STOCK PURCHASE AGREEMENT
BY AND AMONG
FLORIDA CENTER FOR COSMETIC SURGERY
AS THE COMPANY,
BEVERLY REFKIN,
PAUL REFKIN,
STEVEN REFKIN,
AND
SHERMAN CLAY
AS THE SHAREHOLDERS
AND
THE PLASTIC SURGERY COMPANY
AS BUYER
DATED NOVEMBER 15, 2000
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of November
15, 2000, by and among FLORIDA CENTER FOR COSMETIC SURGERY, a Florida
corporation (the "Company"), BEVERLY REFKIN, PAUL REFKIN, STEVEN REFKIN AND
SHERMAN CLAY (the "Shareholders" or "Sellers") and THE PLASTIC SURGERY COMPANY,
a Georgia corporation ("TPSC" or the "Buyer").
R E C I T A L S
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A. The Company is the owner and operator of a cosmetic surgery center
located in Fort Lauderdale, Florida, and the licensor of a cosmetic surgery
center located in Kendall, Florida (collectively, the "Centers"), at which
surgeon(s) provide patient care (the "Business").
B. Shareholders are the registered and beneficial owner of 100% of the
issued and outstanding shares of capital stock of Company, which are comprised
of 100 issued and outstanding shares of Common Stock (the "Shares").
C. Sellers desire to sell to the Buyer, and the Buyer desires to
purchase from Sellers, on the terms and conditions hereinafter set forth in this
Agreement, the Shares.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the terms, covenants, and
conditions hereinafter set forth, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of
this Agreement, on the Closing Date (as hereinafter defined), Buyer shall
purchase and accept from the Sellers, and the Sellers shall sell, transfer,
assign and deliver to Buyer, free and clear of any and all Liens and
Encumbrances (as hereinafter defined), the Shares.
2. PURCHASE PRICE AND TERMS OF PAYMENT. As consideration for the sale
to Buyer of the Shares, and the Non-Competition Agreements described in Section
2.2 below, Sellers shall be entitled to receive from Buyer a purchase price of
Seven Million Dollars ($7,000,000) (the "Purchase Price").
2.1 PAYMENT OF PURCHASE PRICE. On the Closing Date, Buyer
shall pay the Purchase Price to Sellers in the manner hereinafter set forth in
this Section 2.1:
(a) CASH PAYMENTS. Buyer shall make a cash payment to
Sellers in the amount of Nine Hundred Thousand Dollars ($900,000) by wire
transfer in accordance with the wire instructions contained in SCHEDULE 2.1
hereto (the "Cash Payment").
(b) SECURED PROMISSORY NOTE. A portion of the
Purchase Price shall be payable by the issuance by Buyer to Sellers of secured
promissory notes, in the form attached hereto as EXHIBIT A (the "Secured
Promissory Notes"), in an aggregate principal amount of Four Million One Hundred
Thousand Dollars ($4,100,000), which shall accrue interest at a rate of 9% per
annum. The Secured Promissory Notes shall be payable in monthly payments of
interest only until the earlier of (i) the closing of a financing of the Company
in the amount of $4.0 million or more, or (ii) January 1, 2002 (the "Maturity
Date"), at which time all outstanding principal and accrued and unpaid interest
shall become due and payable. The Secured Promissory Notes shall be
collateralized with a first priority security interest in the assets of the
Company and a pledge of all of the Shares;
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(c) UNSECURED PROMISSORY NOTE. A portion of the
Purchase Price shall be payable by the issuance by Buyer to Sellers of unsecured
promissory notes, in the form attached hereto as EXHIBIT B (the "Unsecured
Promissory Notes"), in an aggregate principal amount of One Million Dollars
($1,000,000), which shall accrue interest at a rate of 9% per annum. The
Unsecured Promissory Notes shall be payable over three years in equal monthly
installments of principal and interest, based upon a ten (10) year amortization
schedule, on the first day of each month commencing on December 1, 2000 and
continuing on the first day of each month thereafter to and including November
1, 2003, on which date all accrued and unpaid interest and the remaining balance
of the principal then outstanding shall be due and payable.
(d) ISSUANCE OF STOCK. The balance of the Purchase
Price shall be payable by the issuance of shares of common stock of TPSC to the
Sellers in the aggregate amount of $1,000,000 (the "Shares"). Subject to the
terms and conditions set forth in this Agreement, TPSC shall issue to the
Sellers, and the Sellers shall acquire from TPSC, that number of Shares
determined by dividing $1,000,000 by the average closing price per share of
common stock of TPSC as reported on the American Stock Exchange for the five (5)
trading days ending on the day immediately prior to the Closing Date. Within ten
(10) days after the Closing Date, TPSC shall issue and deliver to each Seller a
certificate registered in the name of each Seller for their individual
percentage of the Shares based upon their pro rata ownership interest in the
Company immediately prior to the Closing Date. No fractional shares of common
stock of TPSC shall be issued, and each Seller who would otherwise be entitled
to receive a fraction of a share of TPSC common stock shall receive from TPSC a
whole number of shares rounded up or down to the nearest whole share, with .5
being rounded up. The Sellers shall have the registration rights with respect to
the Shares provided for in EXHIBIT C attached hereto, and incorporated herein.
2.2 NON-COMPETITION AGREEMENTS. Concurrently with the
execution of this Agreement, each of the Sellers shall enter into a
Non-Competition Agreement in substantially the form of EXHIBIT D hereto (the
"Seller Non-Competition Agreements") with Buyer.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The Seller's hereby,
jointly and severally, make the representations and warranties set forth
hereinafter in this Section 3 to the Buyer and, in conjunction with the making
of such representations and warranties, the Sellers have delivered to Buyer,
concurrently herewith, and SCHEDULES 3.3 to 3.25, inclusive, all of which are
attached to this Agreement (the "Sellers' Disclosure Schedules"). The
representations and warranties of the Sellers are qualified by and to the extent
of any disclosures expressly made in Disclosure Schedule that corresponds, by
number, to such Subsection of this Section 3 that such disclosure modifies,
PROVIDED, HOWEVER, that a disclosure in any one such Disclosure Schedule may, by
express reference thereto in another Disclosure Schedule, be incorporated into
such other Disclosure Schedule.
3.1 AUTHORITY AND BINDING EFFECT.
(a) Each of the Sellers has the legal capacity and
legal right to execute and deliver this Agreement and the Seller Non-Competition
Agreements. This Agreement and the Seller Non-Competition Agreements, and the
consummation by the Sellers of their respective obligations contained herein and
therein, have been duly authorized by all necessary actions of the Sellers and
such Agreements have been duly executed and delivered by the Sellers.
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(b) Each of this Agreement and the Seller
Non-Competition Agreements is a valid and binding agreement of the Sellers that
are party thereto, enforceable against each of them in accordance with its
terms, except as enforceability of the respective obligations of the Sellers
hereunder and thereunder may be limited by (i) bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally, and (ii)
general principles of equity relating to the availability of equitable remedies
(whether such Agreements are sought to be enforced in a proceeding at law or a
proceeding in equity).
(c) It is not necessary for any of the Sellers to
take any action or to obtain any approval, consent or release (other than those
that have already been obtained) by or from any third persons, governmental or
other, to enable each of the Sellers to enter into or perform their respective
obligations under this Agreement and such party's Seller Non-Competition
Agreement.
3.2 FINANCIAL STATEMENTS.
(a) The Sellers have previously delivered to Buyer
(i) the balance sheet of the Company as of September 30, 2000 (the "Current
Balance Sheet") and the related statement of income, shareholders; equity and
cash flows of the Company for the three-month period then ended (the "Interim
Financial Statements") and (ii) the unaudited balance sheets of the Company as
of December 31, 1999, 1998 and 1997 and the related statements of income,
shareholders' equity and cash flows of the Company for the fiscal years then
ended (the "Unaudited Financial Statements" and together with the Interim
Financial Statements, the "Unaudited Financial Statements"). The Unaudited
Financial Statements, to the best of the shareholders knowledge, are in
accordance with the books and records of the Company.
(b) The Unaudited Financial Statements fairly present
the financial condition, retained earnings, assets and liabilities of the Seller
and the results of the operations of the Company's business for the periods
indicated.
(c) Except for such claims, debts and liabilities as
are reflected in the Disclosure Schedule or on the Current Balance Sheet,
including any notes thereto, the Company does not have any outstanding
indebtedness for money borrowed and is not subject to any claims or liabilities
other than obligations incurred in the ordinary course of business since the
date of the Current Balance Sheet, in amounts usual and normal, individually and
in the aggregate.
(d) On or before November 15, 2000, Sellers shall
deliver to Buyer the audited balance sheets of the Company as of December 31,
1999, 1998 and 1997 and the related statements of income, shareholders' equity
and cash flows of the Company for the fiscal years then ended (the "Audited
Financial Statements"). The Audited Financial Statements shall be prepared in
accordance with the books and records of the Company and shall be accompanied by
the audit opinion of Durland, LLC, the Company's independent public accountants.
Buyer shall be responsible for 50% of all costs associated with preparing the
Audited Financial Statements.
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3.3 UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE
3.3, the Company does not have any debts, obligations, liabilities or
commitments of any nature, whether fixed, matured or unmatured, arising out of
or relating to the Business that would exceed, individually, or in the
aggregate, the sum of $50,000 ("Excess Liabilities"). As to each Excess
Liability set forth on SCHEDULE 3.3, the Company has provided the following
information in or as an attachment to such SCHEDULE 3.3: (i) a summary
description of such Liability, together with copies of all relevant
documentation relating thereto, the amounts claimed and any other action or
relief sought and, the identity of the claimant and of any other parties
involved, and, if such Liability is one that may arise from a presently pending
suit, action or other proceeding, the court or agency in which such suit, action
or other proceeding is being prosecuted, and (ii) the best estimate of Sellers
of the maximum amount, if any, which is likely to become payable with respect to
any such contingent Excess Liability. For purposes hereof, if no written
estimate is provided, such best estimate shall be deemed to be zero.
