained therein. Buyer and Seller will use good
faith efforts to agree to settle any disputes concerning the Reports
and the calculations contained therein.
7. BUYER'S CANCELLATION RIGHT. Seller hereby agrees that, Buyer shall
have the right, by written notice given to Seller and Escrow Agent on or before
June 30, 1998, to cancel this transaction if Buyer is not satisfied, in the sole
and absolute discretion, with the status of the Acquired Assets after Buyer's
review of such assets. In such event,
(i) Buyer shall be entitled to withdraw
immediately from the escrow account the sum of Three
Million Seven Hundred Thousand Dollars
($3,700,000.00) plus any and all interest accrued
thereon, less the unpaid payments that would
otherwise have been earned by Seller if not for
termination of payments as described in Section 8
below, from the effective date of this Agreement
through June 30, 1998 (i.e., deducted from said
payments are any amounts previously paid to Seller
for payments after the effective date). The balance
of the escrow account, after the deductions
contemplated by the immediately preceding sentence
shall be delivered to Seller by Escrow Agent.
(ii) the Bill of Sale automatically will be
canceled, ab initio and of no further force and
effect; and
(iii) the Noncompetition Agreement
automatically will be canceled ab initio and of no
further force and effect.
8. TERMINATION OF PAYMENTS. As of the effective date of this Agreement,
Seller agrees to the termination of all payments due to Seller in connection
with the
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Business or pursuant to Paragraph 3(b)(1) of the Servicing Agreement,
unless Buyer exercises its cancellation right pursuant to Section 7 above.
9. ASSISTANCE BY MPI. From the effective date of this Agreement through
June 30, 1998, David Appell, Robert Bourdon, Randolph Commans and Phyllis
Hooker, at the sole cost and expense of Seller, shall accompany a
representative(s) of Buyer to any and all sites of Soliciting Entities, as
requested by Buyer, for the purpose of analyzing, assessing and solidifying such
relationships or for any other purpose reasonably requested by Buyer. Seller
shall also train and assist Buyer to effect an orderly transfer of the
Proprietary System and Know-How from Seller to Buyer.
10. COMMISSIONS TO SELLER ON NEW ACCOUNTS. Provided Buyer does not
exercise its cancellation right pursuant to Section 7 above, then from and after
the effective date of this Agreement, Buyer shall pay to Seller a four percent
(4%) commission on all floral sales or gift orders consummated by any and all
new customers solicited by Seller and approved by Buyer. Seller acknowledges
that Buyer has no obligation to approve any order solicited by Seller, and that
Buyer may refuse to approve any such order, for any reason or no reason, in
Buyer's sole and absolute discretion.
11. ACCESS AND INVESTIGATION. Between the effective date of this
Agreement and June 30, 1998, and upon reasonable advance notice received from
Buyer, Seller shall (a) afford Buyer and its representatives (collectively,
"Buyer's Advisors") access, without payment of additional consideration to
Seller, during regular business hours, to Seller' personnel, properties,
contracts, books and records, and other documents and data relating to the
Acquired Assets, such rights of access to be exercised in a manner that does not
unreasonably interfere with the operations of Seller, (b) furnish Buyer and
Buyer's Advisors with copies of all such contracts, books and records, and other
existing documents and data as Buyer may reasonably request relating to the
Acquired Assets, (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other relevant data and information as Buyer may
reasonably request, and (d) otherwise cooperate and assist, to the extent
reasonably requested by Buyer, with Buyer's investigation of the properties,
assets and financial condition related to the Acquired Assets of Seller. Except
as may be necessary to conduct the Business and fully utilize the Acquired
Assets, or as otherwise required by law, Buyer shall use its best efforts to
keep confidential any proprietary information relating to Seller (unless readily
available from public or published information or sources or required to be
disclosed by any legal requirement or order) obtained from Seller or any of
their representatives. If Buyer cancels this Agreement, Buyer, as soon as
reasonably practicable after such cancellation, shall return to Seller all
documents, work papers and other written material (including all copies thereof)
obtained from Seller or any of its representatives in connection with this
transaction.
12. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. Seller
warrants, represents and covenants to Buyer that as of the Closing Date:
a) Seller shall have taken all action necessary to authorize
the execution, delivery and performance of this Agreement and has and
shall have, from and after the date of this Agreement, with respect to
the Acquired Assets,
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full right, power and authority to sell, transfer and convey to Buyer
the Acquired Assets. This Agreement and all other agreements referred
to herein and executed by Seller are legal, valid and binding
obligations of Seller, enforceable in accordance with their terms,
except (i) that enforceability may be limited by general principles of
equity, (ii) that courts may award money damages rather than specific
enforcement of contractual provisions involving matters other than or
in addition to the payment of money, and (iii) as may be limited by
bankruptcy, reorganization, insolvency and similar laws of general
application relating to or affecting the enforcement of rights of
creditors, excluding however, the application of any "bulk sales" or
"bulk transfer" laws. Unless otherwise disclosed herein, the
performance hereof by Seller does not require the consent of or
approval of any person, agency or court, and will not conflict with,
result in a breach of any term of, or constitute a default under any
material agreement or instrument to which Seller is a party or any
judgment, decree, order, statute, rule or regulation to which Seller is
subject and will not result in the creation of any lien, charge or
encumbrance on the Seller or the Acquired Assets. The execution,
delivery and performance of this Agreement in accordance with its
terms, do not violate the articles of incorporation or bylaws of
Seller.
b) Seller is the owner of and has good and marketable title to
the Acquired Assets, free and clear of all mortgages, pledges, claims,
liens, charges, easements, restrictions, encroachments or other
encumbrances other than the obligations of Seller thereunder.
c) All records of Seller are current and accurate.
d) Seller shall use commercially reasonable efforts to assist
Buyer in obtaining from each person, firm, association, corporation,
partnership and governmental authority, any and all consents and
approvals to the sale, conveyance, transfer and assignment of the
Acquired Assets, which is required by the terms of any statute,
ordinance, regulation, lease or contract to which Seller is a party, or
otherwise. In furtherance of the foregoing, Buyer hereby agrees to
cooperate with Seller to the extent reasonably necessary to obtain any
such consents or approvals.
e) To the best of Seller's knowledge, after due inquiry and
investigation, there is no pending or threatened suit, action or
litigation, or administrative, arbitration or other proceeding or
governmental inquiry or investigation threatened against or affecting
the Acquired Assets (i) which may result in any material adverse effect
upon the Acquired Assets or Seller's business associated therewith,
(ii) which may result in any material liability accruing to Buyer as a
result of execution, delivery and/or performance of this Agreement or
any of the transactions contemplated hereby, or (iii) which seeks to
enjoin, prohibit or challenge the validity of this Agreement or any of
the transactions contemplated hereby.
f) Other than payroll taxes due and owing in the ordinary
course of business (all of which have been timely paid up to the
Closing Date), all taxes of every kind and description (whether
incurred in respect of, or measured by,
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income, sales or otherwise) relating to the business of Seller and to
any date or period of time prior to the Closing Date and payable to the
United States, the states thereof, and any other taxing authority,
which are due prior to the Closing Date, have been paid in full (or
will be paid in full prior to the Closing Date), and Seller is not
delinquent, in any material respect, with respect to any tax payment or
assessment. There are no audits or material claims pending or
threatened, concerning taxes or assessments asserted against Seller by
any taxing authority or agent thereof, nor are there outstanding any
requests by Seller or its agents for any extension of time relating to
the filing, reporting, declaration, assessment or payment of any tax.
