Exhibit 10.9
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AGREEMENT AND PLAN OF MERGER
among
FLORISTS' TRANSWORLD DELIVERY ASSOCIATION
and
PERRY CAPITAL CORP.
and
IRIS ACQUISITION CORP.
AUGUST 2, 1994
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TABLE OF CONTENTS
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RECITALS........................................................................................................... A-1
ARTICLE I DEFINITIONS........................................................................................... A-2
1.1 Definitions........................................................................................... A-2
1.2 Other Definitions; Rules of Construction.............................................................. A-11
ARTICLE II PLAN OF MERGER........................................................................................ A-12
2.1 Merger................................................................................................ A-12
2.2 Effects of the Merger................................................................................. A-12
2.3 Filing of Certificates and Conversion to Profit Corporation........................................... A-13
2.4 Conversion of Shares and Membership Interests......................................................... A-13
2.5 Surrender and Exchange of Interests................................................................... A-14
2.6 Further Action and Obligations of Surviving Corporation............................................... A-17
ARTICLE III PRELIMINARY ACTIONS BY FTD............................................................................ A-18
3.1 FTD Member Approvals.................................................................................. A-18
3.2 Organization of FTDA.................................................................................. A-18
3.3 Required Consents..................................................................................... A-18
3.4 Pre-Merger Amendment of Articles of Association or Bylaws............................................. A-19
3.5 Approval of Michigan Certificate of Merger............................................................ A-19
ARTICLE IV PRELIMINARY ACTIONS BY BUYER AND BUYER SUB............................................................ A-19
4.1 Deposit............................................................................................... A-19
4.2 Organization and Capitalization of Buyer Sub.......................................................... A-19
4.3 Covenants and Undertakings............................................................................ A-20
ARTICLE V CLOSING............................................................................................... A-20
Closing....................................................................................................... A-20
ARTICLE VI POST-SALE RELATIONSHIPS............................................................................... A-21
Post Sale Relationships between Buyer and FTDA................................................................ A-21
ARTICLE VII REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF FTD..................................................... A-21
7.1 Organization, Good Standing, and Power of FTD......................................................... A-21
7.2 Authority and Capacity of FTD......................................................................... A-21
7.3 Effect of Agreement................................................................................... A-22
7.4 Financial Statements of FTD........................................................................... A-23
7.5 Litigation............................................................................................ A-23
7.6 Title to Properties; Absence of Liens and Encumbrances................................................ A-23
7.7 Organization, Good Standing, and Power of Subsidiaries................................................ A-24
7.8 Stock of Subsidiaries................................................................................. A-24
7.9 Intellectual Property................................................................................. A-24
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7.10 List of Leases....................................................................................... A-26
7.11 Employee Benefit Plans............................................................................... A-26
7.12 Taxes................................................................................................ A-27
7.13 Absence of Certain Changes or Events................................................................. A-27
7.14 Labor Relations and Employment....................................................................... A-28
7.15 Compliance........................................................................................... A-28
7.16 Information Statement................................................................................ A-28
7.17 Inventory............................................................................................ A-29
7.18 Opinion of Investment Banker......................................................................... A-29
7.19 Environmental Matters................................................................................ A-29
7.20 [Reserved]........................................................................................... A-29
7.21 Cash Merger Consideration............................................................................ A-29
7.22 The Merger and Certain Related Matters............................................................... A-29
7.23 Fees and Charges..................................................................................... A-30
ARTICLE VIII REPRESENTATIONS, WARRANTIES, AND
AGREEMENTS OF BUYER AND BUYER SUB.................................................................... A-30
8.1 Organization, Good Standing, and Power of Buyer and Buyer Sub........................................ A-30
8.2 Authority and Capacity of Buyer and Buyer Sub........................................................ A-30
8.3 Effect of Agreement.................................................................................. A-30
8.4 Litigation........................................................................................... A-31
8.5 Financing............................................................................................ A-31
8.6 The Merger........................................................................................... A-31
ARTICLE IX CONDUCT OF BUSINESS PENDING CLOSING.................................................................... A-31
9.1 Conduct of Business.................................................................................. A-31
9.2 FTD's Pre-Closing Transactional Expenses............................................................. A-33
ARTICLE X CONDITIONS TO CLOSING................................................................................... A-34
10.1 Buyer and Buyer Sub.................................................................................. A-34
10.2 FTD.................................................................................................. A-35
ARTICLE XI OBLIGATIONS OF FTD AT THE CLOSING...................................................................... A-36
11.1 FTD's Deliveries and Documents....................................................................... A-36
11.2 Opinion of Counsel for FTD........................................................................... A-36
11.3 Certificate of FTD................................................................................... A-37
11.4 Certified Resolutions................................................................................ A-37
11.5 Certificates of Good Standing and Incumbency......................................................... A-37
11.6 Return of Deposit.................................................................................... A-37
11.7 Resignations......................................................................................... A-37
11.8 Certificate of Independent Accountants............................................................... A-37
ARTICLE XII OBLIGATIONS OF BUYER AND BUYER SUB AT CLOSING....................................................... A-37
12.1 Buyer's and Buyer Sub's Deliveries and Documents..................................................... A-37
12.2 Opinion of Counsel for Buyer and Buyer Sub........................................................... A-37
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12.3 Certificate of Buyer and Buyer Sub............................................................................ A-37
12.4 Certified Resolutions......................................................................................... A-38
12.5 Certificates of Good Standing and Incumbency.................................................................. A-38
ARTICLE XIII ANTITRUST FILING........................................................................................... A-38
13.1 Filing........................................................................................................ A-38
ARTICLE XIV EMPLOYEES.................................................................................................. A-38
14.1 Certain Employment Obligations................................................................................ A-38
14.2 Severance Arrangements........................................................................................ A-38
14.3 Post-Merger Transferred Employees............................................................................. A-39
14.4 Termination Notice............................................................................................ A-39
ARTICLE XV ARBITRATION................................................................................................ A-39
15.1 Arbitration................................................................................................... A-39
ARTICLE XVI TERMINATION................................................................................................ A-39
16.1 Termination Events............................................................................................ A-39
16.2 Effect of Termination......................................................................................... A-40
ARTICLE XVII MISCELLANEOUS.............................................................................................. A-41
17.1 Other Offers.................................................................................................. A-41
17.2 Sales and Transfer Taxes...................................................................................... A-41
17.3 Brokers and Finders........................................................................................... A-41
17.4 Non-Survival of Representations and Warranties................................................................ A-41
17.5 Waivers....................................................................................................... A-42
17.6 Expenses...................................................................................................... A-42
17.7 Notices....................................................................................................... A-42
17.8 Confidentiality............................................................................................... A-43
17.9 Binding Effect................................................................................................ A-43
17.10 Non-Assignability............................................................................................. A-43
17.11 Section and Other Headings.................................................................................... A-43
17.12 Counterparts.................................................................................................. A-43
17.13 Publicity..................................................................................................... A-44
17.14 Entire Agreement.............................................................................................. A-44
17.15 Best Efforts.................................................................................................. A-44
17.16 Governing Law................................................................................................. A-44
17.17 Severability.................................................................................................. ▇-▇▇
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") dated August 2, 1994, among
Florists' Transworld Delivery Association, a Michigan nonprofit corporation
("FTD"); Perry Capital Corp., a Delaware corporation ("Buyer"), and IRIS
Acquisition Corp., a Delaware corporation ("Buyer Sub").
RECITALS:
WHEREAS, FTD is a Michigan nonprofit corporation organized on a membership
basis and operated on behalf of the Members (as defined below) and is engaged in
providing services to and facilitating orders among the Members, including
without limitation granting the Members the right to use the Logo (as defined
below); and
WHEREAS, Buyer is the sole stockholder of Buyer Sub; and
WHEREAS, prior to the Merger (as defined below), FTD Association ("FTDA")
will be incorporated in an appropriate United States jurisdiction as a nonprofit
corporation organized on a membership basis; and
WHEREAS, FTD and Buyer desire to cause Buyer Sub to be merged with and into
FTD (the "Merger") on the terms set forth herein, with FTD to be the surviving
corporation following the Merger, with Buyer to be the sole member of FTD, and
with Buyer converting FTD into a Michigan business corporation immediately upon
the Merger becoming effective; and
WHEREAS, FTD will retain in the Merger all of FTD's assets that are
currently used in connection with conducting the operations of FTD known as
Floral Network, Marketplace, Clearing House, Publications, Renaissance Greeting
Cards, and Direct Access (collectively, the "Businesses"); and
WHEREAS, as a result of the Merger, Buyer's stock in Buyer Sub will be
converted to and exchanged for a membership interest in FTD, and Buyer shall be
the sole member of FTD; and
WHEREAS, as a result of the Merger, each Member's FTD Membership Interest
will be converted solely into the right to receive certain cash consideration,
as described below; and
WHEREAS, FTD has operated on a cooperative basis since 1970 in carrying out
its business within the scope of the purposes set forth in its Articles of
Association, and the Board of Directors of FTD has determined that the Cash
Merger Consideration (as defined below) should be distributed on a cooperative
basis substantially in the manner set forth in FTD's Bylaw XIV(d), using the
Patronage Distribution Method (as defined below), subject, with respect to the
Declaratory Judgment Merger Consideration (as defined below), to the
determination of a court of competent jurisdiction in the Declaratory Judgment
Action (as defined below) or a change in applicable law, in either case so as to
provide for the legal method of distributing the Cash Merger Consideration; and
WHEREAS, FTD believes that an actual controversy will exist as to the
Distribution Method (as defined below) and FTD agrees that DJ Trustee shall be
authorized, and the Members shall appoint DJ Trustee at the time of the vote on
the Merger, to serve on an all expense paid basis as the duly authorized
representative of the Members in commencing and conducting the Declaratory
Judgment Action; and
WHEREAS, concurrently with the Merger, each member of FTD will be given the
opportunity to become a member of FTDA; and
WHEREAS, the members of FTD who become members of FTDA will continue to
have the right to use the Member Used Intellectual Property after the Merger
pursuant to rights granted by the Surviving Corporation (as defined below) under
a Trademark Membership License Agreement to be entered into with each such FTDA
member; and
WHEREAS, immediately after the Merger, Buyer, as the sole member of FTD,
will cause FTD to amend its Articles of Association to convert FTD into a
Michigan business corporation, all as described below.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, the Parties agree as follows.
ARTICLE I
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DEFINITIONS
1.1 Definitions. Terms set forth below shall have the following meanings:
"Acquisition Proposal" has the meaning set forth in Section 17.1.
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by, or is under common control
with such Person. As used in this definition, "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of the Person, whether through owning voting securities,
by contract, or otherwise. With respect to Buyer, "Affiliate" shall include all
successors and assignees of Buyer or FTD.
"Allocable Cash Merger Consideration" means an amount equal to the sum of
(a) the Member Equity attributable to a Distributee Member; and (b) the portion
of the Declaratory Judgment Merger Distribution distributable to such member
pursuant to the Declaratory Judgment Decision.
"Antitrust Filing" has the meaning set forth in Section 13.1.
"Businesses" has the meaning set forth in the Recitals.
"Bylaws" means the FTD Bylaws contained in the FTD Handbook at pages 76
through 117, as amended at FTD's 1993 Annual Members' Meeting and through the
Closing Date.
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"Cash Merger Consideration" means an amount equal to $112,200,000 less the
sum of (a) the Transaction Expenses incurred on or after July 1, 1994, (b) the
amount of Members' Equity or any amount of the Credit Deposit Fund paid by FTD
to or on behalf of Members in cash on or after July 1, 1994 through the Closing
Date, (c) the fees, costs and expenses incurred or paid by FTD in connection
with the Declaratory Judgment Action prior to the Closing Date, and (d) the
Credit Deposit Fund as of the Cut Off Time.
"Closing" has the meaning set forth in Article V.
"Closing Date" means the date established by the parties on which the
Closing of the Merger and transactions contemplated by this Agreement shall
occur, such date to be not later than ten (10) business days following the date
on which the conditions set forth in Article X have been satisfied or waived.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consent Order" means the Modified Final Judgment, dated November 13, 1990,
of the United States District Court for the Eastern District of Michigan in the
United States of America v. Florists' Telegraph Delivery Association, Civ. ▇▇.
▇▇-▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ v Florists' Transworld Delivery
Association, Civ. No. 66-28784.
"Corporation Act" means the Michigan Business Corporation Act, as amended,
M.C.L.A. Sec. 450.1101 et seq.
"Credit Deposit Fund" means the money held on behalf of members as a
credit deposit which is part of the Credit Deposit Fund and which is reported in
the Members' equity section of the Financial Statements.
"Cut Off Time" means the close of business on the date which is five (5)
business days prior to the Closing Date.
"DGCL" means the Delaware General Corporation Law.
"DJ Trustee" means the Person or Persons appointed by the Board of
Directors of FTD, and approved by the FTD Record Members at the Special
Membership Meeting, as the authorized representative(s) of the Distributee
Members to bring and prosecute the Declaratory Judgment Action and thereafter
implement the Declaratory Judgment Decision in accordance with this Agreement.
"Damages" means any and all loss, damage, liability or expense (including
reasonable attorneys fees and costs of litigation) arising out of a dispute.
"Declaratory Judgment Action" means an action brought by the DJ Trustee on
or immediately after the approval of the Merger by the Members, but before the
Closing Date, in the Circuit Court for the County of Oakland, State of Michigan
(or if such forum as unavailable, another court of competent jurisdiction)
pursuant to Michigan Court Rule 2.605 to settle an actual controversy, to
preserve legal rights, and to guide future conduct regarding whether the
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Patronage Distribution Method is the proper manner and basis under applicable
law of distributing to Distributee Members the Declaratory Judgment Merger
Distribution or whether it must be modified in any respect so that no member is
adversely affected, within the meaning of applicable law.
"Declaratory Judgment Decision" means the first to occur of (a) the final
and non-appealable decision rendered in the Declaratory Judgment Action, (b)
such change in circumstance or law which, in the written opinion of counsel to
the DJ Trustee acceptable to the Surviving Corporation, resolves the controversy
that would otherwise be decided in a Declaratory Judgment Action, or (c)
settlement of the Declaratory Judgment Action on such basis as may be approved
by the court hearing such action.
