EXECUTION
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LIFESCIENCES OPPORTUNITIES, INC.,
AND
DRTATTOFF, LLC
DATED AS OF SEPTEMBER 7, 2007
TABLE OF CONTENTS
Page No.
ARTICLE I THE MERGER.........................................................1
1.1 The Merger.................................................1
1.2 Closing; Effective Time....................................1
1.3 Effects of Merger..........................................2
1.4 Certificate of Incorporation...............................2
1.5 Bylaws.....................................................2
1.6 Directors and Officers.....................................2
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK.............................2
2.1 Conversion of Capital Stock................................2
2.2 Exchange of Certificates...................................3
2.3 Certain Adjustments........................................4
2.4 Warrants...................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF DR. TATTOFF....................5
3.1 Organization and Qualification; Subsidiaries...............5
3.2 Equity Investments.........................................5
3.3 Authority to Execute and Perform Agreement.................5
3.4 Binding Effect.............................................5
3.5 Capitalization.............................................5
3.6 Vote Required; Managers' Approval..........................6
3.7 Litigation.................................................6
3.8 Title to Properties; Absence of Liens......................6
3.9 Compliance with Laws.......................................6
3.10 Consents and Approvals.....................................6
3.11 Non-contravention..........................................7
3.12 Company Material Contracts.................................7
3.13 Taxes......................................................7
3.14 Financial Statements.......................................8
3.15 Books and Records..........................................8
3.16 Intellectual Property......................................8
3.17 Environmental Matters......................................9
3.18 Real Property..............................................9
3.19 Broker's Fees..............................................9
3.20 Labor Matters..............................................9
3.21 Absence of Liabilities.....................................9
3.22 Absence of Certain Changes or Events.......................9
3.23 Full Disclosure...........................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................10
4.1 Organization and Qualification; Subsidiaries..............10
4.2 Equity Investment.........................................11
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4.3 Authority to Execute and Perform Agreement................11
4.4 Binding Effect............................................11
4.5 Capitalization............................................11
4.6 Board Approval............................................12
4.7 SEC Reports and Financial Statements......................12
4.8 No Material Adverse Change................................12
4.9 Books and Records.........................................13
4.10 Litigation................................................13
4.11 Absence of Liabilities....................................13
4.12 Title to Properties; Absence of Liens.....................13
4.13 Compliance with Laws......................................13
4.14 Intellectual Property.....................................13
4.15 Non-Contravention.........................................13
4.16 Consents and Approvals....................................14
4.17 Material Contracts........................................14
4.18 Taxes.....................................................14
4.19 Environmental Matters.....................................15
4.20 Real Property.............................................16
4.21 Broker's Fees.............................................16
4.22 Labor Matters.............................................16
4.23 Articles of Incorporation, Bylaws, and Minute Books.......16
4.24 Full Disclosure...........................................16
ARTICLE V ADDITIONAL AGREEMENTS OF THE PARTIES..............................17
5.1 Actions Pending Closing...................................17
5.2 Post-Effective Amendment..................................19
5.3 Company Shareholders' Approval............................19
5.4 Dr. Tattoff Stockholder Approval..........................19
5.5 Efforts; Consents.........................................19
5.6 Filing of Tax Returns; Payment of Taxes...................19
5.7 Access to Information.....................................20
5.8 Confidentiality...........................................20
5.9 Notification of Certain Matters...........................21
5.10 Non-Solicitation..........................................21
5.11 Further Assurances........................................22
5.12 Public Disclosure.........................................22
5.13 Board of Directors........................................22
ARTICLE VI CONDITIONS TO CLOSING............................................23
6.1 Conditions to Each Party's Obligations to Consummate
the Transactions........................................23
6.2 Conditions to Obligations of the Company to Consummate
the Transactions........................................23
6.3 Conditions to Obligations of Dr. Tattoff to Consummate
the Transactions........................................24
ARTICLE VII TERMINATION.....................................................25
7.1 Termination...............................................25
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7.2 Effect of Termination.....................................26
7.3 Expenses; Termination Fees................................26
ARTICLE IX MISCELLANEOUS....................................................27
8.1 Certain Definitions; Rules of Construction................27
8.2 Waivers and Amendments....................................33
8.3 Governing Law.............................................33
8.4 Notices...................................................33
8.5 Section Headings..........................................34
8.6 Counterparts..............................................34
8.7 Assignments...............................................34
8.8 Entire Agreement; Enforceability..........................34
8.9 Severability..............................................34
Exhibits
Exhibit A Investment Letter
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 7, 2007, is entered into by and among LIFESCIENCES OPPORTUNITIES,
INC., a Florida corporation the "Company"), and DRTATTOFF, LLC, a California
limited liability company ("Dr. Tattoff")
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of the Company and Dr. Tattoff
have each approved the merger of Dr. Tattoff with and into the Company, with the
Company surviving (the "Merger"), on the terms and conditions contained herein
and in accordance with the Florida Business Corporation Act (the "FLBCA") and
the ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Limited Liability Company Act (the "CALLCA"), and have
determined that the Merger and the transactions contemplated herein are
advisable and in the best interest of their respective corporations and
stockholders;
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and to
prescribe various conditions to the Merger; and
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a) and
Section 351 of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 and Section 351 of the Code.
NOW THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined below), Dr. Tattoff shall be
merged with and into the Company in accordance with the applicable provisions of
the FLBCA and the CALLCA and in accordance with this Agreement, and the separate
existence of Dr. Tattoff shall cease. The Company shall be the surviving
corporation in the Merger (hereinafter sometimes referred to as the "Surviving
Corporation"), and shall continue under the laws of Florida.
1.2. Closing; Effective Time. Subject to the satisfaction or waiver
of all of the conditions to Closing contained in Article VI, the closing of the
Merger (the "Closing"), shall take place at the offices of Blank Rome LLP, ▇▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as soon as practicable (but
not later than 5 Business Days) after the satisfaction or waiver of the
conditions to Closing contained in Article VI (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions), unless another date or place is
agreed to in writing by the parties hereto. The date on which the Closing
actually occurs is hereinafter referred to as the "Closing Date." As soon as is
practicable after the Closing, the parties hereto shall cause the Merger to be
consummated by (i) delivering to the Secretary of State of the State of Florida
a certificate of merger (the "Florida Certificate of Merger"), in such form as
required by, and executed and acknowledged in accordance with, the relevant
provisions of the FLBCA and (ii) delivering to the Secretary of State of the
State of California a certificate of merger (the "California Certificate of
Merger"), in such form as required by, and executed and acknowledged in
accordance with, the relevant provisions of the CALLCA. The Merger shall become
effective as of the date and at such time (the "Effective Time") as the Florida
Certificate of Merger is filed with the Secretary of State of the State of
Florida with respect to the Merger.
1.3. Effects of Merger. The Merger shall have the effects set forth
in the applicable provisions of the FLBCA and the CALLCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of Dr. Tattoff shall vest
in the Surviving Corporation, and all debts, liabilities and duties of Dr.
Tattoff shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4. Certificate of Incorporation. The Certificate of Incorporation
of the Company in effect immediately prior to the Effective Time shall become,
from and after the Effective Time, the Certificate of Incorporation of the
Surviving Corporation, until amended or repealed in accordance with the terms
thereof and with Applicable Law.
1.5. Bylaws. The Bylaws of the Company in effect immediately prior
to the Effective Time shall become, from and after the Effective Time, the
Bylaws of the Surviving Corporation, until thereafter amended or repealed in
accordance with the terms thereof and with Applicable Law.
1.6. Directors and Officers. The directors and officers of Dr.
Tattoff immediately prior to the Effective Time shall become, from and after the
Effective Time, the directors and officers of the Surviving Corporation, each to
hold office from the Effective Time in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualify, or they resign or are
removed.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK
2.1. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the parties or the
registered holders of any shares of capital stock of the Company (each a
"Company Shareholder," and collectively, the "Company Shareholders"):
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(a) Each unit of outstanding membership interest of Dr.
Tattoff (the "Membership Interests") shall be converted into and become 75 fully
paid and non-assessable shares of common stock, par value $0.0001 per share, of
the Surviving Corporation. The number of shares of Company Common Stock issued
to each member of Dr. Tattoff (each a "Member" and collectively the "Members")
in accordance with this Section 2.1(a) shall hereafter be referred to as the
"Merger Shares". At the Effective Time, all Membership Interests of Dr. Tattoff
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each Dr. Tattoff Member shall cease to have any
rights with respect thereto, except the right to receive the Merger Shares.
(b) No fraction of a share of Company Common Stock will be
issued, but in lieu of such issuance, each Dr. Tattoff Member who would
otherwise be entitled to a fraction of a share of Company Common Stock as a
result of the conversion and exchange of shares contemplated by this Article II
shall receive from the Company one (1) additional share of Company Common Stock.
The fractional share interest of Dr. Tattoff Members shall be aggregated such
that no Dr. Tattoff Member shall receive more than the one (1) share of Company
Common Stock with respect to any interest in fractional shares.
2.2. Exchange of Interests.
(a) Immediately prior to the Closing, the Company shall
deposit, or shall cause to be deposited, with Blank Rome LLP (the "Exchange
Agent"), for the benefit of the Dr. Tattoff Members certificates in the names of
each such Dr. Tattoff Member evidencing the number of Merger Shares to be issued
to such Dr. Tattoff Member in accordance with this Article II. As soon as
reasonably practicable after the Effective Time, the Company will instruct the
Exchange Agent to deliver to each holder of Membership Interests of Dr. Tattoff
a letter of transmittal containing instructions for use in effecting the
exchange of Membership Interests for certificates evidencing the relevant number
of Merger Shares. No interest shall be paid on the Merger Shares. All Merger
Shares issued upon exchange of the Membership Interests of Dr. Tattoff in
accordance with the terms hereof shall be deemed to have been issued or paid in
full satisfaction of all rights pertaining to such shares of Company Common
Stock.