On or prior to the Closing Date, Seller, at Seller's expense, shall
discharge any and all such tax liens and encumbrances.
g) Seller has duly filed all tax returns and other reports
required to be filed by it with all proper taxing authorities and has
paid or accrued all taxes, interest, penalties, assessments or
deficiencies called for by such returns and reports or claimed to be
due by any such taxing authority. There are no agreements, waivers or
other arrangements providing for extensions of time with respect to the
assessment or collection of any unpaid tax against Seller, nor are
there any actions, suits, proceedings, investigations or claims now
pending against Seller in respect of any material unpaid tax, or any
matters under discussion with any Federal, state or local authority
relating to any unpaid taxes.
h) No broker or finder has acted for Seller in connection with
the transactions contemplated by this Agreement.
i) Seller represents and warrants to Buyer that: (A) Seller is
not now, nor as a result of the transaction contemplated by this
Agreement will be, insolvent or unable to pay its debts or other
obligations as they become due; (B) Seller's assets, at a fair
valuation, are, and after consummation of the transaction contemplated
by this Agreement will continue to be, greater than all of said
Seller's debts; (C) Seller is generally paying its debts as they become
due; (D) the sale and transfer of the Acquired Assets has not been
contemplated to, nor will it be consummated with the intent to,
defraud, hinder, or delay Seller's creditors; and (E) the transfer of
the Acquired Assets has not been concealed from any of Seller's
creditors.
j) Seller is not a party to any contracts or agreements with
any Soliciting Entity. Further, Seller knows of no fact or occurrence
which would create and/or constitute a default on the part of either
The Flower Club International, Inc. or any Soliciting Entity under any
such contract.
13. AFFIRMATIVE COVENANTS OF SELLER.
a) Between the effective date of this Agreement and June 30,
1998, Seller shall:
(i) conduct the business of Seller
only in the ordinary course of business;
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(ii) except as otherwise directed
by Buyer in writing, and without making any
commitment on Buyer's behalf, use its best
efforts to preserve intact Seller's current
business organization, keep available the
services of the current officers, employees,
and agents of Seller, and maintain the
relations and good will of Seller with the
Soliciting Entities;
(iii) confer with Buyer prior to
implementing Seller operational decisions of
a material nature which may affect the
Acquired Assets;
(iv) otherwise report to Buyer, at
Buyer's request, concerning the status of
the business, operations and finances of
Seller as they concern the Acquired Assets;
(v) keep in full force and effect,
without amendment, all material rights
relating primarily or exclusively to the
Acquired Assets;
(vi) materially comply with all
legal requirements and contractual
obligations applicable to the operations of
Seller's business;
(vii) upon request from time to
time, execute and deliver all documents,
make all truthful oaths, testify in any
proceedings and do all other acts that may
be reasonably necessary or desirable, in the
opinion of Buyer, to consummate the
transactions contemplated herein, all
without further consideration, but at the
expense of Buyer unless arising out of the
default of Seller; and
(viii) maintain all books and
records of Seller relating to Seller's
business in the usual, regular and ordinary
manner.
b) Between the effective date of this Agreement and June 30,
1998, Seller shall promptly notify Buyer in writing if Seller shall
become aware of (i) any fact or condition that causes or constitutes a
breach of any of Seller's representations and warranties made as of the
effective date of this Agreement, or (ii) the occurrence after the
effective date of this Agreement of any fact or condition that would or
be reasonably likely to (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or
warranty had that representation or warranty been made as of the time
of the occurrence of, or Seller's discovery of, such fact or condition.
c) Seller will refer to Buyer all inquiries relating to the
Acquired Assets of Seller's business from customers and all such other
persons. Seller
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will not take any action designed or intended to have the effect of
discouraging any Soliciting Entity from continuing or maintaining the
same such business with Buyer after the Closing Date.
14. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer warrants and
represents to Seller that as of the Closing Date:
a) Buyer has the full right and power, corporate and
otherwise, to enter into this Agreement and to carry out the
transactions contemplated herein; the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite
corporate action of the Buyer; and this Agreement and all other
agreements referred to herein represent legal, valid and binding
obligations of Buyer and are enforceable in accordance with their
terms, except (i) that enforceability may be limited by general
principles of equity, (ii) that courts may award money damages rather
than specific enforcement of contractual provisions involving matters
other than or in addition to the payment of money, and (iii) as may be
limited by bankruptcy, reorganization, insolvency and similar laws of
general application relating to or affecting the enforcement of rights
of creditors, excluding however the application of any "bulk sales" or
"bulk transfer" laws.
b) The transactions contemplated by this Agreement will not
violate or be in conflict with (i) any existing provision of applicable
law, or any existing order, rule, regulation, judgment or decree of any
court, arbitrator or agency of government, or (ii) any existing
provision of the articles of incorporation or bylaws of Buyer; nor will
those transactions violate, be in conflict with, result in a breach of,
or constitute (with or without notice or lapse of time or both) a
default under any material agreement or other instrument to which Buyer
is a party or by which Buyer is bound.
c) No broker or finder has acted for Buyer in connection with
the transactions contemplated by this Agreement.
15. AFFIRMATIVE COVENANT OF BUYER. Between the effective date of this
Agreement and June 30, 1998, Buyer shall promptly notify Seller in writing if
Buyer shall become aware of (i) any fact or condition that causes or constitutes
a breach of any of Buyer's representations and warranties made as of the
effective date of this Agreement, or (ii) the occurrence after the effective
date of this Agreement of any fact or condition that would or be reasonably
likely to (except as expressly contemplated by this Agreement) cause or
constitute a breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or
Buyer's discovery of, such fact or condition.
