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ASSET PURCHASE AGREEMENT
BETWEEN
THERMOLASE CORPORATION,
as Seller
AND
GH DAY SPAS, INC.,
as Buyer
Dated: June 27, 1999
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 27th day of June, 1999, by
and between GH DAY SPAS, INC., a Pennsylvania corporation ("Buyer"), and
THERMOLASE CORPORATION, a Delaware corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the Business (as defined below) and owns
the Purchased Assets (as defined below); and
WHEREAS, Seller desires to sell and Buyer desires to purchase the
Purchased Assets under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants, representations, warranties, and agreements herein
contained, and intending to be legally bound, Buyer and Seller hereby agree as
follows:
A. DEFINITIONS.
1. "Affiliate" of a Person means any Person which, directly or
indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Person. An
Affiliate of Seller shall include ThermoTrex Corporation and Thermo
Electron Corporation and Affiliates thereof.
2. "Agreement" means this Asset Purchase Agreement, and all Exhibits and
Schedules attached hereto, as the same shall be amended from time to
time.
3. "Allocation Schedule" means the allocation of the Purchase Price among
the Purchased Assets and the Assumed Liabilities all as set forth on
Schedule C.3 of this Agreement.
4. "Assumed Liabilities" means only those debts, Liabilities and
obligations of Seller with respect to the Business assumed by Buyer as
listed on Schedule E of this Agreement.
5. "Benefit Plan" means any Plan of Seller, or any predecessor or
Affiliate of Seller, existing prior to or as of the date hereof to
which Seller contributes or has contributed on behalf of any Employee
or under which any Employee or any beneficiary thereof is covered, or
is eligible for coverage or has benefit rights.
6. "Books and Records" of any Person mean all files, documents,
instruments, papers, books and records relating to the business,
operations, condition of (financial or other), results of operations
and business of such Person, including without limitation financial
statements, Returns and related work papers and letters from
accountants, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, contracts, customer lists, computer files and
programs, retrieval programs, operating data and plans and
environmental studies and plans.
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7. "Business" means Seller's hair removal, health and cosmetic spa
operations presently conducted at the "Day Spa Locations" and
previously conducted at the "Closed Day Spa Locations."
8. "Business Day" means any calendar day which is not a Saturday, Sunday
or public holiday under the Laws of the United States of America.
9. "Claim" means any written demand, claim, suit, Lien, action, expense,
including counsel fees, cause of action, investigation or notice by
any Person alleging actual or potential liability.
10. "Closed Day Spa Locations" mean the real property leased by Seller
identified as such in Schedule A.15, which is attached hereto and
incorporated herein, the operations of which have been or are being
terminated by and at the sole cost and expense of Seller.
11. "Closing" means the execution of this Agreement and the Collateral
Documents by Seller and Buyer.
12. "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder or with respect thereto.
13. "Collateral Documents" means collectively each of the documents,
agreements and instruments to be executed, delivered and performed in
connection with this Agreement.
14. "Control" (including, with correlative meaning, the terms "Controlled
by" and "under common Control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to
elect a majority of the board of directors or to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract, family
relationship or otherwise and, in any event and without limitation of
the foregoing, any Person owning fifty percent (50%) or more of the
voting securities of another Person shall be deemed to control that
Person.
15. "Day Spa Locations" mean the Subleased Day Spa Locations and the
Managed Day Spa Locations, but excludes the Closed Day Spa Locations,
the location of all of which are set forth on Schedule A.15, which is
attached hereto and incorporated herein.
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16. "Default" means (a) a breach of or default under any contract, (b) the
occurrence of an event which with the passage of time or the giving of
notice or both would constitute a breach of or default under any
contract, or (c) the occurrence of an event that (with or without the
passage of time or the giving of notice or both) would give rise to a
right of damages, specific performance, termination, renegotiation or
acceleration under any contract.
17. "Destination Spa" means the Greenhouse Spa located at 0000 000xx
Xxxxxx, Xxxxxxxxx, XX.
18. "Employees" mean all employees of Seller engaged in the Business at
any time prior to the date hereof, including former employees of
Seller and employees who are on paid leave of absence or disability
leave.