(b) It is understood that the certificates evidencing the
Merger Shares will bear the legends set forth below:
(i) The Securities represented hereby have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or under the securities laws of any other
jurisdictions. These securities are subject to restrictions on
transferability and resale and may not be transferred or
resold except as permitted under the Act and the applicable
state securities laws, pursuant to registration or exemption
therefrom. Investors should be aware that they may be required
to bear the financial risks of this investment for an
indefinite period of time. The issuer of these securities may
require an opinion of counsel in form and substance
satisfactory to the issuer to the effect that any proposed
transfer or resale is in compliance with the Act and any
applicable state securities laws;
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(ii) Any additional legend required by Applicable Law.
The legend set forth in (i) above shall be removed from any certificate
evidencing such Merger Shares upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that such security can be
freely transferred without such a registration statement being in effect and
that such transfer will not jeopardize the exemption or exemptions from
registration pursuant to which the Company issued such Merger Shares.
2.3. Certain Adjustments. If after the date hereof and prior to the
Effective Time and to the extent permitted by this Agreement, the outstanding
Membership Interests of Dr. Tattoff or Company Common Stock shall be changed
into a different number, class or series of shares by reason of any
reclassification, recapitalization or combination, forward stock split, reverse
stock split (other than the Reverse Stock Split), stock dividend or rights
issued in respect of such stock, or any similar event shall occur (any such
action, an "Adjustment Event"), the number of Merger Shares issued in exchange
for each Membership Interests of Dr. Tattoff shall be adjusted correspondingly
to provide to the Members of Dr. Tattoff the right to receive the same economic
effect as contemplated by this Agreement immediately prior to such Adjustment
Event.
2.4. Warrants. At the Effective Time, to the extent not exercised
prior to the Effective Time, each outstanding warrant to purchase Membership
Interests of Dr. Tattoff (a "Dr. Tattoff Warrant") set forth in Section 2.4 of
the Dr. Tattoff Disclosure Letter shall be automatically be converted into a
warrant to acquire such number of shares of Company Common Stock (a "Company
Warrant") as the holder of such Dr. Tattoff Warrants would have been entitled to
receive as Merger Shares had such holder exercised such Dr. Tattoff Warrant in
full immediately prior to the Effective Time at an exercise price per share of
Company Common Stock appropriately adjusted such that the aggregate exercise
price for such Company Warrant shall be the same as it was prior to the
Effective Time. At the Effective Time, Dr. Tattoff shall expressly assume the
due and punctual observance and performance of each and every covenant contained
in, and condition of, the Dr. Tattoff Warrants to be performed and observed by
Dr. Tattoff and all the obligations and liabilities thereunder.
(a) As promptly as practicable after the Effective Time, the
Company shall deliver to each holder of a Dr. Tattoff Warrant a notice that
contains a calculation in reasonable detail and accurately reflects the number
of shares of Company Common Stock that each such holder is entitled to receive
upon the exercise of such holder's Dr. Tattoff Warrant and the applicable
adjusted exercise price. Together with such notice, or as part of such notice,
Company shall deliver a duly executed confirmation that Company has expressly
assumed the due and punctual observance and performance of each and every
covenant contained in, and condition of, the applicable Dr. Tattoff Warrant to
be performed and observed by Dr. Tattoff and all the obligations and liabilities
thereunder.
(b) The number of shares of Company Common Stock issuable upon
exercise of the Company Warrants shall be reserved by Company out of authorized
but unissued Company Common Stock for issuance upon exercise in full of all
Company Warrants after the Effective Time. Notwithstanding the foregoing, upon
the expiration of the Company Warrants, such Company Common Stock reserved for
issuance upon the exercise of the Company Warrants shall no longer be reserved.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DR. TATTOFF
Except as may be provided in a disclosure letter delivered by Dr. Tattoff
to the Company on the date hereof (the "Dr. Tattoff Disclosure Letter"), Dr.
Tattoff hereby represents and warrants to the Company as follows:
3.1. Organization and Qualification. Dr. Tattoff is a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has requisite corporate power and
authority and governmental approvals to own, lease and operate its properties
and to carry on its business as currently conducted. Dr. Tattoff is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the ownership or leasing of its property or the conduct of
its business requires such qualification or licensing, except where the failure
to be so qualified or licensed or in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on Dr. Tattoff.
3.2. Equity Investments. Dr. Tattoff has no subsidiaries and does
not own any equity interest in any other corporation or in any partnership,
limited liability company or other form of business entity, except as set forth
on Schedule 3.2.
3.3. Authority to Execute and Perform Agreement. Dr. Tattoff has the
requisite power and all authority required to enter into, execute and deliver
this Agreement and the Transaction Documents to which it is a party, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby (collectively, the "Transactions"). The
execution, delivery and performance by Dr. Tattoff of this Agreement and the
consummation by Dr. Tattoff of the Transactions have been duly authorized and
approved by all necessary corporate action.
3.4. Binding Effect. This Agreement has been validly executed and
delivered by Dr. Tattoff and, assuming the due execution and delivery hereof by
the Company, constitutes a valid and binding obligation of Dr. Tattoff,
enforceable against Dr. Tattoff in accordance with its terms, except to the
extent such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting or relating to enforcement of creditors' rights generally, and (ii)
general equitable principles (regardless of whether such enforceability is
considered in equity or at law).
3.5. Capitalization. Except for the notes and warrants issued in
connection with the Bridge Financing and except as set forth in Section 3.5(b)
of the Dr. Tattoff Disclosure Letter, there are no existing options, rights,
subscriptions, warrants, unsatisfied preemptive rights, calls, commitments or
agreements relating to (i) the authorized and unissued membership interests of
Dr. Tattoff, or (ii) any securities or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire
from Dr. Tattoff, any membership interests of Dr. Tattoff and no such
convertible or exchangeable securities or obligations are outstanding.
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3.6. Vote Required; Managers' Approval. The only vote necessary to
approve the Merger is the affirmative vote of the holders of a majority of the
outstanding Membership Interests of Dr. Tattoff. The managing members of Dr.
Tattoff, by resolutions duly adopted at a meeting duly called and held at which
a quorum was present or by the unanimous written consent in lieu of such a
meeting, has approved this Agreement, the Merger and the Transactions in
accordance with the requirements of the CALLCA.
3.7. Litigation. There are no judicial, governmental, administrative
or arbitral actions, claims, suits or proceedings or investigations
(collectively, "Legal Proceedings") pending or, to the Knowledge of Dr. Tattoff,
threatened against or involving Dr. Tattoff or any of its respective property or
assets. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental or regulatory body or arbitration tribunal
against or involving Dr. Tattoff.
3.8. Title to Properties; Absence of Liens. Dr. Tattoff has (i) good
and marketable title free and clear of any and all liens and encumbrances of any
kind in and to all of its assets and properties, excluding immaterial matters
and (ii) sufficient rights to all of their respective assets and properties to
permit them to carry on their business as currently contemplated, whether real,
personal or fixed, free and clear of all Liens, in each case, except (a) for
Liens set forth in Section 3.8 of the Dr. Tattoff Disclosure Letter, (b) for
Liens for Taxes not yet due and payable or which Dr. Tattoff is contesting in
good faith and for which adequate reserves have been established, (c) for such
properties and assets as may have been sold since the date hereof in the
ordinary course of business, and (d) for Liens not securing debt that do not
materially detract from the value or materially interfere with the use of the
property subject thereto (collectively, "Permitted Liens").
3.9. Compliance with Laws. Dr. Tattoff is not in violation of,
default under, or conflict with, any applicable order, consent, approval,
authorization, registration, declaration, filing, judgment, injunction, award,
decree or writ of any Governmental Body or court of competent jurisdiction
(collectively, "Orders") or any Applicable Law, except for any such violations
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
3.10. Consents and Approvals. Except for (i) those consents,
approvals, orders, authorizations, filings or notices set forth in Section 3.10
of the Dr. Tattoff Disclosure Letter, (ii) applicable requirements of the
Securities Act, the Exchange Act or state securities or "blue sky" laws ("Blue
Sky Laws"), (iii) the Florida Certificate of Merger and (iv) the California
Certificate of Merger, no consent, approval or authorization of, filing with, or
notice to, any Governmental Body is required by Dr. Tattoff in connection with
the execution, delivery and performance by Dr. Tattoff of this Agreement, each
and every agreement contemplated hereby, and the consummation by Dr. Tattoff of
the Transactions.
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3.11. Non-contravention. The execution and delivery of this
Agreement and the Transaction Documents by Dr. Tattoff, the performance by Dr.
Tattoff of its obligations hereunder and thereunder, and the consummation of the
Transactions contemplated hereby and thereby by Dr. Tattoff (A) do not and will
not conflict with, or result in a breach or violation of (i) any provision of
Dr. Tattoff's charter or bylaws, (ii) any applicable laws, (iii) any material
agreement, contract, lease, license or instrument to which Dr. Tattoff is a
party or by which it or any of its properties or assets are bound and (B) will
not result in the creation or imposition of any Lien upon any of the property or
assets of Dr. Tattoff pursuant to any provision of any contract or Lien.
3.12. Dr. Tattoff Material Contracts. Except as set forth in Section
3.12 of the Dr. Tattoff Disclosure Letter, Dr. Tattoff is not in default under
any Material Contract of Dr. Tattoff, nor to the Knowledge of Dr. Tattoff does
any condition exist that, with notice or lapse of time or both, would constitute
a default thereunder. To the Knowledge of Dr. Tattoff, no other party to any
such Material Contract of Dr. Tattoff is in default thereunder, nor does any
condition exist that with notice or lapse of time or both would constitute a
default thereunder. No approval or consent of any person is needed in order that
the Material Contracts of Dr. Tattoff continue in full force and effect
following the consummation of the transactions contemplated by this Agreement.
3.13. Taxes. Except as set forth in Section 3.13 of Dr. Tattoff
Disclosure Letter:
(a) Filing of Tax Returns. Dr. Tattoff has timely filed, or
has had timely filed on its behalf, with the appropriate Taxing authorities all
Tax Returns in respect of Taxes it is required to file. The Tax Returns filed
(including any amendments thereof) are complete and accurate in all material
respects. Dr. Tattoff has not requested any extension of time within which to
file any Tax Return in respect of any Taxes, which Tax Return has not since been
filed in a timely manner. To the Knowledge of Dr. Tattoff, no claim has ever
been made by any Taxing authority in a jurisdiction where Dr. Tattoff does not
file Tax Returns, or has Tax Returns filed on its behalf, that Dr. Tattoff is or
may be subject to taxation by that jurisdiction, or liable for Taxes owing to
that jurisdiction.