"Declaratory Judgment Merger Consideration" means an amount equal to the
Cash Merger Consideration less the Member Merger Distributions.
"Declaratory Judgment Merger Distribution" means the Declaratory Judgment
Merger Consideration: (x) less (a) the attorneys fees, costs, and expenses of
the Declaratory Judgment Action; (b) the fees, costs, and expenses of the
Disbursing Agent; (c) the fees, costs and expenses of the DJ Trustee incurred in
connection with the Declaratory Judgment Action on or after the Closing Date;
and (d) any Damages incurred by Buyer or the Surviving Corporation arising out
of or relating to the method of distributing the Cash Merger Consideration; (y)
adjusted for the increase or decrease in the amount of the deposited funds
resulting from income and/or losses arising from the investment of such funds in
Permitted Investments for the period through the date of the Declaratory
Judgment Decision; and, (z) less all taxes imposed on the net income of such
fund as determined by the Distribution Accountants and as required to be set
forth on the tax returns for such fund which returns shall be prepared by the
Distribution Accountants for filing by the DJ Trustee.
"Deposit" has the meaning set forth in Section 4.1.
"Direct Access" means FTD Direct Access, Inc., a Delaware corporation and
wholly-owned subsidiary of Holdings.
"Directory Advertising" means Directory Advertising, Inc., a Michigan
corporation and wholly-owned subsidiary of FTD.
"Disbursement Agreement" means the agreement between the Disbursing Agent
and FTD, in form and substance reasonably satisfactory to the parties, pursuant
to which, among other things, the Cash Merger Consideration will be distributed
as described in Article II.
"Disbursing Agent" means a Person mutually acceptable to Buyer and FTD
which shall disburse the Cash Merger Consideration to Distributee Members
pursuant to the Disbursement Agreement.
"Distributee Member" means a member of FTD immediately prior to the
Effective Time which is entitled to receive a portion of the Cash Merger
Consideration pursuant to the Articles of Association and Bylaws of FTD and
applicable law which members are: (i) the "Active
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Members" which hold the Voting Membership Interests described is Part I of
Schedule 2.4; (ii) the "Affiliate Members" which hold the Affiliate Membership
Interests (Nonvoting) described in Part II of Schedule 2.4; and (iii) those
"Foreign Members" which hold Other Members (Nonvoting) membership interests
described in Part III, subsection (c) of Schedule 2.4 and which Foreign Members
are, in addition, Foreign Members whose business operations are conducted in the
Republic of the Philippines and who are shown on FTD's books and records as
having Member Equity.
"Distribution Accountants" means a national accounting firm mutually
acceptable to the parties and retained for the purpose of calculating the
amounts due to be distributed to the Distributee Members pursuant to the terms
of this Agreement and the Disbursement Agreement.
"Distribution Method" means the Patronage Distribution Method, the Per
Capita Distribution Method or such other method of distributing the Declaratory
Judgment Merger Distribution as shall be determined in the Declaratory Judgment
Action to be proper and lawful.
"Distribution Percentage" means, with respect to any Distributee Member,
that percentage which bears the same ratio to one hundred percent (100%) as the
Member Equity attributable to such Distributee Member bears to the sum of all
Members' Equity attributable to all Distributee Members.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 7.11.
"ERISA Employee Benefit Plan" means any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan as defined in ERISA Section 3(2) ("Employee Pension Benefit Plan"),
(ii) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (iii) qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including any Multi-
employer Plan as defined in ERISA), or (iv) Employee Welfare Benefit Plan as
defined in ERISA Section 3(1).
"Effective Time" has the meaning set forth in Section 7.22.
"Employee Benefit Plan" means any employee benefit or compensation plan,
program, agreement or arrangement, including, without limitation, any ERISA
Employee Benefit Plan, employee fringe benefit plan or program, incentive
compensation plan (whether short term or long term), stock-based pine or
severance or termination plan or program.
"Encumbrances" has the meaning set forth in Section 7.6.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any Person or entity alleging
potential liability arising out of, based on or resulting from (a) the presence,
or release into the environment, of any Hazardous Substances at any location,
whether or not owned or operated by FTD or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law.
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"Environmental Laws" means all federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Substances.
"Escrow Agent" has the meaning set forth in Section 4.1(b).
"Escrow Agreement" has the meaning set forth in Section 4.1(a).
"FTD" has the meaning set forth in the Recitals prior to the Merger and
shall mean the Surviving Corporation effective as of the Merger.
"FTD Canada" means Florists' Transworld Delivery Association of Canada
Limited, a Federal corporation and wholly-owned subsidiary of FTD.
"FTD Handbook" means the FTD Member/Owner Handbook issued by FTD and
containing the Articles of Association, Bylaws, Rules, Regulations, and Policies
(all as described in the FTD Handbook) effective as of April 14, 1993, and as
the same may have been amended by the Members or FTD's Board of Directors
thereafter, a true and complete copy of which or reproduction thereof is
included with the Schedules to this Agreement.
"FTD Membership Interest" means the membership interest of a Distributee
Member.
"FTD Non-Distributee Membership Interest" means the membership interest of
a Non-Distributee Member.
"FTD Permits" has the meaning set forth in Section 7.15.
"FTD Record Member" means a member of FTD on the Record Date entitled to
vote at the Special Membership Meeting pursuant to the Articles of Association
and Bylaws of FTD and applicable law which members are "Active Members" and hold
the Voting Membership Interests described as such in Part I of Schedule 2.4.
"FTD's Intellectual Property" has the meaning set forth in Section 7.9(a).
"FTDA" has the meaning set forth in the Recitals.
"FTDA Bylaws" means the Bylaws of FTDA to be adopted by FTDA.
"FTDA Handbook" means the document which shall be substantially similar to
the FTD Handbook as in effect on the date hereof with such changes or
modifications as are necessary to effectuate the transactions contemplated by
this Agreement.
"Financial Statements" has the meaning set forth in Section 7.4.
"Floral Network" means the system of computer terminals and central
processing units and related peripheral equipment, software, computer programs,
electronic data storage
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mechanisms, and systems, regardless of the software architecture employed, (i)
used in the provision of a specialized electronic network that is currently used
in the Businesses for, among other functions, floral order transmission and
processing, computer network communications services, Member support and
telemarketing services, (ii) used in the provision of depot maintenance, and
(iii) used to provide PC-based business management application software to the
Members, and all documentation and resource material related to any of the
foregoing and all additions, improvements, updates and accessions thereto.
"GAAP" means generally accepted accounting principles applied consistently.
"HSR Act" has the meaning set forth in Section 13.1.
"Hazardous Substances" means those substances designated pursuant to Sec.
101(14) and Sec. 102 of the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. Sec. 9601(14) and Sec. 9602; imminently hazardous
chemical substances or mixtures as defined in Sec. 7(f) of the Toxic Substances
Control Act, 15 U.S.C. Sec. 2606(f); and oils, petroleum, and petroleum
products.
"Holdings" means FTD Holdings, Incorporated, a Delaware corporation and
wholly-owned subsidiary of FTD.
"Information Statement" means the information statement to be sent to
members (including FTD Record Members) in connection with the Special Membership
Meeting.
"Insurance Programs" has the meaning set forth in the Mutual Support
Agreement.
"Intellectual Property'" has the meaning act forth in Section 7.9(a).
"Interflora" means Interflora, Inc., a Michigan corporation.
"Leaseback Agreement" means the agreement to be entered into no later than
the date immediately prior to the Closing Date between the Surviving Corporation
and FTDA in form and substance mutually satisfactory to the parties which shall
provide for: (i) the lease by FTDA at fair market value of certain real property
in Southfield, Michigan and certain furniture and equipment located thereat for
a term of five (5) years, provided the Surviving Corporation shall be entitled
to terminate the Lease for the real property upon reasonable notice in the event
it sells or completely vacates the facility currently occupied by employees of
FTD; (ii) the assignment of the lease and all obligations relating to the office
space in Washington, D.C. currently occupied by employees of FTD or,
alternatively, such other arrangements providing for the use of such space by
FTDA on the terms contained in the underlying lease and otherwise on terms and
conditions mutually acceptable to the Surviving Corporation and FTDA; and (iii)
the lease by FTDA of the publications known as "FTD FAMILY" and "FLORIST" for a
99-year renewable term, in consideration of FTDA providing advertising space to
Surviving Corporation in such publications with a value of $10,000 annually,
adjusted for increases in the CPI Index in the manner provided in the Mutual
Support Agreement.
"Leased Premises" has the meaning set forth in Section 7.6.
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"Leases" has the meaning set forth in Section 7.10.
"Liabilities to Distributee Members and Non-Distributee Members" means
those amounts payable or credited by FTD to Distributee Members and Non-
Distributee Members in the ordinary course of business pursuant to the following
plans or programs: Clearinghouse statement balances, convention savings fund
balances, benevolent fund payments, foreign tour fund balances, and education
savings balances which are included as liabilities in the Financial Statements
for the period ending June 30, 1994 or which if payable or credited after such
date would have been included on such Financial Statements if they were payable
or credited prior to that date.
"Licensed Intellectual Property" means the registered and unregistered
Trademarks owned and used by FTD as of the date of this Agreement, including
without limitation the Logo and the marks "FTD", "FTDA", and "FLORISTS
TRANSWORLD DELIVERY", "FLORIST" and "FTD FAMILY" (all as set forth on Exhibit
TL-A to the Trademark License Agreement, and all other Trademarks used in
connection with the Retail/Professional Florists Industry acquired by the
Surviving Corporation at any time after the date of the Merger, but shall not
include such Trademarks as are used solely in connection with the Floral
Network, any Software which FTD owns or has the right to use pursuant to a
license or other agreement, the marks "Interflora" and "Fleurin" licensed to FTD
under the Interflora/FTD License Agreements dated December 7, 1987 between
Interflora and FTD, or any Trademarks owned by RGC. However, Licensed
Intellectual Property shall not include any Intellectual Property which was used
by FTD prior to the Merger pursuant to an agreement which restricts or otherwise
limits the Surviving Corporation's ability to license to FTDA, or use on FTDA's
behalf, said Intellectual Property, unless the necessary consents from third
parties have been duly obtained pursuant to Section 3.3.
"Licenses" has the meaning set forth in Section 7.9.
"Litigation" has the meaning set forth in Section 7.5.
"Logo" means the stylized Mercury man emblem shown in Exhibit TL-B to the
Trademark License Agreement.
"Material Adverse Effect" means any adverse change in the financial
condition, business, prospects or results of operations of FTD or any of the
Subsidiaries, which is material to FTD and the Subsidiaries, taken as a whole.
"Member" means an Active Member and an Affiliate Member (each as defined in
Bylaw I, Section 2 of FTD's Bylaws) of FTD.
"Member Equity" means the amounts available to be distributed to each
Distributee Member in forms other than cash held by FTD for the account of each
Distributee Member as of June 30, 1994, plus such amounts as shall be
distributable in cash or written notices of allocation to each Distributee
Member for the fiscal year ended June 30, 1994, plus the Stub Period Member
Equity less any amount paid by FTD from the equity account of such Distributee
Member to, or on behalf of, such Distributee Member in cash on or after July 1,
1994 through the Effective Time. Member Equity does not include any amount of
the Credit Deposit Fund.
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"Member Equity Merger Distribution" means that portion of the Cash Merger
Consideration that will be distributed to Distributee Members in satisfaction of
Members' Equity other than Stub Period Member Equity.
"Member Merger Distributions" means the Member Equity Merger Distribution
and the Stub Period Merger Distribution.
"Member Used Intellectual Property" has the meaning set forth in the Mutual
Support Agreement.
"Members' Equity" means the cumulative amount of Member Equity for all
Distributee Members.
"Merger" has the meaning set forth in the Recitals.
"Michigan Certificate of Merger" means the certificate of merger to be
filed pursuant to Section 2.3(c).
"Mutual Support Agreement" means the agreement to be entered into no later
than the date immediately prior to the Closing Date between the Surviving
Corporation and FTDA in the form attached as Exhibit A to this Agreement.
"NOLs" has the meaning set forth in Section 7.12.
"Non-Distributee Member" means those members of FTD which are not
Distributee Members.
"Nonprofit Act" means the Michigan Nonprofit Corporation Act, as amended,
M.C.L.A. Sec. 450.2101 et seq.
"Patronage Distribution Method" means that method of determining the amount
to be distributed to any Distributee Member by applying the Distribution
Percentage to the aggregate amount to be distributed.
"Per Capita Distribution Method" means that method of determining the
amount to be distributed to any Distributee Member by dividing the aggregate
amount to be distributed on an equal per capita basis.
"Permitted Investments" means direct obligations of or obligations fully
guaranteed by the United States of America; provided that the maturities of such
obligations shall be such so as to permit the Disbursing Agent to distribute the
Declaratory Judgment Merger Distribution in accordance with the terms of this
Agreement and the Disbursement Agreement but in no event shall such maturities
exceed more than three hundred and sixty-five (365) days.
"Person" means an individual, a corporation, a partnership, an association,
a trust, or any other entity or organization, including a governmental or
political subdivision or an agency or instrumentality thereof.
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"Pre-Merger Amendment" means an amendment to FTD's Articles of Association
and/or Bylaws to provide for an additional class of FTD membership to which
Buyer will be admitted at the Effective Time of the Merger. Such amendment
shall be in the form to be mutually agreed upon by Buyer and FTD.
"Private Letter Ruling" means the private letter ruling from the United
States Internal Revenue Service to FTD, dated January 23, 1970.
"RGC" means Renaissance Greeting Cards, Inc., a Maine corporation formerly
known as "Renaissance Acquisition Company", and majority-owned subsidiary of
Holdings.
"Real Property" means the real property owned by FTD and/or its
Subsidiaries.
"Record Date" means the record date established by FTD's Board of Directors
for the purpose of determining which of FTD's members are entitled to notice of
and to vote at the Special Membership Meeting to be held to review and approve
the Merger, the Pre-Merger Amendment, and the transactions contemplated by this
Agreement.
"Related Agreements" means the Mutual Support Agreement, Trademark License
Agreement, Leaseback Agreement, the Escrow Agreement, the Disbursement Agreement
and any other agreements, certificates and instruments executed in connection
with this Agreement and the transactions contemplated hereby and by such other
agreements.