3.4 ABSENCE OF CERTAIN CHANGES. Except as set forth in
SCHEDULE 3.4, since September 30, 2000 there has not been:
(a) Any default or breach, or anticipated default or
breach under, or any amendment, termination or revocation or, to the knowledge
of any of the Sellers, any threatened termination or revocation of, any
Contracts (as defined below in Section 3.6);
(b) Any actual or threatened amendment, termination
or revocation of any License or Permit which is required, or, if the transaction
contemplated hereby were not consummated, would be needed, by Seller for the
continued operation of any material portion of the Business;
(c) Any sale, transfer, or other disposition of, or
the incurrence or imposition of any Lien or Encumbrance of any kind on or
affecting, any of the Purchased Assets, except (i) sales or utilization of
inventory and obsolete equipment in the ordinary course of business and
consistent with past practices of the Company, and (ii) Liens for current taxes
not yet due and payable;
(d) Any damage, destruction or loss, whether or not
covered by insurance, of any of the assets of the Company in an amount that
exceeds $10,000 or which adversely affects the Company's ability to continue, or
would reasonably be expected to adversely affect Buyer's ability, after the
Closing, to conduct the Business in any material respect as the Business was
conducted during the fiscal year ended December 31, 1999;
(e) The incurrence by the Company of any indebtedness
in connection with the Business of more than $25,000 individually or $50,000 in
the aggregate, either for borrowed money or in connection with any purchase or
other acquisition of assets, or otherwise;
(f) Any purchase or lease, or commitment for the
purchase or lease, of equipment, machinery, leasehold improvements or other
capital items in connection with the Business which involves amounts exceeding
$10,000 individually or $25,000 in the aggregate, or which is in excess of or
represents a departure from the normal, ordinary and usual requirements of the
Business;
(g) Any increase in salaries, wages or benefits of or
the awarding or payment of any bonuses to any officers, directors or employees
in connection with the Business; the adoption of any new, or any amendment to
any existing, employee benefit plan, or the execution of any new, or the
renewal, extension, or amendment of any existing, employment or consulting
agreements in connection with the Business; provided, however, that the Company
shall have the right to pay bonuses to Sellers at any time prior to Closing,
provided further that the Company will have a minimum of Fifty Thousand Dollars
($50,000) in it operating account on the Closing Date and that the Company shall
be current in all trade receivables due and payable in the ordinary course of
business;
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(h) The entry or violation of any judgment, order,
writ or decree with respect to the Company or the Business that has had or could
reasonably be expected to have a Material Adverse Effect on the Company or the
Business; and
(i) The threat, assertion or commencement of any
legal action or other proceeding or investigation against the Company or the
Business which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect on the Company or the Business, or the occurrence of any
event that could reasonably be expected to result in the commencement of any
such legal action or other proceeding or investigation.
When used in this Agreement (i) the phrases "Material Adverse
Effect on the Company" and "Material Adverse Effect on the Business" shall both
mean any consequence or result, arising from any circumstance, state of facts or
event, that is materially adverse, or could reasonably be expected to become
materially adverse, to the Company or the Business, or the condition (financial
or other), operating results or future prospects of the Business or the ability
of the Company to consummate the transactions contemplated hereby, and (ii) the
phrase "Material Adverse Effect on Buyer" shall mean any consequence or result,
arising from any circumstance, state of facts or event, that is materially
adverse, or could reasonably be expected to become materially adverse to the
condition (financial or other), operating results or future prospects of Buyer
or the ability of Buyer to consummate the transactions it is required to
consummate hereunder.
3.5 THE ASSETS.
(a) FF&E. There is contained in SCHEDULE 3.5A a
complete and accurate list of all of the equipment, furniture, fixtures and
other tangible personal property ("FF&E") used in the Business, other than any
such asset the replacement cost of which would be less than $500 and which is
not of material importance to the operation of the Business. The FF&E are in
good working order and condition, ordinary wear and tear excepted, have been
properly maintained, are suitable for the uses for which they are being utilized
in the Business, do not require more than regularly scheduled maintenance in the
ordinary course, consistent with the Company's established maintenance policies,
to keep them in good operating condition and, and to the best of the Company's
and Sellers' knowledge, comply with all requirements under applicable laws,
regulations and licenses which govern the use and operation thereof.
(b) RECEIVABLES. There is contained in SCHEDULE 3.5B
hereto (i) an accurate list, within five (5) business days before the date
hereof, of all accounts and notes receivable and other rights to payment or
reimbursement to the Company that have arisen out of the operations of the
Business (the "Receivables"), and (ii) an aging of all such Receivables showing
amounts due in 30-day aging categories. The Receivables on such listing, or that
have arisen since the date thereof, arose in the ordinary course of the
Business. Except as set forth on SCHEDULE 3.5B, the Company has not received any
notice and does not know of any counterclaim or set-off with respect to any
Receivables, or any facts or circumstances that would be the basis for any such
counterclaim or set-off.
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(c) INTANGIBLE PROPERTY RIGHTS. SCHEDULE 3.5C hereto
contains a list of (i) any client or vendor lists, promotion lists and marketing
data and other compilations of names and requirements used in or for the
Business; (ii) the telephone numbers and internet addresses and websites used in
or for the Business; (iii) all processes, formulations, methods, software
(including documentation and source code listings), technology, know-how,
formulae, trade secrets and inventions used in or for the Business; and (iv) all
patents, copyrights, trade names, trademarks and service marks (including, but
not limited to, the name "Florida Center for Cosmetic Surgery"), and all
applications therefor, (collectively, the "Intangible Property Rights"). Except
as set forth in SCHEDULE 3.5C, neither of the Sellers nor the Company, to the
best of their or its knowledge, has infringed on any patent, trade name,
trademark, service mark, copyright, trade secret, technology, know-how or
process belonging to any other person, firm or corporation and neither the
Sellers nor the Company has received any written notice or other indication of
any claim of any such infringement. The Company owns, or holds adequate licenses
or other rights (all of which are accurately listed on SCHEDULE 3.5C hereto) to
use, all Intangible Property Rights used in or necessary for the operation of
the Business, as now conducted, and, to the best knowledge of the Sellers, that
use does not and will not conflict with, infringe on or otherwise violate any
rights of others. Except as disclosed in SCHEDULE 3.5 C, (i) all of such
licenses and rights are in full force and effect; and (ii) the Company is not in
default of any thereof.
(d) LEASED PROPERTIES. SCHEDULE 3.5D contains a list
of leases ("Real Property Leases") under which the Company holds or owns any
leasehold interest in real property (the "Leased Properties"), including the
respective addresses of such Leased Properties and the names and addresses of
the landlords thereof. The Company has delivered to Buyer accurate and complete
copies of all environmental studies and reports that are in their possession. To
the best knowledge of the Sellers: (i) the zoning of each of the Leased
Properties permits the presently existing improvements thereon and continuation
of the business presently conducted thereon and no changes therein are pending
or are threatened and (ii) no condemnation or similar proceedings are pending or
threatened against any of the Leased Properties. The Company does not have a fee
interest in any real property.
(e) TITLE TO AND ADEQUACY OF ASSETS. Except as
disclosed on SCHEDULE 3.5E hereto, the Company has good, complete and marketable
title to all of the assets used in the operation of the Business, free and clear
of all mortgages, security interests, liens, options, pledges, equities, claims,
charges, restrictions, conditions, conditional sale contracts and any other
encumbrances or adverse interests of any kind or nature whatsoever (collectively
"Liens and Encumbrances"). Except as set forth on SCHEDULE 3.5E, all of the
assets are in the exclusive possession and control of the Company and the
Company has the unencumbered right to use all of the assets without interference
from and free of the rights and claims of others. The assets constitute all the
assets, properties, rights, privileges and interests that are necessary for the
Buyer to operate the Business substantially in the same manner as it has been
operated by the Company for the 12 months ended December 31, 1999.
3.6 THE CONTRACTS. SCHEDULE 3.6 contains an accurate and
complete list of the agreements, contracts, leases, licenses, instruments,
commitments and understandings, written or oral, that are listed (or, in the
case of oral agreements or understandings, that are described) (the
"Contracts"); and, except as set forth on SCHEDULE 3.6, there are no other
contracts, agreements, indentures, notes, leases, or other instruments or
commitments, whether written or oral, to which the Company is a party or is
bound or which relates to or affects, or could reasonably be expected to affect,
in any material respect, any of the Company, its assets or the continued conduct
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of the Business ("Other Contracts"). The Company has furnished to Buyer accurate
and complete copies of all Contracts and the Other Contracts, if any, listed on
SCHEDULE 3.6. Each of the Assigned Contracts (including, but not limited to,
each of the Real Property Leases and the Intangible Property Rights included in
the Contracts) is a valid and binding obligation of the Company and, to the
Sellers' knowledge, of the other parties thereto, is in full force and effect
and is enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and general principles of equity relating
to the availability of equitable remedies. Except as otherwise set forth in
SCHEDULE 3.6 hereto, there have not been any defaults by the Company or, to the
best knowledge of the Sellers, defaults or any claims of default or claims of
nonenforceability by the other party or parties, under any of the Contracts, or
any of the Other Contracts, which, individually or in the aggregate, would have
or which could reasonably be expected to have a Material Adverse Effect on the
Company and there are no facts or conditions that have occurred or that are
anticipated to occur which, with the passage of time or the giving of notice, or
both, would constitute such a default under, or entitle any of the other parties
to the Contracts or the Other Contracts (if any) to terminate, or accelerate the
Company's payment obligations under, any of the Contracts or the Other Contracts
or would cause the creation or imposition of any Lien or Encumbrance upon any of
the Company's assets.
3.7 EMPLOYEES, EMPLOYMENT AGREEMENTS AND BENEFIT PLANS.
(a) SCHEDULE 3.7 sets forth the name of each employee
and independent contractor of the Company, together with a brief description of
the services they perform for and the compensation and benefits that are payable
to such individuals as a result of their employment with or the services they
perform for the Company. Except as set forth on SCHEDULE 3.7, the Company is not
a party or subject to any labor, employment, deferred compensation, bonus,
retainer, consulting, or incentive agreement, plan or contract and, unless
included in the Contracts listed on SCHEDULE 3.6 hereto.
(b) Except to the extent set forth in SCHEDULE 3.7,
(i) the Company, to the best of its knowledge, is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and (ii) the Company, to the best
of its knowledge, is not engaged in any unfair labor practice and there is no
unfair labor practice complaint pending or, to the best knowledge of the
Sellers, threatened against the Company, nor, to the best knowledge of the
Sellers, is there any factual basis for any such complaint.