(b) Payment of Taxes. All Taxes owed by Dr. Tattoff (whether
or not shown as due on any Tax Returns) have been paid in full or adequate
reserves on Dr. Tattoff's books and/or records have been established. Dr.
Tattoff has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party. Dr. Tattoff has made
all required estimated Tax payments sufficient to avoid any underpayment
penalties. The unpaid Taxes of Dr. Tattoff (A) do not, as of the Closing Date,
exceed the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect the timing differences between book and Tax income) set
forth on the face of Dr. Tattoff's most recent balance sheets (rather than any
notes thereto) and (B) do not exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
Dr. Tattoff in filing, or having filed on its behalf, its Tax Returns. The
charges, accruals and reserves on the books of Dr. Tattoff in respect of any
liability for Taxes (x) based on or measured by net income for any years not
finally determined, (y) with respect to which the applicable statute of
limitations has not expired or (z) that has been previously deferred, are
adequate to satisfy any assessment for such Taxes for any such years.
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(c) Audits, Investigations or Claims. There is no dispute or
claim which has not been resolved concerning any Tax liability of Dr. Tattoff
either (A) claimed or raised by any Taxing authority in writing or (B) as to
which any of the directors and officers (and employees responsible for Tax
matters) of Dr. Tattoff has Knowledge. There is no currently pending audit of
any Tax Return of Dr. Tattoff by any Taxing authority, and Dr. Tattoff has not
been notified in writing that any Taxing authority intends to audit any Tax
Return of Dr. Tattoff. Dr. Tattoff has not executed any outstanding waivers or
consents regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns.
3.14. Financial Statements.
(a) Dr. Tattoff has delivered to the Company copies of its
balance sheets and statements of income for the fiscal years ended December 31,
2006 and 2005 and its unaudited balance sheets and statements of income for the
six month period ended June 30, 2007 (the "Dr. Tattoff Financial Statements").
Dr. Tattoff Financial Statements present fairly the financial condition and
results of operations of Dr. Tattoff at the dates and for the periods covered by
the Dr. Tattoff Financial Statements. Dr. Tattoff represents and warrants that
there has been no material adverse change in the financial condition of Dr.
Tattoff from that stated in Dr. Tattoff Financial Statements.
(b) The Dr. Tattoff Financial Statements and any notes related
thereto comply as to form in all material respects with applicable accounting
requirements, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
fairly present in all material respects (subject, in the case of the unaudited
interim financial statements, to normal, recurring year end adjustments none of
which are or will be material in amount, individually or in the aggregate) the
consolidated financial position of Dr. Tattoff as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
(c) Dr. Tattoff does not have any direct or indirect
liabilities that were not fully and adequately reflected or reserved against on
the balance sheet or described in the notes to the audited financial statements
of Dr. Tattoff. Dr. Tattoff has no Knowledge of any circumstance, condition,
event or arrangement that has taken place at any time that may hereafter give
rise to any liabilities.
3.15. Books and Records. The books and records, financial and
otherwise, of Dr. Tattoff are in all material respects complete and correct and
have been maintained in accordance with sound business and bookkeeping practices
so as to accurately and fairly reflect, in reasonable detail, the transactions
and dispositions of the assets and liabilities of Dr. Tattoff.
3.16. Intellectual Property. Except as set forth in Section 3.16 of
the Dr. Tattoff Disclosure Letter, Dr. Tattoff has no Intellectual Property for
its business as now conducted and as proposed to be conducted. To the Knowledge
of Dr. Tattoff, the business as conducted and as proposed to be conducted by Dr.
Tattoff does not and will not cause Dr. Tattoff to infringe or violate any of
the Intellectual Property of any other Person.
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3.17. Environmental Matters. (i) Dr. Tattoff is in compliance in all
material respects with applicable Environmental Laws; (ii) Dr. Tattoff has all
Permits required pursuant to Environmental Laws and are in compliance in all
material respects with the terms thereof; (iii) there are no past or present
events, activities, practices, incidents, actions or plans in connection with
the operations of Dr. Tattoff which have given rise to or are reasonably likely
to give rise to any material liability on the part of Dr. Tattoff under any
Environmental Law; (iv) Dr. Tattoff has not generated, used, transported,
treated, stored, released or disposed of, or has suffered or permitted anyone
else to generate, use, transport, treat, store, release or dispose of any
Hazardous Substance in violation of any Environmental Laws; and (v) there has
not been any generation, use, transportation, treatment, storage, release or
disposal of any Hazardous Substance in connection with the conduct of the
business of Dr. Tattoff or the use of any property or facility by Dr. Tattoff,
or to the Knowledge of Dr. Tattoff, any nearby or adjacent properties, in each
case, which has created or might reasonably be expected to create any material
liability under any Environmental Law or which would require reporting to or
notification of any Governmental Body.
3.18. Real Property. Dr. Tattoff does not own, and has not owned,
any real property or any interest in any real property.
3.19. Broker's Fees. Except as set forth in Section 3.19 of the Dr.
Tattoff Disclosure Letter, no broker, finder, agent or similar intermediary has
acted on behalf of Dr. Tattoff in connection with this Agreement or the
Transactions, and there are no brokerage commissions, finders' fees or similar
fees or commissions payable in connection therewith based on any agreement,
arrangement or understanding with Dr. Tattoff.
3.20. Labor Matters. Dr. Tattoff is not now, and has not been in the
last five years, bound by or party to any collective bargaining agreement and,
to the Knowledge of Dr. Tattoff, no application for certification of a
collective bargaining agent is pending. Dr. Tattoff is in compliance with all
Applicable Laws applicable to Dr. Tattoff affecting employment practices and
terms and conditions of employment.
3.21. Absence of Liabilities. As of June 30, 2007, the date of Dr.
Tattoff's most recent balance sheet, Dr. Tattoff does not have any debts,
liabilities or obligations of any kind, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, that are not otherwise set forth in
Section 3.21 of the Dr. Tattoff Disclosure Letter, which shall be updated as of
the Closing Date.
3.22. Absence of Certain Changes or Events. Since June 30, 2007, Dr.
Tattoff has not:
9
(a) Conducted any business or engaged in any activities other
than activities related to the negotiation and execution of this Agreement or
activities in the ordinary course of its business;
(b) Declared or made any payment of dividends or other
distributions to its stockholders or upon or in respect of any shares of its
capital stock or purchased, or obligated itself to purchase, retire or redeem,
any shares of its capital stock or other securities;
(c) Amended its articles of incorporation or bylaws;
(d) Borrowed or agreed to borrow any funds; incurred or agreed
to incur or become subject to any debts, liabilities or obligations of any kind
whatsoever (other than (i) in connection with the Bridge Financing, (ii) in
conjunction with the negotiation and execution of this Agreement, (iii) legal,
accounting, advisory and board of director fees and expenses, (iv) obligations
incurred in the ordinary course of business or (v) as set forth in Section
3.22(d) of the Dr. Tattoff Disclosure Letter); subjected or agreed to subject
any of the assets or properties of Dr. Tattoff to any lien, security interest,
charge, interest or other encumbrance or suffered such to be imposed; or
guaranteed or agreed to guarantee the debts or obligations of others.
3.23. Full Disclosure. This Agreement (including the Dr. Tattoff
Disclosure Letter) does not (i) contain any representation, warranty or
information that is false or misleading with respect to any material fact, or
(ii) omit to state any material fact necessary in order to make the
representations, warranties and information contained herein, in the context in
which made or provided, not false or misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as may be provided in a disclosure letter delivered by the Company
on the date hereof (the "Company Disclosure Letter"), the Company hereby
represents and warrants to the Dr. Tattoff as follows:
4.1. Organization and Qualification; Subsidiaries. The Company is a
corporation, duly incorporated or organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has requisite power and authority and governmental approvals to own, lease and
operate its properties and to carry on its business as currently conducted. The
Company is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the ownership or leasing of its property or the
conduct of its business requires such qualification or licensing, except where
the failure to be so qualified or licensed or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company has not engaged in any business activities of any type or kind
whatsoever. The Company does not have any subsidiaries.
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4.2. Equity Investment. The Company does not own any equity interest
in any other corporation or in any partnership, limited liability company or
other form of business entity.
4.3. Authority to Execute and Perform Agreement. The Company has the
requisite power and all authority required to enter into, execute and deliver
this Agreement and the Transaction Documents to which it is a party, to perform
its obligations hereunder and thereunder and to consummate the Transactions. The
execution, delivery and performance of this Agreement and the consummation of
the Transactions have been duly authorized by all necessary corporate action.
4.4. Binding Effect. This Agreement has been validly executed and
delivered by the Company and, assuming the due execution and delivery hereof by
Dr. Tattoff, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting or relating to enforcement of creditors' rights generally, and (ii)
general equitable principles (regardless of whether such enforceability is
considered in equity or at law).
4.5. Capitalization.
(a) As of the date hereof, the authorized capital stock of the
Company consists of (i) Eighty Million (80,000,000) shares of common stock, par
value $0.0001 per share, of which Forty Five Thousand (45,000) shares of common
stock are issued and outstanding, all of which are validly issued, fully paid
and non-assessable and (ii) Twenty Million (20,000,000) shares of preferred
stock, par value $0.0001 per share, of which none are issued and outstanding.
(b) Obligations. There are no obligations, contingent or
otherwise, of the Company to repurchase, redeem or acquire shares of the
Company.
(c) Options, Warrants, etc. There are no existing options,
rights, subscriptions, warrants, unsatisfied preemptive rights, calls or
commitments relating to (i) the authorized and unissued capital stock of the
Company, or (ii) any securities or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for or acquire from the Company
any shares of capital stock of the Company and no such convertible or
exchangeable securities or obligations are outstanding.
