EXHIBIT 10.4
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement dated as of November 4,
2003 is between FCPR L Capital, a fonds commun de placements a risque,
represented by L Capital Management SAS, a societe par actions simplifiee (the
"Investor"), and Advanced Aesthetics, Inc., a Delaware corporation (the
"Company"). Capitalized terms used but not defined herein have the meanings
assigned to them in the Glossary attached hereto.
On June 30, 2003, the Company, through a wholly-owned
subsidiary, acquired all of the issued and outstanding capital stock of Cosmo.
Concurrently herewith, the Company is acquiring the Palm Beach
and Boca Raton businesses of Anushka Boca, Anushka PBG and Wild Hare.
In order to finance the acquisition of Wild Hare and Anushka,
to redeem 825 shares of Series B Preferred Stock, to repay all amounts due under
a note that the Company's wholly-owned subsidiary issued to the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Living Trust dated July 9, 2002 to finance the acquisition of Cosmo and for the
other purposes set forth in Section 4.2, subject to the satisfaction of the
conditions precedent set forth in Sections 5.1 and 5.2, the Company wishes to
sell the Convertible Note to the Investor, and the Investor wishes to purchase
the Convertible Note from the Company, for $13,300,000. Additionally, subject to
the satisfaction of the conditions precedent set forth in Sections 5.3 and 5.4,
the Company wishes to sell the Investor Series D Shares to the Investor, and the
Investor wishes to purchase the Investor Series D Shares from the Company.
The parties agree as follows:
Article I
Purchase and Sale of Securities; Purchase Price; Payment; Closings
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Section 1.1 Purchase and Sale of Securities.
(a) Subject to the terms and conditions in this agreement, at
the Initial Closing, the Company shall issue and sell the Convertible Note to
the Investor, and the Investor shall purchase the Convertible Note from the
Company. The purchase price for the Convertible Note shall be the Initial
Investment Amount.
(b) Subject to the terms and conditions in this agreement, at
the Additional Closing, the Company shall issue and sell the Investor Series D
Shares to the Investor, and the Investor shall purchase the Investor Series D
Shares from the Company. The purchase price for the Investor Series D Shares
shall be the Additional Investment Amount.
Section 1.2 Initial Closing.
(a) On the terms and subject to the conditions in this
agreement, the closing of the sale of the Convertible Note (the "Initial
Closing") shall take place at the offices of Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
LLP, counsel to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at
10:00 a.m. New York time on November 15, 2003 or on such other date and time
as the parties shall mutually agree. The date of the Initial Closing is referred
to as the "Initial Closing Date."
(b) At the Initial Closing: (i) the Company shall deliver the
Convertible Note to the Investor; and (ii) the Investor shall deliver the
Initial Investment Amount to the Company by wire transfer of immediately
available funds to an account designated in writing by the Company prior to the
Initial Closing Date.
Section 1.3 Additional Closing.
(a) At any time from and after March 15, 2004, either party
may give the other written notice. Such notice shall, if sent by the Company,
state the conditions precedent set forth in Section 5.3 have been satisfied or
are capable of being satisfied at the Additional Closing or, if sent by the
Investor, state that the conditions precedent set forth in Section 5.4 have been
satisfied or are capable of being satisfied at the Additional Closing. Such
notice shall also state that the sale of the Shares shall take place on a date
that is at least 12 (and no more than 15) Business Days after the giving of such
notice.
(b) On the terms and subject to the conditions in this
agreement, the closing of the sale of the Shares (the "Additional Closing")
shall take place at the offices of Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP,
counsel to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00
a.m. New York time on the date set forth in the notice referred to in Section
1.3(a) or on such other date and time as the parties shall mutually agree;
provided, however that the right of the Investor to purchase the Investor Series
D Shares shall cease upon the earlier of: (x) the 18 month anniversary of the
Initial Closing Date; and (y) such time as the Investor shall, after 15 Business
Days' written notice from the Company, have failed to approve the next two
proposed acquisitions by the Company (after giving effect to the Wild Hare and
Anushka transactions) of all or substantially all of the business or voting
stock of any Person, or any division, line of business or other business unit of
a Person that are approved by a majority of the Company's board of directors.
The date of the Additional Closing is referred to as the "Additional Closing
Date."
(c) At the Additional Closing: (i) the Company shall deliver
one or more certificates representing the Investor Series D Shares to the
Investor, and (ii) the Investor shall deliver the Additional Investment Amount
to the Company by wire transfer of immediately available funds to an account
designated in writing by the Company prior to the Additional Closing Date.
Article II
Representations and Warranties of the Company
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The Company represents and warrants that:
Section 2.1 Corporate Organization.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware. The
Company is qualified or licensed to conduct its business and is in good standing
in each of the jurisdictions set forth on Schedule 2.1,
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which constitute the only jurisdictions where the nature of its activities or
the character of the properties utilized in its business make such qualification
or licensing necessary. The Company has delivered to the Investor copies of its
certificate of incorporation and bylaws as currently in effect.
(b) Each subsidiary of the Company listed on Schedule 2.1
(each, a "Subsidiary") is the type of entity indicated on Schedule 2.1 and is
duly organized, validly existing and in good standing under the laws of the
jurisdictions set forth on Schedule 2.1. Each Subsidiary is qualified or
licensed to conduct its business and is in good standing in each of the
jurisdictions set forth on Schedule 2.1, which constitute the only jurisdictions
where the nature of its activities or the character of the properties utilized
in its business make such qualification or licensing necessary.
Section 2.2 Power and Authority: Authorization:
Enforceability: No Conflicts Etc.
(a) The Company and each of its Subsidiaries has corporate or
limited liability company (as applicable) power and authority to own its assets
and to carry on its business as it is now being conducted. The Company has full
corporate power and authority to execute and deliver this agreement and each
other agreement, certificate and document contemplated hereby (together with
this agreement, the "Transaction Documents") to which it is a party and to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each Subsidiary has full corporate
or limited liability company (as applicable) power and authority to own its
assets and to carry on its business as it is now being conducted.
(b) The execution, delivery and performance by the Company of
this agreement and the other Transaction Documents to which it is a party and
the consummation by the Company of the transactions contemplated hereby and
thereby has been duly authorized by all requisite corporate action of the
Company. The Company has delivered to the Investor the resolutions adopted by
its board of directors to authorize the transactions contemplated hereby and the
securities to be issued hereunder.
(c) This agreement has been, and the other Transaction
Documents to which the Company is or will be a party will at the Initial Closing
be, duly and validly executed and delivered by the Company and constitutes or
will then constitute, as the case may be, the legal, valid and binding
obligations of the Company, enforceable against it in accordance with their
respective terms.
(d) The execution and delivery by the Company of this
agreement and each of the other Transaction Documents to which it is a party,
the performance by the Company of its obligations hereunder and thereunder and
the consummation by the Company of the transactions contemplated hereby and
thereby do not:
(i) violate any provision of the certificate of incorporation
or bylaws (or similar organizational documents) of the Company or any
Subsidiary;
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(ii) result in: (A) a violation or breach of; or constitute
(with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, amendment, cancellation or acceleration)
under any of the terms, conditions or provisions of any material Contract
to which the Company or any Subsidiary is a party or by which any of the
properties or assets of the Company or any Subsidiary may be bound or
otherwise subject; or (B) in the creation or imposition of any Lien upon
any of the properties or assets of the Company or any of its Subsidiaries;
or
(iii) contravene or violate any Law applicable to the Company
or any Subsidiary or any of their respective properties or assets.