"Restated FTD Articles" has the meaning set forth in Section 2.3(d).
"Retail/Professional Florists Industry" means the business of selling
products and performing services customarily associated with operating and
maintaining a retail/professional florist business.
"Securities Act" has the meaning set forth in Section 6.20.
"Software" means all computer software and databases, including all
embodiments or fixations thereof and related resource material and
documentation, and all additions, improvements, enhancements, updates and
accessions thereto, and including without limitation the Floral Network.
"Special Credit Deposit" means the aggregate of all amounts which have been
assessed against, paid by and remain to the credit of Members as Special Credit
Deposits and advance payments pursuant to the Clearing House Rules set forth in
the FTD Handbook at pages 144 through 149 and which are included as liabilities
in the Financial Statements for the period ended June 30, 1994 or which, if
payable or credited after such date, would have been included on each Financial
Statement if they were payable or credited prior to such date.
"Special Membership Meeting" has the meaning set forth in Section 3.1.
"Stub Period Member Equity" means with respect to each Distributee Member
such amounts as shall be distributable in cash or written notices of allocation
to such Distributee
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Member for the partial fiscal year beginning on July 1, 1994, and ending on the
Closing Date less any amounts paid by FTD from the equity account of such
Distributee Member during such period.
"Stub Period Merger Distribution" means that portion of the Cash Merger
Consideration that will be distributed to Distributee Members in satisfaction of
Stub Period Member Equity.
"Subsidiaries" means, collectively, Holdings, Direct Access, FTD Canada,
Directory Advertising and RGC.
"Surviving Corporation" means FTD following the Merger and its successors.
"Tax" or "tax" has the meaning set forth in Section 7.12 for purposes of
such Section.
"Trademark License Agreement" means the license agreement in substantially
the form attached as Exhibit MS-A to the Mutual Support Agreement to be entered
into no later than the date immediately prior to the Closing Date between the
Surviving Corporation and FTDA.
"Trademark Membership License Agreement" means the license agreement in
substantially the form attached as Exhibit MS-B to the Mutual Support Agreement
to be entered into after the Closing between the Surviving Corporation and each
Person who becomes a member of FTDA.
"Trademarks" means those trademarks, trade dress, trade names, trade
styles, logos or service marks, including all registrations thereof and
applications therefor in the United States, any political subdivisions thereof,
and any foreign jurisdictions.
"Transaction Expenses" has the meaning set forth in Section 9.2.
"Transferred Employees" has the meaning set forth in Section 10.1(n).
"Transmittal Form" has the meaning set forth in Section 2.5(b)(ii).
"Value Plus Program" means the FTD program of member incentives previously
adopted by FTD's Board of Directors and as in effect on the date of this
Agreement and through the Closing Date and described in or attached as Schedule
1.1.
"Value Plus Program Liabilities" means FTD's liabilities to Members accrued
as of the Closing Date on the books of account of FTD to provide benefits to the
Members under the Value Plus Program.
1.2 Other Definitions; Rules of Construction.
(a) As used herein, the terms "Agreement", "FTD", "Buyer", and "Buyer Sub"
shall have the respective meanings ascribed thereto in the introductory
paragraph of this Agreement. These terms, together with the terms defined in
Section 1.1, shall include both the singular and the plural forms thereof and
shall be construed accordingly.
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(b) References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
ARTICLE II
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PLAN OF MERGER
2.1 Merger. On the Closing Date, in accordance with the Nonprofit Act,
the Corporation Act (to the extent it may be applicable) and the DGCL, FTD and
Buyer Sub shall be merged into a single corporation existing under the laws of
the State of Michigan, to wit, FTD, one of the constituent corporations, which
shall be the Surviving Corporation. The separate existence of Buyer Sub shall
thereupon cease, and FTD shall continue its corporate existence as the Surviving
Corporation.
2.2 Effects of the Merger. At the Effective Time:
(a) the separate existence of Buyer Sub shall cease and Buyer Sub
shall be merged with and into FTD, which shall be the Surviving Corporation
under the Nonprofit Act;
(b) the Cash Merger Consideration shall be remitted to the Disbursing
Agent and disbursed as required by this Agreement and in the Disbursement
Agreement, provided that the Declaratory Judgment Merger Consideration
shall be held by the Disbursing Agent and invested in Permitted Investments
as directed by the Surviving Corporation until the Declaratory Judgment
Decision is obtained, after which distribution shall be made to Distributee
Members in accordance with such agreements;
(c) the Articles of Association of FTD as in effect on the Closing
Date shall be the Articles of Association of the Surviving Corporation;
(d) Buyer Sub's Bylaws shall be the Bylaws of the Surviving
Corporation, provided that the name of the Surviving Corporation shall
remain Florists' Transworld Delivery Association until it shall be changed
by the filing of the Restated Articles;
(e) the directors of Buyer Sub shall be the directors of the Surviving
Corporation and shall hold office until their successors are elected in
accordance with the Bylaws of the Surviving Corporation or until their
earlier resignation, removal or death;
(f) the officers of Buyer Sub shall be the officers of the Surviving
Corporation and shall hold office at the pleasure of the Surviving
Corporation's Board of Directors and until their successors are elected in
accordance with the Bylaws of the Surviving Corporation or until their
earlier resignation, removal or death; and
(g) the Surviving Corporation shall thereafter possess all the rights,
privileges, immunities, and franchises, and be responsible and liable for
all liabilities, of each of the constituent corporations as provided by the
Nonprofit Act and the DGCL.
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2.3 Filing of Certificates and Conversion to Profit Corporation. Before,
on or immediately after the Effective Time as herein specified, the following
shall be filed by or on behalf of each of FTD and/or Buyer Sub with the
appropriate authority:
(a) prior to the Effective Time, the Pre-Merger Amendment to the FTD
Articles of Association;
(b) a certificate of merger pursuant to Section 103 of the DGCL to be
effective on the Closing Date;
(c) a certificate of merger pursuant to Sections 707 and 131 of the
Nonprofit Act ("Michigan Certificate of Merger") to be effective as of the
Closing Date after the filing described in subsection (b); and
(d) immediately after the Effective Time, a certificate of amendment
which shall amend the Articles of Association of the Surviving Corporation
to, inter alia, (i) convert the Surviving Corporation to a "for profit"
corporation pursuant to Section 601(2) of the Nonprofit Act, and (ii)
change the name of the Surviving Corporation to "Florists' Transworld
Delivery, Inc." (the "Restated FTD Articles").
2.4 Conversion of Shares and Membership Interests. The manner of
converting outstanding shares of Buyer Sub stock into the consideration to be
exchanged therefor and of converting FTD Membership Interests into the
consideration to be distributed in exchange therefor shall be as follows:
(a) Membership Interests.
(i) A true and accurate description of FTD's outstanding types of
membership interests prior to the effectiveness of the Pre-Merger
Amendment contemplated by Section 2.3(a) is set forth on Schedule
2.4(a), which membership interests are the only existing membership
interests of FTD of any kind or nature whatsoever. The FTD Record
Members are the only holders of membership interests entitled to vote
with respect to the Merger and each such FTD Record Member is entitled
to cast one vote with respect to such member's membership interest.
The Distributee Members hold the only FTD membership interests of any
kind or nature whatsoever that are entitled to be converted in the
Merger and receive any of the Cash Merger Consideration pursuant to
the Articles of Association or Bylaws of FTD or applicable law. At the
Effective Time the membership interests of Non-Distributee Members
will be extinguished and are not entitled to be converted in the
Merger or receive any of the Cash Merger Consideration pursuant to the
Articles of Association or Bylaws of FTD or applicable law.
(ii) At the Effective Time, by virtue of the Merger and without
any further action on the part of the holder thereof, FTD, or Buyer
Sub, each FTD Membership Interest shall be converted into a right to
receive the Allocable Cash
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Merger Consideration (less any required withholding of taxes) without
interest (other than as provided for in the Declaratory Judgment
Merger Distribution).
(iii) At the Effective Time, all FTD membership interests of any
kind or nature whatsoever (excluding only the membership interest to
be held by Buyer pursuant to Section 2.4(b)(ii)) in existence
immediately prior to the Effective Time shall terminate and be
extinguished and the holders of such interests shall cease to have any
rights with respect to the Surviving Corporation except (A) each
Distributee Member shall have the right to receive the Allocable Cash
Merger Consideration (less any applicable withholding of taxes)
without interest (other than as provided for in the Declaratory
Judgment Merger Distribution) pursuant to subsection (ii), and (B) as
provided in Section 2.6.
(b) Buyer Sub Stock.
(i) A description of Buyer Sub's stock issued and outstanding and
entitled to vote with respect to the Merger is 100 shares of common
stock, which is the only issued and outstanding stock of Buyer Sub.
(ii) At the Effective Time, by virtue of the Merger and without
any further action on the part of Buyer, Buyer Sub, or FTD, the 100
issued and outstanding shares of Buyer Sub common stock shall be
converted into the sole membership interest in the Surviving
Corporation.
2.5 Surrender and Exchange of Interests. After the Effective Time, the
exchange and conversion of the interests of Buyer and the Distributee Members in
Buyer Sub and FTD, respectively, shall be carried out as follows:
(a) Buyer Sub Certificates Exchanged for Membership Interest in Surviving
Corporation. Buyer shall surrender to the Surviving Corporation the certificate
or certificates representing the 100 issued and outstanding shares of Buyer Sub
common stock and shall be entitled upon such surrender to receive in exchange
therefor a certificate representing the sole membership interest in the
Surviving Corporation.
(b) Deposit of Funds; Converting FTD Membership Interests.
(i) At or prior to the Effective Time, (A) the Escrow Agent shall have
delivered the Deposit to the Buyer or, at Buyer's direction, the Disbursing
Agent, in partial payment of the Cash Merger Consideration, and (B) Buyer
Sub shall deposit by wire transfer with the Disbursing Agent, pursuant to
the terms of the Disbursement Agreement and this Agreement, an amount in
cash equal to the total Cash Merger Consideration, less the amount of the
Deposit, if delivered to the Disbursing Agent pursuant to clause (A) above.
Buyer Sub shall furnish to FTD evidence satisfactory to FTD that such funds
have been so deposited with the Disbursing Agent. Except with respect to
amounts required to be distributed as part of the Declaratory Judgment
Merger Distribution, no interest on amounts deposited with the Disbursing
Agent shall accrue for the benefit of, or be paid to Distributee Members.
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(ii) Promptly after the Effective Time, the Disbursing Agent shall
notify each Distributee Member and Non-Distributee Member of the
effectiveness of the Merger and shall cause a transmittal and instruction
form ("Transmittal Form") to be sent to each Distributee Member advising
such members of (a) the terms of payment to be effected in connection with
the Merger, (b) the procedure for instructing the Disbursing Agent
regarding the manner and timing of delivering the Allocable Cash Merger
Consideration to which such member is entitled under this Agreement, (c)
the actions required to be taken to become a member of FTDA and continue to
use the Member Used Intellectual Property which actions shall include, but
not be limited to, execution and delivery to FTDA of the Trademark
Membership License Agreement, and (d) that such Distributee Member's FTD
Membership Interest has, by virtue of the Merger, been converted solely
into the right to receive the Allocable Cash Merger Consideration and the
right to receive, as applicable, credits for or repayments of the program
balances described in Section 2.6. Such Transmittal Form shall include, as
a condition to receipt of the Allocable Cash Merger Consideration, an
unconditional release from each Distributee Member for any and all
liabilities owed to such member by FTD, the Surviving Corporation, Buyer or
FTDA in connection with the Merger or such member's FTD membership
interests other than the Allocable Cash Merger Consideration and any
amounts or credits described in Section 2.6.
(iii) The Surviving Corporation shall notify the Disbursing Agent of
the effectiveness of the Merger. Thereafter,
(A) Upon the Disbursing Agent receiving a duly executed Transmittal
Form and such other documents reasonably requested by the Disbursing
Agent from a Distributee Member, the Disbursing Agent shall promptly
pay by check to each such submitting member an amount equal to the
Member Equity attributable to such member as of June 30, 1994 (less
any required withholding of taxes) without interest, provided that if
such submitting member shall have complied with the instructions for
becoming a member of FTDA, the amount payable pursuant to this
subsection shall be reduced by the amount thereof which such member
authorizes the Disbursing Agent to pay over to FTDA as a membership
fee on behalf of such member. The Member Equity attributable to each
Distributee Member pursuant to this subsection shall be as set forth
in the books and records of FTD and shall be certified by the
Distribution Accountants and provided to the Disbursing Agent prior to
the Effective Time;
(B) Upon the Disbursing Agent's receipt of the calculation of the
Stub Period Member Equity for each Distributee Member (if any),
certified by the Distribution Accountants and approved by the
Surviving Corporation and the DJ Trustee, the Disbursing Agent shall
promptly pay, by check to each Distributee Member who has theretofore
submitted a duly executed Transmittal Form, the Stub Period Member
Equity attributable to such member (less any required withholding for
taxes) without interest;
(C) Upon the Disbursing Agent's receipt of a certified Declaratory
Judgment Decision and of a calculation of the portion of the
Declaratory
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Judgment Merger Distribution distributable to each Distributee Member
certified by the Distribution Accountants and approved by the
Surviving Corporation and the DJ Trustee, the Disbursing Agent shall
promptly pay by check to each such Distributee Member who has
theretofore submitted a duly executed Transmittal Form, the portion of
the Declaratory Judgment Merger Distribution distributable to such
member (less any required withholding for taxes) without interest
(other than as provided for in the Declaratory Judgment Merger
Distribution);
(D) In no event shall the Disbursing Agent be required to make any
payment to a person other than a Distributee Member in whose name the
applicable FTD Membership Interest is recorded on FTD's records
immediately prior to the Effective Time, and the Disbursing Agent
shall be permitted to make such inquiries as it deems appropriate to
assure itself with respect to the identity and entitlement to
distribution of any applicant;
(E) Until surrender of the Transmittal Form, the FTD Membership
Interest of a Distributee Member shall represent only the right to
receive such holder's Allocable Cash Merger Consideration and such
holder shall cease to have any other rights with respect to such
interest or the Surviving Corporation other than as provided in
Section 2.6; and,
(F) To the extent that the Surviving Corporation has incurred
Damages arising out of or relating to the method on distributing the
Cash Merger Consideration, Buyer or the Surviving Corporation shall
provide written notice to the DJ Trustee, after which the Surviving
Corporation and the DJ Trustee shall negotiate in good faith to agree
on the total amount of such Damages. In the event that such agreement
cannot be reached within ten (10) days after such notice, the dispute
shall be resolved pursuant to the arbitration procedures set forth in
Article XV. The Disbursing Agent shall pay to the Surviving
Corporation from the Declaratory Judgment Merger Consideration, the
amount of such Damages determined by agreement of the parties or
pursuant to an arbitration award.