16. SUBROGATION. If Buyer becomes liable for or suffers any damage with
respect to any matter for which insurance coverage is available under policies
maintained by Seller at or before the Closing Date, Buyer shall be and is hereby
subrogated to any rights of Seller under the insurance coverage.
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17. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
covenants, representations and warranties made in this Agreement shall be deemed
to be material and to have been relied upon by Seller or Buyer, as the case may
be, notwithstanding any investigation heretofore or hereafter made by or on
behalf of any party, and the indemnification provision, and other provisions of
this Agreement which by their terms are to be performed or observed after the
Closing Date and the several covenants, warranties and representations of the
parties herein contained, shall survive the Closing Date for two (2) years. Any
applicable statute of limitations with reference to any actual or alleged breach
or violation hereunder shall not commence to run until the Closing Date or from
the date of a notice or demand asserting such breach or violation, whichever is
later.
18. INDEMNIFICATION.
a) Each party hereby indemnifies and agrees to hold the other
party (including, but not limited to, its directors, officers, agents,
insurers, attorneys and affiliates) harmless from and against, and to
pay and reimburse the other party for any and all liability, claim,
cause of action, damage, demand, loss, cost or expense, including legal
and accounting fees, incurred by reason of or arising out of:
(i) misrepresentations by either
party in connection with transactions
contemplated by this Agreement; and
(ii) breaches by either party of
any representations, warranties, covenants
or provisions of this Agreement not waived
in writing by the other party.
The right to indemnification is in addition to any other right
available to the party or parties entitled to indemnification
hereunder, including, without limitation, the right to sue at law
and/or in equity for misrepresentation, breach of warranty, or breach
of covenant under the Agreement.
b) If any action, suit or proceedings shall be commenced
against, or any claim or demand be asserted against a party (including,
but not limited to, its directors, officers, agents, insurers,
attorneys, employees and affiliates) ("Indemnified Party") with respect
of which the Indemnified Party proposes to demand indemnification, the
other party, or parties, as the case may be ("Indemnifying Party")
shall, within thirty (30) days after receipt of demand for
indemnification from the Indemnified Party, have the right to assume
the entire control of the defense, compromise or settlement thereof,
including the right of the selection of counsel, subject to the right
of the Indemnified Party to participate and, to the extent the
Indemnified Party shall wish, to direct the defense at its expense and
with counsel of its choice. In connection therewith, the Indemnified
Party shall cooperate fully in all respects with the Indemnifying Party
in any such defense, compromise or settlement, including, without
limitation, making available to the Indemnifying Party all pertinent
information
<PAGE> 12
under the control of the Indemnified Party. The Indemnifying Party will
not compromise or settle any such action, suit, proceeding, claim or
demand without the prior written consent of the Indemnified Party.
19. CONFIDENTIALITY. Except to the extent otherwise required by law or
compelled by a court or other body having jurisdiction over the matter, the
parties agree to keep the terms of this Agreement, including but not limited to
the Purchase Price, confidential and to disclose the terms thereof only to the
board of directors and senior officers of each respective party, and attorneys
and accountants of each respective party. The terms of this Section shall
survive the Closing.
20. MISCELLANEOUS.
a) Buyer shall pay all sales, use and transfer taxes, filing
and recording fees, if any, arising out of the transfer of the Acquired
Assets and shall hold harmless and indemnify Seller from and against
any and all loss, liability, cost or expense, including reasonable
attorney's fees, arising out of Buyer's failure to pay the same. Seller
shall prepare and file all appropriate returns and reports. Each party
shall be responsible for its pro rata share of state and local personal
property taxes, if any, of the Acquired Assets, prorated as of the
Closing Date. Buyer shall not be responsible for any taxes of any kind
related to any period before the Closing Date. Each of the parties
shall pay all costs and expenses incurred or to be incurred by it in
negotiating and preparing this Agreement and in closing and carrying
out the transactions contemplated by this Agreement.
b) This Agreement shall be controlled, construed and enforced
in accordance with the internal laws of the State of Florida without
regard to the conflict-of-laws principles of that state.
c) This Agreement shall be binding upon and inure to the
benefit of the heirs, successors and assigns of the parties; but
nothing in this Agreement, express or implied, is intended to confer on
any party the right to assign its rights or obligations hereunder.
d) This Agreement, the exhibits hereto and other documents
referenced herein and delivered pursuant hereto (which are hereby
collectively incorporated herein by this reference), together set forth
the entire understanding of the parties with respect to the subject
matter hereof, and supersede any prior and contemporaneous oral or
written communications, agreements, representations and understandings
of the parties. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by all of the
parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No
waiver shall be binding unless executed in writing by the party making
the waiver.
e) The covenants contained herein are independent and
separate, and if any provision is declared invalid or illegal, the
other provisions shall not be
<PAGE> 13
affected or impaired and shall remain valid and enforceable. It is also
the intention of the parties hereto that in lieu of each clause or
provision of this Agreement that is illegal or unenforceable, there be
added by a court of competent jurisdiction, as a part of this
Agreement, a clause or provision similar in effect to such illegal,
invalid or unenforceable clause or provision as may be possible to be
legal, valid or enforceable.
f) Nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their
respective, permitted successors and assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability
of any third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation or action
over or against any party to this Agreement.
g) All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have
been duly given on the date of service if served personally or by
messenger on the party to whom notice is to be given, or on the third
day after mailing if mailed to the party to whom notice is to be given,
by first-class mail, registered or certified, postage prepaid, or when
received via telecopy, telex or other electronic transmission, in all
cases addressed to the party for whom intended at its address as
follows:
Buyer: Florafax International, Inc.
8075 20th Street
Vero Beach, Florida 32966
Attention: Mr. James H. West
With a copy to: Drew R. Fuller, Jr.
Cauthorn Hale Hornberger
Fuller Sheehan & Becker, Inc.
700 North St. Mary's St., Suite 620
San Antonio, Texas 78205
Seller: Marketing Projects, Inc.
2899 Agoura Road, Suite 555
Westlake Village, California 91361
Attention: Mr. David Appell
With a copy to: David Wohlberg
Troy & Gould
1601 Century Park East, 16th Floor
Los Angeles, California 90067-2367
Any party may change its address for purposes of this Section by giving
the other party written notice of the new address in the manner set
forth above.
<PAGE> 14
h) Headings in this Agreement are for reference purposes only
and shall not be deemed to have any substantive effect.
i) This Agreement may be executed concurrently in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
j) This Agreement is the product of joint drafting by the
parties hereto and shall not be construed against either such party as
the drafter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the day and year first above written.