(d) Registration. The outstanding shares of the capital stock
of the Company have been issued in full compliance with the registration and
prospectus delivery requirements of the Securities Act or in compliance with
applicable exemptions therefrom, and the registration and qualification
requirements of all applicable securities laws of states of the United States.
(e) Merger Shares. The Merger Shares, when paid for and then
issued as provided in this Agreement, will be duly authorized and validly
issued, fully paid and nonassessable, and will be free of any Liens or
encumbrances and of restrictions on transfer, other than restrictions on
transfer under applicable state and federal securities laws or the Transaction
Documents.
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4.6. Board Approval. The Board of Directors of the Company, by
resolutions duly adopted at a meeting duly called and held at which a quorum was
present or by the unanimous written consent in lieu of such a meeting, has
approved this Agreement, the Merger and the Transactions in accordance with the
requirements of the FLBCA.
4.7. SEC Reports and Financial Statements.
(a) Each form, report, schedule, registration statement, proxy
statement, information statement, exhibit and any other document, to the extent
required to be filed in accordance with Applicable Law by the Company with the
Securities and Exchange Commission (the "SEC") (as such documents have been
amended prior to the date hereof, the "SEC Reports"), as of its respective date,
has complied in all material respects with the applicable requirements of the
Securities Act and Exchange Act and was timely filed (except where a valid
extension of the filing date was filed and the applicable SEC Report was filed
within the period permitted by such extension). None of the SEC Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except for such statements, if any, as have been
modified or superseded by subsequent filings prior to the date hereof.
(b) The consolidated financial statements of the Company
included in such SEC Reports and any notes related thereto comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited interim financial statements, as permitted by Form 10-QSB of the SEC)
and fairly present in all material respects (subject, in the case of the
unaudited interim financial statements, to normal, recurring year end
adjustments none of which are or will be material in amount, individually or in
the aggregate) the consolidated financial position of the Company as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended.
(c) The Company does not have any direct or indirect
liabilities that were not fully and adequately reflected or reserved against on
the balance sheet or described in the notes to the audited financial statements
of the Company. The Company has no Knowledge of any circumstance, condition,
event or arrangement that has taken place at any time that may hereafter give
rise to any liabilities.
4.8. No Material Adverse Change. Except as set forth in SEC Reports
filed since June 14, 2006 (the "Recent Reports"), since June 14, 2006, the
Company has not conducted any business or engaged in any activities other than
activities related to the negotiation and execution of this Agreement or
activities in the ordinary course, consistent with past practice, and there has
been no change in the business, properties, assets, operations or condition
(financial or otherwise) which has resulted or reasonably could be expected to
result in or which the Company has reason to believe could reasonably be
expected to result in a Material Adverse Effect on it, and the Company has no
Knowledge of any such change that is threatened, nor has there been any damage,
destruction or loss affecting the assets, properties, business, operations or
condition (financial or otherwise), whether or not covered by insurance which
has resulted or reasonably could be expected to result in or which the Company
has reason to believe could reasonably be expected to result in a Material
Adverse Effect on the Company. Since December 31, 2005, the Company has not
taken, directly or indirectly, any of the actions identified in Section 5.1,
except as set forth in the Recent Reports.
12
4.9. Books and Records. The books and records, financial and
otherwise, of the Company are in all material respects complete and correct and
have been maintained in accordance with sound business and bookkeeping practices
so as to accurately and fairly reflect, in reasonable detail, the transactions
and dispositions of the assets and liabilities of the Company
4.10. Litigation. There are no Legal Proceedings pending or, to the
Knowledge of the Company, threatened against or involving the Company, or any of
its respective property or assets. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or regulatory body or
arbitration tribunal against or involving the Company.
4.11. Absence of Liabilities. As of July 31, 2007, the date of the
Company's most recent balance sheet, the Company has no debts, liabilities or
obligations of any kind, whether accrued, absolute, contingent or otherwise, and
whether due or to become due, that are not otherwise set forth in Section 4.11
of the Company Disclosure Letter, which shall be updated as of the Closing Date.
4.12. Title to Properties; Absence of Liens. The Company has good
and marketable title to all of their respective assets and properties, whether
real, personal or fixed, free and clear of all Liens, except for Liens for Taxes
not yet due and payable or which the Company is contesting in good faith and for
which adequate reserves have been established.
4.13. Compliance with Laws. The Company is not in violation of,
default under, or conflict with, any applicable Order or any Applicable Law,
except for any such violations that would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
4.14. Intellectual Property. The Company does not own, license or
otherwise has any rights in or to any Intellectual Property.
4.15. Non-Contravention. The execution and delivery of this
Agreement and the Transaction Documents by the Company, the performance by the
Company of its obligations hereunder and thereunder, and the consummation of the
Transactions contemplated hereby and thereby by such entities (A) do not and
will not conflict with, or result in a breach or violation of (i) any provision
of the charter or bylaws of any of the Company, (ii) any applicable laws, (iii)
any material agreement, contract, lease, license or instrument to which the
Company is a party or by which the Company or any of each of its properties or
assets are bound and (B) will not result in the creation or imposition of any
Lien upon any of the property or assets of the Company pursuant to any provision
of any contract or Lien.
13
4.16. Consents and Approvals. Except for (i) those consents,
approvals, authorizations, filings or notices set forth in Section 4.16 of the
Company Disclosure Letter, (ii) applicable requirements of the Securities Act,
the Exchange Act or Blue Sky Laws, (iii) notices and filings in connection with
the Merger, no consent, approval or authorization of, filing with, or notice to,
any Governmental Body is required by the Company in connection with the
execution, delivery and performance by the Company of this Agreement, each and
every agreement contemplated hereby, and the consummation by the Company of the
Transactions.
4.17. Material Contracts. The Company is not in default under any
Material Contract, nor to the Knowledge of the Company, does any condition exist
that, with notice or lapse of time or both, would constitute a default
thereunder. To the Knowledge of the Company, no other party to any such Material
Contract of the Company is in default thereunder, nor does any condition exist
that with notice or lapse of time or both would constitute a default thereunder.
No approval or consent of any person is needed in order that the Material
Contracts of the Company shall continue in full force and effect following the
consummation of the transactions contemplated by this Agreement.
4.18. Taxes. Except as set forth in Section 4.18 of the Company
Disclosure Letter:
(a) Filing of Tax Returns. The Company has timely filed, or
have had timely filed on their behalf, with the appropriate Taxing authorities
all Tax Returns in respect of Taxes required to be filed by them. The Tax
Returns filed (including any amendments thereof) are complete and accurate in
all material respects. The Company has not requested any extension of time
within which to file any Tax Return in respect of any Taxes, which Tax Return
has not since been filed in a timely manner. To the Knowledge of the Company, no
claim has ever been made by any Taxing authority in a jurisdiction where the
Company does not file Tax Returns, or has Tax Returns filed on their behalf,
that they are or may be subject to taxation by that jurisdiction, or liable for
Taxes owing to that jurisdiction.
(b) Payment of Taxes. All Taxes owed by the Company (whether
or not shown as due on any Tax Returns) have been paid in full or adequate
reserves on their respective books and/or records have been established. The
Company has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party. The Company has made
all required estimated Tax payments sufficient to avoid any underpayment
penalties. The unpaid Taxes of the Company (A) do not, as of the Closing Date,
exceed the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect the timing differences between book and Tax income) set
forth on the face of the Company's most recent balance sheets (rather than any
notes thereto) and (B) do not exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
the Company in filing, or having filed on their behalf, their Tax Returns. The
charges, accruals and reserves on the books of the Company in respect of any
liability for Taxes (x) based on or measured by net income for any years not
finally determined, (y) with respect to which the applicable statute of
limitations has not expired or (z) that has been previously deferred, are
adequate to satisfy any assessment for such Taxes for any such years.
14
(c) Audits, Investigations or Claims. There is no dispute or
claim which has not been resolved concerning any Tax liability of the Company
either (A) claimed or raised by any Taxing authority in writing or (B) as to
which any of the directors and officers (and employees responsible for Tax
matters) of the Company has Knowledge. There is no currently pending audit of
any Tax Return of the Company by any Taxing authority, and the Company has not
ever been notified in writing that any Taxing authority intends to audit any Tax
Return of the Company. The Company has not executed any outstanding waivers or
consents regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns.
(d) Lien. There are no encumbrances for Taxes (other than for
current Taxes not yet due and payable) on any assets of the Company.
(e) Tax Elections. The Company (i) has not agreed, or are
required, to make any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise; (ii) have not made an election
pursuant to Code Sections 338 or 336(e) or the regulations thereunder or any
comparable provisions of any foreign or state or local income tax law; (iii) is
not subject to any constructive elections under Code Section 338 or the
regulations thereunder; (iv) has not made any payments, are obligated to make
any payments, or are a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under ss.280G
and ss.162(m) of the Code; and (v) has not made any of the foregoing elections
or are required to apply any of the foregoing rules under any comparable state
or local income Tax provision. (f) Prior Affiliated Groups. The Company (A) has
never been a member of an affiliated group of corporations within the meaning of
Section 1504 of the Code and (B) does not have any liability for the Taxes of
any person under Treas. Reg. ss.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract or otherwise. The
Company is not a successor to any other person by way of merger, reorganization
or similar transaction.
(g) Tax Sharing Agreements. The Company is not a party to any
Tax allocation, indemnity or sharing or similar agreement.
(h) Section 355. The Company has not distributed the stock of
a "controlled corporation" (within the meaning of that term as used in Section
355(a) of the Code) in a transaction subject to Section 355 of the Code within
the past two years.
(i) Partnerships. The Company does not own an interest in a
partnership for Tax purposes.
4.19. Environmental Matters. (i) The Company is in compliance in all
material respects with applicable Environmental Laws; (ii) the Company has all
Permits required pursuant to Environmental Laws and are in compliance in all
material respects with the terms thereof; (iii) there are no past or present
events, activities, practices, incidents, actions or plans in connection with
the operations of the Company which have given rise to or are reasonably likely
to give rise to any liability on the part of the Company under any Environmental
Law; (iv) the Company has not generated, used, transported, treated, stored,
released or disposed of, or has suffered or permitted anyone else to generate,
use, transport, treat, store, release or dispose of any Hazardous Substance in
violation of any Environmental Laws; and (v) there has not been any generation,
use, transportation, treatment, storage, release or disposal of any Hazardous
Substance in connection with the conduct of the business of the Company or the
use of any property or facility by the Company, or to the Knowledge of the
Company, any nearby or adjacent properties, in each case, which has created or
might reasonably be expected to create any material liability under any
Environmental Law or which would require reporting to or notification of any
Governmental Body.