(iv) Six (6) months after the Declaratory Judgment Decision, the
Disbursing Agent shall deliver to the Surviving Corporation any funds not
disbursed pursuant to subsection (iii) above, and thereafter the Surviving
Corporation (subject to applicable abandoned property laws) shall, upon
delivery to it of a duly executed Transmittal Form by a Distributee Member,
distribute to such member the Allocable Cash Merger Consideration without
interest (other than as provided for in the Declaratory Judgment Merger
Distribution) in accordance with the terms of this Section.
(v) Except as provided in subsection (ii) and Section 2.6, after
delivery of the Cash Merger Distribution to the Disbursing Agent, the Buyer
and the Surviving Corporation shall have no further obligations to any
holder of a membership interest in FTD of any kind or nature whatsoever.
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(vi) The DJ Trustee shall be charged with making any and all
determinations, decision and judgments, for any or all purposes, with
respect to the conduct, prosecution and settlement of the Declaratory
Judgment Action and the matters specified in Section 2.5. In no event
shall the DJ Trustee be liable to the Distributee Members in the absence of
willful misconduct or gross negligence. Neither the DJ Trustee, its
affiliates nor any of their respective directors, officers or employees
shall be entitled to compensation for any services provided hereunder;
provided that the DJ Trustee shall be reimbursed for any reasonable out-of-
pocket expenses incurred by the DJ Trustee out of the funds deposited with
the Disbursing Agent.
(vii) The parties to this Agreement acknowledge and agree that they
will treat, and cause the DJ Trustee to treat, all amounts deposited with
the Disbursing Agent, and all earnings thereon, for all tax purposes as
owned by a separate taxpayer that is not an Affiliate of any party to this
Agreement. The parties hereto will charge the DJ Trustee with filing all
tax returns and paying all taxes due with respect to the income and losses
of the funds deposited with the Disbursing Agent and invested in Permitted
Investments. Accordingly, the portion of the Declaratory Judgment Merger
Distribution to be paid to each Distributee Member pursuant to this
Agreement shall be net of an allocable portion of the total amount of such
taxes.
(c) On or before the Cut Off Time, FTD shall provide Buyer with a
Closing statement which sets forth the amount of the Cash Merger
Consideration and the method of calculation thereof. In the event that
Buyer disputes the amount of the Cash Merger Consideration, Buyer and FTD
shall negotiate in good faith to resolve any difference.
2.6 Further Action and Obligations of Surviving Corporation. Following the
Closing, the Surviving Corporation shall be required to satisfy FTD's
obligations to the former Distributee Members and Non-Distributee Members with
respect to the following:
(a) liabilities of the Surviving Corporation to former members for:
(i) Liabilities to Distributee Members' and Non-Distributee
Members' funds or accounts; and
(ii) the Special Credit Deposit attributable to such former
Member's deposit account;
(b) payment of an amount in cash equal to:
(i) the Value Plus Program Liabilities attributable to each former
member at the Effective Time; provided that the Surviving Corporation
shall only pay such liabilities by check thirty (30) days after it has
filed a consolidated tax return for the tax period ending at the
Effective Time which filing the Surviving Corporation undertakes to
make on or before six (6) months from the Closing Date; and
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(ii) the Credit Deposit Fund account balance attributable to each
former member at the Effective Time shall be paid by check promptly
after the Closing Date; and
(c) rights of each former member who is or becomes a Provisional
Member of FTDA (as defined in the Mutual Support Agreement) or who elects
to become a member of FTDA to continue to use the Member Used Intellectual
Property, subject to the Mutual Support Agreement and such member's
execution of and adherence to the terms of the Trademark Membership License
Agreement.
ARTICLE III
-----------
PRELIMINARY ACTIONS BY FTD
3.1 Ftd Member Approvals. FTD, acting through its Board of Directors,
shall promptly take the actions necessary in accordance with the Nonprofit Act,
the Corporation Act (to the extent the same may be applicable), and its Articles
of Association and Bylaws to call and give notice of a special meeting of the
members for the purpose of approving the proposed plan of merger and related
transactions (the "Special Membership Meeting") and to otherwise facilitate
receiving the affirmative vote of members with respect to the Merger and the
other transactions contemplated hereby. The Special Membership Meeting will be
held at the earliest practicable date for the purpose of considering and
approving the Merger and transactions contemplated in this Agreement, including
adopting the Pre-Merger Amendment. FTD's Board of Directors shall recommend
that FTD Record Members vote in favor of the adoption and approval of: the
Merger and transactions contemplated by this Agreement and the Pre-Merger
Amendment and that FTD's Board of Directors include such recommendation in the
Information Statement and other materials to be distributed to members in
connection with the Special Membership Meeting. FTD shall promptly prepare and
submit to Buyer for approval the Information Statement and agrees to consult and
cooperate with Buyer in connection with preparing or making any announcements to
or communications with Members or obtaining the approval of Members, in each
case relating to the transactions contemplated by the Agreement. The Information
Statement shall seek approval of the FTD Record Members of the manner and method
of distributing the Cash Merger Consideration contemplated by this Agreement.
3.2 Organization of FTDA. FTD shall permit, encourage and facilitate the
independent organization of FTDA as a nonprofit corporation organized on a
membership basis in an appropriate United States jurisdiction as soon as
practicable after the date of this Agreement but prior to the Special Membership
Meeting. The Articles of Incorporation and Bylaws of FTDA shall be in
substantially the form submitted to the Members in the Information Statement
after approval of Buyer which approval shall not be unreasonably withheld.
Following the Merger, each member who is or becomes a Provisional Member of FTDA
or who elects to become a member of FTDA will continue to have the right to use
the Member Used Intellectual Property; subject to the Mutual Support Agreement
and such member's execution of and adherence to the terms of the Trademark
Membership License Agreement.
3.3 Required Consents. To the extent that any License, contract, Real
Property lease, Lease, FTD Permit, or other asset used in conducting any of the
Businesses is subject to
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restrictions which may require that FTD may not effect or be a party to the
Merger without the consent of a third party or which may restrict the ability of
the Surviving Corporation to operate the Businesses as herein contemplated, FTD
shall use its reasonable best efforts to obtain the third party's consent to the
Merger and deliver such consent at the Closing.
3.4 PRE-MERGER AMENDMENT OF ARTICLES OF ASSOCIATION OR BYLAWS. Upon
obtaining the affirmative vote of the FTD Record Members as required by law in
favor of the Pre-Merger Amendment, FTD shall, prior to the Closing, take all
further steps required or appropriate to implement and effect the Pre-Merger
Amendment.
3.5 APPROVAL OF MICHIGAN CERTIFICATE OF MERGER. Promptly after the date
of this Agreement, FTD shall submit the proposed form of Michigan Certificate of
Merger to the Michigan Department of Commerce requesting the Department to give
its pre-filing approval to the proposed Michigan Certificate of Merger.
ARTICLE IV
PRELIMINARY ACTIONS BY BUYER AND BUYER SUB
4.1 DEPOSIT.
(a) Buyer shall, contemporaneous with executing and delivering this
Agreement, deposit $1,500,000 cash ("Deposit") pursuant to and in accordance
with the Escrow Agreement attached hereto as Exhibit B ("Escrow Agreement"), to
be held as described in subsection (b).
(b) The Deposit shall be held by The Bank of New York ("Escrow Agent") in
escrow pursuant to and in accordance with the terms hereof and the Escrow
Agreement until the earliest to occur of: (i) its proper distribution in
connection with the Merger in accordance with Section 2.5(b) hereof; (ii) its
disposition prior to the Merger by written agreement signed by both Buyer and
FTD; (iii) its release pursuant to Section 16.2; or (iv) its return to Buyer
pursuant to Section 16.2.
(c) At the Closing, the Deposit shall be released from escrow and returned
to Buyer.
4.2 ORGANIZATION AND CAPITALIZATION OF BUYER SUB.
(a) Buyer has formed Buyer Sub as a newly-organized, wholly-owned
subsidiary under the DGCL and such subsidiary has full corporate power and
authority to enter into and become a party to this Agreement.
(b) Immediately before the Closing, Buyer shall contribute or otherwise
provide cash to the capital of Buyer Sub in an amount sufficient to provide the
Cash Merger Consideration. Upon request, Buyer shall furnish to FTD and Buyer
Sub evidence satisfactory to FTD and Buyer Sub, respectively, that such funds
have been provided.
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4.3 COVENANTS AND UNDERTAKINGS.
(a) Buyer shall cause Buyer Sub to perform all of its obligations under
this Agreement and shall not permit Buyer Sub to take any action which it is not
permitted to take under this Agreement.
(b) Buyer Sub represents that from and after its organization it has not
and covenants and agrees that from and after the execution of this Agreement it
will not, prior to the Merger, (i) enter into any transaction except those
required or contemplated by this Agreement, (ii) conduct any business except
that required or contemplated by this Agreement, or (iii) incur any liability,
obligation, tax or other claim except as a consequence of any of the
transactions required or contemplated in this Agreement.
(c) After the Merger, the Surviving Corporation shall not and Buyer shall
not permit the Surviving Corporation to make the election provided by Code
Section 338(g) or take any action which would cause Buyer Sub to be treated as
having been deemed to make an election pursuant to Code Section 338(e) or
otherwise treat FTD as having sold all of its assets at the close of the Merger.
(d) Buyer Sub, acting through its Board of Directors, shall promptly take
all actions necessary in accordance with the DGCL to cause this Agreement to be
submitted to Buyer, as its sole stockholder, for approval pursuant to Sections
251 and 252 of such law; and, Buyer agrees to vote all the stock of Buyer Sub
for the adoption of the Agreement.
(e) Buyer agrees to cause the Surviving Corporation to continue to
indemnify:
(i) provided it is not contrary to applicable law, the officers and
directors of FTD to the fullest extent provided under the Articles of
Association, the Bylaws and the indemnification policy previously approved
by the FTD Board of Directors on February 2, 1988 as in effect on the date
hereof for any actions taken prior to the Effective Time; and
(ii) W. Y. ▇▇▇▇▇▇▇▇ & Company pursuant to Exhibit A to the Engagement
Letter dated April 13, 1994 (as amended).
ARTICLE V
CLOSING
CLOSING. The Closing of the Merger and the other transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Dickinson,
Wright, Moon, Van Dusen & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the Closing Date.
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ARTICLE VI
POST-SALE RELATIONSHIPS
POST-SALE RELATIONSHIPS BETWEEN BUYER AND FTDA. FTD acknowledges that, on
the Closing Date, FTD as the Surviving Corporation and FTDA will enter into and
be bound by the Mutual Support Agreement, the Trademark License Agreement and
the Leaseback Agreement.
ARTICLE VII
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF FTD
FTD represents, warrants, and agrees with Buyer as follows:
7.1 ORGANIZATION, GOOD STANDING, AND POWER OF FTD. FTD is a nonprofit
corporation duly organized, validly existing and is in good standing under the
laws of the State of Michigan and is qualified and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it requires such qualification, except where
failure to so qualify or be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect. FTD has all requisite power to own
or lease its properties and to carry on its business in the manner and in the
place where such properties are owned or leased and its business is now being
conducted. FTD has heretofore made available to Buyer complete and correct
copies of the Articles of Association and Bylaws of FTD. Such Articles of
Association and Bylaws are in full force and effect and FTD is not in violation
of any provision of its Articles of Association and Bylaws.
7.2 AUTHORITY AND CAPACITY OF FTD. FTD has all requisite corporate power,
authority and capacity to enter into this Agreement and the Related Agreements
and transactions contemplated herein and therein and, subject to the approval of
this Agreement and the transactions contemplated herein by a majority of the FTD
Record Members at the Special Membership Meeting in accordance with the
Nonprofit Act and FTD's Articles of Association, to perform its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the Related Agreements and transactions contemplated by this
Agreement and the transactions contemplated herein and therein by FTD have been
duly authorized, approved and adopted by all necessary corporate action of FTD,
including the approval by its Board of Directors, and no other corporate
proceedings on the part of FTD are necessary to authorize this Agreement and the
Related Agreement contemplated herein or to consummate the transactions
contemplated herein and therein (other than the approval at this Agreement and
the transactions contemplated herein by the affirmative vote of a majority of
the FTD Record Members at the Special Membership Meeting in accordance with the
Nonprofit Act and FTD's Articles of Association and Bylaws as contemplated by
this Agreement and, with respect to the Related Agreements to be performed by
the Surviving Corporation, the ratification of such FTD approvals by the Board
or Directors of the Surviving Corporation as contemplated by Section 12.4).