19. "Environmental Claim" means any Claim (including, without limitation,
potential or actual liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property
damages, personal injuries or penalties) arising out of, related to or
in connection with the use, treatment, removal, storage, disposal,
presence, migration, transport, handling, manufacture, possession,
distribution, or the actual or threatened emission, injection, escape,
dumping, spill, leak, discharge or release of Materials of
Environmental Concern.
20. "Environmental Laws" mean all federal, state and local Laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C.A.ss.ss.9601 et
seq., the Resource Conversation and Recovery Act ("RCRA"), 42
U.S.C.A.ss.ss.6901 et seq., the Clean Water Act, 33 U.S.C.A.ss.ss.1251
et seq., the Clean Air Act 42 X.X.X.X.xx.xx. 7401 et seq., the
Occupational Safety and Health Act, 29 X.X.X.xx. 651 et seq., The
Toxic Substances Control Act, 15 U.S.C.ss.2601 et seq., and Laws and
regulations relating to emissions, spills, leaks, discharges, releases
or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, possession, distribution, use,
treatment, storage, disposal, presence, transport or handling of
Materials of Environmental Concern.
21. "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder or with
respect thereto.
22. "Excluded Assets" means the assets which are specifically excluded
from the Purchased Assets being transferred to Buyer pursuant to this
Agreement as set forth on Schedule B.2 of this Agreement.
23. "Exhibits" mean the exhibits, attached to, referenced in and delivered
pursuant to this Agreement.
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24. "GAAP" means generally accepted accounting principles consistently
applied, as applied in the United States of America.
25. "Governmental Entity" means any government and political subdivisions
thereof, court, arbitral tribunal, administrative agency, tribunal or
commission or any other governmental or regulatory body,
instrumentality or authority, whether federal, state or local or
foreign.
26. "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
27. "Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or
services (other than trade payables or accruals incurred in the
ordinary course of business), (iv) under capital leases, and (v) in
the nature of guarantees of the obligations described in clauses (i)
through (iv) above of any other Person.
28. "Indemnified Party" means any Person claiming indemnification under
any provision of Section J.
29. "Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Section J.
30. "Intellectual Property" means collectively, all copyrights,
trademarks, trade names, brand names, brand marks and logos used
currently for the exclusive benefit of the Business and/or the
Destination Spa, Licenses, computer software, proprietary computer
systems and related proprietary documentation, trade secrets and
related data, and similar intangible rights used currently for the
exclusive benefit of the Business and/or the Destination Spa.
31. "Inventory and Supplies" means all inventory and supplies ordered by
or owned by Seller that are used or will be used in the Business, for
which payments (full or part) have been made or bills (full or part)
for the payment thereof have been submitted to Seller or the Business,
all in "as-is condition," excepting therefrom products located at
Creative Beauty Innovators, Inc., Carollton, Texas for which payment
in full has not been made as of the date hereof.
32. "IRS" means the Internal Revenue Service.
33. "Known" or "Knowledge" or words of similar import mean, with regard to
a particular fact or other matter, that the Person is actually aware
of such fact or other matter or a prudent individual could be expected
to know. Knowledge of Seller shall not include Knowledge of facts or
matters solely as a result of Knowledge of Xxxxxx or Xxxxx Xxxxxxx or
employees reporting to them.
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34. "Laws" mean all laws, statutes, ordinances, governmental regulations,
orders, decrees, edicts, rules or other requirements of any
Governmental Entity, including without limitation, those covering
environmental, safety, health, transportation, bribery, record
keeping, employment, tax, anti-discrimination, antitrust, wage and
hour and price and wage control matters.
35. "Leases" means the leases with the Seller for the Day Spa Locations.
36. "Leased Real Property" means the real property leased at the Day Spa
Locations and the Closed Day Spa Locations.
37. "Leases" means the leases of the Day Spa Locations between Seller, as
tenant, and each of the landlords thereof.
38. "Liabilities" mean all Indebtedness, obligations and other
liabilities, and any Loss, damage, cost, unpaid expense, claim,
deficiency, guaranty or endorsement of or by any Person.