SELLER:
MARKETING PROJECTS, INC.,
A CALIFORNIA CORPORATION
BY:
------------------------------------
DAVID APPELL, PRESIDENT
BUYER:
FLORAFAX INTERNATIONAL, INC.,
A DELAWARE CORPORATION
BY:
------------------------------------
JAMES H. WEST, PRESIDENT
FOR THE SOLE PURPOSE OF ACKNOWLEDGING AND AGREEING TO THE TERMS OF SECTION 8 OF
THIS AGREEMENT, THE UNDERSIGNED HAS PLACED ITS SIGNATURE IN THE SPACE PROVIDED
BELOW.
THE FLOWER CLUB INTERNATIONAL, INC.
BY:
----------------------------------
JAMES H. WEST, PRESIDENT
<PAGE> 15
EXHIBIT "A"
-----------
[insert form of Bill of Sale]
<PAGE> 16
EXHIBIT "B"
-----------
[insert list of Soliciting Entities]
<PAGE> 17
EXHIBIT "C"
-----------
[insert form of Noncompetition Agreement]
<PAGE> 18
EXHIBIT "D"
-----------
[insert form of Escrow Agreement]
<PAGE> 1
Exhibit 10.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") dated as of May 31, 1998, is
made by and among MARKETING PROJECTS, INC., a California corporation ("Seller"),
FLORAFAX INTERNATIONAL, INC., a Delaware corporation ("Buyer"), and FIRST UNION
NATIONAL BANK OF FLORIDA, a national banking association (the "Escrow Agent").
RECITALS
A. Seller and Buyer have entered into that certain Asset Purchase and
Sale Agreement dated effective May 1, 1998 (the "Asset Purchase Agreement"),
relating to the proposed acquisition by Buyer from Seller of the Acquired Assets
(as defined in the Asset Purchase Agreement).
B. Pursuant to the Asset Purchase Agreement, Buyer is required to
deliver to the Escrow Agent cash in the amount of $3,700,000 (the "Escrow
Amount").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. RECITALS. The parties acknowledge and agree that the recitals set
forth above are true and correct.
2. APPOINTMENT OF ESCROW AGENT. Buyer and Seller do hereby appoint and
designate Escrow Agent as escrow agent for the purposes set forth herein, and
Escrow Agent does hereby accept such appointment under the terms and conditions
set forth herein.
3. ESTABLISHMENT OF THE ESCROW. Simultaneously with the execution
hereof, Buyer shall deliver the Escrow Amount to Escrow Agent. Upon receipt of
the Escrow Amount, Escrow Agent shall immediately notify Seller it has been
received.
4. INVESTMENT OF FUNDS. Escrow Agent shall place the Escrow Amount in a
separate or segregated interest-bearing account.
5. DELIVERY OF THE ESCROW AMOUNT.
Escrow Agent shall retain control over the Escrow Amount and shall not deliver
any of the Escrow Amount unless and until:
(i) it receives a written notice from Buyer on or before June
30, 1998, which notice specifies that Buyer has elected to cancel the
transaction in accordance with the provisions of Section 7 of the Asset
Purchase Agreement, in which event Escrow Agent shall disburse to Buyer
Three Million Seven Hundred Thousand Dollars ($3,700,000.00) less the
Commissions (as such term is defined in the Asset Purchase Agreement),
that would otherwise have been earned by Seller if not for termination
of Commissions as described in Section 8 of the Asset Purchase
Agreement, from May 1, 1998 through June 30, 1998, as
<PAGE> 2
agreed by the parties. Escrow Agent shall disburse to Seller the
remaining Escrow Amount; or
(ii) it does not receive a written notice of cancellation from
Buyer on or before June 30, 1998, in which event Escrow Agent shall
disburse to Seller Three Million Seven Hundred Thousand Dollars
($3,700,000.00) no earlier than 3:00 p.m., June 30, 1998, and Escrow
Agent shall disburse to Buyer the remaining Escrow Amount, including
any and all interest accrued thereon; or
(iii) a final and nonappealable judgment, decree or order of a
court of competent jurisdiction, whereupon Escrow Agent shall promptly
deliver the Escrow Amount as instructed in such judgment.
6. RESIGNATION AND REMOVAL OF ESCROW AGENT. Escrow Agent may resign
from the performance of its duties hereunder at any time by giving ten (10)
days' prior written notice to Buyer and Seller, or may be removed, with or
without cause, by Buyer and Seller acting jointly by furnishing a joint written
direction signed on behalf of each of them to Escrow Agent, at any time by the
giving of ten (10) days' prior written notice to Escrow Agent. Such resignation
or removal shall take effect upon the appointment of a successor Escrow Agent as
provided hereinbelow. Upon any such notice of resignation or removal, Buyer and
Seller shall jointly appoint a successor Escrow Agent hereunder, which shall be
a commercial bank, trust company or other financial institution with a combined
capital and surplus in excess of $100,000,000. Upon the acceptance in writing of
any appointment as Escrow Agent hereunder by a successor Escrow Agent, such
successor Escrow Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Escrow Agent, and the
retiring Escrow Agent shall be discharged from its duties and obligations under
this Escrow Agreement, but shall not be discharged from any liability for
actions taken as Escrow Agent hereunder prior to such succession. After any
retiring Escrow Agent's resignation or removal, the provisions of this Escrow
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Escrow Agent under this Escrow Agreement.
7. LIABILITY OF ESCROW AGENT. Escrow Agent shall have no liability or
obligation with respect to the Escrow Amount except for Escrow Agent's willful
misconduct or gross negligence. Escrow Agent's sole responsibility shall be for
the safekeeping and delivery of the Escrow Amount in accordance with the terms
of this Escrow Agreement. Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein or in any written notice
delivered as provided herein. Escrow Agent may rely upon any instrument, not
only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained therein, which Escrow Agent in
good faith believes to be genuine, to have been signed or presented by the
person or parties purporting to sign the same and to conform to the provisions
of this Agreement. In no event shall Escrow Agent be liable for incidental,
indirect, special, consequential or punitive damages. Escrow Agent shall not be
obligated to take any legal action or commence any proceeding in connection with
the Escrow Amount, any account in which the Escrow Amount is deposited, this
Agreement or the Asset Purchase Agreement, or to appear in, prosecute or defend
any such legal action or proceeding. Escrow Agent
<PAGE> 3
may consult legal counsel selected by it in the event of any dispute or
question as to the construction of any of the provisions hereof or of any other
agreement or of its duties hereunder, and shall incur no liability and shall be
fully protected from any liability whatsoever in acting in accordance with the
opinion or instruction of such counsel. Buyer shall promptly pay, upon demand,
the reasonable fees and expenses of any such counsel.