(e) Other than the obligation of the Company to file a
registration statement in accordance with the Registration Rights Agreement or
as set forth on Schedule 2.2, no prior or subsequent Consent of any Person,
including, without limitation, any Governmental Entity, is required to be made
or obtained by the Company or any Subsidiary in connection with the execution,
delivery and performance by the Company of this agreement or any of the other
Transaction Documents to which the Company is a party or the consummation by the
Company of the transactions expressly contemplated hereby and thereby.
(f) The consummation by the Company of the merger of Advanced
Aesthetics Merger Sub, Inc., a Delaware corporation, into Advanced Aesthetics
Sub, Inc., a Delaware corporation, which merger is referred to on Schedule 2.1,
will not result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under any of the terms,
conditions or provisions of any Contract listed on any Disclosure Schedule.
Section 2.3 Capitalization.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Common Stock and 1,000,000 shares of preferred stock, par
value $0.01 per share, of which 20,000 have been designated as Series A
Preferred Stock, 600,000 have been designated as Series B Preferred Stock and
100,000 have been designated as Series C Preferred Stock. At the Initial
Closing, there will be issued and outstanding an aggregate of 9,265,003 shares
of Common Stock, 2,725 shares of Series B Preferred Stock and 1,300 shares of
Series C Preferred Stock. All of the outstanding shares of Common Stock, Series
B Preferred Stock and Series C Preferred Stock will at the Initial Closing be
duly authorized and validly issued and fully paid and non-assessable. Except as
set forth on Schedule 2.3, there are no outstanding options, warrants,
preemptive rights, participation rights, antidilution provisions or other rights
to acquire or subscribe to, or calls or commitments of any character whatsoever
to which the Company is a party or may be bound, requiring the issuance or sale
of shares of any class of capital stock oro other equity securities of the
Company or securities or rights convertible into or exchangeable for such shares
or other equity securities, and there are no contracts, commitments,
understandings or arrangements for which the Company is or may become bound to
issue additional shares of its capital stock or other equity securities or
options, warrants or tights to acquire or subscribe to any additional shares of
any class of its capital stock or other equity securities or securities
convertible into or exchangeable for such shares or other equity securities.
None of the
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Company' capital stock has been issued or will be issued in connection with the
transactions contemplated by this agreement in violation of any preemptive
right.
(b) The shares of Common Stock issuable upon conversion of or
otherwise pursuant to the Convertible Note have been reserved for issuance and,
upon conversion thereof or issuance in accordance with its terms, will be duly
authorized, validly issued, fully paid and nonassessable. The Series D Preferred
Stock has been duly authorized and, upon the filing of its certificate of
designation with the Secretary of State of Delaware and the issuance and sale of
the Investor Series D Shares in accordance with the terms hereof will be validly
issued, fully paid and nonassessable. The shares of Common Stock issuable upon
conversion or otherwise pursuant to Series D Preferred Stock have been reserved
for issuance and, upon conversion thereof or issuance in accordance with its
terms, will be duly authorized, validly issued, fully paid and nonassessable.
(c) Except for the Subsidiaries, the Company has no
subsidiaries and does not own any outstanding shares of capital stock or have
any direct or indirect interest in or control over any corporation, partnership,
joint venture, trust, corporation, limited liability company or other entity.
The Company owns 100% of the capital stock (and other ownership interests) of
each Subsidiary free and clear of all Liens (including, without limitation, any
restriction on the right to sell or otherwise dispose of such capital stock or
other ownership interests), and all of the outstanding shares of such capital
stock were duly authorized and validly issued and are fully paid and
non-assessable. There are no outstanding options, warrants, rights to acquire or
subscribe to, or calls or commitments of any character whatsoever to which the
Company or any Subsidiary is a party or may be bound, requiring the issuance or
sale of shares of any class of capital stock or other equity securities of any
Subsidiary or securities or rights convertible into or exchangeable for such
shares or other equity securities, and there are no contracts, commitments,
understandings or arrangements for which the Company or any Subsidiary is or may
become bound to issue additional shares of any Subsidiary's capital stock or
other equity securities or options, warrants or rights to acquire or subscribe
to any additional shares of any class of any Subsidiary's capital stock or other
equity securities or securities convertible into or exchangeable for such shares
or other equity securities. None of any Subsidiary's capital stock has been
issued in violation of any preemptive right. There are no outstanding
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any outstanding securities of any Subsidiary.
Section 2.4 Financial Statements. The Balance Sheet, a copy of
which has been delivered to the Investor, has been derived from and is based
upon and consistent with the books and records of the Company and fairly
presents the consolidated financial condition of the Company as of the date
thereof. To the knowledge of the Company, the Balance Sheet has been prepared in
accordance with GAAP.
Section 2.5 No Material Adverse Change: Other Changes Since
the Balance Sheet Date:
(a) the business of the Company and its Subsidiaries has been
conducted in the ordinary course and consistent with past practice;
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(b) no event, condition or circumstance has occurred that
would or would be reasonably likely to, individually or in the aggregate, have a
Company Material Adverse Effect;
(c) the Company has not, except in connection with or as
contemplated by this agreement:
(i) declared, set aside or paid any dividend or other
distribution with respect to any shares of capital stock of the Company, or
repurchased, redeemed or acquired any outstanding shares of capital stock
or other securities of the Company;
(ii) amended any material term of any outstanding security of
the Company, excluding the amendment to the certificate of incorporation
contemplated hereunder;
(iii) incurred, assumed or guaranteed, or caused or permitted
any Subsidiary to incur, assume or guarantee, any indebtedness for borrowed
money other than in the ordinary course of business and in amounts and on
terms consistent with past practices, but not in any event exceeding
$100,000;
(iv) created or incurred of any Lien on any material asset
other than in the ordinary course of business consistent with past
practices;
(v) made any loan, advance or capital contributions to or
investment in any Person;
(vi) suffered any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or assets of
the Company which, individually or in the aggregate, has had or could
reasonably be expected to have a Company Material Adverse Effect;
(vii) except as set forth on Schedule 2.5, entered into any
material transaction or made any material commitment, or entered into any
material Contract relating to its assets or business (including the
acquisition or disposition of any assets) or relinquished any material
Contract or other right, in each case other than in the ordinary course of
business;
(viii) changed any method of accounting or accounting
practice, except for any such change after the date hereof required by
reason of a concurrent change in generally accepted accounting principles;
(ix) entered into any employment, deferred compensation,
severance, retirement or other similar agreement entered into with any
director, officer or employee of the Company (or any amendment to any such
existing agreement), granted any severance or termination pay to any
director, officer or employee of the Company, or changed the compensation
or other benefits payable to any director, officer or employee of the
Company pursuant to any severance or retirement plans or policies thereof,
in each case other than in the ordinary course of business; or
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(x) had any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to org any employees of the Company, which employees
were not subject to a collective bargaining agreement at the Balance Sheet
Date, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to any employees of the Company.