(c) Except as otherwise set forth on SCHEDULE 3.7
hereto, the Company does not now have, nor during the past five (5) years has
the Company had, in effect, for the benefit of any employees of the Company, any
Employee Plan (as hereinafter defined), including, without limitation, any
funded Employee Plan which is required to be qualified under Section 401 of the
Internal Revenue Code (the "Code"). Correct and complete copies of each of such
Employee Plan have been furnished to Buyer. For purposes of this Section 3.7,
the term "Employee Plan" means all present (including those terminated or
transferred within the past five (5) years) plans, programs, agreements,
arrangements and methods of contribution or compensation (including all
amendments to and components of the same, such as a trust with respect to a
plan) providing any remuneration or benefits, other than current cash
compensation, to any current or former employee of the Company or to any other
person who provides or had provided services to the Company, whether or not any
such plans, programs, agreements, arrangements and methods of contribution or
compensation are subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or are qualified under the Code. By way of example, but
without limitation, the term Employee Plan includes retirement, profit sharing,
incentive compensation, stock option, stock bonus and nonqualified deferred
compensation plans, and disability, medical, dental, worker's compensation,
health insurance, life insurance, vacation benefits, and other fringe benefits
and includes any Employee Plan that is a multiemployer plan as defined in
Section 3(37) of ERISA.
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3.8 CONFLICTS. Except as described on SCHEDULE 3.8 hereto,
neither the execution and delivery of, nor the consummation of the transactions
contemplated by, this Agreement or the Seller Non-Competition Agreements will or
could result in any of the following:
(a) A default or an event that, with notice or lapse
of time, or both, would be a default, breach or violation of any of the
Contracts or Other Contracts;
(b) The termination of any Contract, or the
acceleration of the maturity of any indebtedness or other obligation of the
Company;
(c) The creation or imposition of any Lien or
Encumbrance on any of the respective assets or properties of the Company;
(d) The creation or imposition of any new, or a
violation or breach of any existing, writ, injunction or decree that would
become or is now applicable to or binding on the Company or any of its
properties or assets;
(e) A loss or adverse modification of any License or
Permit needed for the conduct of the Business, granted to or otherwise held by
the Company or used in the Business, which would have a Material Adverse Effect
on the Company or the Business; or
(f) The cessation or termination of any other
business relationship or arrangement between the Company and any third party,
such as, but not limited to, any Third Party Payor, that would have a Material
Adverse Effect on the Company of the Business.
3.9 INTENTIONALLY OMITTED.
3.10 INSURANCE. SCHEDULE 3.10A contains an accurate
description (including liability limits, deductibles and coverage exclusions) of
all policies of fire, general and professional liability, worker's compensation,
errors and omissions, malpractice and other forms of insurance maintained by or
on behalf of the Company. Except as set forth in SCHEDULE 3.10A hereto, all of
such policies are now in full force and effect. The Company has not received any
notice of cancellation or material amendment of any such policies; no coverage
thereunder is being disputed; and all material claims thereunder have been filed
in a timely fashion. SCHEDULE 3.10B contains a schedule that sets forth (i) all
insurance claims filed by or on behalf of the Company at any time within the
past three (3) years, and (ii) the disposition thereof. No such claims have been
denied by any of the Company's insurers and the Company has not failed to comply
with the requirements of any insurance policies which would provide any such
insurers the right to deny any claim.
3.11 COMPLIANCE WITH LAW.
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(a) To the best of the Sellers' and the Company's
knowledge, except as set forth in SCHEDULE 3.11 hereto, the Company is in
compliance with each, and the Company is not in violation of any, law,
ordinance, order, decree, rule or regulation of any governmental agency or
authority, the violation of or noncompliance with which could have a Material
Adverse Effect on the Company. Except as disclosed in SCHEDULE 3.11 hereto, no
(i) charges of violations of laws or regulations have been made or threatened,
(ii) proceedings or investigations are pending or have been threatened, and
(iii) citations or notices of deficiency have been issued or have been
threatened, against the Company by or on behalf of any governmental authorities,
which have had or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, the Business, or on Buyer
(following the Closing); and, to the best knowledge of the Sellers, there are no
facts or circumstances upon which any such charges, proceedings, investigations,
or citations or deficiency notices, may be instituted, issued or brought
hereafter. Each surgeon and any other clinical personnel retained by the Company
to provide patient services or other healthcare services is properly and fully
licensed in the State of Florida to provide such services.
(b) To the best of the Sellers' or the Company's
knowledge, neither the Seller, nor any employees or independent contractors of
the Company, has engaged in any activities which are prohibited under state or
local statutes or regulations, or which are prohibited by any rules of
professional conduct governing the Company or such other persons, including but
not limited to, the following:
(i) knowingly and willfully making or causing to
be made a false statement or representation of a material fact in any
application for any benefit or payment;
(ii) knowingly and willfully making or causing to
be made any false statement or representation of a material fact for use in
determining rights to any benefit or payment;
(iii) any failure to disclose knowledge of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own or on behalf of another, with the intent to fraudulently
secure such benefit or payment; and
(iv) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe or rebate) directly or
indirectly, overtly or covertly, in cash or in kind, or offering to pay or
receive such remuneration (A) in return for referring an individual to a person
for the furnishing or arranging for the furnishing of any item or service, or
(B) in return for purchasing, leasing or ordering or arranging for, or
recommending, purchasing, leasing or ordering, any good, facility, service or
item.
(c) Neither the Company nor any other healthcare
provider affiliated with the Company has been convicted of, or pleaded guilty or
nolo contendere to, patient abuse or negligence.
3.12 LICENSES AND PERMITS. SCHEDULE 3.12 contains an accurate
and complete list of all licenses, permits, certificates of need, franchises and
other governmental permits or licenses used for or in connection with the
operations of the Business (collectively the "Licenses and Permits"), true and
correct copies of which have been furnished by the Company to Buyer. To the best
of Sellers' knowledge, such Licenses and Permits are the only licenses, permits,
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authorizations, franchises, certificates and rights to operate that are required
for operation of the Business, as it has been conducted for the 12 months ended
December 31, 1999, and all of such Licenses and Permits are in full force and
effect at the date hereof. To the best of Sellers' knowledge, except as
otherwise set forth in SCHEDULE 3.12, the Company is in compliance with the
conditions and requirements imposed by or in connection with such Licenses and
Permits. The Company has not received any notice, nor do the Sellers have any
knowledge or reason to believe, that any governmental authority intends to
cancel, terminate or modify any such Licenses or Permits and there are no valid
grounds for any such cancellation, termination or modification.
3.13 TAXES AND TAX RETURNS. The Company has duly filed all Tax
Returns (as hereinafter defined) which are required by law to be filed by it and
has duly and properly paid, or withheld for payment, when due, all foreign,
federal, state and local Taxes (as hereinafter defined) due or claimed to be due
from the Company including, without limitation, all taxes that have arisen out
of the conduct of the Business, and there are no assessments or claims for
payment of such Taxes, nor any audit of the financial, tax or business records
of the Company, now pending or, to the best knowledge of the Sellers, threatened
by any taxing authority. For purposes of this Agreement, (i) the term "Tax" or
"Taxes" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not; and (ii) the term "Tax Return" means
any return, declaration, report, claim for refund, or information return or
statement (including, but not limited to, information returns or reports related
to back-up withholding and any payments to third parties) relating to any Taxes,
including any schedule or attachment thereto, and including any amendment
thereof. Buyer shall have no liability or obligation whatsoever, and shall not
incur any loss, expense or cost, and none of the Purchased Assets, or any assets
of Buyer, shall be subjected to any Lien or Encumbrance, by reason of any Taxes
arising out of (x) any of the Company's activities or operations, including, but
not limited to, the conduct of the Business, prior to the consummation of the
sale hereunder of the Shares to Buyer, or (y) any other operations or activities
which the Company has conducted prior to the Closing Date. The Company and the
Sellers further represent and warrant that they are relying solely on their own
accountants and advisors for advice as to the tax consequences to them of the
transactions contemplated hereby.
3.14 RELATED PARTY TRANSACTIONS. Except as set forth in
SCHEDULE 3.14, the Company does not have any existing or pending transactions,
nor are there any agreements or understandings of the Company, employees of the
Company, or any person that is related to, or any person or entity that is
affiliated with, any of them (collectively, "Affiliates"), relating to, arising
from or affecting the Business, the Company or any of its assets, including,
without limitation, any transactions, arrangements or understandings relating to
the purchase or providing of services, the lending of monies, or the sale, lease
or use of any of the Company's assets, with or without adequate consideration,
in any amount whatsoever. No current or former employee of the Company has any
claims against or disputes with the Company which could result in the imposition
of any liability, judgment, or Lien or Encumbrance against the Company or any of
its assets.
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3.15 LITIGATION AND PROCEEDINGS. Except as set forth in
SCHEDULE 3.15 hereto, there is no action, suit, proceeding or investigation, or
any counter or cross-claim in an action brought by or on behalf of the Company,
whether at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind, that is pending or, to the best knowledge of
the Sellers, threatened, against the Company.
3.16 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in
SCHEDULE 3.16, the Company, to the best of its knowledge, has complied, and the
operation of the Business and the use of the Company's assets are in compliance,
in all material respects, with all federal, state, regional and local statutes,
laws, ordinances, rules, regulations and orders relating to the protection of
human health and safety, natural resources or the environment, including, but
not limited to, air pollution, water pollution, noise control, on-site or
off-site hazardous substance discharge, disposal or recovery, toxic or hazardous
substances, training, information and warning provisions relating to toxic or
hazardous substances, and employee safety relating to the Company's operations
and its conduct of the Business (collectively the "Environmental Laws"). Except
as otherwise provided in SCHEDULE 3.16, to the best of its knowledge, the
Company does not have, and in no event shall Buyer have, any liability or incur
any loss, cost or expense, and the Company's assets shall not be adversely
affected, by reason of the current presence, or the past or current generation,
use, treatment, storage, transfer or disposal, of any toxic or hazardous
substances in, at, under, from, to or into, or on any real properties during the
occupancy thereof by the Company or prior to such occupancy. The Company, to the
best of its knowledge, has not disposed, or had disposed of on its behalf, toxic
or hazardous substances at any site other than a federal and state licensed
hazardous waste treatment, storage and disposal facility and, to the best
knowledge of the Sellers, each such facility is not currently listed, or
threatened to be listed, on any state or federal "superfund" list. For the
purposes of this Agreement, the term "toxic or hazardous substances" shall
include any material, substance or waste that, because of its quantity,
concentration or physical or chemical characteristics, is deemed under any
federal, state, local or regional statute, law, ordinance, regulation or order,
or by any governmental agency pursuant thereto, to pose a present or potential
hazard to human health or safety of the environment, including, but not limited
to, (i) any material, waste or substance which is defined as a "hazardous
substance" pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. '9602 ET SEQ.), as amended ("CERCLA"),
and its related state and local counterparts, (ii) asbestos and asbestos
containing materials and polychlorinated biphenyls, and (iii) any petroleum
hydrocarbon including oil, gasoline (refined and unrefined) and their respective
constituents and any wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal energy.