8. INDEMNIFICATION OF ESCROW AGENT. From and at all times after the
date of this Agreement, Buyer and Seller, jointly and severally, shall, to the
fullest extent permitted by law and to the extent provided herein, indemnify and
hold harmless Escrow Agent and each director, officer, employee, attorney, agent
and affiliate of Escrow Agent (collectively, the "Indemnified Parties") against
any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including
without limitation reasonable attorneys' fees, costs and expenses) incurred by
or asserted against any of the Indemnified Parties from and after the date
hereof, whether direct, indirect, or consequential, as a result of or arising
from or in any way relating to any claim, demand, suit, action or proceeding
(including any inquiry or investigation) by any person, whether threatened or
initiated, asserting a claim for any legal or equitable remedy against any
person under any statute or regulation, including, but not limited to, any
federal or state securities laws, or under any common law or equitable cause or
otherwise, arising from or in connection with the negotiation, preparation,
execution, performance or failure of performance of this Agreement or any
transactions contemplated herein, whether or not any such Indemnified Party is a
party to any such action, proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the right
to be indemnified hereunder for any liability finally determined by a court of
competent jurisdiction, subject to no further appeal, to have resulted solely
from the gross negligence or willful misconduct of such Indemnified Party. If
any such action or claim shall be brought or asserted against any Indemnified
Party, such Indemnified Party shall promptly notify Buyer and Seller in writing,
and Buyer and Seller shall assume the defense thereof, including the employment
of counsel and the payment of all expenses. Such Indemnified Party shall, in its
sole discretion, have the right to employ separate counsel in any such action
and to participate in the defense thereof, and the fees and expenses of such
counsel shall be paid by such Indemnified Party unless (a) Buyer and/or Seller
agree to pay such fees and expenses, or (b) Buyer and/or Seller shall fail to
assume the defense of such action or proceeding or shall fail, in the reasonable
discretion of such Indemnified Party, to employ counsel satisfactory to the
Indemnified Party in any such action or proceeding, or (c) the named parties to
such action or proceeding (including any impleaded parties) include both
Indemnified Party and Buyer and/or Seller, and Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to Buyer or Seller.
All such fees and expenses payable by Buyer and/or Seller pursuant to the
foregoing sentence shall be paid from time to time as incurred, both in advance
of and after the final disposition of such action or claim. All of the foregoing
losses, damages, costs and expenses of the Indemnified Parties shall be payable
by Buyer and Seller, jointly and severally, upon demand by such Indemnified
Party. The obligations of Buyer and Seller under this Section shall survive any
termination of this Agreement and the resignation or removal of Escrow Agent.
The parties agree that neither the payment by Buyer or Seller of any claim by
Escrow Agent for indemnification hereunder nor the disbursement of any amounts
to Escrow Agent from the Escrow Amount in respect of a
<PAGE> 4
claim by Escrow Agent for indemnification shall impair, limit, modify, or
affect, as among Buyer and Seller, the respective rights and obligations of
Buyer, on the one hand, and Seller, on the other hand, under the Asset Purchase
Agreement.
9. COMPENSATION OF ESCROW AGENT. Buyer agrees to (i) pay Escrow Agent
upon execution of this Agreement reasonable compensation for the services to be
rendered hereunder, and (ii) pay or reimburse Escrow Agent upon receipt of a
written request from Escrow Agent (including relevant supporting documentation)
for all expenses, disbursement and advances, including reasonable attorneys'
fees, incurred or made by it in connection with the performance or termination
of this Agreement.
10. CONFLICT WITH TERMS OF AGREEMENT. In the event that Escrow Agent
receives instructions, claims or demands from Buyer or Seller that, in its
opinion, conflict with any provision of this Agreement, or is otherwise
uncertain of its rights and duties hereunder, it shall without liability of any
kind, be entitled to refrain from taking any action, and its sole obligation in
such instances shall be to keep safely the Escrow Amount until it shall be
directed otherwise in writing by all of the other parties hereto or by a final
and nonappealable judgment, decree or order of a court of competent
jurisdiction. Escrow Agent may deposit the Escrow Amount into a court of
competent jurisdiction and upon such deposit, Escrow Agent shall be relieved of
any further liability or responsibility with respect thereto.
11. TAX IDENTIFICATION NUMBERS. Buyer and Seller shall each provide
Escrow Agent with its Tax Identification Number (TIN) as assigned by the
Internal Revenue Service. All interest or other income earned under this
Agreement shall be reported by Buyer and Seller to the Internal Revenue Service
to the extent so allocated. Escrow Agent shall have no responsibility for tax
reporting.
12. TERMINATION. This Agreement shall be terminated (i) upon
disbursement or release of all of the Escrow Amount by Escrow Agent, (ii) by
written mutual consent signed by Buyer and Seller; (iii) by Escrow Agent,
pursuant to Section 7 hereof; or (iv) by deposit of the Escrow Amount into a
court of competent jurisdiction in accordance with Section 11 hereof. This
Agreement shall not be otherwise terminated.
13. NOTICES.
(a) All notices and communications hereunder shall be in
writing and shall be deemed to have been given (i) when delivered if delivered
in person; (ii) the next business day after being sent via a nationally
recognized overnight courier service or telecopier, provided that the notifying
party receives electronic confirmation of the notified party's receipt of the
telecopied notice; or (iii) three (3) business days after being sent by
certified or registered mail, postage prepaid and return receipt requested, to
the appropriate party at the address specified below:
If to Escrow Agent, to:
First Union National Bank of Florida
1001 20th Place
Vero Beach, Florida 32960
Attention: Nancy Beckwith
<PAGE> 5
Fax No.: (561) 778-6109
If to Buyer, to:
Florafax International, Inc.
8075 20th Street
Vero Beach, Florida 32966
Attention: James H. West
Fax No.: (561) 563-9958
With a copy to:
Drew R. Fuller, Jr.
Cauthorn Hale Hornberger
Fuller Sheehan & Becker, Inc.
700 North St. Mary's St., Suite 620
San Antonio, Texas 78205
Fax No.: (210) 271-1740
If to Seller, to:
Marketing Projects, Inc.
2899 Agoura Road, Suite 555
Westlake Village, California 91361
Attention: David Appell
Fax No: (805) 494-6540
With a copy to:
David Wohlberg
Troy & Gould
1601 Century Park East, 16th Floor
Los Angeles, California 90067-2367
Fax No.: (310) 201-4746
or at such other address as any of the above may have furnished to the other
parties in writing by registered mail, return receipt requested. In the event
that Escrow Agent, in its sole discretion, determines that an emergency exists,
Escrow Agent may use such other means of communicating with Buyer and/or Seller
as Escrow Agent reasonably deems advisable.