15
4.20. Real Property. The Company has not owned, any real property or
any interest in any real property.
4.21. Broker's Fees. No broker, finder, agent or similar
intermediary has acted on behalf of the Company in connection with this
Agreement or the Transactions, and there are no brokerage commissions, finders'
fees or similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with the Company.
4.22. Labor Matters. The Company is not now, and has not been in the
last five years, bound by or party to any collective bargaining agreement and,
to the Knowledge of the Company, no application for certification of a
collective bargaining agent is pending. The Company is in compliance with all
Applicable Laws applicable to the Company affecting employment practices and
terms and conditions of employment.
4.23. Articles of Incorporation, Bylaws, and Minute Books. The
copies of the Articles of Incorporation and of the Bylaws of the Company which
have been delivered to the Dr. Tattoff are true, correct and complete copies
thereof. The corporate minutes of the Company, which have been delivered to Dr.
Tattoff, are complete and accurate minutes of all meetings and accurate consents
in lieu of meetings of the Board of Directors (and any committee thereof) and of
the stockholders of the Company since the date of incorporation and accurately
reflects all transactions referred to in such minutes and consents in lieu of
meetings. The Company has delivered to Company all books, records, agreements
and other material information of the Company relating to the business of the
Company (the "the Company Information"). All documents furnished or caused to be
furnished to Dr. Tattoff by the Company are true and correct copies, and there
are no amendments or modifications thereto except as set forth in such
documents.
4.24. Full Disclosure. This Agreement (including the Company
Disclosure Letter) and the SEC Reports, do not (i) with respect to the Company,
contain any representation, warranty or information that is false or misleading
with respect to any material fact, or (ii) with respect to the Company, omit to
state any material fact necessary in order to make the representations,
warranties and information contained herein (including the Company Disclosure
Letter) and the SEC Reports, in the context in which made or provided, not false
or misleading.
16
ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES
5.1. Actions Pending Closing. From the date hereof until the
Effective Time, unless otherwise agreed to in writing, each of the parties to
this Agreement agree to conduct its business and operations only in the ordinary
course and in substantially the same manner as heretofore conducted and the
Company shall continue to make timely filings (except pursuant to valid
extensions) as required by the SEC pursuant to the Securities Act and the
Exchange Act and shall not take any action that will adversely affect the
ability of the Company to qualify for quotation of its common stock on the over
the counter bulletin board. Without limiting the generality of the foregoing,
prior to the Effective Time, none of the parties to this Agreement shall, except
as contemplated by this Agreement (including without limitation, the
transactions contemplated in connection with the Bridge Financing), without the
prior written consent of the other parties to this Agreement, directly or
indirectly, do any of the following:
(a) except to the extent required by Applicable Law, as
contemplated by this Agreement, amend or otherwise change the articles of
incorporation, Bylaws, operating agreement or other similar organizational
document;
(b) issue or authorize or propose the issuance of, sell,
pledge or dispose of, grant or otherwise create, or agree to issue or authorize
or propose the issuance, sale, pledge, disposition, grant or creation of any
additional shares of, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of, its capital stock or any debt or
equity securities convertible into or exchangeable for such capital stock;
(c) purchase, redeem or otherwise acquire or retire, or offer
to purchase, redeem or otherwise acquire or retire, any shares of its capital
stock (including any security convertible or exchangeable into its capital
stock);
(d) enter into any Material Contract, except in the ordinary
course of business;
(e) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, reclassify, recapitalize, split, combine or exchange any
of its shares of capital stock;
(f) incur or become contingently liable with respect to any
indebtedness for borrowed money or guarantee any such indebtedness or issue any
debt securities;
17
(g) (i) increase the compensation payable or to become payable
to, or enter into any employment agreement with, any of its directors, executive
officers or employees, (ii) grant any severance or termination pay to any
director, officer or employee, (iii) enter into any severance agreement with any
director, officer or employee, (iv) establish, adopt, enter into, terminate,
withdraw from or amend in any material respect or take action to accelerate any
rights or benefits under any collective bargaining agreement, any stock option
plan or any employee Benefit Plan or policy, or (v) hire any employee or
consultant;
(h) take any action, other than reasonable actions in the
ordinary course of business and consistent with past practice, with respect to
accounting policies or procedures, except as may be required by GAAP;
(i) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other means, any business or any corporation,
partnership, association or other business entity;
(j) mortgage or otherwise encumber, subject to any Lien, or
sell, transfer or otherwise dispose of, any of its properties or assets that are
material, individually or in the aggregate;
(k) adopt a plan of complete or partial liquidation,
dissolution, restructuring, recapitalization or other reorganization;
(l) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in its financial statements or incurred in the ordinary course
of business and consistent with past practice;
(m) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.1(a) through (l) above, or any action which
would make any of the representations or warranties contained in this Agreement
untrue or incorrect in any material respect or prevent the parties to this
Agreement from performing or cause the parties to this Agreement not to perform
their respective covenants under this Agreement in any material respect;
(n) waive, release, assign, settle or compromise any material
rights, claims or litigation (including any confidentiality agreement);
(o) authorize any of, or commit or agree to take any of, the
foregoing actions; or
(p) make or change any Tax election, settle any audit, claim
or examination of Taxes, adopt or apply to change any method of accounting or
accounting practice for Tax purposes, file any amended Tax Return, enter into
any closing agreement or request a Tax ruling from a Tax authority, settle any
claims for Taxes, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Taxes, Tax Return
or claim for Taxes, or take any action or fail to take any action that would
have a material adverse effect on the Tax liability of any of the parties to
this Agreement.
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5.2. Company Shareholders' Approval. As soon as practicable after
the date hereof, the Company will take all steps necessary to solicit the
approval of the requisite number of stockholders of the Company approving the
Merger and this Agreement in accordance with the provisions of the FLBCA (the
"Company Consent"). Except as otherwise contemplated by this Agreement and
subject to the exercise of the fiduciary duties of the Company's directors, the
Board of Directors of the Company (i) shall recommend to the stockholders of the
Company that they approve the Merger, and (ii) shall use its reasonable best
efforts to obtain the Company Consent.
5.3. Post-Effective Amendment. The Company shall file with the SEC a
Post Effective Amendment pursuant to Rule 419 promulgated under the Securities
Act.
5.4. Dr. Tattoff Member's Approval. As soon as practicable after the
date hereof, Dr. Tattoff will take all steps necessary to solicit the approval
of the requisite number of its members approving the Merger and this Agreement
in accordance with the provisions of the CALLCA and its operating agreement (the
"Dr. Tattoff Consent"). Except as otherwise contemplated by this Agreement and
subject to the exercise of the fiduciary duties of Dr. Tattoff's managing
members, the managing members of Dr. Tattoff (i) shall recommend to the Members
of Dr. Tattoff that they approve the Merger, and (ii) shall use its reasonable
best efforts to obtain the Dr. Tattoff Consent.
5.5. Efforts; Consents. Each of the parties to this Agreement agrees
to, and to cause its respective Subsidiaries to, use reasonable best efforts to
take or cause to be taken all actions necessary, proper or advisable to
consummate the Merger and the Transactions. Without limiting the generality of
the foregoing, each of the parties hereto shall use, and shall cause its
respective Subsidiaries to use, reasonable best efforts to obtain all
authorizations, consents, orders and approvals of Federal, state, and local
regulatory bodies, that are or may become necessary for the performance of its
respective obligations pursuant to this Agreement, the Transactions Documents
and the consummation of the Transactions, and shall cooperate fully in promptly
seeking to obtain such authorizations, consents, orders and approvals as may be
necessary for the performance of its respective obligations pursuant to this
Agreement, the Transaction Documents and the Transactions. The parties shall not
take, and shall cause their respective Subsidiaries not to take, any action
which would have the effect of delaying, impairing or impeding the receipt of
any required regulatory approvals, and the parties shall use, and shall cause
their respective Subsidiaries to use, reasonable best efforts to secure such
approvals as promptly as possible. The parties shall use, and shall cause their
respective Subsidiaries to use, reasonable best efforts not to take any action
or enter into any transaction which would result in a breach of any covenant
made by such party in this Agreement.
5.6. Filing of Tax Returns; Payment of Taxes. Each of the parties to
this Agreement will prepare in a manner consistent with its past practice and
timely file all Tax Returns it is required to file, the due date of which
(without extensions) occurs on or before the Closing Date and shall pay all
Taxes due with respect to any such Tax Returns.
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5.7. Access to Information.
(a) The Company shall afford Dr. Tattoff and shall cause its
independent accountants to afford to Dr. Tattoff, and its accountants, counsel
and other representatives, reasonable access during normal business hours during
the period prior to the Closing to all information concerning the Company as Dr.
Tattoff may reasonably request, provided that the Company shall not be required
to disclose any information which it is legally required to keep confidential.
Dr. Tattoff will not use such information for purposes other than this Agreement
and will otherwise hold such information in confidence (and Dr. Tattoff will
cause its consultants and advisors also to hold such information in confidence)
until such time as such information otherwise becomes publicly available without
any violation of this Agreement by Dr. Tattoff, and in the event of termination
of this Agreement for any reason the Company shall promptly return, or cause to
be returned, to Dr. Tattoff all documents obtained from Dr. Tattoff, and any
copies made of such documents, extracts and copies thereof.
(b) Dr. Tattoff shall afford the Company and the Company
Shareholders and shall cause its independent accountants to afford to the
Company and the Company Shareholders, and their accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Closing to all of Dr. Tattoff's properties, books,
contracts, commitments and records and to the audit work papers and other
records of Dr. Tattoff's independent accountants. During such period, Dr.