Section 2.6 No Undisclosed Liabilities. The Company has no
liabilities or obligations that are required by GAAP to be disclosed on the
Balance Sheet, except for liabilities and obligations reflected or reserved
against on the Balance Sheet and current liabilities incurred since the Balance
Sheet Date in the ordinary course of business. To the knowledge of the Company,
there is no existing condition, situation or set of circumstances that could
reasonably be expected to result in such a liability. The Company has no other
material liabilities or obligations (absolute or contingent), other than the
requirement to perform its obligations under Contracts disclosed in the
Disclosure Schedules.
Section 2.7 Litigation: Compliance with Law: Licenses and
Permits.
(a) There is no pending or, to the knowledge of the Company,
threatened Proceeding: (a) that has been commenced by or against the Company or
any Subsidiary or any part of their respective businesses, operations,
properties or assets; or (b) that challenges or seeks to alter or materially
delay the transactions contemplated hereby and, to the knowledge of the Company,
there exists no basis for any such Proceeding.
(b) The Company and each Subsidiary has every License and
every Permit required for them to conduct their business as presently conducted,
except for Licenses and Permits the failure of which to obtain would not have a
Company Material Adverse Effect. All such Licenses and Permits are listed on
Schedule 2.7.
Section 2.8 Employee Benefit Plans; ERISA.
(a) Schedule 2.8 lists each material "employee benefit plan"
(as defined in Section 3(3) of ERISA and all other material employee benefits
(including any non-qualified plans), bonus, deferred compensation, incentive,
stock option (or other equity-based), medical insurance, life insurance and
fringe benefit plans maintained or contributed to by the Company or any
Subsidiary for the benefit of any employee or former employee of the Company or
any Subsidiary (collectively, the `Plans").
(b) Each of the Plans complies in all material respects with
the applicable provisions of ERISA, the Code and Treasury and Labor regulations
and any other applicable Law, and has been administered in accordance with
ERISA, the terms of the Plan and, where applicable, the Code.
Section 2.9 Real Property.
(a) The Company owns no real property.
(b) Schedule 2.9 lists all the leases and subleases under
which the Company uses or occupies any real property (such leased or subleased
real property being herein called
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collectively, the "Leased Real Property"). The Company has delivered to the
Investor complete copies of all leases for the Leased Real Property
(collectively, the "Leases"). Each Lease is in full force and effect, all rent
and other sums and charges payable thereunder are current, no written notice of
default or termination under any Lease has been received or given, no
termination event or condition or default which has remained uncured beyond
applicable cure periods exists on the part of any party under any Lease, and no
event has occurred which, with the giving of notice or the lapse of time or
both, would constitute such a default or termination event or condition.
(c) The Company is not, nor has it been within the last five
years, a "United States real property holding corporation" within the meaning of
Section 897 of the Code.
Section 2.10 Personal Property. The Company has good,
marketable and valid title to all personal property (tangible and intangible)
owned by it and used in its business, free and clear of all Liens.
Section 2.11 Intellectual Property.
(a) Schedule 2.11 lists each copyright, trademark, service
▇▇▇▇, trade name and patent owned by the Company or any of its Subsidiaries, and
each federal, state and foreign registration thereof Such schedule includes,
without limitation, a list of all registration and application numbers and
expiration dates in jurisdictions where registrations have been filed.
(b) To the knowledge of the Company, neither the Company nor
any Subsidiary has infringed, misappropriated or otherwise violated any
intellectual property right of any third party. There is no Proceeding pending
against, or, to the knowledge of the Company, threatened against or affecting,
the business of the Company or any Subsidiary or any present or former officer,
director or employee of the Company or any Subsidiary: (i) based upon, or
challenging or seeking to deny or restrict, the rights of the Company in any of
the intellectual property rights of the Company or any Subsidiary; (ii) alleging
that the use of the intellectual property rights of the Company or any
Subsidiary or any services provided, processes used or products manufactured,
used, imported or sold with respect to the business of the Company or any
Subsidiary to or may conflict with, misappropriate, infringe or otherwise
violate any intellectual property right of any third party; or (iii) alleging
that the Company or any Subsidiary infringed, misappropriated or otherwise
violated any intellectual property right of any third party.
Section 2.12 Material Contracts.
(a) Schedule 2.12 hereto contains an accurate and complete
list of all material Contracts to which the Company or any Subsidiary is a party
or by which any of its material assets are bound. For purposes of this Section
2.12, an agreement, lease, license, contract or commitment shall not be deemed
"material" unless it: (a) obligates the Company or any Subsidiary to pay an
amount of $100,000 or more; (b) cannot be terminated by providing less than 90
days' notice or by paying any penalty; (c) is a real property lease; (d) is a
Contract with a medical professional; (e) is a Contract that restricts the
Company's right or ability to conduct its business as conducted or as proposed
to be conducted; or (I) is a Contract between the Company and an Affiliate of
the Company or of KCO).
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(b) Neither the Company nor any Subsidiary is in default under
any Contract to which it is a party, and there is no def or breach on the part
of the Company or any Subsidiary or event known to the Company or any Subsidiary
that, with notice or lapse of time, or both would constitute a material default
by any party to any of these agreements or give them any right to terminate,
cancel, accelerate or modify any of these agreements or results m the creation
of a Lien on any of the Company's assets or properties. Each Contract listed on
Schedule 2.12 is a valid and binding agreement of the Company or the Subsidiary
party thereto and is in full force and effect.
Section 2.13 Environmental Matters.
(a) The Company and the Subsidiaries have complied in all
respects with all, are not in violation in any respect of any, and have no
liability under any applicable Environmental Laws, except where such f to
comply, such violation or such liability would not be reasonably likely to
result in a Company Material Adverse Effect.
(b) To the knowledge of the Company, the Company and its
Subsidiaries have all required Environmental Permits and are in compliance with
the terms thereof except where the failure to have such Environmental Permits or
to be in compliance therewith would not be reasonably likely to result in a
Company Material Adverse Effect.
(c) To the knowledge of the Company, except as specifically
disclosed in the Phase II Site Assessment dated March 1, 2000 prepared by
Ardaman & Associates, Inc. (and only to the extent of such disclosure), no Site
is a treatment, storage or disposal facility, as defined in and regulated under
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., is on or
ever was listed or is proposed for listing on the National Priorities List
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., or on any similar list of sites requiring
investigation or cleanup, except where such status of any Site as such a
facility or such a Site's presence on such a list would not be reasonably likely
to result in a Company Material Adverse Effect.
(d) There are no pending or outstanding corrective actions for
the investigation, remediation or cleanup of any Site, except for such actions
that would not be reasonably likely to result in a Company Material Adverse
Effect.
(e) To the knowledge of the Company, there has been no Release
of a Hazardous Substance at, from, in, to, on or under any Site and no Hazardous
Substances are present in, on, about or migrating to or from any Site, except
for such Releases at, from, in, to, or under and such Hazardous Substances
present in, on, about or migrating to or from, a Site that would not be
reasonably likely to result in a Company Material Adverse Effect.
(f) The Environmental Permits will remain in full force and
effect after the Closing without notice to or consent from any Person, except
for such Environmental Permits the expiration of which would not be reasonably
likely to result in a Company Material Adverse Effect.
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(g) There are no pending or, to the knowledge of the Company,
threatened Environmental Claims against the Company or any Subsidiary, except
for such Environmental Claims that would not be reasonably likely to result in a
Company Material Adverse Effect.
(h) Neither the Company nor, to the knowledge of the Company,
any Subsidiary has transported or arranged for the treatment of any Hazardous
Substance to any off- site location, except for such transportation or
arrangement that would not be reasonably likely to result in a Company Material
Adverse Effect.