39. "Licenses" mean all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises, rights, orders
and similar consents or certificates granted or issued by any
Governmental Entity relating to the Business or its assets. 1.
40. "Lien" means any mortgage, lien (including federal, state and local
Tax liens), security interest, pledge, negative pledge, encumbrance,
assessment, title retention agreement, restriction or restraint on
transfer, defect of title, charge in the nature of a lien or security
interest, or option (whether consensual, statutory or otherwise) or
any conditional sale contract, title retention contract or other
contract to give any of the foregoing.
41. "Litigation" means any action, lawsuit, arbitration, criminal
prosecution, tax audit, administrative or other proceeding or
investigation, or any inquiry asserting a violation of any Law, by,
before or for any Governmental Entity.
42. "Loss" means any and all damages, losses, obligations, deficiencies,
liabilities, encumbrances, penalties, fines, costs and expenses,
including without limitation interest, court costs, reasonable fees of
attorneys, accountants and other experts or other reasonable expenses
of Litigation or other proceedings or of any Claim, Default or
assessment, other than consequential damages.
43. "Managed Day Spa Locations" mean the Day Spa Locations which are
identified as such on Schedule A.15 as of the date hereof.
44. "Management Agreement" means the agreement between Seller and Buyer,
as manager, for Buyer to manage a Day Spa Location that is not subject
to a Sublease Agreement between Seller and Buyer.
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45. "Material Adverse Effect" means an effect which is or would be
materially adverse to the Business.
46. "Medical Director Agreements" mean those consulting agreements in
which Seller engaged a qualified physician to provide consulting
services that may be required in connection with laser assisted hair
removal and skin resurfacing services to be performed at the Day Spa
Locations and Closed Day Spa Locations, all as more particularly
described therein.
47. "Non-Transferable Assets" means any Purchased Asset or Relevant
Contract, that cannot be transferred to Buyer without the consent of a
third party, which consent has not been obtained as of the date
hereof.
48. "Permitted Liens" mean (i) Liens for current Taxes not yet delinquent
for which appropriate accruals in accordance with GAAP have been
created, (ii) statutory Liens imposed by law which are incurred in the
ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers and materialmen, none of which Permitted Liens,
individually or in the aggregate, has a Material Adverse Effect or
will detract from or interferes or will interfere with either Seller's
or Buyer's, as the case may be, right to dispose of any property, the
use of such property or their prospects, business or operations, as
presently conducted.
49. "Person" means any natural person, sole proprietorship, corporation,
partnership, joint venture, association, trust, or any other entity or
organization, including a government or a political subdivision,
agency or instrumentality thereof.
50. "Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of
absence, layoff, vacation, day or dependent care, legal services,
cafeteria, life, health, accident, disability, workmen's compensation
or other insurance, severance, separation or other employee benefit
plan, practice, policy or arrangement of any kind, whether written or
oral, including, but not limited to, any "employee benefit plan"
within the meaning of Section 3(3) of ERISA.
51. "Purchased Assets" have the meaning set forth in Section B.1 of this
Agreement.
52. "Purchase Price" has the meaning set forth in Section C.1 of this
Agreement.
53. "Relevant Contracts" mean any and all contracts to which Seller or its
Affiliates is a party relating to the Purchased Assets or otherwise
appurtenant to the Day Spa Locations or used in or intended for use
primarily in the operation of the Business (other than the personal
property leases and the Intellectual Property), together with all
purchase orders and sales orders entered into in the ordinary course
of business at any time prior to the date hereof, all of which Buyer
is willing to assume provided that payment for such purchase orders
and sales orders entered into prior to the date hereof in the ordinary
course of business shall be the obligation of Seller.
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54. "Relevant Licenses" means all Licensees used in connection with the
Business to the extent transferable or assumable.
55. "Returns" means collectively all federal, state, and local Tax
Returns.
56. "Schedules" mean the schedules, attached to, referenced in and
delivered pursuant to this Agreement.