Tattoff shall use reasonable efforts to furnish promptly to the Company and the
Company Shareholders such information concerning Dr. Tattoff as the Company and
the Company Shareholders may reasonably request, provided that Dr. Tattoff shall
not be required to disclose any information which it is legally required to keep
confidential. The Company and the Company Shareholders will not use such
information for purposes other than this Agreement and will otherwise hold such
information in confidence (and the Company and the Company Shareholders will
cause their respective consultants and advisors also to hold such information in
confidence) until such time as such information otherwise becomes publicly
available without any violation of this Agreement by the Company, and in the
event of termination of this Agreement for any reason the Company and the
Company Shareholders shall promptly return, or cause to be returned, to the
disclosing party all documents obtained from Dr. Tattoff, and any copies made of
such documents, extracts and copies thereof.
5.8. Confidentiality. Unless (i) otherwise expressly provided in
this Agreement, (ii) required by Applicable Law, (iii) necessary to secure any
required consents as to which the other party has been advised, or (iv)
consented to in writing by Dr. Tattoff and the Company, this Agreement and any
information or documents furnished in connection herewith shall be kept strictly
confidential by the Company, Dr. Tattoff and its Subsidiaries, and their
respective officers, directors, employees and agents. Prior to any disclosure
pursuant to the preceding sentence, the party intending to make such disclosure
shall consult with the other party to the extent practicable regarding the
nature and extent of the disclosure. Subject to the preceding sentence, nothing
contained herein shall preclude disclosures to the extent necessary to comply
with accounting, SEC and other disclosure obligations imposed by Applicable Law.
In the event the Merger is not consummated, Dr. Tattoff and the Company shall
return to the other all documents furnished by the other and all copies thereof
made by such party and will hold in absolute confidence all information obtained
from the other party except to the extent (i) such party is required to disclose
such information by Law or such disclosure is necessary in connection with the
pursuit or defense of a claim, (ii) such information was known by such party
prior to such disclosure or was thereafter developed or obtained by such party
independent of such disclosure, (iii) such party received such information on a
non-confidential basis from a source, other than the other party, which is not
known by such party to be bound by a confidentiality obligation with respect
thereto or (iv) such information becomes generally available to the public or is
otherwise no longer confidential. Prior to any disclosure of information
pursuant to the exception in clause (i) of the preceding sentence, the party
intending to disclose the same shall so notify the party which provided the same
to the extent practicable in order that such party may seek a protective order
or other appropriate remedy should it choose to do so.
20
5.9. Notification of Certain Matters. The Company shall give prompt
notice to Dr. Tattoff if any of the following occurs after the date of this
Agreement: (i) receipt of any notice or other communication in writing from any
person alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement; (ii) receipt of
any notice or other communication from any Governmental Authority (including,
but not limited to, the NASD, the SEC or any securities exchange) in connection
with the transactions contemplated by this Agreement; (iii) the occurrence or
non-occurrence of any fact or event which could reasonably be expected to cause
any covenant, condition or agreement hereunder not to be complied with or
satisfied in any material respect; (iv) the commencement or threat of any
litigation involving or affecting the Company, or any of their respective
properties or assets; (v) the occurrence or non-occurrence of any fact or event
that causes or is reasonably likely to cause a breach by the Company of any
provision of this Agreement, and (vi) the occurrence of any event that, had it
occurred prior to the date of this Agreement without any additional disclosure
hereunder, would have constituted a Material Adverse Effect on the Company.
5.10. Non-Solicitation.
(a) No party to this Agreement, nor any of their respective
officers, directors, employees, agents, affiliates, accountants, counsel,
investment bankers, financial advisors or other representatives (collectively,
"Representatives"), shall (i) directly or indirectly, initiate, solicit or
encourage, or take any action to facilitate the making of, any Acquisition
Proposal, (ii) enter into any agreement or take any other action that by its
terms could reasonably be expected to adversely affect the ability of the
parties hereto to consummate the Merger, or (iii) directly or indirectly engage
or otherwise participate in any discussions or negotiations with, or provide any
information or data to, or afford any access to their properties, books or
records to, or otherwise assist, facilitate or encourage, any person (other than
Dr. Tattoff or any affiliate or associate thereof) relating to any Acquisition
Proposal.
(b) Each of the parties to this Agreement and each of their
Representatives shall immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any other persons conducted
heretofore with respect to any Acquisition Proposal.
21
For purposes of this Agreement, an "Acquisition Proposal"
means any inquiry, proposal or offer from any person relating to (i) any direct
or indirect acquisition or purchase of a business that constitutes 50% or more
of the net revenues, net income or assets of any party to this Agreement, taken
as a whole, or 50% or more of the common stock or voting power (or of securities
or rights convertible into or exercisable for such common stock or voting power)
of the Company or Dr. Tattoff, (ii) any tender offer or exchange offer that if
consummated would result in any person beneficially owning 50% or more of the
common stock or voting power (or of securities or rights convertible into or
exercisable for such common stock or voting power) of the Company or Dr.
Tattoff, or (iii) any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company, Dr. Tattoff or any of their Subsidiaries that constitutes 50% or more
of the net revenues, net income or assets of the Company and its Subsidiaries or
Dr. Tattoff and its Subsidiaries, as the case may be, taken as a whole, or that
results in the stockholders of the Company or the Members of Dr. Tattoff, as the
case may be, immediately prior to such transaction owning less than 50% of the
outstanding voting securities of the Company or Dr. Tattoff, as the case may be,
immediately after such transaction, in each case other than the transactions
contemplated by this Agreement. Each of the transactions referred to in clauses
(i) - (iii) of the foregoing definition of Acquisition Proposal, other than the
Merger proposed by this Agreement, is referred to herein as an "Acquisition
Transaction."
5.11. Further Assurances. At any time and from time to time after
the Closing, each party to this Agreement agrees to cooperate with each other
party and to execute and deliver such other documents, instruments of transfer
or assignment, files, books and records and do all such further acts as may be
reasonably required to consummate the Transactions, including to provide any
necessary information in connection with the Company's filing its Post Effective
Amendment with the SEC.
5.12. Public Disclosure. Prior to the Closing, each party to this
Agreement shall consult with each other party before issuing any press release
or otherwise making any public statements, announcements or communications with
respect to this Agreement or any of the Transactions and shall not issue any
such press release or make any such public statement, announcement or
communication without the prior written consent of the other parties, which
consent shall not be unreasonably withheld, except as may be required by
Applicable Law.
5.13. Board of Directors. Prior to the Effective Time, the Board of
Directors of the Company, in accordance with applicable law, shall take all
necessary action (including the resignation of existing directors) to cause its
Board of Directors, as of the Effective Time, to consist of a total of five
members, with all such members to be designated in writing by Dr. Tattoff, each
to hold office from the Effective Time until their respective successors are
duly elected or appointed and qualify, or they resign or are removed.
5.14. Existing Company Liabilities. At July 31, 2007 and at Closing,
the Company shall pay or otherwise satisfy or discharge all of its debts,
obligations and liabilities of any kind whatsoever, including, without
limitation, all of the debts, obligations and liabilities set forth on the July
31, 2007 balance sheet, incurred between the date thereof and the Closing Date.
22
ARTICLE VI
CONDITIONS TO CLOSING
6.1. Conditions to Each Party's Obligations to Consummate the
Transactions. The respective obligations of each party to this Agreement to
consummate the Transactions shall be subject to the following conditions, unless
waived in writing prior to the Closing Date by such party:
(a) Consents and Approvals. All consents, approvals,
authorizations, orders and action of any Governmental Body required to permit
the consummation of the Transactions shall have been obtained or made and shall
be in full force and effect.
(b) No Restraints. No action shall have been taken, and no
statute, rule, regulation, executive order, judgment, decree, or injunction
shall have been enacted, entered, promulgated or enforced (and not repealed,
superseded, lifted or otherwise made inapplicable), by any court or governmental
or regulatory agency of competent jurisdiction which restrains, enjoins or
otherwise prohibits the consummation of the Transactions (each party agreeing to
use its reasonable best efforts to avoid the effect of any such statute, rule,
regulation or order or to have any such order, judgment, decree or injunction
lifted).
(c) Investment Letter. Each Dr. Tattoff Member shall have
delivered to the Company and Dr. Tattoff a completed investment representation
letter in the form attached hereto as Exhibit A (each, an "Investment Letter").
(d) Rule 419. The Company shall have filed its Post Effective
Amendment with the SEC pursuant to Rule 419 promulgated under the Securities
Act.
6.2. Conditions to Obligations of the Company to Consummate the
Transactions.
The obligation of the Company to consummate the Transactions shall be
subject to the satisfaction of the following conditions, unless waived in
writing prior to the Closing Date by the Company:
(a) Representations and Warranties. The representations and
warranties of Dr. Tattoff contained herein that are qualified as to materiality
or a Material Adverse Effect (or similar concept) shall be true and correct, and
those not so qualified shall be true and correct in all material respects, in
each case at and as of the Effective Time with the same force and effect as
though made at and as of the Effective Time (except to the extent a
representation or warranty speaks specifically as of an earlier date, in which
case as of such date).
(b) Performance of Obligations. Dr. Tattoff shall have
performed, in all material respects, all obligations and complied with all
covenants required by this Agreement to be performed or complied with, in all
material respects, by each of them prior to the Effective Time.
23
(c) Officer's Certificate. Dr. Tattoff shall have executed and
delivered to the Company a certificate, dated the date of Closing and signed by
an officer of Dr. Tattoff, evidencing compliance with Sections 6.2(a) and 6.2(b)
hereof.
(d) Due Diligence. The Company shall have completed its
financial, business and legal due diligence investigation of Dr. Tattoff to the
Company's and its counsel's satisfaction which shall be determined at the sole
and absolute discretion of the Company and its counsel.
(e) Equity Financing. Definitive agreements obligating
investors to acquire at least $2,500,000 in capital stock of the Company based
on a pre-money valuation as reasonably agreed among the parties, on terms and
conditions satisfactory to Dr. Tattoff, in its sole discretion, shall have been
executed and delivered to the Company, subject only to the Closing of the
Merger, and the purchase price for such capital stock shall have been placed in
escrow with the release of such purchase price subject only to the closing of
the Merger.