(i) To the knowledge of the Company, there are no: (i)
underground storage tanks; (ii) polychlorinated biphenyl containing equipment;
or (iii) asbestos-containing material at, in, on or under any Site, except where
the foregoing would not be reasonably likely to result in a Company Material
Adverse Effect.
(j) To the knowledge of the Company, there have been no
environmental investigations conducted by, on behalf of; or that are in the
possession of the Company or any Subsidiary with respect to the Company, any
Subsidiary or any Site, except for such investigations that would not be
reasonably likely to result in a Company Material Adverse Effect.
Section 2.14 Labor and Employee Matters.
(a) No employees of the Company or any Subsidiary are covered
by a collective bargaining agreement.
(b) There does not currently exist and, to the knowledge of
the Company, there is not currently threatened, any grievance or complaint filed
on behalf of an employee or labor organization, before the National Labor
Relations Board, the Equal Employment Opportunity Commission, state and local
civil rights agencies, federal or state departments of labor, the various
occupational health and safety agencies or any judicial or arbitration forum
with respect to the Company or any Subsidiary.
(c) The Company and each Subsidiary are in compliance with all
applicable Laws relating to employment, employment practices, wages, hours,
discrimination, safety and health of employees, workers compensation,
unemployment insurance, withholding of wages, and terms and conditions of
employment, except where the failure to so be in compliance would not be
reasonably likely to result in a Company Material Adverse Effect.
Section 2.15 Taxes.
(a) The Company and each Subsidiary:
(i) have filed when due (taking into account all extensions of
filing dates) with the appropriate authorities all Tax Returns required to
be filed by them on or before the date hereof, and all such Tax Returns
were, at the time of the filing, true and complete in all material
respects; and
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(ii) have paid (or caused to be timely paid or withheld and
remitted to the appropriate Governmental Entity) all Taxes due and payable
in respect of all periods up to and including the date hereof (other than
Taxes being contested in good faith) or, where payment is not yet due, has
established (or has caused to be established on its behalf) in compliance
with GAAP an adequate accrual for all Taxes through the last period for
which the Company and its Subsidiaries ordinarily record items on their
respective books.
Schedule 2.15 sets forth a list of each jurisdiction in which the Company or any
Subsidiary has filed or is required to file a Tax Return, the type of Tax and
the type of Tax Return filed or required.
(b) There is no pending or, to the knowledge of the Company,
threatened audit, investigation, proceeding or claim respecting any Tax for
which the Company is or may be liable or which relates to the income, assets or
operations of the Company.
Section 2.16 Brokers and Finders. Neither the Company nor any
Subsidiary has employed any broker, agent or finder or incurred any liability
for any brokerage fees, agents' commissions or finders' fees in connection with
the transactions contemplated hereby.
Section 2.17 Absence of Certain Legal Proceedings. Within the
past 15 years, neither the Company nor, to the Company's knowledge, any of its
directors, or executive officers have been convicted of or pled guilty to any
felony under the laws of the United States or any state thereof. To knowledge of
the Company, no criminal arrests or Proceedings are pending, nor have any been
threatened against any such Persons in the last 36 months.
Section 2.18 Employees. Schedule 2.18 lists the names,
titles, annual salaries and other compensation of the Company's executive
officers. Schedule 2.18 also lists the names, titles, annual salaries and other
compensation of the principals of Cosmo, Wild Hare and Anushka.
Section 2.19 Solvency. The Company has not admitted in
writing an inability to pay its debts generally as they become due, filed or
consented to the filing against it of a petition in bankruptcy or a petition to
take advantage of any insolvency act, made an assignment for the benefit of
creditors, consented to the appointment of a receiver for itself or for the
whole or any substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the federal bankruptcy laws or any
other laws or of the United States or any other jurisdiction.
Section 2.20 Registration Rights. Except as provided for
herein and as set forth on Schedule 2.20, the Company is not a party to any
agreement or commitment that obligates the Company to register under the
Securities Act, any of the Company's presently outstanding securities or any of
the Company's securities that may hereafter be issued.
Section 2.21 Compliance with Securities Laws. Assuming the
accuracy of the representations and warranties of the Investor set forth herein,
the offer and sale of the Convertible Note and the Shares in accordance with the
terms hereof and the shares of Common Stock issuable upon conversion thereof
will not be in violation of the Securities Act or the
11
Exchange Act, any state securities or c sky" laws, or the Company's certificate
of incorporation or bylaws.
Section 2.22 Transfer Restrictions. Except as set forth on
Schedule 2.22, there are no restrictions on the transfer of capital stock of the
Company imposed by its certificate of incorporation or bylaws, any agreement to
which the Company is a party (other than those agreements expressly contemplated
by this agreement), any order of any court or any governmental agency to which
the Company is subject, or any statute other than those imposed by relevant
state and federal securities laws.
Section 2.23 Insurance.
(a) Set forth on Schedule 2.23 is a list of; and the Company
has furnished to the Investor true and complete copies of; all insurance
policies relating to the assets, business, operations, employees, officers or
directors of the Company and its Subsidiaries.
(b) There is no claim by the Company or any Subsidiary pending
under any of such policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or in respect of which such
underwriters have reserved their rights. All premiums payable under all such
policies have been timely paid and the Company and its Subsidiaries have
otherwise complied fully with the terms and conditions of all such policies.
Such policies of insurance are in full force and effect.
(c) Seller does not know of any threatened termination or
premium increase with respect to, or material alteration of coverage under, any
of such policies, it being understood that such policies are generally renewed
annually and terms and prices vary from year to year based on facts occurring
during the prior period and other f
(d) Schedule 2.23 describes the nature and amounts of
insurance coverage which the Company intends to require each medical
practitioner with whom the Company or any Subsidiary enters into any form of
employment or independent contractor or other agreement to maintain.
(e) The Company has carefully considered the question of the
amount and type of insurance that would be reasonable and appropriate for it to
obtain after reviewing its business operations as now conducted and as proposed
to be conducted, its present and projected economic condition and the insurance
polices and coverage generally available to the Company with respect to its
business operations. In the opinion of the Company, the insurance coverage that
the Company has as of the date hereof is reasonable for its business and
operations. In addition, the Company believes that in the future, and subject to
other events as to which `it has no control, it will be able to obtain insurance
in increased amounts as its business and operations expand in the areas in which
it presently proposes to conduct its business operations.
Section 2.24 Complete Disclosure. No representation or
warranty of the Company in this agreement contains any untrue statement of a
material fact or omits a material fact required to be stated herein to make the
representations and warranties contained herein not misleading.
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Article III
Representations and Warranties of the Investor
----------------------------------------------
The Investor represents and warrants that:
Section 3.1 Organization. The Investor is a fonds commun de
placements a risque duly organized, validly existing and in good standing under
the laws of the Republic of France.
Section 3.2 Power and Authority: Authorization:
Enforceability: No Conflicts Etc.
(a) The Investor has all requisite power and authority to
execute and deliver this agreement and the other Transaction Documents to which
it is a party and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by the Investor of
this agreement and the other Transaction Documents to which it is a party and
the consummation by the Investor of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action of the Investor.