This Agreement has been and the Related Agreements contemplated herein will be
when executed duly and validly certified, executed, acknowledged and delivered
by FTD and, subject to the approval of this Agreement and the transactions
contemplated herein and therein by the affirmative vote of a majority of the FTD
Record Members at the Special Membership Meeting in accordance with the
Nonprofit Act and FTD's Articles of Association and Bylaws, assuming
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this Agreement and the Related Agreements contemplated herein will constitute or
will constitute when executed, the valid and binding agreements of Buyer, the
Surviving Corporation and any other parties thereto, constitute the valid and
binding agreements of FTD, enforceable against FTD in accordance with their
respective terms, except that that enforcement hereof and thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
7.3 Effect of Agreement. Neither the execution and delivery of this
Agreement or the Related Agreements nor the consummation by FTD of the
transactions contemplated herein or therein will (a) conflict with or result in
any breach of any provision of the Articles of Association or Bylaws of FTD or
the charter documents or bylaws of any of the Subsidiaries; (b) except as set
forth in Schedule 7.3, require any consent, approval, authorization or permit
or, or filing with or notification to, any governmental or regulatory authority,
except (i) in connection with the Antitrust Filing, (ii) the filing of the
Michigan Certificate of Merger pursuant to the Nonprofit Act, the Corporation
Law and the DGCL, and appropriate documents with the relevant authorities of
other jurisdictions in which FTD or any of the Subsidiaries are authorized to do
business, (iii) in connection with any state or local tax which is attributable
to the beneficial ownership of FTD's or the Subsidiaries' real property, if any,
(iv) such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Merger or the other transactions contemplated
by this Agreement, (v) such filings, consents, approvals, orders, registrations
and declarations as may be required under the laws of any foreign country or
locality thereof in which FTD or any of the Subsidiaries conducts any business
or owns any assets, all of which are described in Schedule 7.3, or (vi) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not individually or in the aggregate,
have a Material Adverse Effect or impair the ability of FTD to consummate the
Merger and the transactions contemplated thereby; (c) except as set forth on
Schedule 7.3, result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or lien or other charge or
encumbrance) under any or the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, permit, franchise, license, agreement or other
instrument or obligation to which FTD or any of the Subsidiaries or any of their
assets may be bound or affected, except for such violations, breaches and
defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which requisite waivers or consents have been
obtained or which, individually or in the aggregate, would not have a Material
Adverse Effect or impair the ability by FTD to consummate the Merger and the
transactions contemplated hereby; or (d) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 7.3 are duly and timely obtained or made and the approval of this
Agreement and the transactions contemplated herein by the Members has been
obtained, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to FTD or any of the Subsidiaries or to any of their
respective assets, including without limitation, the Consent Order and the
Private Letter Ruling, except for violations which would not, individually or in
the aggregate, have a Material Adverse Effect or impair the ability of FTD to
consummate the Merger and the transactions contemplated thereby.
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7.4 FINANCIAL STATEMENTS OF FTD.
(a) Except with respect to the change of accounting principles regarding
accounting for deferred taxes and retiree medical payments pursuant to F.A.S.B.
No. 106 and No. 109, FTD has maintained its books of account in accordance with
GAAP. FTD has previously delivered to Buyer copies of the audited consolidated
statements of financial position of FTD and its subsidiaries as of June 30,
1992, June 30, 1993, and June 30, 1994, audited by Deloitte & Touche, together
with the related audited consolidated statements of operations, members' equity,
and cash flows for such fiscal years then ended and the related notes thereto
(collectively, the "Financial Statements"). The Financial Statements, including
the notes thereto, (i) were prepared in accordance with GAAP, (ii) present
fairly in all material respects the consolidated financial position, results of
operations, and changes in financial position of FTD as of such dates and for
the periods then ended, and (iii) are, in all material respects, in accordance
with FTD's books of account and records.
(b) Except as and to the extent set forth in Schedule 7.4 or in the
Financial Statements, neither FTD nor any of the Subsidiaries has any liability
or obligation of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected on a balance sheet, or in the notes
thereto, prepared in accordance with GAAP, except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since June 30, 1994, which would not, individually or in the aggregate,
have a Material Adverse Effect.
7.5 LITIGATION. Except as set forth in Schedule 7.5 and 7.9(f), there is no
action, suit, charge, judicial or administrative proceeding, assessment,
arbitration or governmental investigation ("Litigation") pending, or to the best
knowledge of FTD, threatened, against or relating to FTD or any Subsidiary or
any of their respective properties, assets, rights or business or the
transactions contemplated by this Agreement or the Related Agreements, nor is
there any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against FTD or any of the Subsidiaries, which might reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect or impair the
ability of FTD consummate the Merger and the transactions contemplated herein.
7.6 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES. Schedule 7.6
contains a complete and accurate list of street address (if any) and city and
state where located for all real property owned by FTD and the Subsidiaries as
of the date of this Agreement. No portion of the Real Property or any real
property acquired by FTD after the date hereof is subject to any governmental
decree or order to be sold or is being condemned, expropriated or otherwise
taken by any governmental authority or entity with or without payment of
compensation therefor, nor has any such condemnation, expropriation or taking
been proposed, that is reasonably likely to have a Material Adverse Effect.
Schedule 7.6 contains a complete and accurate list of the street address
(if any) and city and state where located for all real property leased by FTD or
the Subsidiaries as of the date of this Agreement ("Leased Premises"). FTD has
made available to Buyer complete and accurate originals or copies of all the
Leases with respect to the Leased Premises, including all amendments thereto.
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Except as disclosed in Schedule 7.6, FTD and each of the Subsidiaries have
good and valid title to or a valid leasehold interest in all the tangible
properties and assets which it purports to own or lease, including, without
limitation, the Real Property, the Leased Premises and all the personal
properties and assets reflected in the Financial Statements (except for property
sold, consumed or otherwise disposed of since June 30, 1994, in the ordinary
course of business and consistent with past practice), in each case, free and
clear of all title defects or objections, liens, claims, charges, security
interests or other encumbrances or any nature whatsoever ("Encumbrances") except
for Encumbrances which would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
7.7 Organization, good Standing, and Power of Subsidiaries. FTD has no
subsidiaries other than the Subsidiaries. Each of FTD and the Subsidiaries is a
corporation duly organized and validly existing and in good standing under the
laws of its respective jurisdiction of incorporation, and is qualified and in
good standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it requires such
qualification, except where failure to so qualify or be in good standing would
not individually or in the aggregate have a Material Adverse Effect. Each of
FTD and the Subsidiaries has all requisite power to own or lease its properties
and to carry on its business in all manner and in the place where such
properties are owned or leased and its business is now being conducted. FTD has
heretofore made available to Buyer complete and correct copies of the charter
documents and Bylaws of each of the Subsidiaries. Such charter documents and
Bylaws or the Subsidiaries are in full force and effect and none of the
Subsidiaries is (or will be, as applicable) in violation of any provision of its
respective charter documents or Bylaws.
7.8 Stock of Subsidiaries. Except as set forth on Schedule 7.8, FTD is,
directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the Subsidiaries, and no equity
securities of any of the Subsidiaries are or may become required to be issued by
reason of any options, warranties, or commitments of any character whatsoever
relating to, or securities convertible into, shares of any capital stock of any
Subsidiary, and there are no contracts or commitments by which FTD or any
Subsidiary is or may be bound to issue additional shares of the Subsidiaries'
capital stock. Except as set forth on Schedule 7.8, all of such shares owned by
FTD have been duly authorized and validly issued, and are fully paid and
nonassessable and are owned by it free and clear of any claim, lien, charge, or
encumbrance of any kind.
7.9 Intellectual Property.
(a) Schedule 7.9(a) sets forth a complete and accurate list of all (i)
patents and patent applications, (ii) registered copyrights, applications for
copyright registration, and material unregistered copyrights (including any in
proprietary computer software), (iii) all registered and all material
unregistered Trademarks, listing for each such Trademark the owner thereof and
whether it is used solely in connection with the Floral Network (the foregoing
items, together with all trade secrets, proprietary know-how, the goodwill of
the business symbolized by and/or associated with the Trademarks, unregistered
copyrights, Software, and general intangibles of like nature, and all technical
manuals and documentation made or used in connection with any of the foregoing,
are collectively referred to herein as the "Intellectual Property") owned by FTD
or
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a Subsidiary and used in or necessary for the conduct of the businesses of FTD
or a Subsidiary ("FTD's Intellectual Property").
(b) Schedule 7.9(b) sets forth a complete and accurate list of all
agreements pertaining to the use of or granting any right to use or practice any
rights under any Intellectual Property used in or necessary for the conduct of
the business or FTD and the Subsidiaries (whether FTD or a Subsidiary,
respectively, is the licensee, licensor, or another ▇▇▇▇▇ thereunder) listing in
each case, the parties to such agreement, whether FTD or a Subsidiary is the
licensee, licensor, or another party thereto, the subject matter of the license,
and whether the rights granted are exclusive or non-exclusive (collectively, the
"Licenses"). The Licenses include, without limitation, the agreement dated
April 5, 1984, between ▇. ▇. ▇▇▇▇▇▇ Inc., and FTD regarding the ▇▇▇▇ "PICK ME
UP", and the Interflora/FTD License Agreement dated December 7, 1987, between
Interflora and FTD regarding the ▇▇▇▇ "INTERFLORA".
(c) FTD or a Subsidiary owns or has the right to use all of FTD's
Intellectual Property. FTD or a Subsidiary is the sole and exclusive owner of
the Intellectual Property on Schedule 7.9(a) and its respective interest in the
Licenses, free and clear of all liens, claims and encumbrances. Either FTD or a
Subsidiary currently is listed in the records of the appropriate United States,
state or foreign agency as the sole owner of record for each application and
registration for the Intellectual Property on Schedule 7.9(s), except for those
applications and registrations listed in Schedule 7.9(c). To the best of FTD's
knowledge, the activities and products of FTD and the Subsidiaries, the conduct
of their respective businesses, and the exercise of FTD's Intellectual Property
do not infringe upon the rights of any third party.
(d) The Intellectual Property on Schedule 7.9(a) is valid, subsisting, in
proper form and enforceable, and has been duly maintained, including the
submission of all necessary filings in accordance with the legal and
administrative requirements of the appropriate jurisdictions. The Intellectual
Property on Schedule 7.9(a) has not lapsed, expired or been abandoned, and no
application or registration therefor is the subject of any pending, existing or
threatened opposition, interference, cancellation proceeding, or other legal or
governmental proceeding before any registration authority in any jurisdiction,
except for the pendency of those pending applications listed in Schedule 7.9(d).
(e) To the best of FTD's knowledge, no trade secret, know-how or any other
confidential information relating to FTD and the Subsidiaries has been disclosed
or authorized to be disclosed to any third party, other than pursuant to a non-
disclosure agreement that fully protects FTD's proprietary interest in and to
such confidential information.
(f) Except as set forth on Schedule 7.9(f), there are no claims or suits
pending or, to the best of FTD's knowledge, threatened, and FTD has received no
notice of any claim or suit (i) alleging that FTD's or a Subsidiary's activities
or products or the conduct of the businesses of FTD or a Subsidiary infringes
upon or constitutes the unauthorized use of the proprietary rights of any third
party, or (ii) challenging the ownership, use, validity or enforceability of
FTD's Intellectual Property.
(g) There are no infringement or violations by third parties of FTD's
Intellectual Property other than those listed in Schedule 7.9(g) and those which
have occurred in the ordinary
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course of business by retail florist shops which are not authorized to use FTD's
Intellectual Property and which would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect. FTD has not entered into
any consent, indemnification, forbearance to ▇▇▇, or settlement agreement with
any third party relating to the Intellectual Property which would individually
or in the aggregate be reasonably likely to have a Material Adverse Effect.
(h) Except as disclosed on Schedule 7.9(h), there is no restriction or
limitation on the right of FTD or a Subsidiary to transfer any of FTD's
Intellectual Property, as herein contemplated. The consummation of the
transactions contemplated by this Agreement and the Related Agreements will not
result in the loss or impairment of any of FTD's or a Subsidiary's rights in and
to FTD's Intellectual Property or in, to and under the Licenses.
7.10 LIST OF LEASES. True and accurate copies of all leases used in the
business operations of FTD and its Subsidiaries (the "Leases") have previously
been delivered or made available to Buyer. The Leases are legally binding and
in full force and effect and, upon the Merger with any required consents as
contemplated by this Agreement, will constitute valid, binding and enforceable
leases in favor of FTD. No default presently exists under any material Lease
and no event of default will occur as a result of the Merger and the other
transactions contemplated by this Agreement and the Related Agreement and the
transactions contemplated herein and therein and no condition presently exists
which, with the passage of time, will result in a default thereunder.
7.11 EMPLOYEE BENEFIT PLANS. Schedule 7.11 sets forth a list of all
Employee Benefit Plans covering employees or former employees (or directors or
former directors) of FTD or any of the Subsidiaries. Copies or descriptions of
all such plans have previously been delivered by FTD to Buyer. Each of the
Employee Benefit Plans is in substantial compliance with applicable laws,
including ERISA and the Code; each of the Employee Benefit Plans intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified;
all contributions or other amounts payable by FTD or its Subsidiaries as of June
30, 1994 with respect to each Employee Benefit Plan in respect of current or
prior plan years have been either paid or accrued on the Financial Statements.
There are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of, or against any of the Employee Benefit
Plans or any trusts related thereto.
FTD and its Subsidiaries do not contribute to any multi-employer pension
plan, as defined in ERISA, and are not subject to any claims, whether fixed or
contingent, for withdrawal liability relating to any multiemployer pension plan.
As of June 30, 1994, the present value of the projected benefit obligations of
each ERISA Employee Benefit Plan that is subject to Title IV of ERISA, based
upon the actuarial assumptions (to the extent reasonable) presently used by such
ERISA Employee Benefit Plan, did not exceed the current value of the assets of
such plan by more than $3,400,000. No ERISA Employee Benefit Plan has an
accumulated or waived funding deficiency within the meaning of section 412 of
the Code. No "reportable event"' as such term is defined in section 4043(b) of
ERISA, has occurred with respect to any ERISA Employee Benefit Plan.
For purposes of this paragraph, the term "Plans" shall include each ERISA
Employee Benefit Plan subject to Title IV of ERISA maintained (or contributed
to) at any time within the
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past six years by FTD or by any trade or business, whether or not incorporated
(an "ERISA Affiliate"), which together with FTD would be deemed a "single
employer" within the meaning of section 4001 or ERISA. Neither the Company nor
an ERISA Affiliate has incurred, directly or indirectly, any liability
(including any contingent liability) to or on account of a Plan pursuant to
Title IV of ERISA; no proceedings have been instituted to terminate any Plan;
and no condition exists that presents a material risk to FTD or an ERISA
Affiliate of incurring a liability to or on account of a Plan pursuant to Title
IV of ERISA.