(f) Stock Certificates. Certificates evidencing the number of
Merger Shares to be issued to each Dr. Tattoff Member in the names of such Dr.
Tattoff Members shall have been delivered by the Company's agent to counsel to
Dr. Tattoff in accordance with Section 2.2.
(g) Approval. Holders of at least a majority of the Company's
outstanding capital stock shall have approved the Merger and this Agreement in
accordance with the FLBCA.
(h) Legal Opinion. Dr. Tattoff Members shall have received the
legal opinion of counsel to the Company, in agreed upon form addressed to such
Members.
(i) Resignations. The members of the Board of Directors of the
Company shall have each delivered his or her resignation effective as of the
Closing in a form reasonably acceptable to Dr. Tattoff.
(j) Material Adverse Effect. There shall not have occurred
after the date hereof any event or events that, individually or in the
aggregate, constitute a Material Adverse Effect on Dr. Tattoff.
6.3. Conditions to Obligations of Dr. Tattoff to Consummate the
Transactions. The obligation of Dr. Tattoff to consummate the Transactions shall
be subject to the satisfaction of the following conditions, unless waived in
writing prior to the Closing Date by Parent and Merger Sub:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein that are qualified as to materiality
or a Material Adverse Effect (or similar concept) shall be true and correct, and
those not so qualified shall be true and correct in all material respects, in
each case at and as of the Effective Time with the same force and effect as
though made at and as of the Effective Time (except to the extent a
representation or warranty speaks specifically as of an earlier date, in which
case as of such date).
24
(b) Performance of Obligations. The Company shall have
performed, in all material respects, all obligations and complied with all
covenants required by this Agreement to be performed or complied with, in all
material respects, by it prior to the Effective Time.
(c) Officer's Certificate. The Company shall have executed and
delivered to Dr. Tattoff a certificate, dated the date of Closing and signed by
an officer of the Company, evidencing compliance with Sections 6.3(a) and 6.3(b)
hereof.
(d) Approval. Holders of at least a majority of the
outstanding membership interests of Dr. Tattoff shall have approved the Merger
and this Agreement in accordance with the CALLCA. (e) Legal Opinion. The Company
Shareholders shall have received the legal opinion ------------- of counsel to
the Dr. Tattoff, in agreed upon form addressed to such Company Shareholders.
(f) Material Adverse Effect. There shall not have occurred
after the date hereof any event or events that, individually or in the
aggregate, constitute a Material Adverse Effect on the Company.
ARTICLE VII
TERMINATION
7.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and
the Merger by the stockholders of the Company:
(a) by the mutual written consent of the parties to this
Agreement;
(b) by either the Company or Dr. Tattoff, by written notice to
the other if, for any reason, the Closing has not occurred prior to the close of
business on or before November 15, 2007; provided, however, that (i) the right
to terminate this Agreement pursuant to this Section 7.1(b) shall not be
available to the Company or Dr. Tattoff, as applicable, if the party seeking to
terminate the Agreement is responsible for the delay;
(c) by either the Company or Dr. Tattoff, by written notice to
the other, if any court of competent jurisdiction shall have issued an order,
judgment or decree (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment or decree
shall have become final and nonappealable;
(d) at the election of the Company, if (i) Dr. Tattoff has
materially breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach has not been cured on or before thirty
(30) Business Days following delivery of written notice of such breach by the
Company to Dr. Tattoff; provided, however, that the right to terminate this
Agreement pursuant to this Section 7.1(d) (A) shall not be available to the
Company if the Company at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement, or
(B) if the Company or its counsel is not satisfied with the financial, business
or legal due diligence investigation of Dr. Tattoff or any item or issue that is
discovered in the course of such investigation as determined by the Company or
its counsel in its sole and absolute discretion; and
25
(e) at the election of Dr. Tattoff, if the Company has
materially breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach has not been cured on or before thirty
(30) Business Days following delivery of written notice to the Company of such
breach by Dr. Tattoff; provided, however, that the right to terminate this
Agreement pursuant to this Section 7.1(e) shall not be available to Dr. Tattoff
if Dr. Tattoff, at such time, is in material breach of any representation,
warranty, covenant or agreement set forth in this Agreement.
7.2. Effect of Termination. In the event of the termination of this
Agreement by either the Company or Dr. Tattoff pursuant to Section 7.1, (i) this
Agreement shall forthwith become void and have no further force or effect, and
(ii) there shall be no further liability under this Agreement on the part of Dr.
Tattoff or the Company, other than pursuant to the provisions of Section 5.6,
Section 5.7, this Section 7.2 and Section 7.3.
7.3. Expenses; Termination Fees.
(a) Except as set forth in this Section 7.3, all costs and
expenses incurred in connection with this Agreement and the Transaction shall be
paid by the party incurring such costs and expenses, whether or not the Merger
is consummated.
(b) All payments under this Section 7.3 shall be made by wire
transfer of immediately available funds to an account designated by the party to
whom such payment will be made.
(c) The term "Expenses" shall mean all out-of-pocket expenses
incurred by the Company and its affiliates in connection with this Agreement,
any letter of intent related to this Agreement, and the transactions and due
diligence contemplated hereby, including, without limitation, fees and expenses
of accountants, attorneys and financial advisors.
(d) The parties acknowledge that the agreements contained in
this Section 7.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, neither Dr. Tattoff nor the
Company would enter into this Agreement. Accordingly, if either party fails to
promptly pay any amounts owing pursuant to this Section 7.3 when due, then the
party from whom such payment is due shall in addition thereto pay to the other
party all costs and expenses (including fees and disbursements of counsel)
incurred in collecting such amounts, together with interest on such amounts (or
any unpaid portion thereof) from the date such payment was required to be made
until the date such payment is received by the party entitled to such payment
hereunder at the prime rate of Chase Manhattan as in effect from time to time
during such period.
26
ARTICLE VIII
MISCELLANEOUS
8.1. Certain Definitions; Rules of Construction. Definitions shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed to be references to Articles
and Sections of, and Exhibits and Schedules to, this Agreement unless the
context shall otherwise require. All Exhibits and Schedules attached hereto
shall be deemed incorporated herein as if set forth in full herein and, unless
otherwise defined therein, all terms used in any Exhibit or Schedule shall have
the meaning ascribed to such term in this Agreement. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise expressly
provided herein, any agreement, plan, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, plan, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. For the purposes of this Agreement, the following terms
shall have the following meanings:
"Acquisition Proposal" has the meaning set forth in Section 5.9.
"Acquisition Transaction" has the meaning set forth in Section 5.9.
"Adjustment Event" has the meaning set forth in Section 2.3.
"Affiliate" shall mean, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such first Person. The term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Applicable Law" means any Federal, state or local law, regulation, code,
ordinance, statute, rule, Order, judgment, decree or other requirement of a
Governmental Body applicable to the business of the Company or Dr. Tattoff, as
the context may require.
"Benefit Plan" means each deferred compensation, executive compensation,
incentive compensation, stock purchase or other stock-based compensation plan,
severance or termination pay, holiday, vacation or other bonus plan or practice,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit sharing, pension, or retirement plan, program,
agreement, commitment or arrangement, and each other employee Benefit Plan,
program, agreement or arrangement, including, without limitation, each "employee
Benefit Plan" as such term is defined under Section 3(3) of ERISA.
27
"Blue Sky Laws" has the meaning set forth in Section 3.10.
"Bridge Financing" means the bridge financing pursuant to which lenders
provided financing for Dr. Tattoff in an aggregate amount of $375,000.
"Business Day" means any day other than Saturday or Sunday or any other
day on which banks in the State of New York are permitted or obligated to be
closed for business.
"CALLCA" has the meaning set forth in the recitals.
"California Certificate of Merger" has the meaning set forth in Section
1.2.
"Claim" means any action, suit, claim, complaint, demand, litigation or
similar proceeding.
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" has the meaning set forth in Section 1.2.
"Company" has the meaning set forth in the preamble.
"Company Certificates" has the meaning set forth in Section 2.2(a).
"Company Common Stock" has the meaning set forth in Section 2.1(b).
"Company Consent" has the meaning set forth in Section 5.2.
"Company Disclosure Letter" has the meaning set forth in Article III.
"Company Shareholder" and "Company Shareholders" have the meaning set
forth in Section 2.1.
"Company Warrant" has the meaning set forth in Section 2.4.
"Dr. Tattoff Disclosure Letter" has the meaning set forth in Article IV.
"Dr. Tattoff" has the meaning set forth in the preamble.
"Dr. Tattoff Financial Statements" has the meaning set forth in Section
3.14.
"Dr. Tattoff Information" has the meaning set forth in Section 4.24.
"Dr. Tattoff Warrant" has the meaning set forth in Section 2.4.
28
"Effective Time" has the meaning set forth in Section 1.2.
"Environmental Laws" means all applicable statutes, rules, regulations,
ordinances, orders, decrees, judgments, permits, licenses, consents, approvals,
authorizations, and governmental requirements or directives or other obligations
lawfully imposed by Governmental Body under federal, state, local or common law,
indemnity agreements or other contractual obligations, in each case, pertaining
to the protection of the environment, protection of public health, protection of
worker health and safety, the treatment, emission and/or discharge of gaseous,
particulate and/or effluent pollutants, and/or the handling of hazardous
materials, including, without limitation, the Clean Air Act, 42 U.S.C. ss. 7401,
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), 42 U.S.C. ss. 9601, et seq., the Federal Water Pollution
Control Act, 33 U.S.C. ss. 1321, et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6901, et seq. ("RCRA"), and the Toxic Substances Control Act, 15
U.S.C. ss. 2601, et seq.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Agent" has the meaning set forth in Section 2.2.
"Expenses" has the meaning set forth in Section 7.3(d).
"FLBCA" has the meaning set forth in the recitals.
"Florida Certificate of Merger" has the meaning set forth in Section 1.2.