3.17 OPERATIONAL RESTRICTIONS. To the best of Seller's
knowledge, SCHEDULE 3.17 sets forth a description of (i) any restrictions under
any applicable laws or regulations or any non-competition or confidentiality or
other agreement that are not described in any of the other Disclosure Schedules
of the Company, or (ii) any judgment, order, writ, injunction, decree, or order,
any of which has had or could reasonably be expected to have a Material Adverse
Effect on the Company, or Buyer or conduct of the Business of the Company after
the Closing. Except as disclosed in SCHEDULE 3.17, the Sellers know of no facts,
circumstances or events which has had, or with the passage of time may have, a
Material Adverse Effect on Company.
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3.18 NO BROKER. The Company has not retained or used the
services of an agent, finder or broker in connection with the transactions
contemplated by this Agreement. The Sellers shall pay, and shall jointly and
severally indemnify, hold harmless and defend Buyer from and against, all
commissions, finder's and other fees and expenses charged or asserted by any
agent, finder or broker, by reason of any such retention or use of the services
of any such agent, finder or broker by the Company or any of the Sellers.
3.19 INTENTIONALLY OMITTED.
3.20 ORGANIZATION AND STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida, and is authorized to do business in each jurisdiction in which
the character of the properties owned by it or the nature of its business makes
such authorization necessary and where the failure to be so qualified would have
a material adverse effect on the Company or its Business or operations. The
Company has the requisite corporate power and authority to conduct the Business
as now conducted and to own or lease (as the case may be), and to use, the
properties and assets used therein. The Company has all licenses and other
permits required to operate the Company's Business and conduct its operations as
now conducted. Complete and correct copies of (i) the Company's Articles of
Incorporation and all amendments thereto, certified by the Florida Secretary of
State; (ii) the Company's Bylaws, as amended to date, certified by the Company's
Secretary; (iii) the stock and minute books of the Company; and (iv) all
agreements, commitments or understandings, written or oral, if any, restricting
the transfer of or otherwise pertaining to the Shares, have been made available
to Buyer. The stock and minute books of the Company are accurate in all material
respects. No actions or proceedings have been commenced or threatened against
the Company or the Shareholders that, if adversely determined, and, except as
set forth in SCHEDULE 3.20, no agreements or transactions have been entered into
by the Company or the Shareholders which, if consummated, would give rights to
any person, other than Buyer, in or to acquire any of the Shares or any other
shares of capital stock, or any of the assets, of the Company or otherwise
interfere with the consummation of the transactions contemplated by this
Agreement.
3.21 CAPITALIZATION. The Company's authorized capital stock
consists solely of 1,000 shares of Common Stock, with a par value of $1.00 per
share, of which 100 shares are issued and outstanding and no shares of such
stock are reserved for issuance either upon exercise of any warrants, options or
other rights to purchase, or upon conversion of any securities convertible into,
shares of common stock. No other class of capital stock, or instrument that is
convertible or exercisable into or exchangeable for such stock, has been
authorized or issued. All of the Shares are validly issued, fully paid and
non-assessable and no shares of common stock of the Company were issued in
violation or contravention of any applicable federal or state securities laws or
regulations and no shares of the Company's common stock have been issued in
violation of either any preemptive rights of any shareholder or any agreement to
which the Company or any shareholder of the Company is or was a party. The
Company has not granted, sold or issued, nor is it a party to any agreement,
commitment or understanding providing for the grant, sale or issuance of, nor
are there outstanding, any subscriptions, options, warrants or other rights to
purchase or receive, and the Company is not obligated to issue, sell or
otherwise transfer, any shares of capital stock or other securities of the
Company. Except as set forth on SCHEDULE 3.21 hereto, the Company has not
redeemed or otherwise repurchased during the past five (5) years, and between
the date hereof and the Closing shall not redeem or purchase or agree to redeem
or purchase, (i) any shares of its capital stock or (ii) any shares of stock or
equity interest in any subsidiary of the Company, including any partnership of
which the Company is a partner or other business entity in which it holds any
equity interest.
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3.22 STOCK OWNERSHIP. Except as set forth on Schedule 3.22,
the Sellers are, and at the Closing will be, the sole owners, beneficially and
of record, of the Shares, free and clear of all claims, liens, encumbrances,
security interests, pledges, options, charges, restrictions and defects in title
of any nature whatsoever, other than restrictions imposed by federal and
applicable state securities laws which do not constitute an impediment to the
transfer described in this Agreement. The Shares constitute, and on consummation
of the sale and transfer of the Shares to Buyer shall constitute, 100% of the
issued and outstanding shares of capital stock of the Company. The Sellers have
not, and as of the Closing Sellers shall not have, granted or sold, and Sellers
are not, and at the time of Closing will not be, a party to any agreement,
commitment or understanding, written or oral, providing for the grant or sale
of, rights to purchase or restricting the transfer of, and Sellers are, and at
the Closing will not be, obligated to sell or otherwise transfer, any of the
Shares to any person or entity except to the Buyer. The Sellers have not, in the
past give (5) years, purchased or otherwise acquired, and will not be acquiring
between the date hereof and the Closing, any shares of capital stock of the
Company or any equity interest in any subsidiary of the Company from any other
person or entity.
3.23 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. To the
best of the Sellers' knowledge, the representations and warranties of the
Sellers contained herein, and the disclosures contained in Sellers' Disclosure
Schedules, do not contain any statement of a material fact that was untrue when
made or omits any information necessary to make any such statement contained
therein, in light of the circumstances under which such statement was made, not
misleading.
3.24 BANK ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 3.24 sets
forth a true and complete list, as of the date hereof, of each bank or other
institution in which the Company has an account or safe deposit box, and the
names of all persons authorized to draw thereon or to have access thereto and
the names of all persons, if any, who hold any powers of attorney for or granted
by the Company.
3.25 SUBSIDIARIES; INVESTMENTS. Except as otherwise set forth
on SCHEDULE 3.25, the Company does not own, directly or indirectly, shares of
capital stock of any other corporation or any equity interest in any other
entity or business, nor does the Company control, directly or indirectly, any
other corporation, association or business organization.
3.26 INVESTMENT REPRESENTATIONS.
(a) The Sellers shall acquire the Shares for their
own respective accounts, not as nominees or agents, for investment and not with
a view to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
(b) The Sellers understand that (i) the Shares have
not been registered under the Securities Act by reason of a specific exemption
therefrom, that they must be held by them indefinitely, and that they must,
therefore, bear the economic risk of such investment indefinitely, unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration; (ii) each certificate representing the Shares
will be endorsed with substantially the following legend along with any other
legend required by applicable securities laws or agreements:
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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT COVERING SUCH SECURITIES OR
IF THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT.
and (iii) TPSC will instruct any transfer agent not to register the transfer of
any of the Shares unless the conditions specified in the foregoing legend are
satisfied; provided, however, that no such opinion of counsel shall be necessary
if the sale, transfer or assignment is made pursuant to United States Securities
and Exchange Commission ("SEC") Rule 144 and the Sellers provide TPSC with
evidence reasonably satisfactory to TPSC and its counsel that the proposed
transaction satisfies the requirements of Rule 144. TPSC agrees to remove the
foregoing legend from any securities if the requirements of SEC Rule 144(k) (or
any successor rule or regulation) apply with respect to such securities and TPSC
and its counsel are provided with reasonably satisfactory evidence that the
requirements of Rule 144(k) apply.
(c) Each Seller acknowledges that he or she can bear
the economic risk of his or her investment and has such knowledge and experience
in financial or business matters that he or she is capable of evaluating the
merits and risks of the investment in the Shares.
(d) The Sellers and their representatives have been
furnished with or have had access to such information, including, without
limitation, TPSC's SEC filings, as they have considered necessary to make a
determination as to the acquisition of the Shares, together with such additional
information as is necessary to verify the accuracy of the information supplied.
(e) The Sellers and their representatives have had
all questions which have been asked by them satisfactorily answered by TPSC.
(f) Each Seller understands that the Shares they are
acquiring are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from TPSC in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act, only in certain limited circumstances, and it represents that it
is familiar with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.
(g) No broker, finder or similar agent has been
employed by, or on behalf of, any Seller in connection with this Agreement or
the transactions contemplated by this Agreement.
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4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer makes the following
representations and warranties to Sellers as of the date of this Agreement:
4.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
4.2 CORPORATE POWER. Buyer possesses the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Promissory Notes, the Convertible Promissory Notes and the Seller
Non-Competition Agreements.
4.3 NECESSARY ACTIONS; BINDING EFFECT. Buyer has taken all
corporate action necessary to authorize the execution and delivery of, and the
performance of its obligations under, this Agreement, the Secured Promissory
Notes, the Unsecured Promissory Notes and the Seller Non-Competition Agreements.
This Agreement constitutes, and upon their execution and delivery of the Secured
Promissory Notes, the Unsecured Promissory Notes and Seller Non-Competition
Agreements will constitute, valid obligations of Buyer that are legally binding
on and enforceable against Buyer in accordance with their respective terms,
except (in each case) as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights, and
(ii) general principles of equity relating to the availability of equitable
remedies (regardless of whether such agreements are sought to be enforced in a
proceeding at law or in equity).