(b) All notices sent by Escrow Agent to Buyer shall be copied
to Seller and all notices sent by Escrow Agent to Seller shall be copied to
Buyer. All notices sent by Seller to Escrow Agent shall be copied to Buyer and
all notices sent by Buyer to Escrow Agent shall be copied to Seller. In each
case, all copied notices shall be sent to the addresses described in Section
14(a) above and delivered in the same manner as the notice.
14. RELIANCE ON INSTRUCTIONS. In the event funds transfer instructions
are given, whether in writing, by telecopier or otherwise, Escrow Agent is
authorized to seek confirmation of such instructions by telephone call-back to
the representatives of Buyer and Seller designated on Schedule I hereto, and
Escrow Agent may rely upon the confirmation of anyone purporting to be a
representative so designated. The persons and telephone numbers for callbacks
may be changed only in a writing actually received
<PAGE> 6
and acknowledged by Escrow Agent. Buyer and Seller acknowledge that such
security procedure is commercially reasonable.
15. WAIVER OR AMENDMENT. The provisions of this Agreement may be
waived, altered, amended or supplemented, in whole or in part, only by a writing
signed by all of the parties hereto.
16. ASSIGNMENT. This Agreement shall be binding upon and inure solely
to the benefit of the parties hereto and their respective successors and
assigns. Neither this Agreement nor any right or interest hereunder may be
assigned in whole or in part by any party without the prior consent of the other
parties.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. MERGER OR CONSOLIDATION OF ESCROW AGENT. Any corporation into which
Escrow Agent in its individual capacity may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which Escrow Agent in its individual capacity shall be a
party, or any corporation to which substantially all of the corporate trust
business of Escrow Agent in its individual capacity may be transferred, shall be
Escrow Agent under this Agreement without further act.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without regard to its policies
and principles of conflicts of laws. Each party hereto irrevocably waives any
objection on the grounds of venue, forum non conveniens, or any similar grounds
and irrevocably consents to the jurisdiction of said courts and the service of
process from such courts by mail or by any other means permitted by applicable
law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
SELLER: MARKETING PROJECTS, INC.,
A CALIFORNIA CORPORATION
BY:
------------------------------------------
DAVID APPELL, PRESIDENT
BUYER: FLORAFAX INTERNATIONAL, INC.
BY:
------------------------------------------
JAMES H. WEST, PRESIDENT
ESCROW AGENT: FIRST UNION NATIONAL BANK OF FLORIDA
BY:
------------------------------------------
NAME:
-------------------------------------
TITLE:
------------------------------------
<PAGE> 7
SCHEDULE I
Telephone Number(s) for Call-Backs and
Person(s) Designated to Confirm Funds Transfer Instructions
If to Seller:
Name Telephone Number
------------------------------------------------------------
David Appell (805) 494-9490
If to Buyer:
Name Telephone Number
------------------------------------------------------------
James H. West (561) 563-0263
Telephone call-backs shall be made to each of Buyer and Seller if joint
instructions are required pursuant to the Agreement.
<PAGE> 1
Exhibit 10.3
FIRST AMENDMENT TO ESCROW AGREEMENT
This First Amendment to Escrow Agreement (the "First Amendment") is
entered into to be effective as of May 29, 1998 by and among MARKETING PROJECTS,
INC., a California corporation ("Seller"), FLORAFAX INTERNATIONAL, INC., a
Delaware corporation ("Buyer"), and FIRST UNION NATIONAL BANK OF FLORIDA, a
national banking association (the "Escrow Agent").
RECITALS
A. Seller, Buyer and Escrow Agent entered into that certain
Escrow Agreement dated May 29, 1998 (the "Escrow Agreement").
B. The Escrow Agreement contains a mistake in Section 5(i)
relating to release of the Escrow Amount (as defined therein).
C. Seller and Buyer wish to correct said mistake, and Escrow
Agent has agreed to execute this First Amendment, to evidence
the correction of said mistake.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. RECITALS. The parties acknowledge and agree that the recitals set
forth above are true and correct.
2. DELIVERY OF THE ESCROW AMOUNT. Sections 5(i) and (ii) of the Escrow
Agreement is hereby deleted in its entirety and the following provision
substituted therefor:
"(i) it receives a written notice from Buyer on or
before June 30, 1998, which notice specifies that Buyer has
elected to cancel the transaction in accordance with the
provisions of Section 7 of the Asset Purchase Agreement, in
which event Escrow Agent shall disburse to Buyer Three Million
Seven Hundred Thousand Dollars ($3,700,000.00) plus any and
all accrued interest thereon, less the unpaid payments, that
would otherwise have been earned by Seller if not for
termination of payments as described in Section 8 of the Asset
Purchase Agreement, from May 1, 1998 through June 30, 1998
(i.e., deducted from said payments are any amounts previously
paid to Seller for payments after the effective date of the
Asset Purchase Agreement). The balance of the Escrow Amount,
after the distribution to Buyer contemplated by
<PAGE> 2
the immediately preceding sentence, shall be delivered to
Seller by Escrow Agent.
(ii) it does not receive a written notice of cancellation from
Buyer on or before June 30, 1998, in which event Escrow Agent
shall disburse to Seller Three Million Seven Hundred Thousand
Dollars ($3,700,000.00) less the payments previously paid to
Seller after the effective date of the Asset Purchase
Agreement. Escrow Agent shall disburse to Buyer the remaining
portion of the Escrow Amount, excluding any and all interest
accrued on the Escrow Amount."
3. Except as set forth in this First Amendment, the Escrow Agreement
remains in full force and effect.
In witness whereof, the parties hereto have executed the First
Amendment to be effective as of the date and year first above written.
WITNESS: MARKETING PROJECTS, INC.,
A CALIFORNIA CORPORATION
- ----------------------------
By:
----------------------------
Its:
----------------------------
WITNESS: FLORAFAX INTERNATIONAL, INC.
A DELAWARE CORPORATION
- ----------------------------
By:
----------------------------
Its:
----------------------------
WITNESS: FIRST UNION NATIONAL BANK
OF FLORIDA, A NATIONAL BANKING
ASSOCIATION
- ----------------------------
By:
----------------------------
Its:
----------------------------
<PAGE> 1
Exhibit 10.4
BILL OF SALE,
ASSIGNMENT AND ASSUMPTION
WHEREAS, MARKETING PROJECTS, INC., a California corporation ("Seller"),
FLORAFAX INTERNATIONAL, INC., a Delaware corporation ("Buyer") have entered into
an Asset Purchase and Sale Agreement ("Agreement") dated to be effective May 1,
1998; and
WHEREAS, Seller is the owner of the Acquired Assets (as such term is
defined in the Agreement); and
WHEREAS, Seller desires to evidence the assignment and conveyance to
Buyer of Seller's entire interest in and to the Acquired Assets as hereinafter
provided.