57. "Sublease Agreements" means the sublease agreements between Seller, as
sublessor, and Buyer, as sublessee, for each Day Spa Location which
has been subleased by Seller to Buyer as of the date hereof, each as
identified on Schedule A.15.
58. "Subleased Day Spa Locations" mean the Day Spa Locations which are
identified as such on Schedule A.15 as of the date hereof.
59. "Survival Date" means the date which is two (2) years after the date
hereof .
60. "Tangible Personal Property" means all furniture, equipment, spare
parts, tools, office equipment and other tangible personal property
(other than Inventory and Supplies) located at, stored for or intended
for use in the Day Spa Locations and the Closed Day Spa Locations.
61. "Xxxxxxxxx Agreement" means a License Agreement with Xxxxxxxx
Xxxxxxxxx dated as of February 10, 1993, a copy of which is attached
hereto as Exhibit "E".
62. "Tax(es)" mean all taxes and all charges, fees, levies or other
assessments in the nature of a tax, including but not limited to all
net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, withholding, payroll, employment, social
security, unemployment, excise, estimated, stamp, occupation, property
or other taxes, customs, duties, fees, assessments or charges of any
kind whatsoever, including all interest and penalties thereon, and
additions to tax or additional amounts imposed by any taxing
authority, domestic or foreign upon a Person, or any of its Affiliates
or properties.
63. "Tax Returns" mean all returns, declarations and reports, estimates
and information returns and statements required by applicable law to
be filed with respect to Taxes.
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B. SALE AND PURCHASE OF ASSETS.
1. Assets to be Acquired.
a. Subject to the terms and conditions contained herein, (i)
Seller hereby sells, assigns, transfers and delivers to
Buyer, and Buyer hereby purchases from Seller, all of the
assets of Seller used primarily in the Business other than
the Excluded Assets, whether real, personal, or mixed,
tangible or intangible, including Tangible Personal
Property, Intellectual Property, Relevant Licenses, and
Relevant Contracts, all in as-is condition and all free and
clear of all pledges, Liens or other restrictions, other
than Permitted Liens (collectively, the "Purchased Assets"),
and (ii) Buyer hereby assumes the Assumed Liabilities.
b. Purchased Assets located at a Closed Day Spa Location shall
be removed by Buyer within thirty (30) days of the date
hereof, to the extent Seller would be permitted to remove or
move same, all in accordance with the terms of the lease for
each Closed Day Spa Location, and all at Buyer's option. The
cost and expense of such removal and moving shall be shared
equally between Seller and Buyer.
c. Waiver of Bulk Sales. Buyer hereby waives compliance with
any bulk sales acts or similar or corresponding laws of any
jurisdiction applicable to the sale of the Purchased Assets.
2. Excluded Assets. The Excluded Assets are specifically excluded from
the Purchased Assets being transferred to Buyer pursuant to this
Agreement.
3. Non-Transferable Assets.
a. To the extent there are any Non-Transferable Assets, the
parties shall reasonably cooperate to provide to each other
with the benefit of such Non-Transferable Asset.
b. After the date hereof, Seller, at its expense, shall use its
best efforts, and Buyer, at its expense, shall cooperate
with Seller, to obtain any necessary consents, waivers and
approvals, so as to transfer each Non-Transferable Asset to
Buyer without materially adversely modifying, amending or
burdening such Non-Transferable Asset.
c. Neither Seller nor Buyer shall be obligated to pay any
amount or incur any Liability to transfer a Non-Transferable
Asset.
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d. To the extent that as of the date hereof, there is any
Non-Transferable Asset, Seller, at its expense, shall, from
and after Closing, cooperate with Buyer in any reasonable
and lawful arrangement designed to provide the benefit
(including the tax benefits, if possible, that would have
accrued to Buyer had such asset been a Purchased Asset) of
such Non-Transferable Asset to Buyer; provided that Buyer
shall, so long as such benefit is so provided, satisfy or
perform any Liabilities or obligations under or in
connection with such Non-Transferable Asset which would not
be a Liability or obligation retained by Seller if such
Non-Transferable Asset were a Purchased Asset.