4.4 NO CONFLICTS. Neither the execution and delivery nor the
performance of this Agreement, the Secured Promissory Notes and the Unsecured
Promissory Notes or the Seller Non-Competition Agreements by Buyer will result
in any of the following: (i) a default or an event that, with notice or lapse of
time, or both, would constitute a default, breach or violation of the Articles
of Incorporation or Bylaws of Buyer, any contract, lease, license, franchise,
promissory note, conditional sales contract, commitment, indenture, mortgage,
deed of trust, security or pledge agreement, or other agreement, instrument or
arrangement to which Buyer is a party or is subject and which is material to
Buyer (a "Material Buyer Contract"); (ii) the termination of any Material Buyer
Contract or the acceleration of the maturity of any indebtedness or other
monetary obligation of Buyer that is material in amount; or (iii) a violation or
breach of any writ, injunction or decree of any court or governmental
instrumentality to which the Buyer is a party or by which any of its properties
is bound or any laws or regulations applicable to Buyer, where the violation
would have a Material Adverse Effect on Buyer.
4.5 SECURITIES FILINGS; FINANCIAL STATEMENTS.
(a) Buyer has filed and made or will make available
to the Sellers all forms, reports and documents required to be filed by Buyer
with the SEC or the American Stock Exchange since January 1, 2000 (the "Buyer
SEC Reports"). The Buyer SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to a state a material fact required to be stated in such Buyer SEC
Reports or necessary in order to make the statements in such Buyer SEC Reports,
in the light of the circumstances under which they were made, not misleading.
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(b) Each of the consolidated financial statements
(including, in each case, any related notes) contained in the Buyer SEC Reports,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP (except as may be indicated in the notes to such financial statements or,
in the case of unaudited statements, as permitted by Form 10-Q or the SEC) and
fairly presented the consolidated financial position of Buyer and its
subsidiaries as of the respective dates and the consolidated results of its
operations and cash flows for the period indicated, except that the unaudited
interim financial statements do not include notes, but do include all
adjustments, which consist only of normal recurring adjustments, necessary for
fair presentation.
(c) No change in the business, assets, liabilities,
condition (financial or other), or results of operations of Buyer has occurred
between the date of filing the Buyer SEC Reports filed prior to the date hereof
with the SEC and the date hereof that would cause such Buyer SEC Reports,
including the financial statements and schedules included or incorporated by
reference therein, to contain, as of the date hereof, any untrue statement of
material fact or to omit to state a material fact that would be required to be
stated or incorporated by reference therein or that would be necessary in order
to make the statements contained therein, as of the date hereof, not ,
misleading.
4.6 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer do not contain any statement of a material fact that was
untrue when made or omits any information necessary to make any statement of
material contained therein, in light of the circumstances under which such
statement was made, not misleading. Buyer has not made, and is not making, any
representations or warranties to the Sellers with respect to (i) the federal,
state or local income or other tax consequences to Sellers of the consummation
of the transactions contemplated hereby, or (ii) the future financial
performance of Buyer.
4.7 BROKER. Buyer has not retained or used the services of an
agent, finder or broker in connection with the transactions contemplated by this
Agreement. Buyer shall pay, and shall indemnify, hold harmless and defend the
Sellers from and against all commissions, finder's and other fees and expenses
charged or asserted by any agent, finder or broker, by reason of any such
retention or use of the services of any agent, finder or broker by Buyer.
5. CONDUCT OF BUSINESS PENDING THE CLOSING. Between the date hereof and
the Closing, and except as otherwise consented to by Buyer in writing, or
permitted pursuant to Section 7 below, each of the Sellers and the Company
jointly and severally covenant as follows:
5.1 ACCESS. The Company shall give to Buyer and its respective
representatives, from and after the date of execution of this Agreement, on
prior request therefor from Buyer or such representatives, such access to the
premises, employees, agents and consultants of the Company, and such copies of
the Company's financial statements, books and records, and contracts and leases
and other documentation, so as to enable Buyer to inspect and evaluate all
aspects of the business and operations, assets, operating results, financial
condition, future prospects, capitalization, ownership, and legal and regulatory
affairs of the Company and to verify the accuracy of the information heretofore
furnished to Buyer, and the representations and warranties made in this
Agreement, by the Company with respect to the foregoing matters. The Company
agrees that the Company will furnish all information reasonably requested by
Buyer. Buyer agrees to conduct its review in a manner designed to minimize any
disruption of the Company's operations.
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5.2 CONDUCT OF COMPANY'S BUSINESS. Unless Buyer gives its
prior written consent for actions to be taken to the contrary, from the date of
this Agreement and until the Closing or termination of this Agreement, whichever
first occurs, the Company shall:
(a) OPERATION OF BUSINESS. Operate and conduct the
Company's business and operations diligently and only in the ordinary course of
business consistent with past practices. The Company shall not increase the
amount due and owing to any lender for borrowed money or increase the
compensation or benefits of any employee, independent contractor or agent or
adopt or amend any commission plan or arrangement or any employee benefit plan
or arrangement of any type which results or may result in an increase in costs
or liabilities thereunder of more than $5,000 per month, in the aggregate, above
those existing on the date hereof, or otherwise lend or advance any sum or
extend credit to any employee, director or shareholder or any of their
respective affiliates. Notwithstanding any language to the contrary, this
paragraph shall be subject to the terms and conditions of Section 3.4(g) above;
(b) ORGANIZATION. Preserve intact the Company's
organization and use its reasonable best efforts to retain all employees of and
the services of all vendors, suppliers, agents and consultants to the Company,
commensurate with the requirements of the Company's business;
(c) INSURANCE. Maintain insurance, including
liability and errors and omissions insurance, consistent with past practices
and, unless comparable insurance is substituted therefore or is not generally
available to businesses of the type conducted by the Seller, not take any action
to terminate or modify, nor permit the lapse or termination of, the present
insurance policies and coverages of the Company;
(d) LAWSUITS, CLAIMS. Promptly notify Buyer of all
lawsuits, claims, proceedings or investigations that are, or which any officers
of the Company, as a result of events or circumstances actually known to them,
has reason to believe may be, threatened, brought, asserted or commenced against
the Company or any of its officers or directors, involving or affecting in any
way the Company's Business or operations, or any of its assets, or the
transactions contemplated hereby; and not settle any action or proceeding which
would materially and adversely affect the Company, its business, financial
condition or operating results and, not release, settle, compromise or
relinquish any claims, causes of action or rights involving more than $10,000
individually or in the aggregate which the Company may have against any other
persons, including, without limitation, claims or rights to reimbursement or
payment for services rendered by the Company;
(e) CERTAIN CHANGES. Not sell or otherwise dispose,
or enter into any agreement for the sale, of any of its assets or properties,
except for sales of inventory and obsolete equipment in the ordinary course of
business and consistent with past practices, and not permit or allow, or enter
into any agreements providing for or permitting, any of its assets or properties
to be subjected to any mortgage, security interest, pledge, option, lien, charge
or encumbrance other than liens or security interests in existence on the date
hereof and statutory liens to secure taxes that are not yet due and payable;
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(f) CONDITION OF ASSETS. Maintain in good working
order and condition, ordinary wear and tear excepted, and in compliance in all
material respects with all applicable laws and regulations, all vehicles,
machinery, equipment, computers, furniture, fixtures, tools, and other tangible
assets, wherever located, that are used, leased or owned by the Company;
(g) AGREEMENTS. Except as set forth on Schedule
5.2(g), observe and perform all terms, conditions, covenants and obligations
contained in all existing agreements between the Company and third parties the
violation of which would have, individually or in the aggregate, a Material
Adverse Effect on the Company; and, except as required by any existing
agreements, not enter into any new agreements or transactions, or incur any
expenditures, liabilities or obligations, involving more than $25,000
individually or in the aggregate, or renew, extend, amend or modify any existing
agreement involving any commitments, obligations, liabilities or requiring any
expenditures that would exceed $25,000 individually or in the aggregate; not
take any action which would cause a breach or violation of or default under any
material agreement, lease, contract, or other written instrument, commitment or
arrangement, or under any permit, license, franchise, judgement, writ or order,
applicable to or affecting the Seller or its Business, and promptly notify Buyer
in writing of the occurrence of any such breach or default; and not enter into
any transaction with any shareholder, director or officer or any person or
entity related to or affiliated with any such person;
(h) CONSENTS; COMPLIANCE WITH LAWS. Use its
reasonable best efforts to obtain and maintain all consents, assignments or
approvals of, and licenses, permits and franchises and rights to operate granted
by, governmental authorities and agencies and other third parties, in form and
substance reasonably satisfactory to Buyer, the absence or loss of which would
have a Material Adverse Effect on the Business or the Company either prior to or
following the Closing; and not take any action which would result in a violation
of or the noncompliance with any laws, regulations, consents or approvals
applicable to the Company or any conditions imposed on the Company under any of
its permits, franchises, contracts or licenses, where such violation or
non-compliance could have a material adverse effect on the Business or
operations of the Seller, or result in the incurrence of any material liability
by the Company or in the revocation, modification or loss of any license, permit
or right needed for the operation of the Company's Business as presently
conducted by the Company, or which would adversely affect the obtaining of
government approvals needed for Buyer's acquisition of the Shares; and cooperate
with Buyer and render to Buyer such assistance as Buyer may reasonably request
in obtaining such governmental approvals;
(i) TAXES. Pay, when due, and prior to the imposition
or assessment of any interest, penalties or liens by reason of the non-payment
of, all Taxes (as defined above) assessed against the Company, any of the
Company assets;
(j) DIVIDENDS, ETC. Not: (i) declare or pay any
dividends or make any distributions with respect to or redeem any shares of the
Company's capital stock; (ii) accelerate the payment of or prepay any
indebtedness or other obligations of the Company; (iii) approve or effect any
reclassification or recapitalization of the Company or its authorized or
outstanding shares; (iv) merge or consolidate the Company with or sell any of
its assets to a third party other than sales of assets in the ordinary course of
business and consistent with past practices; (v) approve or commence any
proceedings for the liquidation of the Company; and (vi) enter into any
agreement to do any of the foregoing; and
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(k) CORPORATE MATTERS. Not: (i) amend in any manner
the Articles of Incorporation or Bylaws of the Company; (ii) alter the
composition or membership of the Company's Board of Directors; (iii) authorize
or issue any shares of capital stock of any class or series; (iv) create or
issue any warrants, obligations, subscriptions, options, convertible securities
or other commitments under which any additional shares of the capital stock of
any class or other equity securities of the Company may be directly or
indirectly authorized, issued or transferred; or (v) agree to do any of the
above.