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS:
1. Seller, for good and valuable consideration to it in hand paid by
Buyer, the receipt of which is hereby acknowledged, has BARGAINED, SOLD,
ASSIGNED and DELIVERED, and by these presents does BARGAIN, SELL, ASSIGN and
DELIVER unto the said Buyer, all of the Seller's interest in the following
described property (collectively, "Property Rights"), to-wit:
(1) the Proprietary System and Know-How (as such term is defined in the
Agreement) and more specifically including creative specifications,
artwork, design concepts, presentation materials, electronic and other
files, historical records and processes, names and numbers of present
and past contacts, historical sales records, previous insert material,
historical insertion records, account creative specifications,
historical client requests, locations of various facilities, message
statement articles, value added offers, statements of future insertion
dates and quantities, sales presentation material, notes of meetings,
records of account file-sizes and other matters, electronic catalogues,
custom-tracking systems, as well as any other right, title and interest
Seller may have to the Business (as such term is defined in the
Agreement) but not described particularly herein; and
(2) the Servicing Agreement (as such term is defined in the Agreement).
2. To the extent that the following is legally required for Buyer to
enforce any of the Property Rights hereby assigned, Seller hereby constitutes
and appoints Buyer its true and lawful attorney with full power and authority,
for the sole benefit of Buyer, its successors and assigns, and, if necessary, in
the name of Seller, to sue upon and enforce such Property Rights and to
compromise and give full releases of the same.
3. Buyer hereby agrees to assume all duties, obligations and
liabilities imposed upon Seller to service the Property Rights, as described in
the Servicing Agreement (as such term is defined in the Agreement), and Buyer
agrees to be bound by and to perform all of such obligations, duties, covenants
and conditions of Seller,
<PAGE> 2
from and after the date hereof, but not prior thereto. Buyer agrees to
indemnify, save and hold harmless Seller from and against any and all loss,
liability, claims, causes of action and expenses, including reasonable
attorney's fees, which may be incurred or suffered by Seller, or asserted
against Seller by any party entitled to receive such services, arising out of or
relating to Buyer's failure to perform any of such services, on or after the
date hereof.
4. Seller hereby agrees to indemnify and hold Buyer harmless from and
against any and all loss, liability, claims, causes of action and expenses,
including reasonable attorney's fees, which may be incurred or suffered by
Buyer, or asserted against Buyer, by any party entitled to receive such
services, arising out of or relating to Seller's failure to perform any of such
services prior to the date hereof.
5. Seller and Buyer agree to take or cause to be taken such further
action, and to execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments as may be necessary or as may be
reasonably requested in order to effectuate fully the purposes, terms and
condition of this Bill of Sale, Assignment and Assumption ("Assignment
Agreement").
6. This Assignment Agreement shall be binding upon Seller and shall
inure to the benefit of Buyer and its respective successors and assigns. This
Assignment Agreement shall in no way expand the rights or remedies of any third
party against Buyer or Seller as compared to the rights or remedies which such
third party would have had against Buyer or Seller if this Assignment Agreement
had not been executed by Seller. Without limiting the generality of the
preceding sentence, this Assignment Agreement shall not create any third party
beneficiary rights nor restrain or limit Buyer or Seller from contesting or
asserting defenses against any third parties.
7. This Assignment Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
8. Except as otherwise defined herein, all terms used herein shall have
the same meaning as they have in the Agreement.
9. In the event Buyer exercises its cancellation right described in
Section 7 of the Agreement, then as of June 30, 1998, this Assignment Agreement
automatically will be canceled ab initio and of no further force and effect.
EXECUTED to be effective as of the 29th day of May, 1998.
SELLER:
MARKETING PROJECTS, INC.,
A CALIFORNIA CORPORATION
BY:
-----------------------------------
NAME:
----------------------------
ITS:
-----------------------------
BUYER:
FLORAFAX INTERNATIONAL, INC.
BY:
-----------------------------------
NAME:
---------------------------
ITS:
----------------------------
<PAGE> 1
Exhibit 10.5
NONCOMPETITION AND NONDISCLOSURE
AGREEMENT
THIS NONCOMPETITION AND NONDISCLOSURE AGREEMENT ("Agreement") dated to be
effective the 29th day of May, 1998, is entered into by and between MARKETING
PROJECTS, INC., a California corporation ("MPI"), DAVID APPELL, ROBERT BOURDON,
RANDOLPH COMMANS and PHYLLIS HOOKER (MPI and said individuals collectively,
"Covenantor"), and FLORAFAX INTERNATIONAL, INC., a Delaware corporation, and its
successors and assigns ("Purchaser").
W I T N E S S E T H :
WHEREAS, MPI and Purchaser have entered into an Asset Purchase and Sale
Agreement dated to be effective May 1, 1998 (the "Purchase Agreement"), under
the terms of which Purchaser has agreed to purchase from Covenantor, and
Covenantor has agreed to sell to Purchaser, all of the Acquired Assets (as
defined therein) of Seller's business associated therewith; and
WHEREAS, Purchaser would not agree to purchase the Acquired Assets from
Covenantor unless Covenantor agreed to enter into this Agreement, and as an
inducement to Purchaser to enter into and consummate the transactions
contemplated by the Purchase Agreement, Covenantor agreed to enter into this
Agreement; and
WHEREAS, it is acknowledged and agreed that if Covenantor could compete
with Purchaser with respect to any Soliciting Entity (as such term is defined in
that certain Servicing Agreement, dated July 29, 1994, by and between MPI,
Purchaser and The Flower Club, Inc., predecessor-in-interest to The Flower Club
International, Inc.), it would materially and adversely affect the benefits to
be accorded to Purchaser pursuant to the Purchase Agreement. A list of all
Soliciting Entities is attached hereto and incorporated herein as EXHIBIT "A".
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual promises,
covenants and representations set forth herein, the parties hereto agree as
follows:
ARTICLE I
NON-COMPETE AND NONDISCLOSURE
1.01 DEFINITION OF BUSINESS. For purposes of this Agreement, the term
"Business" shall mean the solicitation of floral and gift orders from any
Soliciting Entity.