C. PURCHASE PRICE.
1. Purchase Price. As full payment for the Purchased Assets, Buyer shall
(i) pay to Seller Two Million Five Hundred Thousand Dollars
($2,500,000.00) (the "Purchase Price") and (ii) assume the Assumed
Liabilities as set forth in Section E hereof.
2. Payment of Purchase Price. The Purchase Price shall be payable on the
date hereof by execution of and delivery to Seller of a promissory
note of Buyer and a security agreement, in the forms attached hereto
as Exhibit "A" and "B", respectively.
3. Allocation of Purchase Price. The Purchase Price and the Assumed
Liabilities assumed by Buyer pursuant to Section E hereof shall be
allocated as set forth on the Allocation Schedule. The Allocation
Schedule shall be adjusted to reflect the adjustments, if any, to the
Purchase Price. Buyer and Seller will file all Tax Returns and
reports, including IRS Form 8594, in accordance with the Allocation
Schedule and neither party will take a contrary position for federal,
state or local Tax purposes that is not consistent with the Allocation
Schedule and the specific allocations set forth in Form 8594 on any
Tax Return or any documents filed by any of said parties with federal,
state or local authorities.
4. Prorations. Except with respect to rent under the Leases and Section
E.2, all prorations with respect to the transactions contemplated
hereby shall be as of the date hereof.
D. LEASED REAL PROPERTY.
1. Buyer and Seller shall enter into a Sublease Agreement, in the form
attached hereto as Exhibit "C", which is incorporated herein by
reference, for each Day Spa Location which has been subleased to Buyer
as of the date hereof. The Day Spa Locations subject to Sublease
Agreements are set forth on Schedule A.15 and are referred to as the
"Subleased Day Spa Locations". The initial term of each Sublease
Agreement shall commence on the date hereof and shall end on December
31, 2000. The term of each Sublease Agreement shall renew and extend
thereafter, at the option of the Buyer, in accordance with the
Sublease Agreement. A Sublease Agreement shall be renewable or
extendable after December 31, 2000 only if all of the Sublease
Agreements and all of the Management Agreements are renewed.
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2. Buyer and Seller shall enter into a Management Agreement for each Day
Spa Location which has not been subleased to Buyer as of the date
hereof, in the form attached hereto as Exhibit "D", which is
incorporated herein by reference. Such Day Spa Locations are set forth
on Schedule A.15 and are referred to as the "Managed Day Spa
Locations". The initial term of each Management Agreement shall
commence on the date hereof and end on December 31, 2000. The term of
each Management Agreement shall renew thereafter, at the option of the
Buyer, in accordance with the Management Agreement. A Management
Agreement shall be renewable or extendable after December 31, 2000
only if all of the Sublease Agreements and all of the Management
Agreements are renewed. If the consent of the landlord is necessary
under a Lease to sublease a Day Spa Location to Buyer which is subject
to a Management Agreement, Seller shall use its best efforts to seek
the consent of the landlord to a sublease to Buyer, subject to the
limitations set forth in Section B.3.c.. If and when the consent is
obtained, Seller and Buyer shall terminate the Management Agreement
and enter into a Sublease Agreement for the balance of the initial
term of the Management Agreement and any renewals thereof.
E. LIABILITIES OF SELLER.
1. Assumed Liabilities. At Closing, Buyer will assume only the Assumed
Liabilities. Except as set forth on Schedule E and herein, Buyer does
not and will not otherwise acquire, discharge, assume, or become
responsible for any debts, Liabilities or obligations of Seller in
connection with the Day Spa Locations or the Closed Day Spa Locations
or in connection with the Business accruing prior to the date hereof.
Except for the Assumed Liabilities, Buyer does not hereby and shall
not assume or in any way undertake to pay, perform, satisfy or
discharge any Liabilities or obligations of Seller and Seller agrees
to pay and satisfy when due those liabilities and obligations not
assumed by Buyer, which, if not paid or satisfied, could result in
Liability to Buyer.