(l) LIABILITIES AND EXPENSES. Not: create or incur
(whether as principal, surety or otherwise) any actual or contingent liabilities
or expenses other than liabilities and expenses incurred in the ordinary course
of business consistent with past practices.
5.3 CERTAIN COVENANTS OF THE COMPANY. Unless and until this
Agreement has been terminated in accordance with and for any reason permitted
herein, the Company, nor any of their respective representatives, agents,
officers, directors, or the Shareholders, will solicit or accept offers from,
provide information or assistance to, or negotiate or enter into any agreement
or understanding, oral or written, with, any other person or entity regarding or
relating to (i) the sale, merger, or reorganization of the Company; (ii) the
sale of any of the Company's assets (other than sales of assets by the Company
in the ordinary course of business and consistent with past practices); (iii)
the sale or other transfer of any of the outstanding shares of Company capital
stock or the issuance of any new shares of capital stock or other securities of
the Company; or (iv) any other transaction which could cause or result in any
change, other than of an immaterial nature, in the Company's business, or which
could interfere in any manner with the consummation of the transactions
contemplated in this Agreement.
6. OBLIGATIONS PENDING AND FOLLOWING THE CLOSING.
6.1 PAYMENT OF SECURED OBLIGATIONS; TERMINATION OF LIENS AND
ENCUMBRANCES. The Company hereby covenants that it shall arrange to pay (from
the Company's accounts), at or prior to the Closing, all of the indebtedness or
other obligations listed on SCHEDULE 6.1(a) (the "Secured Obligations") and to
obtain, concurrently therewith, from the holders of the Secured Obligations, and
any other persons or entities who may hold any security interest or other Lien
or Encumbrance on any of the Company's assets except for those operating leases
existing at or prior to the Closing and listed on SCHEDULE 6.1(b), such
documents and instruments (including UCC Termination Statements) as the Buyer
may reasonably request (i) to evidence the payment of such Secured Obligations;
and (ii) to effectuate and evidence the removal and termination of such security
interests and other Liens and Encumbrances and the release, by the holders of
the Secured Obligations or any such Liens or Encumbrances, of any claims they
may have against the Company and the Company's assets. If it is determined at
any time hereafter that there continues to exist any Lien or Encumbrance on any
of the Company's assets that was in existence on or prior to the date hereof, or
if any Lien or Encumbrance is imposed or placed on any of the Company's assets
(or any replacements thereof) after the date hereof as a result of any act or
omission of the Company, occurring on or prior to the Closing Date, then, on the
demand of Buyer, the Sellers shall, joint and severally, cause such Lien or
Encumbrance to be removed at no expense or liability to Buyer.
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6.2 FURTHER ASSURANCES. Each party hereto shall execute and
deliver after the date hereof such instruments and take such other actions as
the other party may reasonably request in order to carry out the intent of this
Agreement or to better evidence or effectuate the transactions contemplated
herein.
6.3 EMPLOYMENT AGREEMENTS; CONSULTING AGREEMENT. Concurrently
with the Closing, (i) the Company and each of Beverly Refkin, Stephen Refkin and
Sherman Clay shall enter into an Employment Agreement in the form of EXHIBIT E
hereto, which Employment Agreements shall include the terms described in
SCHEDULE 6.3 hereto; and (ii) the Company and each of Paul Refkin and Jeff Davis
shall enter into a Consulting Agreement in the form of EXHIBIT F attached hereto
(the "Consulting Agreement"), which shall include the terms described in
SCHEDULE 6.3 hereto.
6.4 OPTION PLAN. Subject to and as of the Closing, Buyer shall
set aside a pool of options to acquire One Hundred and Fifty Thousand (150,000)
shares of Buyer's Common Stock (the "New Options") to be granted to employees of
the Company immediately following the Closing. The New Options shall be
distributed among the Company's employees in such amounts and manner as shall be
determined, at the sole discretion of Beverly Refkin. The exercise price for
such New Options shall be the closing price of Buyer's Common Stock on the
American Stock Exchange on the date of grant. The New Options shall be subject
to such additional terms and conditions as may be provided in Buyer's stock
option plan, a copy of which has been provided to Sellers.
6.5 CONSENTS. Each party to this Agreement shall use its
reasonable best efforts to obtain or cause to be obtained at the earliest
practicable date, and prior to the Closing, all consents, approvals and
licenses, if any, which such party requires to permit it to consummate the
transactions contemplated hereby without violating any material agreement,
contract, instrument or applicable law or regulation, license or permit, to
which it is a party or to which it or its assets are subject. The parties hereto
shall cooperate with each other in their efforts to obtain all such consents,
approvals and licenses.
6.6 NOTICE OF BREACH. Each party to this Agreement will
immediately give notice to the other parties of the occurrence of any event, or
the failure of any event to occur, that results in a breach by it of any
representation or warranty or a failure by it to comply with or fulfill any
covenant, condition or agreement contained herein.
6.7 Restrictive Covenants. Buyer agrees that, until such time
as the Unsecured Promissory Notes and the Secured Promissory Notes are paid in
full, Buyer shall not (i) open any plastic surgery center within ten (10) miles
of the Centers and (ii) use or distribute any retained earnings from the
Company.
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7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS. Regardless
of any investigation, verification, knowledge or approval by any party hereto of
any representation and warranty made by the other party hereto, whether in this
Agreement or such other party's Disclosure Schedules, all of the respective
representations and warranties of each party hereto shall survive the
consummation of the transactions contemplated hereby (the "Closing"), and shall
continue in full force and effect, until the expiration of one (1) year
following the date hereof; provided, however, that the representations and
warranties set forth in Section 3.21 (Capitalization) and Section 3.22 (Stock
Ownership) shall continue in full force and effect following the Closing. The
covenants of any party hereto that cannot be or are not fully performed by such
party on or prior to the Closing Date shall survive the Closing until fully and
finally performed.
8. THE CLOSING. Unless this Agreement is terminated pursuant to Section
9 below, the consummation of the transactions contemplated hereby (the
"Closing") shall take place on January 2, 2001 at a location mutually agreed to
by the parties (the "Closing Date").
8.1 CLOSING DELIVERIES OF THE SELLERS. At the Closing, the
Sellers shall deliver, or cause to be delivered to Buyer, the documents and
instruments set forth on SCHEDULE 8.1 (the "Sellers' Closing Documents") in form
and substance reasonably satisfactory to Buyer and its counsel, including, but
not limited to the stock certificates evidencing the Shares, accompanied by
appropriate instruments of transfer duly executed by the Sellers.
8.2 CLOSING DELIVERIES OF BUYER. At the Closing, Buyer shall
deliver, or cause to be delivered, to the Sellers, the documents and instruments
set forth on SCHEDULE 8.2 (the "Buyer's Closing Documents"), in form and
substance reasonably satisfactory to Sellers and its counsel.
9. TERMINATION. Upon the execution of this Agreement by the parties
hereto, Company and the Sellers shall deliver a check in the aggregate amount of
Fifty Thousand Dollars ($50,000) to the law firm of Kipnis & Kahn, Ltd.
("Trustees"). Prior to the execution of this Agreement by the parties hereto,
Buyer delivered a check in the amount of Fifty Thousand Dollars ($50,000) to the
Trustees. The checks to be delivered or have been delivered to the Trustees
hereunder shall be the "Trust Funds". Trustee shall hold said Trust Funds to the
date of closing or until such Trust Funds are distributed pursuant to this
Section 9. If Sellers shall fail, for any reason, to close on the Closing Date,
Buyer shall have the right to forthwith terminate this Agreement and upon said
termination, Trustee shall distribute all of the Trust Funds to Buyer. If Buyer
shall fail, for any reason, to close on the Closing Date, the Company and
Sellers shall have the right to forthwith terminate this Agreement and upon said
termination, Trustee shall distribute all Trust Funds to Sellers. If neither of
the parties hereto is prepared to close on the Closing Date, then the Trustees
shall continue to hold the Trust Funds subject to the joint direction of said
parties. Upon the Closing the Fifty Thousand Dollars ($50,000) deposited by
Buyer shall be applied as credit to the Cash Payment required to be paid by
Buyer at the time of Closing and the Fifty Thousand Dollars ($50,000) deposited
by the Company and Sellers shall be returned to the Sellers. Notwithstanding any
language to the contrary herein contained, the terms and conditions of this
paragraph may be modified by the parties as contemplated by that certain Payment
Agreement to be executed by the parties.
10. INDEMNIFICATION PROVISIONS.
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10.1 OBLIGATION OF THE SELLERS. The Sellers shall jointly and
severally indemnify, hold harmless and defend Buyer and the Company and their
directors, officers, stockholders, employees and agents and the respective
successors and assigns of Buyer, the Company and such other persons (all of the
foregoing, collectively, the "Indemnified Parties" or, individually, an
"Indemnified Party"), from and against any and all Buyer Liabilities (as
hereinafter defined) that arise from or are in connection with:
(a) Any facts, circumstances or events, the existence
or happening of which constitutes a material breach of or material inaccuracy in
any of the representations or warranties of the Sellers or the Company contained
in this Agreement, or in any of the Sellers' Disclosure Schedules or Closing
Certificates;
(b) Any breach or default by the Sellers of any of
their covenants or agreements contained in this Agreement;
(c) Any injury to or death of any person or damage to
property arising from the operation or conduct of the Company's Business prior
to the Closing whether or not such injury, death or damage, or any claim or suit
with respect thereto is known or unknown, is disclosed in this Agreement or in
any Schedule or Exhibit hereto, is now pending or is made or brought after the
Closing;
(d) Any of the pending or threatened legal actions
described on Schedule 3.15 hereto; and
(e) Any Taxes arising out of or in connection with
the conduct of the Company prior to the Closing Date.