7.12 TAXES. Since 1970, FTD has been a cooperative within the meaning of
Section 1381 of the Code. As of June 30, 1994, FTD and its Subsidiaries had in
the aggregate at least $7.0 million of regular tax net operating losses within
the meaning of Section 172 of the Code ("NOLs"). FTD and each of the
Subsidiaries have correctly filed all material tax returns required to be filed
by any of them and has paid (or FTD has paid on its behalf), or has set up an
adequate reserve for the payment of, all taxes required to be paid as shown on
such returns and the Financial Statements reflect an adequate reserve for all
taxes payable by FTD and the Subsidiaries accrued through the date of such
Financial Statements. The unpaid taxes of FTD and the Subsidiaries, which have
accrued as of the date of the Financial Statements, do not materially exceed the
reserve for accrued tax liability (including any reserve for deferred taxes
established to reflect timing differences between book and tax income) set forth
or included in such Financial Statements. All material deficiencies or any
taxes which have been proposed, asserted or assessed against FTD or any of the
Subsidiaries have been fully paid, or are fully reflected as a liability in such
Financial Statements, or are being contested and an adequate reserve therefor
has been established and is fully reflected in such Financial Statements. There
are no liens for taxes (other than for current taxes not yet due and payable) on
the assets of FTD or the Subsidiaries. Except as otherwise set forth in
Schedule 7.12, as of the date hereof, neither FTD nor the Subsidiaries have been
audited by the United States Internal Revenue Service or any state, local or
foreign taxing jurisdiction since the year ended December 31, 1989, and no
agreements or consents extending the period during which any taxes may be
assessed or collected are now in force. FTD has previously delivered or made
available to Buyer true and complete copies of its federal income tax returns
for the last three taxable years ended June 30, 1993. Neither FTD nor any of
the Subsidiaries is a party to or bound by any agreement providing for the
allocation or sharing of taxes with any entity which is not, either directly or
indirectly, a Subsidiary. Neither FTD nor, to its knowledge, any of the
Subsidiaries has filed a consent pursuant to or agreed to the application of
Section 341(f) of the Code. FTD is not obligated for the payment of amounts
under any contract or arrangement that would not be deductible under Section
280G of the Code. For the purpose of this Agreement, the term "tax" (including,
with correlative meaning, the terms "taxes" and "taxable") shall include all
federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, service, lease, property, withholding, excise
and other taxes, duties or assessments of any nature whatsoever, together with
all interest, penalties and additions imposed with respect to such amounts.
7.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Financial Statements or in Schedule 7.13, since June 30, 1994, (i) the business
of FTD has been carried on only in the ordinary and usual course and there has
not been any adverse change in its business, operations or financial condition
which, individually or in the aggregate, resulted in or is reasonably likely to
result in a Material Adverse Effect, and (ii) FTD has not taken any action
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that would have been prohibited by Section 9.1 if such action had been taken
after the date of this Agreement.
7.14 LABOR RELATIONS AND EMPLOYMENT. Except to the extent set forth in
Schedule 7.14, (i) there is no labor strike, dispute, slowdown, stoppage or
lockout actually pending, or to the best knowledge of FTD, threatened against or
affecting FTD or the Subsidiaries; (ii) to the best knowledge of FTD, no union
claims to represent the employees of FTD or the Subsidiaries; (iii) neither FTD
nor any Subsidiary is a party to or bound by any collective bargaining or
similar agreement with any labor organization, or work rules or practices agreed
to with any labor organization or employee association applicable to its
employees; (iv) FTD's and the Subsidiaries' employees are not represented by any
labor organization and FTD does not have any knowledge of any current union
organizing activities among such employees nor does any question regarding
representation exist concerning such employees; (v) there are no written
personnel policies, rules or procedures applicable to FTD's and the
Subsidiaries' employees other than those set forth in Schedule 7.14, true and
correct copies of which have heretofore been delivered to Buyer, and (vi) none
of FTD's or the Subsidiaries' employees has suffered an "employment loss" (as
defined in the Worker Adjustment and Retraining Notification Act of 1988) within
90 days prior to the Closing.
7.15 COMPLIANCE. Neither FTD nor any of the Subsidiaries is in conflict
with, or in default or violation of, (i) any order, writ, injunction, decree,
statute, rule or regulation applicable to FTD or any of the Subsidiaries or by
which any property or asset of FTD or any of the Subsidiaries is bound or
affected, including without limitation, the Consent Order and the Private Letter
Ruling, or (ii) any note, bond, mortgage, indenture, lease, permit, franchise,
license, agreement or other instrument or obligation to which FTD or any of the
Subsidiaries in a party or by which FTD or any of the Subsidiaries or any
property or asset of FTD or any of the Subsidiaries is bound or affected, except
for any such conflicts, defaults or violations that would not, individually or
in the aggregate, have a Material Adverse Effect. FTD and the Subsidiaries hold
all permits, licenses, exemptions, orders and approvals of all governmental and
regulatory authorities, necessary for the lawful conduct of their respective
businesses (the "FTD Permits"), except for failures to hold such FTD Permits
which would not, individually or in the aggregate, have a Material Adverse
Effect. FTD and the Subsidiaries are in compliance with the terms of the FTD
Permits, except where the failure to so comply would not, in the aggregate, be
reasonably likely to have a Material Adverse Effect.
7.16 INFORMATION STATEMENT. None of the information to be supplied by and
relating to FTD for inclusion in the Information Statement will, at the time of
the mailing of the Information Statement and at the time of the Special
Membership Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Special Membership Meeting,
any event with respect to FTD or any of the Subsidiaries should occur which is
required to be described in an amendment of, or a supplement to, the Information
Statement, such event shall be so described, and, as required by applicable
state law, such amendment or supplement shall be disseminated to the Members.
The Information Statement will comply as to form in all material respects with
the requirements of applicable state and Federal law.
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7.17 INVENTORY. As of June 30, 1994, the inventories of FTD and the
Subsidiaries as stated in the Financial Statements are usable or saleable in the
ordinary course of business, except for obsolete products and materials and
materials of below standard quality, which have either been written down to
their realizable market value (except for any such write downs which would not
have a Material Adverse Effect) or for which adequate reserves have been
provided for (except for any such reserves the lack of which would not have a
Material Adverse Effect).
7.18 OPINION OF INVESTMENT BANKERS. FTD has received the opinion of W. Y.
▇▇▇▇▇▇▇▇ & Company dated July 18, 1994, updated as of the date hereof, to the
effect that, as of such dates, the Merger is fair to the Members of FTD from a
financial point of view and has provided Buyer with signed copies of such
opinion.
7.19 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 7.19, FTD is in compliance in all
material respects with all applicable Environmental Laws (which compliance
includes, but is not limited to, the possession by FTD of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof). FTD has not received any
communication (written or oral), whether from a governmental authority, citizens
group, employee or otherwise, that alleges that FTD is not in such compliance,
and, to the best knowledge of FTD, there are no circumstances that may prevent
or interfere with such compliance in the future.
(b) Except as set forth in Schedule 7.19, there is no Environmental Claim
pending or threatened against FTD or, to the best knowledge of FTD, against any
person or entity whose liability for any Environmental Claim FTD has or may have
retained or assumed either contractually or by operation of law.
7.20 [RESERVED]
7.21 CASH MERGER CONSIDERATION. Upon the effectiveness of the Merger and
the Cash Merger Consideration having been deposited with the Disbursing Agent in
accordance with the terms of this Agreement, any and all financial obligations
of the Surviving Corporation to any member of FTD (including Active, Affiliate,
Student, Retired, Honorary, Associate, and other members of FTD), including but
not limited to paying the Cash Merger Consideration and any and all patronage
dividends or other capital in FTD or the Surviving Corporation, shall have been
fully satisfied and extinguished except for the liabilities, obligations,
deposits and rights described in Section 2.6, and no Person shall hold any
membership interest in the Surviving Corporation of any kind or nature
whatsoever, except Buyer.
7.22 THE MERGER AND CERTAIN RELATED MATTERS. Upon filing with the
Secretary of State of the State of Delaware a certificate of merger, and
thereafter filing the Michigan Certificate of Merger and the endorsement upon
such certificate of the word "filed" in accordance with Section 131 of the
Nonprofit Act, the Merger will be effective in accordance with the DGCL and
Michigan law ("Effective Time"). Members are not entitled to dissenters rights
under the Nonprofit Act and the Corporation Act (to the extent it may be
applicable) as a result of the transactions contemplated by the Merger and the
Pre-Merger Amendment.
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7.23 FEES AND CHARGES. Schedule 7.23 contains a true and accurate list of
all fees, charges and assessments which are chargeable to members from and after
July 1, 1994. The fees, charges and assessments set forth therein are not
materially lower than the highest comparable amounts charged or assessed during
the fiscal year ended June 30, 1994.
ARTICLE VIII
REPRESENTATIONS, WARRANTIES, AND
AGREEMENTS OF BUYER AND BUYER SUB
Buyer and Buyer Sub hereby represent warrant, and agree with FTD as
follows:
8.1 ORGANIZATION, GOOD STANDING, AND POWER OF BUYER AND BUYER SUB. Each
of Buyer and Buyer Sub is a corporation duly organized, validly existing and in
good standing in the state of Delaware, and is (or will be prior to the Closing)
qualified to do business and in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it requires such qualification, except where failure to so qualify
or be in good standing would not, individually or in the aggregate, have a
material adverse effect on Buyer's or Buyer's Sub's ability to consummate the
Merger and the other transactions contemplated herein, and has all requisite
power to own or lease its properties and to carry on its business in the manner
and in the place where such properties are owned or leased and its business is
now being conducted. All of the issued and outstanding shares of Buyer Sub's
capital stock have been duly authorized and validly issued, and are fully paid
and non-assessable.
8.2 AUTHORITY AND CAPACITY OF BUYER AND BUYER SUB. Each of Buyer and Buyer
Sub have all requisite corporate power, authority, and capacity to enter into
this Agreement and the Related Agreements and transactions contemplated herein
and therein aud to perform its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Related Agreements
and the transactions contemplated herein and therein by Buyer and Buyer Sub have
been duly authorized, approved and adopted by all necessary corporate action of
Buyer and Buyer Sub (other than the approval of Buyer as sole stockholder of
Buyer Sub), and no other corporate proceedings on the part of Buyer or Buyer Sub
(other than the approval of Buyer as sole stockholder of Buyer Sub) are
necessary to authorize this Agreement and the Related Agreements or to
consummate the transactions contemplated herein and therein. This Agreement and
the Related Agreements and the transactions contemplated herein and therein have
been and will be when executed duly and validly certified, executed,
acknowledged and delivered by Buyer and Buyer Sub and, assuming this Agreement
and the Related Agreements contemplated herein constitute the valid and binding
agreements of the other parties thereto, constitute (subject to the approval of
Buyer as sole stockholder of Buyer Sub) or will constitute when executed the
valid and binding agreements of Buyer and Buyer Sub, enforceable against Buyer
and Buyer Sub in accordance with their terms, except that the enforcement hereof
and thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect relating to
creditor's rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law).
8.3 EFFECT OF AGREEMENT. The execution, delivery and performance of this
Agreement and the related agreements contemplated
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herein and the transactions contemplated herein and therein by Buyer and Buyer
Sub will not violate, with or without the giving of notice or the passage of
time, or both, any provision of law applicable to Buyer or Buyer Sub, and will
not conflict with, or result in the breach or termination of any provision of,
or constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any of their assets pursuant to, any corporate charter, bylaws,
indenture, mortgage, lease or other agreement or instrument to which Buyer or
Buyer Sub is a party or by which Buyer or Buyer Sub or any of their respective
assets and properties may be bound, or any license, permit or franchise held by
Buyer or Buyer Sub except for such violations, conflicts, breaches,
terminations, liens, charges or encumbrances which would not have a material
adverse effect on the ability of Buyer or Buyer Sub to consummate the Merger and
the transactions contemplated herein.
8.4 LITIGATION. There is no action, suit, judicial or administrative
proceeding, assessment, arbitration, or governmental investigation pending or,
to the best knowledge of Buyer or Buyer Sub, threatened, against or relating to
Buyer or Buyer Sub or their respective properties, assets, rights, or business
which might reasonably be expected to, individually or in the aggregate, have a
material adverse effect on the ability of Buyer and Buyer Sub to consummate the
Merger and the transactions contemplated by this Agreement or the other
transactions contemplated
8.5 FINANCING. Buyer has, in currently available funds or in committed
financing arrangements, all funds necessary to satisfy the Cash Merger
Consideration and to perform its other obligations required hereunder.
8.6 THE MERGER. Upon the delivery to the Secretary of State of the State
of Delaware of a certificate of merger and the endorsement upon the original
signed certificate of merger of the word "filed" in accordance with Section 103
of the DGCL, the Merger will be effective in accordance with Delaware law.