2. Post-Closing Accounts Payable. Buyer shall immediately deliver to
Seller any invoices it receives following Closing which relate to the
Business for accounts payable incurred by Seller in the ordinary
course of business prior to the date hereof. Seller shall pay such
invoices and all accounts payable which relate to the Business
incurred by Seller in the ordinary course of business prior to the
date hereof in a timely manner (but on no less than twenty (20) days
notice) so as not to cause the addition of any late fees or other
additional costs as a result of late payment. To the extent such
invoices are not paid timely or Seller and Buyer disagree as to who is
responsible to pay an invoice, such dispute will be subject to the
arbitration provisions hereof.
F. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants
to Buyer as follows:
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1. Organization, Power, Standing and Qualification. Seller is a
corporation duly organized, validly existing, and in good standing
under the Laws of the State of Delaware and all other jurisdictions in
which the failure to be in good standing would have a Material Adverse
Effect. Seller has full corporate power and authority to carry on its
businesses as it is now being conducted and to own and operate the
properties and assets now owned and operated by it.
2. Corporate Power and Authority. Seller has the requisite corporate
power and authority to execute, deliver and perform this Agreement and
the Collateral Documents and to transfer the Purchased Assets to
Buyer. The execution, delivery and performance of this Agreement and
each of the Collateral Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary action on the part of Seller and requires no further
authorization or consent by Seller or any other party except as set
forth herein. All resolutions by the Board of Directors of Seller
authorizing the actions taken in connection with the sale of the
Purchased Assets, including the execution and delivery of this
Agreement, are in accordance with the Articles and By-Laws of Seller
and were duly adopted and continue in full force and effect. All
corporate consents and authorizations required to be obtained by
Seller with regard to this Agreement and consummation of the
transactions contemplated hereby have been obtained. The officers of
Seller executing this Agreement and the documents executed and
delivered pursuant to or in connection with this Agreement are
incumbent officers of Seller and are authorized to do so. This
Agreement and the Collateral Documents required to be executed on the
date hereof, have been duly and validly executed and delivered by
Seller. This Agreement and the Collateral Documents constitute the
legal, valid and binding obligation of Seller, enforceable in
accordance with their terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, moratorium or similar Laws
affecting the enforcement of creditors' rights generally.
3. Validity of Contemplated Transactions. The execution, delivery and
performance of this Agreement and each of the Collateral Documents and
the consummation of the transactions contemplated hereby and thereby
do not and will not: (a) violate, breach or contravene any of the
terms, conditions or provisions of the Articles of Incorporation or
By-Laws of Seller; (b) violate, breach, be in conflict with,
constitute a Default under, cause the acceleration of any payments
pursuant to, or otherwise impair the good standing, validity or
effectiveness of any contract relating to the Business or the
Purchased Assets; (c) violate any provision of Law applicable to
Seller or any of its properties or assets; (d) require any consent,
approval, waiver, authorization or permit of, or filing or
registration with or notification to, any Governmental Entity or any
other Person to be obtained by Seller other than the landlords under
the Leases, if so required, the Medical Directors under the Medical
Director Agreements, if so required, the licensors under Relevant
Licenses, if any and if so required, and certain registrations or
notifications which may be necessary with respect to the operation of
the SoftLight(R) Laser Hair Management System; (e) result in the
creation or imposition of any Lien, other than Permitted Liens,
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against any of the Purchased Assets or the Business; or (f) otherwise
adversely affect the good standing, validity or effectiveness of any
contract which would have a Material Adverse Effect. To Seller's
Knowledge, there is no proceeding pending or threatened before any
court or Governmental Entity in which it is being sought to restrain
or prohibit the consummation of the transactions contemplated hereby.