"BUYER LIABILITIES," as used in this Agreement, shall mean:
(x) demands, claims, actions, suits, and any other legal or investigative
proceedings brought against any or all of the Indemnified Parties, and any
judgments rendered therein or settlements thereof to which any of the
Indemnified Parties become subject and (y) all liabilities, damages, losses,
Taxes, costs and expenses, including, without limitation, reasonable attorneys'
fees, incurred by any of the Indemnified Parties, whether or not they have
arisen from or were incurred in or as a result of any demand, claim, action,
suit, assessment or other proceeding or any settlement or judgment.
10.2 LIMITATIONS ON OBLIGATIONS OF THE SELLERS. The liability
of the Sellers to the Indemnified Parties pursuant to this Section 10 shall be
subject to the following limitations:
(a) The Sellers shall not be required to indemnify
any of the Indemnified Parties under this Section 10 for any Buyer Liabilities,
unless and until the aggregate amount of Buyer Liabilities exceeds the sum of
$50,000 (the "Deductible"), whereupon the Sellers shall become liable to
indemnify the Indemnified Parties hereunder for all Buyer Liabilities, including
the initial $50,000.
(b) The maximum aggregate liability of the Sellers
under this Section 10 shall be $200,000; provided, however, that the maximum
aggregate liability of the Sellers under this Section 10 related to a breach of
a representation and warranty set forth in Section 3.21 (Capitalization) and/or
Section 3.22 (Stock Ownership) shall be an amount equal to the Purchase Price.
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<PAGE>
10.3 THIRD-PARTY CLAIMS. In the event of the assertion of a
third-party claim or dispute which, if adversely determined, would entitle any
of the Indemnified Parties to indemnification hereunder (a "Third-Party Claim"),
Buyer or any other of the Indemnified Parties shall promptly notify any of the
Sellers thereof in writing; provided, however, that any delay in providing or
failure to provide such notification shall not affect the right of the
Indemnified Parties to indemnification hereunder, except to the extent the
Parties are materially prejudiced by the delay or failure. The Sellers may
elect, by written notice to Buyer within not more than ten (10) days of the
earliest date that any of the Sellers becomes aware of such Third-Party Claim,
to assume and direct, at their sole expense, the defense thereof with counsel
that is reasonably acceptable to Buyer. After the assumption of such defense by
the Sellers, with counsel reasonably acceptable to Buyer, and for so long as the
Sellers conduct such defense on a diligent and timely basis, the Sellers shall
not be responsible for the payment of legal fees incurred thereafter in
connection with such Third-Party Claim by the Indemnified Party or Parties (who
may, however, continue to participate in the defense thereof with separate
counsel); PROVIDED, HOWEVER, that, the Sellers shall be responsible for paying
the fees and expenses of one separate counsel for the Indemnified Parties in
each local jurisdiction in which any Third-Party Claim is brought or is pending
if any of the Sellers and any of the Indemnified Parties have conflicting
positions with respect to such Third-Party Claim or any of the Sellers, on the
one hand, or any of the Indemnified Parties, on the other hand, have defenses
not available to the other. If the Sellers fail to, and until they undertake the
defense of any such Third-Party Claim in accordance with the provisions hereof,
or if the Sellers discontinue the diligent and timely conduct thereof, any of
the Indemnified Parties may undertake such defense and the Sellers shall be
responsible for reimbursing the Indemnified Parties for their legal fees and
expenses in connection therewith as and when such legal fees and expenses are
incurred by them. No party hereto may settle or compromise any such Third-Party
Claim or dispute without the prior written consent of the other parties hereto,
which consent shall not be unreasonably withheld, except that Buyer or any other
of the Indemnified Parties may settle or compromise any such Third-Party Claim
without such consent, if (i) the Sellers have not assumed the defense thereof in
accordance with this Section 10.3 or (ii) the Sellers are disputing or have
breached any of their obligations hereunder to indemnify any of the Indemnified
Parties with respect to such Third-Party Claim.
10.4 PROCEDURES APPLICABLE TO INDEMNIFICATION CLAIMS. To be
effective, any claim for indemnification under this Section 10 by any of the
Indemnified Parties must be made by a written notice (a "Notice of Claim") to
any of the Sellers delivered or sent in manner set forth in Section 11.1 hereof.
Upon receipt of a Notice of Claim, the Sellers shall have thirty (30) calendar
days to contest its indemnification obligation with respect to such claim, or
the amount thereof, by written notice to Buyer (a "Contest Notice"). Such
Contest Notice shall specify the reasons or bases for the objection of the
Sellers to the indemnification claim, and if the objection relates to the amount
of the Buyer Liability asserted, such Contest Notice shall also set forth the
amount, if any, which the Sellers believe is due the Indemnified Party or
Parties. If a Contest Notice is not given to the Buyer within such 30-day
period, the obligation of the Sellers to pay to the Indemnified Parties the
amount of the Buyer Liability arising out of the matters set forth in the Notice
of Claim shall be deemed established and accepted by the Sellers. If, on the
other hand, any of the Sellers contests a Notice of Claim within such 30-day
period, Buyer and the Sellers shall thereafter attempt in good faith to resolve
their dispute by agreement. If they are unable to so resolve their dispute
within the thirty (30) days following the date the amount of the Buyer Liability
has been established, such dispute shall be resolved by binding arbitration, as
provided in Section 11.9 below. The award of the arbitrator shall be final and
binding on the parties and may be enforced in any court of competent
jurisdiction. Upon final determination of the amount of the Buyer Liability that
is the subject of any indemnification claim (whether such determination is the
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result of the Sellers' acceptance of or failure to contest a Notice of Claim, or
of a resolution of any dispute with respect thereto by agreement of the parties
or binding arbitration), such amount shall be paid, in cash or by first reducing
the principal and interest due on the Secured Promissory Notes on a pro rata
basis and if they are paid in full, by then reducing the principal and the
interest on the Unsecured Promissory Notes on a pro rata basis, by the Sellers,
who shall be jointly and severally liable therefor, to the Indemnified Party or
Parties who have been determined to be entitled thereto within ten (10) business
days of such final determination of the amount of the Buyer Liability due by the
Sellers. Notwithstanding anything to the contrary contained elsewhere in this
Section 10, if the Sellers are contesting only the amount of any Buyer
Liability, then, as a condition precedent to the effectiveness of any Contest
Notice, the Sellers shall pay to Buyer concurrently with the delivery of such
Contest Notice the portion of the Buyer Liability which they are not contesting.
11. MISCELLANEOUS.
11.1 NOTICES. All notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed to have been
duly given, (i) on the date of delivery if delivered in person; (ii) on the
second business day after being sent by fax, provided that the successful
transmission of the fax has been confirmed through a confirmation function sheet
provided by the fax machine used for such transmission and a true and correct
copy thereof is sent by first class mail to the party to which the fax was sent
within one (1) business day thereafter; or (iii) on the third business day
following the deposit thereof in the United States Mails, provided it is mailed
by certified mail, return-receipt requested and postage prepaid and properly
addressed as set forth on EXHIBIT G hereto. Any party hereto may from time to
time, by written notice to the other parties, designate a different address,
which shall be substituted for the one specified in EXHIBIT G hereto.
11.2 ASSIGNMENT. Neither party may assign this Agreement, or
assign any of their respective rights or delegate any of their respective duties
hereunder, without the prior written consent of the other party.
11.3 SEVERABILITY. Any provision of this Agreement which is
illegal, invalid or unenforceable shall be ineffective to the extent of such
illegality, invalidity or unenforceability, without affecting in any way the
remaining provisions hereof.
11.4 GOVERNING LAW. This Agreement is deemed to have been made
in the State of Florida, and its interpretation, its construction and the
remedies for its enforcement or breach are to be applied pursuant to, and in
accordance with, the laws of the State of Florida for contracts made and to be
performed in that state.
11.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement (which
includes the Exhibits and Schedules hereto, which are an integral part of this
Agreement), and each additional agreement and document to be executed and
delivered pursuant hereto (the "Additional Agreements"), constitute all of the
agreements of the parties with respect to, and supersede all prior agreements
and understandings relating to the subject matter of, this Agreement and the
Additional Agreements and the transactions contemplated by this Agreement and
the Additional Agreements. This Agreement may not be modified or amended except
by a written instrument specifically referring to this Agreement signed by the
parties hereto.
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11.6 WAIVER. No waiver by one party of the other party's
obligations, or of any breach or default by the other party of any
representation or warranty or any covenant hereunder of the other party, shall
be valid or effective, unless such waiver is set forth in writing and is signed
by the party giving such waiver; PROVIDED, HOWEVER, that no such waiver shall be
deemed to be a waiver of either any subsequent breach or default of the same or
similar nature or of any other representation or warranty or covenant of such
other party hereunder.
11.7 INTERPRETATION; HEADINGS. This Agreement is the result of
arms'-length negotiations between the parties hereto and no provision hereof,
because of any ambiguity found to be contained therein or otherwise, shall be
construed against a party by reason of the fact that such party or its legal
counsel was the draftsman of that provision. Unless otherwise indicated
elsewhere in this Agreement, (i) the term "or" shall not be exclusive; (ii) the
term "including" shall mean "including, but not limited to," and (iii) the terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific section,
subsection, paragraph or clause where such terms may appear. The section,
subsection and any paragraph headings contained herein are for the purpose of
convenience only and are not intended to define or limit or affect, and shall
not be considered in connection with, the interpretation of any of the terms or
provisions of this Agreement.
11.8 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9 ARBITRATION. Except as otherwise provided hereinafter,
all claims, controversies, differences or disputes between any of the parties
hereto arising from or relating to this Agreement, or any of the Additional
Agreements between the parties, shall be determined solely and exclusively by
arbitration in accordance with the rules of commercial arbitration then in
effect of the American Arbitration Association, or any successors thereto, in
Broward, Florida. Each of the parties consent to venue for such arbitrations in
such county and to service of process by certified or registered mail to their
respective addresses where notices may be sent pursuant to Subsection 11.1.