(c) This agreement has been, and the other Transaction
Documents to which the Investor is or will be a party will at the Initial
Closing be, duly and validly executed and delivered by the Investor and
constitutes or will then constitute, as the case may be, the legal, valid and
binding obligations of the Investor, enforceable against it in accordance with
their respective terms.
(d) The execution and delivery by the Investor of this
agreement and of each of the Transaction Documents to which it is a party, the
performance by it of its obligations hereunder and thereunder and the
consummation by it of the transactions contemplated hereby and thereby do not:
(i) violate any provision of the certificate of formation or
limited liability company agreement (or similar organizational documents)
of the Investor;
(ii) result in a violation or breach of; or constitute (with
or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under
any of the terms, conditions or provisions of any Contract to which the
Investor is a party or by which the properties or assets of the Investor
may be bound or otherwise subject; or
(iii) contravene or violate any Law applicable to the
Investor.
(e) No prior or subsequent filing or registration with,
notification to, or authorization, consent or approval of; any Governmental
Entity is required to be made or obtained by the Investor in connection with the
execution, delivery and performance of this
13
agreement by the Investor or any of the other Transaction Documents to which the
Investor is a party or the consummation by the Investor of the transactions
contemplated hereby and thereby.
Section 3.3 Accredited Investor.
(a) The Investor is an "accredited investor" as defined in
Rule 501 of Regulation D under the Securities Act and, by reason of Investor's
business and financial experience, and the business and financial experience of
those retained by such Investor to advise it with respect to its investment in
the securities of the Company being acquired hereunder and the extensive due
diligence performed by it, and on its behalf; Investor, together with such
advisors, has such knowledge and experience in financial and business matters so
as to be capable of evaluating the merits and risks of an investment in the
Company and making an informed investment decision with respect thereto.
(b) The Investor acknowledges that the securities of the
Company it will receive hereunder have not been registered under the Securities
Act or any applicable state securities laws and, therefore, cannot be sold
unless subsequently registered under such Securities Act and such applicable
state securities laws or an exemption from such registration is available.
Investor is acquiring such stock for its own account and not with a view to
their distribution within the meaning of Section 2(11) of the Securities Act.
(c) The Investor understands that it must, and is able to,
bear the economic risk of the investment in such stock indefinitely because such
shares may not be sold, hypothecated or otherwise disposed of unless
subsequently registered under the Securities Act and applicable state securities
laws, or an exemption from registration is available.
Section 3.4 Brokers and Finders. The Investor has not
employed any broker, agent or finder or agreed to incur any liability for any
brokerage fees, agents' commissions or finders' fees in connection with the
transactions contemplated hereby, except as otherwise disclosed herein.
Article IV
Covenants
---------
Section 4.1 Other Actions. Each of the parties hereto shall
use its best efforts to: (a) take, or cause to be taken, all actions; (b) do, or
cause to be done, all things; and (c) execute and deliver all such documents,
instruments and other papers, as in each case may be necessary, proper or
advisable under applicable Laws, or reasonably required in order to carry out
the terms and provisions of this agreement and to consummate and make effective
the transactions contemplated hereby, including, without limitation, the Initial
Closing and the Additional Closing.
Section 4.2 Use of Proceeds.
(a) The Company shall use the Initial Investment Amount: (i)
to finance the acquisition of Anushka and Wild Hare in accordance in all
material respects with the agreements therefor set forth on Schedule 2.12; (ii)
to repay all amounts due under the $1,300,000 secured subordinated promissory
note issued to the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Living Trust dated July 9, 2002 in
14
connection with the Company's acquisition of Cosmo; (iii) to redeem 825 shares
of Series B Preferred Stock issued to the Persons listed on Schedule 4.2 in
accordance with the right of the Company to redeem such stock as set forth in
the certificate of designation for such Series B Preferred Stock and (iv) for
general corporate purposes.
(b) The Company shall use the Additional Investment Amount:
(i) to finance acquisitions to open the next two markets approved by its board
of directors; and (ii) for general corporate purposes.
Section 4.3 Conduct of Business. From the date hereof
through the Initial Closing Date, except as contemplated or disclosed in this
agreement, the Company will not: (a) pay or declare any dividends on, or make
any distributions in respect of; or issue, purchase or redeem, any of the
outstanding shares of its capital stock (b) make or authorize any changes in its
certificate of incorporation, except as required or contemplated by this
agreement; (c) make any commitments or disbursements or incurred any obligations
or liabilities of a substantial and material nature and that are not in the
usual and ordinary course of business; (d) mortgage or pledge or subject to any
Lien any of its assets, tangible or intangible; (e) sell, lease or transfer or
contract to sell, lease or transfer any assets, tangible or intangible or enter
into any other transactions, except in the ordinary course of business; (1) make
any loan or advance to any stockholder, officer or director of the Company or to
any other individual or entity; (g) grant any options to purchase Common Stock;
or (h) make any material change in any existing employment agreement or increase
the compensation payable or made any arrangement for the payment of any bonus to
any officer, director, employee or agent.
Section 4.4 Access. Until the Initial Closing (or the
earlier termination of this agreement), the Company shall afford the officers,
attorneys, accountants and other authorized representatives of the Investor and
its Affiliates free and full access, during regular business hours and upon
reasonable notice, to the books and records of the Company so that the Investor
may have full opportunity to make such review, examination and investigation as
it may desire. The Company will cause its employees, and if reasonably
necessary, its accountants and attorneys to cooperate fully with said review,
examination, and investigation and to make full disclosure to the Investor of
all material facts affecting its financial condition and business operation.
From and after the Initial Closing, the rights of the Investor with respect to
the matters set forth in this Section 4.4 shall be as set forth in the
Securityholders Agreement or applicable Law.
Section 4.5 Notice of Developments. Promptly upon becoming
aware of same, each party shall notify the other party in writing of any
inaccuracy of a representation or warranty or non-performance of any covenant of
such party in this agreement.
Article V
Conditions Precedent
--------------------
Section 5.1 The Investor's Conditions Precedent to the
Initial Closing. The obligation of the Investor to consummate the transactions
contemplated by the Initial Investment is subject to the satisfaction (or
waiver) of each of the following conditions precedent:
15
(a) The representations and warranties of the Company
contained in this agreement shall, when read without qualification as to
"materiality" or material adverse effect (or words of similar effect), be true
and correct in all respects on and as of the Initial Closing Date with the same
force and effect as though such representations and warranties had been restated
and made on and as of the Initial Closing Date, except where the failure of such
representations and warranties to be so true and correct would not have a
Company Material Adverse Effect; provided, however that those representations
and warranties that speak as of a specified date shall be so true and correct on
and as of such date.
(b) At or prior to the Initial Closing, the Company shall have
complied with and duly performed in all material respects all covenants and
obligations to be complied with or performed by it prior to the Closing.
(c) The Investor shall have received a certificate dated the
Initial Closing Date and executed by an officer of the Company certifying that
the conditions precedent in Section 5.1(a) and (b) shall have been satisfied.
(d) The Investor shall have received a certificate of the
Secretary of the Company dated the Initial Closing Date certifying as to: (1)
the fill force and effect of its certificate of incorporation and bylaws of the
Company attached to such certificate as exhibits; (ii) the fill force and effect
of resolutions of its board of directors authorizing it to enter into this
agreement and each other Transaction Document to which it is a party and perform
its obligations hereunder and thereunder (which such resolutions shall be
attached to such certificate as exhibits); and (iii) the signature and
incumbency of those of its officers who are authorized to execute the
Transaction Documents.