"Fully Diluted Basis" shall mean that the amount of common stock of an
entity outstanding shall be determined on the basis that all outstanding
options, warrants and other convertible securities shall be deemed to be fully
exercised or converted (as the case may be) into common stock; provided however,
that the notes and warrants issued by the Company in connection with the Bridge
Financing shall not be included in a calculation on a Fully Diluted Basis for
purposes of this Agreement.
"GAAP" has the meaning set forth in Section 4.7(b).
"Governmental Body" means any court, administrative or regulatory agency
or commission or other governmental authority of competent jurisdiction.
"Government Agency" means (i) the United States Government, including all
departments and agencies of any branch of the United States Government, all
independent agencies or instrumentalities and all non-appropriated fund
activities within the United States Government and United States Government
corporations, and (ii) any state or local government, including all departments,
agents, agencies, branches, independent agencies or instrumentalities,
activities, and non-appropriated fund activities of or within a state or local
government and all state or local government corporations.
29
"Hazardous Substances" means any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes, constituents,
compounds, chemicals (including, without limitation, petroleum or any
by-products or fractions thereof, any form of natural gas, ▇▇▇▇▇▇ Amendment
materials, lead, asbestos and asbestos-containing materials, building
construction materials and debris, polychlorinated biphenyls ("PCBs") and
PCB-containing equipment, radon and other radioactive elements, ionizing
radiation, electromagnetic field radiation and other non-ionizing radiation,
sonic forces and other natural forces, infectious, carcinogenic, mutagenic, or
etiologic agents, pesticides, defoliants, explosives, flammables, corrosives and
urea formaldehyde foam insulation) that are regulated by any Environmental Laws.
"Intellectual Property" means all of the following as they are used in
connection with the business of a Person as presently conducted and as they
exist in all jurisdictions throughout the world, in each case, to the extent
owned by such Person:
(a) patents, patent applications and inventions, designs and
improvements described and claimed therein, patentable inventions and other
patent rights (including any divisions, continuations, continuations-in-part,
substitutions, or reissues thereof, whether or not patents are issued on any
such applications and whether or not any such applications are modified,
withdrawn, or resubmitted);
(b) trademarks, service marks, trade dress, trade names, brand
names, designs, logos, or corporate names, whether registered or unregistered,
and all registrations and applications for registration thereof;
(c) copyrights and mask works, including all renewals and
extensions thereof, copyright registrations and applications for registration
thereof;
(d) trade secrets, confidential business information and other
proprietary information, concepts, ideas, designs, research or development
information, processes, procedures, techniques, technical information,
specifications, operating and maintenance manuals, engineering drawings,
methods, know-how, technical data and databases, discoveries, inventions,
modifications, extensions, improvements, and other proprietary rights (whether
or not patentable or subject to copyright, mask work, or trade secret
protection);
(e) computer software programs, including, without limitation,
all source code, object code, and documentation related thereto; and
(f) Internet addresses, domain names, web sites, web pages and
similar rights and items.
"Investment Letter" has the meaning set forth in Section 6.1(c).
"Knowledge" with respect to any Person, means the actual knowledge of any
of the officers or directors of such Person after diligent inquiry.
"Legal Proceedings" has the meaning set forth in Section 3.7.
30
"Lien" means any mortgage, pledge, lien, charge, easement, restrictive
covenant, encumbrance, voting or transfer restriction, or security interest.
"Material Adverse Effect" means any change, effect, event or occurrence
that is materially adverse to the condition (financial or otherwise), assets,
properties, business or operations of a Person and its Subsidiaries, taken as a
whole.
"Material Contract" means all of the following contracts, agreements,
understandings or arrangements, whether or not in writing, to which a Person is
a party or by or to which any of them or any of their assets or properties are
bound or subject, with respect to: (i) any current or former officer, director,
stockholder, employee, consultant, agent or other representative or with an
entity in which any of the foregoing is a contracting person; (ii) any labor
union or association representing any employee; (iii) the purchase or sale of
materials, supplies, equipment, merchandise or services that contain an
escalation, renegotiation or redetermination clause calling for an aggregate
purchase or sale price or payments of more than $5,000 in any one case (or in
the aggregate, in the case of any related series of contracts and other
agreements); (iv) the sale of any of its assets or properties other than in the
ordinary course of business or for the grant to any person of any preferential
rights to purchase any of its assets or properties; (v) joint ventures,
strategic alliances or partnerships; (vi) an indemnity or sharing of any tax
liability of any third party; (vii) the purchase or sale price or payments of
more than $5,000 in any one case (or in the aggregate, in the case of any
related series of contracts and other agreements) that cannot be canceled by
such Person with less than ninety days' notice without incurring liability,
premium or penalty; (viii) the sharing of fees, the rebating of charges or other
similar arrangements; (ix) obligations or liabilities of any kind to holders of
such Person securities as such; (x) covenants of such Person not to compete in
any line of business or with any person in any geographical area or covenants of
any other person not to compete with the such Person in any line of business or
in any geographical area; (xi) the acquisition by the such Person of any
operating business, including the assets or the capital stock of any other
person; (xii) options for the purchase of any asset, tangible or intangible,
requiring the payment to any person of a commission or fee; (xiii) the payment
of fees or other consideration on behalf of any officer or director of such
Person or to any other entity in which any of the foregoing has an interest;
(xiv) the borrowing of money; (xv) any purchase price or sale price or payments
of more than $5,000 in any one case (or in the aggregate, in the case of any
related series of contracts and other agreements) whether or not made in the
ordinary course of business; (xvi) the purchase or sale of material, supplies,
equipment, merchandise, intellectual property, real property, assets (whether
tangible or intangible) or services where the purchase or sale price, the
estimated purchase or sale price, the maximum order price, the maximum contract
price, or the ceiling price (whether in one case or in the aggregate, in the
case of a related series of contracts or other agreements) is more than $5,000,
and a party to the contract or the known end or ultimate user, seller, or
purchaser is any Government Agency; (xvii) any schedule contracts with the
United States General Services Administration or any multiple award schedule
contracts, basic agreements, basic ordering agreements, or blanket purchase
agreements with any Government Agency; and (xviii) any other contract, agreement
or arrangement that is material to the business of a Person.
"Member" and "Members" have the meaning set forth in Section 2.1(a).
31
"Membership Interests" has the meaning set forth in Section 2.1(a).
"Merger" has the meaning set forth in the recitals.
"Merger Shares" has the meaning set forth in Section 2.1(b).
"Orders" has the meaning set forth in Section 3.9.
"Permitted Liens" has the meaning set forth in Section 3.8.
"Person" means any individual, corporation, partnership, limited liability
company or partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
"Recent Reports" has the meaning set forth in Section 4.8.
"Representatives" has the meaning set forth in Section 5.9.
"SEC" has the meaning set forth in Section 4.7(a).
"SEC Reports" has the meaning set forth in Section 4.7(a).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" of any Person means any corporation, partnership, joint
venture or other legal entity of which such Person (either directly or through
or together with any other Subsidiary of such Person), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or similar governing body of such corporation, partnership, joint venture or
other legal entity.
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Tax" or "Taxes" means any taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, franchise, profits,
gross receipts, capital, sales, use, ad valorem, value added, transfer, transfer
gains, inventory, capital stock, license, withholding, payroll, employment,
social security (or similar), unemployment, excise, severance, stamp,
occupation, real or personal property, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), customs duties, registration,
alternative or add-on minimum, and estimated taxes, customs duties, fees,
assessments and charges of any kind whatsoever, together with any interest and
any penalties, fines, additions to tax or additional amounts thereon whether
disputed or not, imposed by any taxing authority (Federal, state, local or
foreign) and shall include any transferee liability in respect of Taxes.
32
"Tax Return" means any returns, declarations, reports, estimates,
information returns or statements relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transaction Documents" means this Agreement and each of the agreements
and instruments contemplated hereby or thereby, including, without limitation,
the Florida Certificate of Merger and the California Certificate of Merger, the
officer's certificate to be delivered by Dr. Tattoff pursuant to Section 6.2(c)
and the Company pursuant to Section 6.3(c), the Company Disclosure Letter, the
Dr. Tattoff Disclosure Letter and all documents, instruments or agreements
attached to or contemplated by any of the foregoing.
"Transactions" has the meaning set forth in Section 3.3.
8.2. Waivers and Amendments. Subject to Applicable Law, this
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by or on behalf of the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
8.3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE, APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
8.4. Notices. Any notices or other communications required under
this Agreement shall be in writing and be effective upon delivery if given by
hand delivery or facsimile transmission or on the next day after given if
delivered by overnight courier, and shall be given at the addresses or facsimile
numbers set forth below, with copies provided as follows:
(a) if to the Company or the Surviving Corporation:
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇.▇▇▇▇
33
(b) if to Dr. Tattoff:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ - Street Level Suite 105
Beverly Hills, CA 90211
Attn: ▇▇▇▇▇ ▇▇▇▇▇, CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Blank Rome LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties to this Agreement in the manner herein
proved.
8.5. Section Headings. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
8.6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which,
together, shall constitute one and the same instrument. This Agreement may be
executed by facsimile or other electronic image transmission technology. Copies
of signature pages delivered by facsimile or other means of electronic image
transmission shall have the same force and effect as originals thereof.
8.7. Assignments. This Agreement, by operation of law or otherwise,
shall be binding upon and inure to the benefit of successors and legal
representatives of the parties hereto.
8.8. Entire Agreement; Enforceability. This Agreement and the
Transaction Documents, including the Exhibits and Schedules attached hereto and
thereto: (i) constitute the entire agreement among the parties with respect to
the Transactions and supersedes all prior agreements and understandings, both
written and oral, among the parties, with respect to the subject matter hereof
and thereof; and (ii) shall be binding upon, and are solely for the benefit of
each party hereto and nothing in this Agreement is intended to confer upon any
other Person any rights or remedy of any nature whatsoever hereunder or by
reason of this Agreement or any of the Transaction Documents.
8.9. Severability. Any term or provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without rendering invalid, illegal or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
[Signature page follows.]
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be duly executed as of the date first above written.
LIFESCIENCES OPPORTUNITIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
DRTATTOFF, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
FORM OF INVESTMENT LETTER
* Copies of exhibits and schedules provided upon request.