Either party may initiate any such arbitration and, if initiated, the parties
shall jointly select a mutually acceptable arbitrator therefor. In the event the
parties fail to agree upon such an arbitrator within twenty (20) days after
written notification of the initiation of the arbitration has been given to all
of the parties, then each party shall select an arbitrator and such arbitrators
shall then select a third arbitrator to serve as the sole arbitrator, provided
that if, in such event, either party fails to select such an arbitrator within
seven (7) days, such party's arbitrator shall be selected by the American
Arbitration Association, or any successor thereto, upon application of either
party. Judgment upon the award of the agreed upon arbitrator or the so chosen
third arbitrator, as the case may be, shall be binding and may be entered in any
court of competent jurisdiction. The parties agree to abide by any decision
rendered in any such arbitration as final and binding and waive the right to
submit the dispute to a public tribunal for jury or non-jury trial.
Notwithstanding the foregoing, any party may bring an action in any court of
competent jurisdiction when the remedy sought is limited to injunctive relief of
a breach or threatened breach of this Agreement or any of the Additional
Agreements by another party hereto or specific performance of any of the
obligations of any of the other parties thereto. The prevailing party in any
such arbitration or other proceeding brought in accordance with this Subsection
11.9, shall be reimbursed for its reasonable attorneys' fees and disbursements
and costs incurred in connection therewith by the non-prevailing party.
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IN WITNESS WHEREOF, the undersigned have caused this Stock
Purchase Agreement to be executed by officers thereunto duly authorized, and the
individuals have executed this Stock Purchase Agreement, on the date first above
stated.
BUYER: THE PLASTIC SURGERY COMPANY
a Georgia corporation
By: /S/ Dennis Condon
---------------------------------------
Dennis Condon, Chief Executive Officer
/S/ Steven Refkin
SELLERS: -------------------------------------
Steven Refkin
/S/ Paul Refkin
-------------------------------------
Paul Refkin
/S/ Beverly Refkin
-------------------------------------
Beverly Refkin
/S/ Sherman Clay
-------------------------------------
Sherman Clay
COMPANY: FLORIDA CENTER FOR COSMETIC SURGERY,
a Florida corporation
By: /S/ Paul Refkin
-----------------------------------
Paul Refkin, Chief Executive Officer
26
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SCHEDULE 6.4
------------
TERMS OF EMPLOYMENT AGREEMENTS
------------------------------
BEVERLY REFKIN
--------------
Term: Until the Promissory Notes are paid in full, plus an
option, exercisable at the Company's sole discretion,
for additional one-year periods.
Base: $150,000
Severance: In the event of termination without Cause, Base Salary
shall be payable for a period equal to the grater of (i)
6 months or (ii) the remaining term of the Agreement.
STEPHEN REFKIN
--------------
Term: Until the Promissory Notes are paid in full, plus an
option, exercisable at the Company's sole discretion,
for additional one-year periods.
Base: $100,000
Severance: In the event of termination without Cause, Base Salary
shall be payable for a period equal to the grater of (i)
6 months or (ii) the remaining term of the Agreement.
SHERMAN CLAY
------------
Term: Until the Promissory Notes are paid in full, plus an
option, exercisable at the Company's sole discretion,
for additional one-year periods.
Base: $100,000
Severance: In the event of termination without Cause, Base Salary
shall be payable for a period equal to the grater of (i)
6 months or (ii) the remaining term of the Agreement.
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TERMS OF CONSULTING AGREEMENTS
------------------------------
PAUL REFKIN
-----------
Term: Until the later of (i) when the Promissory Notes are
paid in full or (ii) three years, plus an option,
exercisable at the Company's sole discretion, for
additional one-year periods.
Base: $150,000
Severance: In the event of termination without Cause, Base Salary
shall be payable for a period equal to the grater of (i)
6 months or (ii) the remaining term of the Agreement.
JEFF DAVIS
----------
Term: Until the Promissory Notes are paid in full, plus an
option, exercisable at the Company's sole discretion,
for additional one-year periods.
Fee: $105,400 per annum
Severance: In the event of termination without Cause, Base Salary
shall be payable for a period equal to the grater of (i)
6 months or (ii) the remaining term of the Agreement.
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EXHIBIT A
FORM OF SECURED PROMISSORY NOTE
<PAGE>
EXHIBIT B
FORM OF UNSECURED PROMISSORY NOTE
<PAGE>
EXHIBIT C
REGISTRATION RIGHTS
1. REGISTRATION.
TPSC will within ninety (90) days after issuance of the Shares file a
registration statement for resale of the Shares, and TPSC shall keep such
registration effective at all times until each Seller has either sold all the
Shares or each Seller is able to use Rule 144 of the Securities Act to sell all
the Shares.
2. OBLIGATIONS OF TPSC.
When applicable within the terms hereof and as required to effect any
registration hereunder within the limitations hereof, TPSC shall, as
expeditiously and as reasonably possible, use its reasonable best efforts, to:
(a) Prepare, file and cause to become effective with the Securities and
Exchange Commission (the "SEC") a registration statement (the "Registration
Statement"), and reasonable and necessary amendments to such Registration
Statement, to include the Shares. Such Registration Statement may include other
shares of TPSC's common stock for sale.
(b) Enter into a written underwriting agreement in customary form and
substance reasonably satisfactory to TPSC, the Sellers and the managing
underwriter or underwriters of the public offering of such securities, if the
offering is to be underwritten in whole or in part.
(c) Furnish to the Sellers and to the underwriters of the securities
being registered such reasonable number of copies of the Registration Statement,
preliminary prospectus, final prospectus, and all amendments and supplements
thereto, in conformity with the requirements of the Securities Act or as such
underwriters may reasonably request in order to facilitate the public offering
of such securities.
(d) Register and qualify the securities covered by such Registration
Statement under such state securities or blue sky laws of such jurisdictions
deemed necessary by TPSC, and prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements and to take
such other actions as may be necessary to maintain such registration and
qualification as necessary.
(e) Notify the Sellers, at any time when a prospectus relating to the
Shares covered by the Registration Statement is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. TPSC will promptly amend
or supplement the Registration Statement to correct any such untrue statement or
omission.
<PAGE>
(f) Notify the Sellers of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for the purpose.
(g) Do such other actions or make available to the Sellers such
documents as reasonably required under the Securities Act and as reasonably
requested in relation to the registration of securities covered by the
Registration Statement.
3. EXPENSES.
With respect to each inclusion of the Shares held by the Sellers in a
registration statement pursuant to Section 1 and 2 of this Exhibit B, all fees,
costs and expenses of and incidental to such registration statement and any
underwritten public offering in connection therewith shall be borne entirely by
TPSC; provided, however, that the Sellers shall bear their pro rata share of any
underwriting discounts and commissions, state transfer taxes and brokerage
commissions, this pro rata share to be paid solely from the proceeds from the
sale of Shares, and with the Sellers not otherwise liable to pay these amounts.
The fees, costs and expenses to be borne by TPSC as provided in the preceding
sentence shall include, without limitation, all registration, filing,
qualification and NASD fees, printing expenses, fees and disbursements of
counsel and accountants for TPSC, fees and disbursements of counsel for the
underwriter or underwriters (if TPSC and/or the Sellers are required to bear
such fees and disbursements), and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the Shares to be offered are to be registered or
qualified. All costs, fees and expenses incurred in connection with all
additional registrations and qualifications shall be borne pro rata by TPSC, the
Sellers and any other shareholders of TPSC participating in such registration,
this pro rata share to be paid solely from the proceeds from the sale of Shares,
and with the Sellers not otherwise liable to pay these amounts.
4. INDEMNIFICATION.
(a) INDEMNIFICATION BY TPSC. TPSC shall indemnify and hold harmless the
Sellers and each of their attorneys, accountants and any underwriter (as defined
in the Securities Act or the United States Securities Exchange Act of 1934, as
amended (the "Exchange Act")), for the Sellers, from and against, and shall
reimburse the Seller and each such attorney, accountant, and underwriter with
respect to, any and all claims, actions, demands, losses, damages, liabilities,
costs and expenses to which the Sellers or any such attorney, accountant, or
underwriter may become subject under the Securities Act, the Exchange Act or
otherwise insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses arise out of or are caused by any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
TPSC shall not be liable in any such case to the extent that any such claim,
action, demand, loss, damage, liability, cost or expense arises out of or is
based upon an untrue statement or omission so made in reliance upon and in
strict conformity with written information furnished by the Sellers or any of
their attorneys or accountants specifically for use in the preparation thereof.
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(b) INDEMNIFICATION BY THE SELLERS. The Sellers, both jointly and
severally, shall indemnify and hold harmless TPSC and each of its officers,
directors, employees, attorneys and accountants, any underwriter (as defined in
the Securities Act or the Exchange Act) for TPSC and each person, if any, who
controls TPSC within the meaning of the Securities Act or the Exchange Act from
and against, and shall reimburse TPSC and each such officer, director, employee,
attorney, accountant, underwriter and controlling person with respect to, any
and all claims, actions, demands, losses, damages, liabilities, costs and
expenses to which TPSC or such officer, director, employee, attorney,
accountant, underwriter or controlling person may become subject under the
Securities Act, the Exchange Act or otherwise insofar as such claims, actions,
demands, losses, damages, liabilities, costs or expenses arise out of or are
caused by any untrue statement or alleged untrue statement of any material fact
contained in any registration statement, any prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
each case to the extent, but only to the extent, that any such untrue statement
or omission was so made in reliance upon and in strict conformity with written
information furnished by any Seller or any of their, attorneys or accountants
specifically for use in the preparation thereof.
(c) INDEMNIFICATION PROCEDURES. Promptly after receipt by an
indemnified party pursuant to the provisions of Section 4(a) or 4(b) hereof of
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party shall, if a claim thereof
is to be made against the indemnifying party pursuant to the provisions of such
Sections 4(a) or 4(b), notify the indemnifying party of the commencement
thereof; provided, however, that the failure to so notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may have to
the indemnified party otherwise than hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to participate
in, and to the extent that it may wish, jointly assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election to so assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party pursuant to the provisions of Section 4(a) or 4(b) for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of investigation
(except if representation of such indemnified party by counsel to the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between the indemnified party and any other party represented by such
counsel). No indemnifying party shall be liable to an indemnified party for any
settlement of any action or claim without the consent of the indemnifying party.
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EXHIBIT D
NON-COMPETITION AGREEMENTS
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EXHIBIT E
EMPLOYMENT AGREEMENTS
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EXHIBIT F
CONSULTING AGREEMENTS
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EXHIBIT G
CONTACT INFORMATION