(e) The Investor shall have received a certificate from a
governmental official in each jurisdiction set forth on Schedule 2.1, indicating
that the Company and each Subsidiary is in good standing in their respective
jurisdictions of organization and is qualified or licensed to conduct its
business and is in good standing in each other jurisdiction set forth next to
its name on Schedule 2.1.
(f) No claim,, suit, action, proceeding, investigation or
governmental inquiry shall have been instituted and be continuing (or threatened
and unresolved) before a Governmental Entity of competent jurisdiction: (i) to
restrain or prevent the consummation of the transactions contemplated hereby; or
cu) that could reasonably be expected to materially and adversely affect the
right of the Investor to own the Convertible Note, the Shares or the shares of
Common Stock issuable upon conversion thereof.
(g) The Company shall have duly executed and delivered the
Convertible Note to the Investor.
(h) The Investor shall have received an opinion of Jenkens &
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel to the Company, dated as of the Initial
Closing Date and in the form of Exhibit D.
(i) The Investor shall have received the Securityholders
Agreement and the Registration Rights Agreement, each duly executed by the other
parties thereto. The
16
Securityholders Agreement shall, among other things, include provisions relating
to the size and composition of the board of directors of the Company.
(j) The Investor shall have received the Consulting Services
Agreement, duly executed by the Company, and shall have received the Advisory
Services Agreement, duly executed by the Company and KCO.
(k) The Investor shall have received the Share Transfer
Agreement and the Escrow Agreement, each duly executed by the parties thereto
and the Existing Stockholder Common Shares shall have been deposited with the
Escrow Agent.
(l) The Company, KCO and the Investor shall have entered into
the Letter Agreement.
(m) The principals and Affiliates of KCO who own 1,900 shares
of Series B Preferred Stock and warrants to purchase 380,000 shares of Common
Stock (whose names (and the number of shares and warrants owned by each) are set
forth on Schedule 5.1(m)) shall have waived their right to receive in the future
any additional shares of Common Stock issuable upon exercise of such warrants
and shall have agreed that maximum dividend rate on their Series B Preferred
Stock will not exceed 10% per annum.
(n) The Company shall have entered into an agreement with
▇▇▇▇▇ ▇▇▇▇▇▇▇ Medicine, a division of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Health System
Corporation, and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ University regarding its affiliation with the
Company, which agreement shall be reasonably satisfactory to the Investor.
(o) The Company shall have consummated the merger of Advanced
Aesthetics Merger Sub, Inc., a Delaware corporation, into Advanced Aesthetics
Sub, Inc., a Delaware corporation. Such merger is described in greater detail on
Schedule 2.1.
(p) The Company shall have delivered all such other
certificates and documents as the Investor or its counsel may reasonably
request.
Section 5.2 The Company's Conditions Precedent to the
Initial Closing. The obligation of the Company to consummate the transactions
contemplated by the Initial Investment are subject to the satisfaction (or
waiver) of each of the following conditions precedent:
(a) The representations and warranties of the Investor
contained in this agreement shall, when read without qualification as to
"materiality" or material adverse effect (or words of similar effect), be true
and correct in all respects on and as of the Initial Closing Date with the same
force and effect as though such representations and warranties had been restated
and made on and as of the Initial Closing Date, except where the failure of such
representations and warranties to be so true and correct would not have a
material adverse effect on the ability of the Investor to consummate the
transactions contemplated hereby; provided, however, that those representations
and warranties that speak as of a specified date shall be so true and correct on
and as of such date.
17
(b) At or prior to the Initial Closing, the Investor shall
have complied with and duly performed in all material respects all covenants and
obligations to be complied with or performed by it at or prior thereto.
(c) The Company shall have received a certificate dated the
Initial Closing Date and executed by an officer of the Investor certifying that
the conditions precedent in Section 5.2(a) and (b) shall have been satisfied.
(d) The Company shall have received a certificate of an
official of the Investor dated the Initial Closing Date certifying as to: (i)
the full force and effect of its certificate of formation and limited liability
company agreement (or similar organizational documents) attached to such
certificate as exhibits; (ii) the fill force and effect of resolutions of its
board of directors (or similar governing body) authorizing it to enter into this
agreement and each other Transaction Document to which it is a party and to
perform its obligations hereunder and thereunder; and (iii) the signature and
incumbency of those of its officers who are authorized to execute the
Transaction Documents.
(e) There shall be no order, decree or injunction of a court
of competent jurisdiction or other Governmental Entity that prevents the
consummation of the transactions contemplated by this agreement.
(f) The Company shall have received an opinion of the general
counsel to the Investor, dated as of the Initial Closing Date and in the form of
Exhibit K.
(g) The Investor shall have executed and delivered the
Securityholders Agreement and the Registration Rights Agreement to the Company.
(h) The Company shall have received the Consulting Services
Agreement, duly executed by L Capital and shall have received the Advisory
Services Agreement, duly executed by KCO.
(i) The Company shall have received the Share Transfer
Agreement and the Share Escrow Agreement, each duly executed by the other
parties thereto.
(j) The Investor and KCO shall have executed and delivered the
Letter Agreement.
(k) The Investor shall have delivered all such other
certificates and documents as the Company or its counsel may reasonably request
Section 5.3 The Investor's Conditions Precedent to the
Additional Closing. The obligation of the Investor to consummate the
transactions contemplated by the Additional Investment is subject to the
satisfaction (or waiver) of each of the following conditions precedent:
(a) The representations and warranties of the Company
contained in Sections 2.2(a), 2.2(b), 2.2(c), 2.2(d), 2.7(a), 2.7(b) (except for
the last sentence thereof), 2. 12(b)(except for the last sentence thereof) of
this agreement shall, when read without qualification as to
18
"materiality" or material adverse effect (or words of similar effect), be true
and correct in all respects on and as of the Additional Closing Date with the
same force and effect as though such representations and warranties had been
restated and made on and as of the Additional Closing Date, except where the
failure of such representations and warranties to be so true and correct would
not have a material adverse effect on the ability of the Investor to consummate
the transactions contemplated hereby; provided, however that those
representations and warranties that speak as of a specified date shall be so
true and correct on and as of such date.
(b) At or prior to the Additional Closing, the Company shall
have complied with and duly performed in all material respects all covenants and
obligations to be complied with or performed by it prior thereto.
(c) The Investor shall have received a certificate dated the
Additional Closing Date and executed by an officer of the Company certifying
that that the conditions precedent in Section 5.3(a) and (b) shall have been
satisfied.
(d) The Investor shall have received a certificate of the
Secretary of the Company dated as of the Additional Closing Date certifying as
to: (i) the full force and effect of its certificate of incorporation and bylaws
of the Company attached to such certificate as exhibits; (ii) the fill force and
effect of resolutions of its board of directors authorizing it to enter into
this agreement and each other Transaction Document to which it is a party and
perform its obligations hereunder and thereunder (which such resolutions shall
be attached to such certificate as exhibits); and (iii) the signature and
incumbency of those of its officers who are authorized to execute the
Transaction Documents.
(e) The Investor shall have received a certificate from a
governmental official in each jurisdiction set forth on Schedule 2.1, indicating
that the Company and each Subsidiary is in good standing in their respective
jurisdictions of organization and is qualified or licensed to conduct its
business and is in good standing in each other jurisdiction set forth next to
its name on Schedule 2.1.