ARTICLE IX
CONDUCT OF BUSINESS PENDING CLOSING
9.1 CONDUCT OF BUSINESS. FTD agrees that, prior to the Closing Date and
except as set forth in Section 9.2 and except as otherwise consented to by Buyer
in writing, FTD shall and shall cause the Subsidiaries to:
(a) operate the Businesses only in the usual and ordinary manner
consistent with past practice and preserve the present business
organization intact, keep available the services of its present employees,
and preserve its member and supplier relationships;
(b) maintain its properties in customary repair, order and condition,
reasonable wear and tear excepted, and maintain insurance upon its
properties and with respect to the Businesses in such amounts and of such
kinds as would be maintained by a prudent person with respect to a similar
business of comparable size;
(c) maintain its books, accounts and records in the ordinary manner,
on a basis consistent with FTD's accounting practices and procedures
presently in existence, and comply with all applicable laws;
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(d) provide to Buyer, its agents and representatives, full access
(during regular business hours and upon reasonable notice) to the officers,
employees, agents, properties, offices, and other facilities, and to the
books, records, and contracts of FTD and the Subsidiaries, and shall
furnish Buyer, its agents and representatives, all financial, operating and
other data and information as Buyer may from time to time reasonably
request;
(e) provide to Buyer copies of all land surveys, real property
appraisals, environmental reports, and other records relating to the Real
Property as presently exist and are available in FTD's records, and provide
Buyer with a commitment for title insurance and a Phase I environmental
report, in each case of a recent date for each parcel of the Real Property;
(f) make no distributions to the members except distributions of
patronage dividends or out of the Credit Deposit Fund and Member Equity
consistent with FTD's past practice and prior to the Cut Off Time, it being
understood that all patronage dividends required in the opinion of FTD's
counsel to preserve FTD's cooperative tax-status shall be made prior to Cut
Off Time and that FTD shall, prior to the Closing Date, declare the
patronage dividend with respect to the fiscal and tax period from July 1,
1994 through the Closing Date;
(g) not intentionally incur any liability or obligation (absolute,
accrued, contingent or otherwise) other than in the ordinary and usual
course of business and consistent with past practice or issue any debt
securities or, other than in the ordinary course of business consistent
with past practice, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other Person;
(h) not acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division or significant assets thereof or acquire, directly or indirectly,
any equity interest in any Person;
(i) except as contemplated by this Agreement, not amend or modify the
Articles of Association or Bylaws or equivalent document of FTD or any of
the Subsidiaries or the provisions of the FTD Handbook as in effect on the
date hereof or any material agreement of FTD or any of the Subsidiaries;
(j) other than as contemplated by this Agreement and except as
permitted under Section 17.1, not sell, lease, license, encumber or
otherwise dispose of any of its assets which are material, individually or
in the aggregate, to FTD;
(k) not make any change in financial or tax accounting methods,
principles or practices or make or cause to be made any elections on any
federal, state or local tax returns of FTD or any Subsidiary, except as
consistent with past practices and promptly file all tax returns required
to be filed;
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(l) not fail to use all reasonable efforts to take or omit to take any
action where such failure would make any representation or warranty in
Article VII untrue or incorrect in any material respect;
(m) not make or commit to make any single capital expenditure in
excess of $25,000 or which, together with all other capital expenditures
made by FTD and the Subsidiaries after the date hereof and prior to the
Closing Date, exceeds $200,000 in the aggregate;
(n) except as permitted under Section 17.1, not enter into any
material agreement;
(o) not (i) enter into, adopt or (except as may be required by law)
amend or terminate any benefit or compensation plan, program, agreement or
arrangement for the benefit of any employee, director, former employee or
former director, (ii) increase in any manner the compensation or benefits
of any individual or pay any benefit not required by a plan, program,
agreement or arrangement as in effect as of the date hereof except for
merit increases consistent with past practice in the ordinary course of
business which shall not in the aggregate exceed four and four-tenths
percent (4.4%) of the compensation base of the employees eligible for such
increases as set forth on a schedule to be provided to Buyer as soon as
practicable after the execution hereof, (iii) fund any employee benefit
plan except as required by law or the terms of any such plan as in effect
as of the date of this Agreement, or (iv) enter into any contract,
agreement, commitment or arrangement to do any of' the foregoing;
(p) not cancel or forgive any indebtedness or waive or modify any
claims or rights of substantial value or pay or prepay any indebtedness,
expense or other obligation before the same becomes due;
(q) not make any material change in any plan, program or benefit
provided or related to members;
(r) not settle or discontinue the prosecution or defense of any
material claim, including but not limited to, the Floral Network Litigation
referred to in Section 2.8(p) of the Mutual Support Agreement;
(s) not make any payments out of the Credit Deposit Fund, of the
Member Equity or of the Stub Period Member Equity on or after the Cut Off
Time; or
(t) not agree, in writing or otherwise, to do any of the foregoing.
9.2 FTD'S PRE-CLOSING TRANSACTIONAL EXPENSES. Prior to or concurrently with
the Closing, FTD will pay all fees, costs, and expenses, whether or not accrued
or then invoiced, of FTD's investment bankers, legal counsel, accountants, other
financial advisors in connection with or related to the transactions anticipated
by this Agreement and the costs associated with printing and mailing the
Information Statement (the "Information Expenses"). Schedule 9.2 lists all
payees to whom it is expected such Transaction Expenses will be payable. Such
Schedule is to be updated as of the Effective Time.
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ARTICLE X
---------
CONDITIONS TO CLOSING
10.1 Buyer and Buyer Sub. All of Buyer's and Buyer Sub's obligations under
this Agreement are subject to the fulfillment, prior to or at the Closing, of
each or the following conditions:
(a) Buyer shall have received all of the documents and certificates
required to be delivered by FTD under Article XI.
(b) FTD's representations and warranties set forth in Article VII
shall be true and correct in all material respects as of the date of this
Agreement and shall be deemed to have been made again at and as of the
Closing and shall then be true and correct in all material respects.
(c) FTD shall have performed and satisfied its obligations then to be
performed under this Agreement in all material respects.
(d) FTD, FTDA, Buyer, and Buyer Sub shall have received all permits,
waivers, authorizations, consents, and approvals of all third parties or as
required by the laws of an applicable jurisdictions which are necessary or
desirable for consummating the transactions contemplated by this Agreement or
the failure of which to have or obtain would have a Material Adverse Effect;
provided, however, that no such permit, waiver, authorization, consent or
approval shall contain any material limitation on the conduct of the Businesses
after the Merger.
(e) The waiting period required in connection with the Antitrust
Filing, if any, shall have expired or been terminated.
(f) There shall not be any injunction, judgment, order, decree, or
ruling or other legal restraint or prohibition in effect from any court of
competent jurisdiction or government authority expressly preventing consummation
of any transactions contemplated by this Agreement and no proceeding brought by
any governmental authority shall be in effect, pending or threatened which seeks
an injunction, restraining order, or other order which would prohibit the
consummation of the Merger or materially impair Buyer's ability to own and
operate the Businesses after the Merger.
(g) FTD shall have received all authorizations, consents and approvals
of its Members required to be obtained in connection with FTD performing its
obligations under this Agreement, including the Merger and the Pre-Merger
Amendments.
(h) The Certificate of Merger to be filed in connection with the
Merger with the Michigan Department of Commerce and with the Secretary of State
of the State of Delaware shall have been accepted for filing by each such
office.
(i) Buyer shall have received commitments for title insurance and
Phase I environmental reports (and, if reasonably deemed necessary by Buyer,
Phase II environmental reports) relating to the Real Property in form and
substance reasonably satisfactory to Buyer.
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(j) The representations and warranties contained in Sections 7.1, 7.2,
7.3, 7.5, 7.15 and 7.16 with respect to FTD shall be true and correct in all
material respects with respect to FTDA, to the extent applicable, as if made by
FTDA on the Closing Date, and FTDA shall have executed and delivered no later
than the date immediately prior to the Closing Date the Related Agreements to
which it is a party.
(k) There shall not have occurred after the date hereof any change or
any fact, event or circumstance which has had or could have a Material Adverse
Effect.
(l) Each Person entitled to receive payments of Transaction Expenses
shall have provided Buyer with evidence reasonably satisfactory to Buyer that
such person has received payment in full for all services rendered in connection
with or related to the transaction contemplated by this Agreement on or prior to
the Closing Date.
(m) The Articles of Association and Bylaws of FTDA shall be in
substantially the forms submitted to the FTD Record Members as contemplated by
Section 3.2 hereof.
(n) FTDA shall have, not later than sixty (60) days prior to the
Merger or as close to such date as is reasonably practicable, identified to
Buyer (with Buyer's consent which shall not be unreasonably withheld) those
employees who, effective as of the Merger, shall have been offered employment
with FTDA ("Transferred Employees"), provided that the numbers of such
employees, shall be not less than forty (40), shall be reasonably allocated to
representative seniority levels, shall have expertise in FTD's core trade
association activities and shall be offered levels of compensation and benefits
substantially similar to those paid such employees prior to Closing; provided,
further, that in the event that any Transferred Employees do not accept such
offers of employment, FTDA shall have used its reasonable best effort to fill
the positions relating to such employees with other employees of FTD having
similar qualifications.
(o) Immediately prior to the effectiveness of the Merger, FTD and the
Subsidiaries will have in the aggregate of least $6.0 million of NOLs available,
subject to Code Section 382 utilization limitations, to be carried forward to
offset income of the Surviving Corporation or the respective Subsidiary in which
such loss arose.
(p) At least sixty (60) days prior to the Closing Date, FTD shall have
provided the notice contemplated by Section 14.4.
10.2 FTD. All FTD's obligations under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
(a) FTD shall have received all of the documents and certificates
required to be delivered by Buyer and/or Buyer Sub under Article XII.
(b) The representations and warranties and agreements of Buyer and
Buyer Sub set forth in Article VIII shall be true and correct in all material
respects as of the date of this Agreement and shall be deemed to have been made
again at and as of the Closing and shall then be true and correct in all
material respects.
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(c) Buyer and Buyer Sub shall have performed and satisfied their
respective obligations then to be performed under this Agreement in all material
respects.
(d) FTD, FTDA, Buyer, and Buyer Sub shall have received all permits,
waivers, authorizations, consents, and approvals of all third parties or as
required by the laws of all applicable jurisdictions which are necessary or
desirable for consummating the transactions contemplated by this Agreement.
(e) The waiting period required in connection with the Antitrust
Filing, if any, shall have expired or been terminated.
(f) There shall not be any injunction, judgment, order, decree,
ruling, or other legal restraint or prohibition in effect from any court of
competent jurisdiction expressly preventing consummation of any transactions
contemplated by this Agreement and no proceeding brought by any governmental
authority shall be in effect, pending or threatened which seeks an injunction,
restraining order, of other order which would prohibit the consummation of the
Merger.
(g) FTD shall have received all authorizations and consents of the
Members required to be obtained in connection with FTD performing its
obligations under this Agreement, including the Merger and the Pre-Merger
Amendments.
(h) The certificates of merger to be filed in connection with the
Merger with the Michigan Department of Commerce and with the Secretary of State
of the State of Delaware shall have been delivered and accepted for filing.
ARTICLE XI
OBLIGATIONS OF FTD AT THE CLOSING
At the Closing, FTD shall deliver to Buyers:
11.1 FTD'S DELIVERIES AND DOCUMENTS. Evidence that FTD has executed the
certificates of merger, this Agreement, and such other instruments of assignment
or conveyance (such instruments in form reasonably satisfactory to Buyer), as
shall be necessary to effect the Merger pursuant to this Agreement and
consummate the transactions contemplated hereby and in the Exhibits hereto.
11.2 OPINIONS OF COUNSEL FOR FTD. An opinion of Dickinson, Wright, Moon,
Van Dusen & ▇▇▇▇▇▇▇, counsel for FTD, dated the Closing Date, substantially in
the form attached as Exhibit C hereto. The following additional opinions of
counsel of FTD shall be delivered to Buyer, in each case in form and substance
reasonably satisfactory to Buyer: (i) Osler, ▇▇▇▇▇▇ & Harcort with respect to
Florists' Transworld Delivery Association of Canada Limited; (ii) Maine counsel
reasonably satisfactory to Buyer with respect to Renaissance Greeting Cards,
Inc.; (iii) Michigan counsel reasonably satisfactory to Buyer with respect to
that matter identified in that certain letter to Buyer's counsel; and (iv)
counsel reasonably satisfactory to Buyer with respect to FTDA.
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11.3 Certificate of FTD. A certificate of the president or a vice
president and the secretary or assistant secretary of FTD, dated the Closing
Date, to the effect that, to the best of the knowledge of each such officer, all
of the conditions specified in this Section have been fulfilled and all of the
representations, warranties and agreements of FTD set forth in Article VII are
true and correct in all material respects.
11.4 Certified Resolutions. Certified copies of the resolutions adopted by
FTD's Board of Directors (and any committees thereof) and the FTD Record Members
entitled to vote thereon authorizing and approving this Agreement, the Related
Agreements and the transactions contemplated herein, therein and in the exhibits
hereto and thereto.
11.5 Certificates of good standing and incumbency. Certificates of good
standing with respect to FTD and each of the Subsidiaries executed by the proper
officials of their respective states of incorporation, and a certificate
relating to the incumbency of FTD's officers executed by FTD's secretary.
11.6 Return of Deposit. Seller shall have surrendered the Deposit to
Buyer.
11.7 Resignations. The written resignation of each director and officer of
FTD requested by Buyer, each effective as of the Effective Time, provided that
such resignation(s) shall not effect the contractual or employee benefit rights
of any such officer who is an employee of FTD.
11.8 Certificate of Independent Accountants. A Certificate of Deloitte &
Touche, reasonably satisfactory to Buyer, with respect to FTD's compliance with
the Private Letter Ruling.
ARTICLE XII
-----------
OBLIGATIONS OF BUYER AND BUYER SUB AT CLOSING
At the Closing, Buyer and Buyer Sub shall deliver to FTD:
12.1 Buyer's and Buyer Sub's Deliveries and Documents. Evidence of
delivery by Buyer Sub of the Cash Merger Consideration to the Disbursing Agent,
and the execution by Buyer, Buyer Sub and the Surviving Corporation of this
Agreement, the certificates of merger, the Trademark License Agreement, the
Mutual Support Agreement, the Leaseback Agreement, as applicable, and such other
instruments (in form reasonably satisfactory to FTD) as shall be necessary to
effect the Merger pursuant to this Agreement and consummate the transactions
contemplated hereby and in the Exhibits hereto.
12.2 Opinion of Counsel for Buyer and Buyer Sub. An opinion of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel for Buyer and Buyer Sub, substantially in
the form attached as Exhibit D hereto.
12.3 Certificate of Buyer and Buyer Sub. A certificate, dated the Closing
Date, of the president or a vice president and the secretary or assistant
secretary of each of Buyer and
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Buyer Sub to the effect that, to the best of the knowledge of each such officer,
all of the conditions specified in this Section have been fulfilled and all of
the representations, warranties and agreements of Buyer and Buyer Sub set forth
in Article VIII are true and correct in all material respects.
12.4 CERTIFIED RESOLUTIONS. Certified copies of the resolutions adopted by
Buyer's, Buyer Sub's and Surviving Corporation's Board of Directors in
connection with this Agreement, the Related Agreements and the transactions
contemplated herein, therein and in the Exhibits hereto and thereto.
12.5 CERTIFICATES OF GOOD STANDING AND INCUMBENCY. Certificates of good
standing with respect to Buyer and Buyer Sub executed by the proper officials of
the State of Delaware, and a certificate relating to the incumbency of Buyer's
and Buyer Sub's officers executed by Buyer's and Buyer Sub's respective
secretary.