1.02 COVENANTS AND NONCOMPETITION.
(a) During the period commencing with the Closing Date (as
such term is defined in the Purchase Agreement) and continuing
thereafter until the second (2nd) anniversary of the Closing Date (the
"Term"), Covenantor shall not, directly or indirectly, for itself or
himself, or on behalf of any other person, firm, partnership,
association, corporation, trust or any other entity (whether, as
<PAGE> 2
example only, and not limited to, an individual, creditor, agent,
servant, employee, employer, officer, director, shareholder, surety,
guarantor, investor, principal, consultant, advisor, beneficiary or in
any other capacity), or permit anyone, directly or indirectly, on its
or his behalf to, engage in or participate in any aspect of the
Business wherever any Soliciting Entity conducts its respective
business; provided however, nothing herein shall prohibit Covenantor
from owning stock or other securities of the Purchaser or not more than
five percent (5%) of the issued and outstanding securities of any other
publicly traded corporation or other entity or from engaging or
participating with any Soliciting Entity or otherwise in any business
other than the Business.
(b) During the Term, Covenantor shall not, directly or
indirectly, for itself or himself, or on behalf of any other person,
firm, partnership, association, corporation, trust or any other entity
(whether, as example only, and not limited to, an individual, creditor,
agent, servant, employee, employer, officer, director, shareholder,
surety, guarantor, investor, principal, consultant, advisor,
beneficiary or in any other capacity), or permit anyone, directly or
indirectly, on its or his behalf to, disclose to any person or entity
any confidential information of Purchaser including, but not limited
to, customer lists, trade secrets, proprietary information, prices,
advertising or marketing plans, methods, systems, procedures or
processes used by Purchaser in the Business, which disclosure would
have a material adverse effect on the Business. As used in this
subsection (b), confidential information shall mean information which
is not generally available to the public and provides Purchaser with a
competitive advantage in the Business.
1.03 CONSIDERATION. In consideration of Covenantor's performance of
their obligations under this Agreement, Purchaser agrees to pay to MPI the
amounts specified in the Purchase Agreement. Covenantor acknowledges the
sufficiency of such consideration and further acknowledges that Purchaser would
not enter into the Purchase Agreement but for Covenantor's entering into this
Agreement. Nothing contained herein shall be construed to limit Purchaser's
right to recover damages for Covenantor's breach of any obligation contained
herein except as herein provided.
ARTICLE II
REMEDIES AVAILABLE
2.01 REMEDIES AVAILABLE. In the event of default, breach or
noncompliance by either party of any of the terms, provisions, covenants,
representations or warranties contained in this Agreement, the aggrieved party
shall have the right to (i) recover from the other party all loss, damage, cost
or expense, including court costs and reasonable attorneys' fees, which result
from, arise out of or are incidental to the occurrence of such default, breach
or noncompliance and/or (ii) pursue such other rights and/or remedies, including
specific performance, that the aggrieved party may have hereunder and/or at law
or in equity.
Covenantor acknowledges that its and his expertise in the Business is
of a special, unique, unusual, extraordinary, and intellectual character, which
gives said expertise a peculiar value, and that a breach by Covenantor of the
provisions of this
<PAGE> 3
Agreement cannot reasonably or adequately be compensated in damages in an action
at law; and a breach of any of the provisions contained in this Agreement will
cause Purchaser irreparable injury and damage. Covenantor further acknowledges
that it and he possess unique skills, knowledge and ability and that competition
in violation of this Agreement or any other breach of the provisions of this
Agreement would be extremely detrimental to the Purchaser. By reason thereof,
Covenantor agrees that Purchaser shall be entitled, in addition to any other
remedies it may have under this Agreement or otherwise, to preliminary and
permanent injunctive and other equitable relief to prevent or curtail any breach
of this Agreement; provided, however, that no specification in this Agreement of
a specific legal or equitable remedy shall be construed as a waiver or
prohibition against the pursuing of other legal or equitable remedies in the
event of such a breach.
ARTICLE III
EARLY TERMINATION
3.01 EARLY TERMINATION. In the event Purchaser exercises its
cancellation right, as provided by Section 7 of the Purchase Agreement, then as
of such cancellation date, this Agreement automatically shall terminate and be
of no further force and effect.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.01 SEVERABILITY, REFORMATION. If, for any reason, any provision
contained in this Agreement should be held invalid in part by a court of
competent jurisdiction, then it is the intent of the parties hereto that the
balance of the Agreement be enforced to the fullest extent permitted by
applicable law. Further, it is the intent of the parties that this Agreement be
enforced to the fullest extent permitted by law or in equity. Accordingly,
should a court of competent jurisdiction determine that the scope of the
covenant not to compete, nondisclosure covenant or any other provision contained
herein is too broad to be enforced as set forth herein, it is the intent of the
parties that the court should reform such covenant or provision to such narrower
scope as it determines enforceable.
4.02 FUNDAMENTAL AGREEMENT; REASONABLE RESTRICTION. The parties hereto
recognize and agree that this Agreement is necessary and essential to the
protection of the Business and the consummation of the obligations of Purchaser
under the Purchase Agreement, that the area and duration of the covenant not to
compete and nondisclosure covenant contained herein are reasonable, and that
good and valuable consideration exists for Covenantor agreeing to be bound by
such covenants.
4.03 BINDING EFFECT. This Agreement shall inure to the benefit of
Purchaser, its successors and assigns and shall be binding upon Covenantor and
its, his or her heirs, executors, administrators, successors, representatives
and assigns.
4.04 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
4.05 CLOSING DATES. The "Closing Date" hereunder shall have the same
meaning as in the Purchase Agreement. Consequently, the closing hereunder shall
<PAGE> 4
occur concurrently with, and be conditioned upon, the closing of the
transactions contemplated in the Purchase Agreement on the same closing date
thereunder.
4.06 CANCELLATION OF AGREEMENT. In the event Buyer exercises its
cancellation right described in Section 7 of the Purchase Agreement, then as of
June 30, 1998, this Agreement automatically will be canceled ab initio and of no
further force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective on the day and year first above written.
COVENANTOR:
-----------------------------------
DAVID APPELL
-----------------------------------
ROBERT BOURDON
-----------------------------------
RANDOLPH COMMANS
-----------------------------------
PHYLLIS HOOKER
MARKETING PROJECTS, INC.,
A CALIFORNIA CORPORATION
BY:
---------------------------------
DAVID APPELL, PRESIDENT
PURCHASER:
FLORAFAX INTERNATIONAL, INC.,
A DELAWARE CORPORATION
BY:
---------------------------------
JAMES H. WEST, PRESIDENT
<PAGE> 5
EXHIBIT "A"
[insert list of Soliciting Entities]