(f) No claim, suit, action, proceeding, investigation or
governmental inquiry shall have been instituted and be continuing (or threatened
and unresolved) before a Governmental Entity of competent jurisdiction: (i) to
restrain or prevent the consummation of the transactions contemplated hereby; or
(ii) that could reasonably be expected to materially and adversely affect the
right of the Investor to own the Convertible Note, the Investor Series D Shares
or the shares of Common Stock issuable upon conversion thereof.
(g) The Investor shall have received an opinion of Jenkens &
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel to the Company, dated as of the Additional
Closing Date and in the form of Exhibit D.
(h) The physical refurbishment and re-opening of Cosmo,
Anushka and Wild Hare in the manner set forth on Schedule 5.3(h) shall have been
completed in a manner reasonably satisfactory to the Investor.
(i) The Company shall have entered into definitive agreements
with at least two unaffiliated Persons to acquire all or substantially all of
their business or voting stock, or any
19
division, line of business or other business unit of either such Person; and the
Investor shall have approved such acquisitions in its sole discretion.
(j) The Company shall have delivered the December 31, 2003
Balance Sheet to the Investor, which shall have been derived from and be based
upon and consistent with the books and records of the Company and fairly present
the consolidated financial condition of the Company as of the date of such date.
To the knowledge of the Company, such balance sheet shall have been prepared in
accordance with GAAP.
(k) No event, condition or circumstance shall have occurred
since December 31,2003 that would or would be reasonably likely to have a
Company Material Adverse Effect.
(l) The Company shall have no liabilities or obligations that
are required by GAAP to be disclosed on the December 31, 2003 Balance Sheet,
except for liabilities and obligations reflected or reserved against on the
December 31,2003 Balance Sheet and current liabilities incurred since December
31, 2003 in the ordinary course of business. To the knowledge of the Company,
there shall be no existing condition, situation or set of circumstances that
could reasonably be expected to result in such a liability. The Company shall
have no other material liabilities or obligations (absolute or contingent),
other than the requirement to perform its obligations under Contracts disclosed
in the Disclosure Schedules or under Contracts expressly permitted by the terms
of any Transaction Document.
(m) The Investor shall be reasonably satisfied that the
Company's performance has been consistent with the metrics set forth in the
business plan attached as Appendix 2 to the Letter of Intent dated September 23,
2003 among the Company, the Investor and ▇▇▇▇ & Company, LLC, as adjusted in
good faith to reflect the Company's new fiscal year and the fact that the
consummation of the acquisition of the Palm Beach and Boca Raton businesses of
Anushka Boca, Anushka PBG and Wild Hare and the finding therefor shall have
occurred later than contemplated by such business plan.
(n) The Company shall have delivered all such other
certificates and documents as the Investor or its counsel may reasonably
request.
Section 5.4 The Company's Conditions Precedent to the
Additional Closing. The obligation of the Company to consummate the transactions
contemplated by the Additional Investment are subject to the satisfaction (or
waiver) of each of the following conditions precedent:
(a) The representations and warranties of the Investor
contained in this agreement shall, when read without qualification as to
"materiality" or material adverse effect (or words of similar effect), be true
and correct in all respects on and as of the Additional Closing Date with the
same force and effect as though such representations and warranties had been
restated and made on and as of the Additional Closing Date, except where the
failure of such representations and warranties to be so true and correct would
not have a material adverse effect on the ability of the Investor to consummate
the transactions contemplated hereby; provided, however that those
representations and warranties that speak as of a specified date shall be so
true and correct on and as of such date.
20
(b) At or prior to the Additional Closing, the Investor shall
have complied with and duly performed in all material respects all covenants and
obligations to be complied with or performed by it at or prior thereto.
(c) The Company shall have received a certificate dated the
Additional Closing Date and executed by an officer of the Investor certifying
that the conditions precedent in Section 5.4(a) and (b) shall have been
satisfied.
(d) The Company shall have received a certificate of an
official of the Investor dated as of the Additional Closing Date certifying as
to: (i) the full force and effect of its certificate of formation and limited
liability company agreement (or similar organizational documents) attached to
such certificate as exhibits; (ii) the fix!! force and effect of resolutions of
its board of directors (or similar governing body) authorizing it to enter into
this agreement and each other Transaction Document to which it is a party and to
perform its obligations hereunder and thereunder; and (iii) the signature and
incumbency of those of its officers who are authorized to execute the
Transaction Documents.
(e) There shall be no order, decree or injunction of a court
of competent jurisdiction or other Governmental Entity that prevents the
consummation of the transactions contemplated by this agreement
(f) The Company shall have received an opinion of the general,
counsel to the Investor, dated as of the Initial Closing Date and in the form of
Exhibit L.
(g) The Investor shall have delivered all such other
certificates and documents as the Company or its counsel may reasonably request.
Article VI
Indemnification: Survival
-------------------------
Section 6.1 Indemnification.
(a) The Company shall hold harmless, defend and indemnify the
Investor (which term for purposes of this Section 6.1 includes each of the
Investor's agents, officers, directors, managing members and Affiliates in their
respective capacities as such) from and against any losses, claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees and
disbursements) suffered or incurred by it arising out of or in connection with
this agreement or the transactions contemplated hereby, based upon or resulting
from: (i) the failure of any representation or warranty made by the Company to
be true and correct on the date hereof; (ii) the Company's failure to perform or
to comply with any covenant or agreement to be performed or complied with
hereunder; and (iii) any inaccuracy in the certificates referred to in Section
5.1(c) or 5.3(c).
(b) An indemnifying party shall make payments of all amounts
required to be made pursuant to this Section 6.1 to, or for the account of; the
indemnified party from time to time promptly upon receipt of bills or invoices
relating thereto or when otherwise due and payable.
21
(c) Any Person entitled to indemnification under this Section
6.1 will: (i) give prompt notice to the indemnifying party of any claim with
respect to which it seeks indemnification; and (ii) permit such indemnifying
party to participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party, to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such defense is
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). If the indemnifying party elects to assume the
defense of a claim, it shall not be liable to such indemnified party for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof. Notwithstanding the indemnifying party's election to
assume the defense of a claim, the indemnified party shall have a right to
employ separate counsel, and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if the actual or potential
defendants in, or targets of any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that (x) there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party or (y) a conflict of interest between such indemnified
party and indemnifying parties may exist in respect of such claim. No
indemnifying party will consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. If the indemnifying party is
not entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel (and one local
counsel) for all parties indemnified by such indemnifying party with respect to
such claim. If the failure of any Person to give prompt notice to one
indemnifying party of any claim with respect to which it seeks indemnification
materially prejudices such indemnifying party, such indemnifying party shall be
relieved of its obligation to indemnify such Person to the extent such
indemnifying party has been prejudiced.
Section 6.2 Survival of Representations The representations
and warranties of the parties shall survive the execution and delivery of this
agreement and the Initial Closing (and the Additional Closing if the Additional
Closing shall occur) and shall thereafter continue in full force and effect
until the second anniversary of the Initial Closing Date; provided, however that
the representations and warranties contained in Sections 2.13 (Environmental)
and 2.15 (Taxes) shall continue until the expiration of applicable statutes of
limitation.