ARTICLE XIII
ANTITRUST FILING
FILING. As soon as practicable following the execution of this Agreement,
if required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended ("HSR Act"), both Buyer and FTD shall file an Antitrust Improvements Act
Notification and Report Form (the "Antitrust Filing") relating to the
transaction contemplated by this Agreement with the Federal Trade Commission and
the Department of Justice. If such Antitrust Filing is required, Buyer and FTD
shall use their best efforts to take all action necessary, proper and advisable
under applicable laws and regulations to cause the expiration or termination of
the waiting periods under the HSR Act as soon as practicable.
ARTICLE XIV
EMPLOYEES
14.1 CERTAIN EMPLOYMENT OBLIGATIONS. The Surviving Corporation agrees to
satisfy prior contractual obligations, if any, of FTD to former FTD officers,
all of which are listed on Schedule 14.1.
14.2 SEVERANCE ARRANGEMENTS. The Buyer agrees to cause the Surviving
Corporation to pay severance benefits as set forth on Schedule 14.2, provided
that no severance benefits shall be payable by Buyer or the Surviving
Corporation with respect to any employees of FTD who have received an offer of
employment contemplated by Section 10.1(n).
14.3 POST-MERGER TRANSFERRED EMPLOYEES. Transferred Employees and any
other employees of FTD offered employment contemplated by Section 10.1(n) shall
be deemed terminated by FTD immediately prior to the Effective Time of the
Merger for all purposes, including for the purposes of any ERISA Employee
Benefit Plan maintained by FTD after the Merger unless FTDA becomes a
participating employer in such Plan effective as of the date of the Merger.
▇-▇▇
▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇. At least sixty (60) days prior to the Closing
Date, FTD shall provide to those employees identified by Buyer pursuant to
Section 10.1(n) a notice, in form and substance reasonably satisfactory to
Buyer, setting forth a notice of termination of employment with FTD, and the
proposed terms of any applicable offer of employment of such persons, after the
Closing.
ARTICLE XV
ARBITRATION
ARBITRATION. Any dispute as to any claims under this Agreement shall be
resolved exclusively by arbitration in Chicago, Illinois, by three arbitrators,
one of whom shall be appointed by Buyer, one of whom shall be appointed by FTD
or FTDA (as the case may be) and the third of whom shall be appointed by the
first two arbitrators. If either Buyer or FTD or FTDA (as the case may be) fails
to appoint an arbitrator within twenty (20) days of a request in writing by the
other to do so, or if the first two arbitrators cannot agree on the appointment
of a third arbitrator within 20 days after the second arbitrator is designated,
then such arbitrator shall be appointed by the Chief Judge of the United Stares
District Court located in the City of Chicago or by the American Arbitration
Association so as to enable the arbitrators to render an award within ninety
(90) days after the three arbitrators have been appointed. Following the
selection of arbitrators as set forth above, the arbitration shall be conducted
promptly and expeditiously and in accordance with the rules of the American
Arbitration Association. The arbitrators shall award to the prevailing party
interest for the period from the date that the loss or damage occurred to the
date of payment to the prevailing party. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction therefor. Each party
shall bear the expenses of the arbitrator it selects and shall jointly and
equally share with the other expenses for the third arbitrator and the
arbitration proceeding, including, without limitation, any expenses of the
arbitrators but excluding legal, expert, accountant and other professional fees
of the other side.
ARTICLE XV
TERMINATION
16.1 TERMINATION EVENTS. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing:
(a) By mutual written consent of Buyer, Buyer Sub and FTD;
(b) By Buyer, Buyer Sub or FTD if this Agreement and the transactions
contemplated hereby are not approved by the affirmative vote of the FTD Record
Members as required by law prior to the close of business on March 15, 1995; or
(c) By Buyer or FTD following written notice to the other at any time prior
to the Closing of any material breach by the other of a representation, warranty
or covenant contained in this Agreement, and the breach continues for a period
of thirty (30) days after such notification; or
(d) [Reserved]; or
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(e) By Buyer or FTD if FTD executes an agreement with respect to an
Acquisition Proposal in furtherance of exercising its fiduciary duties as
described in the penultimate sentence of Section 17.1; or
(f) By Buyer if the Board of Directors of FTD withdraws or modifies its
recommendation referred to in Section 3.1; or
(g) By Buyer or FTD if the Michigan Department of Commerce or the Secretary
of State of the State of Delaware refuses to accept the filing of the
Certificate of Merger; or
(h) By Buyer or FTD if the transactions contemplated by this Agreement have
not been consummated by March 31, 1995; or
(i) By Buyer if any of the conditions to Closing with respect to FTDA as
set forth in Section 10.1 (d), (j), (m) or (n) have not been satisfied.
16.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 16.1, the Merger shall be abandoned and this Agreement shall become void
and of no effect with no liability on the part of any party, except that the
agreements contained in Sections 17.3, 17.6 and 17.8 shall survive the
termination hereof, and the Deposit shall be returned to Buyer; provided,
however, that, in the event FTD terminates this Agreement under subsection
16.1(c) due to Buyer's material breach of a representation, warranty, or
covenant contained herein (including without limitation Buyer's failure to
obtain adequate financing) and provided neither FTD nor any Subsidiary is in
material breach of any representation, warranty or covenant in this Agreement
FTD shall be entitled to receive the Deposit from the Escrow Agent and retain
the amount so received as payment in full and complete satisfaction and
discharge of all liabilities of Buyer to FTD with respect to this Agreement, the
transactions anticipated hereby, or otherwise; provided further, in the event of
a termination of this Agreement under subsection 16.1(b), (e), (f), (g) or (i)
or by Buyer under subsection 16.1(c) due to FTD's material breach of a
representation, warranty or covenant contained herein, and provided neither
Buyer nor Buyer Sub is in material breach of any representation, warranty or
covenant contained in this Agreement, FTD shall promptly pay to Buyer $1.5
million as payment in full and complete satisfaction and discharge of all
liabilities of FTD to Buyer with respect to this Agreement, the transactions
anticipated hereby or otherwise (other than the return of the Deposit described
above and the topping fee described below); provided further, in the event of a
termination of this Agreement by FTD under subsection 16.1(e), FTD shall also
pay to Buyer a topping fee (not to exceed $9.5 million) in an amount equal to
the greater of (i) fifty percent (50%) of the excess of the greater of the
stated value or the fair market value of the consideration in such Acquisition
Proposal over the Cash Merger Consideration, or (ii) Buyer's actual out-of-
pocket expenses paid or accrued with respect to the transactions contemplated
hereby, including but not limited to, legal and accounting services, proxy
solicitation fees and expenses and financing commitment fees and expenses. The
Deposit shall be returned to Buyer in the event the Closing does not occur other
than as a result of a material breach by Buyer of a representation, warranty or
covenant contained in this Agreement.
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ARTICLE XVII
MISCELLANEOUS
17.1 OTHER OFFERS. From the date hereof until the termination hereof, FTD,
its Affiliates and their respective officers, directors, employees, or other
agents will immediately cease any existing discussions or negotiations with any
Person conducted heretofore with respect to any Acquisition Proposal and will
not directly or indirectly, (a) engage in discussions or negotiations with or
take any action to solicit, initiate, or encourage any offer or indication of
interest from any Person with respect to any Acquisition Proposal, (b) propose,
authorize, recommend, or enter into any agreement with respect to any
Acquisition Proposal, or (c) disclose any nonpublic information relating to FTD
or afford access to its properties, books, or records to any Person who might be
considering making, or has made, an offer with respect to an Acquisition
Proposal. FTD will promptly notify Buyer after receiving any offer or
solicitation with respect to an Acquisition Proposal or any request for
nonpublic information relating to it or for access to its properties, books, or
records by any Person that may be considering making, or has made, an offer with
respect to an Acquisition Proposal, and will keep Buyer fully informed of the
status and details of any such offer, indication, or request and provide Buyer
with a copy thereof. Notwithstanding anything herein to the contrary, FTD may
respond to, negotiate with, disclose information and provide access to its
properties, books and records pursuant to confidentiality agreements, and enter
into any agreement with any Person with respect to an unsolicited written
Acquisition Proposal if the Board of Directors of FTD by a majority vote
determines in its good faith judgment based as to legal matters on the written
opinion of outside counsel that failing to take such action would constitute a
breach of the Board's fiduciary duties. For purposes of this Section 17.1,
"Acquisition Proposal" means any proposal for a merger or other business
combination involving FTD or any of the Subsidiaries, or to acquire any material
assets of FTD or any of the Subsidiaries, other than (a) the transactions
contemplated by this Agreement and (b) any such transaction among FTD, FTDA,
and/or any of the Subsidiaries.
17.2 SALES AND TRANSFER TAXES. All sales and transfer taxes imposed by
federal, state or local government authorities upon the Merger or otherwise upon
the transactions contemplated by this Agreement shall be paid by Surviving
Corporation.
17.3 BROKERS AND FINDERS. Except for fees and expenses payable by FTD to
W. Y. ▇▇▇▇▇▇▇▇ & Company in accordance with Section 9.2 and except for a fee
payable by Buyer and Buyer Sub but not FTD or any affiliate thereof, each Party
represents and warrants to the other Party that it has not incurred any
obligation or liability, contingent or otherwise, for brokerage or finders'
fees, or agents' commissions or other like payment in connection with this
Agreement or the transactions contemplated hereby. Except as contemplated by
Section 17.6, each party agrees to indemnify and hold the other harmless from
and against any obligation or liability for brokers' or finders' fees or agents'
commissions or other like payment based in any way on agreements, arrangements
or understandings claimed to have been made by such indemnifying party with any
third party.
17.4 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each Party hereto
covenants and agrees that its representations and warranties contained in this
Agreement and in any document delivered or to be delivered pursuant to this
Agreement shall not survive the Closing Date but in all other respects this
Agreement, including all covenants and undertakings,
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shall continue in full force and effect. No action shall be commenced for any
alleged breach of any such representations or warranties after the Closing Date
except an action based on fraud.
17.5 WAIVERS. No action taken pursuant to this Agreement, including
without limitation any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
17.6 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall pay the fees and
expenses of its respective counsel, accountants and other experts, and all other
expenses incurred by such party incident to the negotiations, preparation and
execution of this Agreement. FTD will pay all such fees and expenses accrued
prior to the Closing in accordance with Section 9.2.
17.7 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given upon the earlier of delivery if
delivered personally, or upon receipt if sent by registered or certified mail,
return receipt requested, postage prepaid, or on the second next business day
after deposit if sent by recognized overnight delivery service, or upon
transmission if sent by telecopy or facsimile transaction (with request of
assurance of receipt in a manner customary for communications of such type) as
follows:
(a) If to Buyer:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
Perry Capital Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to FTD:
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President and Secretary
Florists' Transworld Delivery Association
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Dickinson, Wright, Moon, Van Dusen & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
17.8 CONFIDENTIALITY. Buyer, Buyer Sub and FTD each agree that each of
their respective officers, directors, employees and other representatives shall
hold in strict confidence and shall use data and information obtained from the
others in connection with this Agreement solely in connection with the
transactions herein contemplated, except to the extent such data and information
may be publicly available through no fault of either of them or required by law
to be disclosed. Should the Merger and related transactions not be consummated,
Buyer or FTD, as the case may be, shall return to the other such data and
information and all copies thereof, or certification confirming its destruction,
and shall continue to hold all of the same in confidence and not use it for any
purpose whatsoever. Promptly after the date of this Agreement, but in no event
later than five business days from such date, FTD shall request and use its good
faith efforts to obtain any data or information provided to any third parties
(including any of their employees, advisors or agents) pursuant to the terms of
any applicable confidentiality agreement or otherwise in connection with their
review of FTD.
17.9 BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the Parties hereto and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the Parties hereto and their successors and assigns, as the
case may be, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
17.10 NON-ASSIGNABILITY. This Agreement shall not be assignable by any
Party without the prior written consent of the other party; provided, however,
that Buyer may assign its rights and obligations hereunder to Buyer Sub or
another subsidiary with the consent of FTD which consent shall not be
unreasonably withheld; provided, that Buyer executes an agreement fully
guaranteeing the obligations of Buyer Sub or such other subsidiary in form and
substance reasonably satisfactory to FTD and FTDA, provided further, that Buyer
and Buyer Sub may assign their respective rights but not their obligations to
any lender providing financing to Buyer Sub or the Surviving Corporation.
17.11 SECTION AND OTHER HEADINGS. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
17.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
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17.13 PUBLICITY. Prior to the Merger, except as contemplated by this
Agreement or in accordance with law, neither FTD nor Buyer shall issue or
release any publicity of any kind relating to the transactions contemplated by
this Agreement without obtaining the prior written approval of the other.
17.14 ENTIRE AGREEMENT. This Agreement and the other agreements and
documents referred to herein constitute the entire agreement between the Parties
with respect to the transactions described in this Agreement. This Agreement may
not be changed, waived or terminated except by a written instrument signed by
the party against whom enforcement of the change, waiver or termination is
sought.
17.15 BEST EFFORTS. The Parties hereto shall use their respective best
efforts to perform all of the obligations and satisfy all of the conditions to
which such Party is subject pursuant to this Agreement. Each party shall keep
the others apprised of any inquiries made of such Party by any governmental
agency or authority or members of their respective staffs with respect to this
Agreement of the transactions contemplated hereby.
17.16 GOVERNING LAW. This Agreement shall be construed according to the
laws of the State of Michigan, without giving effect to any choice of law
provisions.
17.17 SEVERABILITY. In case any one or more of the obligations of any
party hereto under this Agreement or any related document shall be invalid,
illegal, or unenforceable in any jurisdiction, the validity, legality, and
enforceability of the party's remaining obligations shall not in any way be
affected or impaired thereby, and such invalidity, illegality, or
unenforceability in one jurisdiction shall not affect the validity, legality, or
enforceability of the party's obligations under this Agreement and each related
document in any other jurisdiction.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, Buyer, Buyer Sub and FTD have caused this Agreement to
be duly executed as of the day and year first above written.
PERRY CAPITAL CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Its: President
-------------------------------
IRIS ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Its: President
-------------------------------
FLORISTS' TRANSWORLD DELIVERY ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Its: Chairman of the Board
-------------------------------
And: /s/ ▇▇▇▇ ▇▇▇▇
-------------------------------
Its: President
-------------------------------
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