Article VII
Termination
-----------
Section 7.1 Termination. This Agreement may be terminated
prior to the Initial Closing:
(a) by the mutual agreement of the parties;
(b) by either party (if such party is not in breach of or
default under this agreement) by giving written notice to such effect to the
other if the Initial Closing shall not have occurred on or before December 31,
2003 or such later date as the parties shall have agreed upon prior to the
giving of such notice;
22
(c) by either party if any material Proceeding shall have been
brought that seeks to restrain, prohibit or invalidate the consummation of the
transactions contemplated by this agreement; or
(d) by either party in the event that the conditions precedent
to its obligation to consummate the transactions contemplated hereunder shall
have become incapable of being satisfied.
Section 7.2 Effect of Termination. In the event of the
termination and abandonment hereof prior to the Initial Closing Date pursuant to
the provisions of this Article VII, this agreement shall become void and have no
effect, and, except as set forth in Section 8.1, each party shall pay all of its
own expenses incurred in connection herewith, without any liability on the part
of any party or its partners, directors, officers or shareholders; provided,
however that if this agreement is terminated and abandoned because either party
has defaulted under or breached this agreement or any representation, warranty,
covenant or obligation set forth in this agreement, then the party so electing
to terminate this agreement shall be entitled to pursue, exercise and enforce
any and all other remedies, rights, powers and privileges available to it at law
or in equity.
Article VIII
Miscellaneous
-------------
Section 8.1 Fees and Expenses. Each party hereto shall pay
the direct and indirect expenses (including, without limitation, the fees and
expenses of their legal, tax and accounting counsel and advisors) incurred by it
in connection with the negotiation and preparation of this agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby; provided, however that the Company shall pay
the fees and expenses of the Investor (not to exceed US$300,000) in the event
this agreement shall be terminated by the Investor pursuant to Section 7.1(d) as
a result of the Company's default under or breach of this agreement.
Section 8.2 Notices, Etc. All notices, consents, demands,
instructions, requests and other communications required or permitted hereunder
must be in writing and shall be deemed to have been duly given only if delivered
personally, by facsimile transmission, by first- class mail (postage prepaid,
return receipt requested), or by delivery by a recognized international courier
service (all costs prepaid) to the parties at the following addresses or
facsimile numbers:
If to the Company, to:
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇ & Company, LLC
Three Pickwick Plaza
Greenwich, CT 06830
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor to:
L Capital Management
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇-▇▇-▇▇-▇▇-▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇
All such notices, requests and other communications will be deemed given upon
receipt thereof. Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
like notice specify such change to the other party hereto.
Section 8.3 Further Assurances. From and after the Initial
Closing Date, the parties hereto will, without further consideration, execute
and deliver such further documents and instruments and take such other actions
as may be necessary or desirable to perfect the transactions contemplated
hereby.
Section 8.4 No Waiver. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other
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right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 8.5 Entire Agreement. This agreement, the Exhibits
and the Schedules hereto supersede all prior and/or contemporaneous
negotiations, understandings, discussions and agreements (written or oral)
between the parties with respect to the subject matter hereof (all of which are
merged herein and therein) and contains the sole and entire agreement among the
parties hereto with respect to the subject matter hereof.
Section 8.6 Governing Law. This agreement shall be
construed, interpreted and enforced in accordance with, and shall be governed
by, the laws of the state of New York without regard to principles of conflicts
of laws.
Section 8.7 Jurisdiction: Venue. Each of the parties hereto
hereby irrevocably consents and submits to the exclusive jurisdiction of the
United States District Court for the Southern District of New York in connection
with any dispute arising out of or relating to this agreement or the
transactions contemplated hereby, waives any objection to venue in such District
(unless such court lacks jurisdiction with respect to such dispute, in which
case, each of the parties hereto irrevocably consents to the jurisdiction of the
courts of the State of New York located in New York County in connection with
such dispute and waives any objection to venue in the County of New York), and
agrees that service of any summons, complaint, notice or other process relating
to such dispute may be effected in the manner provided by Section 8.2.
Section 8.8 Tax Disclosure. Effective from the date of
commencement of discussions concerning the transactions contemplated hereby, the
parties hereto and each of their employees, representatives and other agents may
disclose to all Persons, without limitation of any kind, the tax treatment and
tax structure of the transactions contemplated hereby and all materials of any
kind, including opinions or other tax analyses that have been provided relating
to such tax treatment and tax structure. However, the foregoing does not
constitute any authorization to disclose the identity of any existing or future
party to the transaction contemplated hereby or their Affiliates, agents or
advisers, or, except to the extent relating to such tax structure or tax
treatment, any specific pricing terms or commercial or financial information.
Section 8.9 Assignment. Neither this agreement nor any of
the rights, interests or obligations hereunder shall be assignable by any of the
parties hereto without the prior written consent of the other party; provided,
however that the Investor may assign its rights under this agreement to an
individual or entity to whom the Investor shall transfer the Convertible Note,
the Shares or any shares of Common Stock issuable upon conversion thereof in the
manner contemplated by the Securityholders Agreement.
Section 8.10 Binding Effect. This agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 8.11 No Third Party Beneficiaries. Nothing contained
in this agreement, whether express or implied, is intended, or shall be deemed,
to create or confer any
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right, interest or remedy for the benefit of any Person other than as otherwise
provided in this agreement.
Section 8.12 Amendment and Waiver. Any term of this agreement
may be amended or terminated only by the written consent of all parties hereto.
The observance of any term of this agreement may be waived (either generally or
in a particular instance, either retroactively or prospectively, and either for
a specified period of time or indefinitely), only by a writing signed by the
party for whose benefit such term is to be performed. Any agreement on the part
of a party to any extension or waiver shall only be valid if set forth in an
instrument in writing signed on behalf of such party. Any such waiver or
extension shall not operate as waiver or extension of any other subsequent
condition or obligation.
Section 8.13 Severability. If any provision of this agreement
is found to be void or unenforceable by a court of competent jurisdiction, the
remaining provisions of this agreement shall nevertheless be binding upon the
parties with the same force and effect as though the unenforceable part had been
severed and deleted.
Section 8.14 Specific Performance. The parties agree that
irreparable damage will result in the event that this agreement is not
specifically enforced and the parties hereto agree that any damages available at
law for a breach of this agreement would not be an adequate remedy. Therefore,
the provisions hereof and the obligations of the parties hereunder shall be
enforceable in a court of equity, or other tribunal having jurisdiction, by a
decree of specific performance, and appropriate injunctive relief may be applied
for and granted in connection therewith.
Section 8.15 Definition of Knowledge. As used in this
agreement, the "knowledge" of a Person with respect to any matter means: (a) if
such Person is an individual, the actual knowledge of such Person; and (b) if
such Person is an entity, the actual knowledge of such matter that any director
or officer of such entity should have after reasonable investigation thereof
(or, if such entity has no directors or officers, then the knowledge that
individuals who serve in similar capacities should have of such matter after
reasonable investigation thereof).
Section 8.16 Counterparts. This agreement may be executed in
one or more counterparts (including signature pages delivered by facsimile
transmission), each of which shall be deemed an original, but all of which
together will constitute one and the same agreement.
[The next page is the signature page]
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The parties have executed this Securities Purchase Agreement
as of the date first written above.
ADVANCED AESTHETICS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
FCPR L CAPITAL
Represented by L Capital Management SAS
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-fact
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