4. Title to Properties.
a. There are no Defaults by any party under any of the Leases for
the Day Spa Locations and the obligations to be performed by
Seller as tenant under the Leases have been performed and will be
performed at its sole expense through the date hereof, and
Seller, at its sole expense shall pay all monetary obligations
accrued under the Leases for the Day Spa Locations through June
30, 1999, and prior to and after the date hereof for the Leases
for the Closed Day Spa Locations.
b. Seller has delivered to Buyer prior to the execution of this
Agreement true and complete copies of all Leases, and all
amendments thereof, including material correspondence and other
documentation in Seller's possession, with respect to the Leased
Real Property which may have a Material Adverse Effect.
c. To Seller's Knowledge, there has been no condemnation by a
Governmental Entity with respect to any Leased Real Property.
d. To Seller's Knowledge, no portion of the Leased Real Property are
affected or threatened by any special assessments the cost of
which might be assessed against Buyer.
e. Seller is in possession of and has good, valid and marketable
title to, or has valid leasehold interests in or valid rights
under contracts to use, all the Tangible Personal Property used
in connection with the Business. All the Tangible Personal
Property is free and clear of all Liens, other than Permitted
Liens.
5. Third Party Options. There are no contracts or rights of any kind
with, to, in or under discussion with any third party to acquire any
of the Purchased Assets or any interest in or portion of, the
Purchased Assets or the Business.
6. Inventories and Supplies. The Inventories and Supplies of Seller,
which are included in the Purchased Assets, are carried on the Books
and Records of Seller using the normal inventory valuation policy
utilized by Seller and is in accordance with GAAP, consistently
applied.
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7. Financial Statements. Seller has delivered to Buyer true and correct
copies of the financial statements of the Business prepared by Seller
in the normal course of its business through April 1999.
8. Absence of Undisclosed Liabilities. To Seller's Knowledge there are no
reasonable grounds for the assertion against the Business of any
Liability not disclosed in this Agreement or of which Buyer is not
otherwise aware, which would have a Material Adverse Effect.
9. Certain Tax Matters.
a. For any period ending before the date hereof, Seller has duly and
timely filed or will file all Returns required to be filed or
sent by it or on behalf of the Business and all such Returns are
or will be true, correct and complete. Seller has paid or will
pay in full all Taxes and any penalties entered with respect to
the Business, due and payable for any period during Seller's
ownership of the Business. All Taxes, to the extent that they
relate to periods during Seller's ownership of the Business, have
been paid, withheld, or reserved for or will be paid by Seller as
and when due.
b. There are no Liens for Taxes upon any of the Purchased Assets,
and no event has occurred which with the passage of time or the
giving of notice, or both, could result in a Lien (other than
Permitted Liens) for Taxes on any of the Purchased Assets.
c. No deficiency for any Taxes has been proposed, asserted or
assessed against Seller with respect to the Business which has
not been resolved and paid in full.
d. Seller has not requested any extension of time within which to
file any Tax Return, which Tax Return has not since been filed
except for calendar year 1998, which will be timely filed.
10. Litigation; Compliance. Except as set forth in Schedule F.10, attached
hereto and incorporated herein, there is no suit, action, Claim,
arbitration, administrative or legal or other proceeding, or
governmental investigation pending or, to Seller's Knowledge
threatened, against or related to Seller with respect to or against
the Business, nor any failure to comply with, nor any Default under,
any Law, or order applicable to, nor any violation of or Default with
respect to any order, writ, injunction, judgment, or decree of any
court or Governmental Entity or other instrumentality issued or
pending against Seller or the Business which is reasonably expected to
have a Material Adverse Effect.
13
11. Benefit Plans.
a. Compliance. Each Benefit Plan affecting an Employee is, has been
and will be in compliance in all material respects and is, has
been and will be administered in all material respects in
accordance with the applicable provisions of ERISA, the Code, and
any other applicable law.
b. Funding. Seller or its Affiliates have made and will make all
payments and contributions to all Benefit Plans on a timely basis
as required by the terms of each such plan and any applicable
law.
12. Hazardous Substances.
a. Compliance. With respect to the Business, Seller is and has
received no written or oral notice, from any Governmental Entity
or any individual, and Seller has no Knowledge of a set of facts
indicating, that Seller is not in compliance with any and all
Environmental Laws with which the failure to comply is reasonably
expected to result in a Material Adverse Effect.
b. Disposal; Conditions. At no time during Seller's ownership of the
Business have there been used or disposed of any Materials of
Environmental Concern in the Leased Real Property and there is no
asbestos or urea formaldehyde foam insulation contained in or
forming part of any building, building component, structure or
space located on or in the Leased Real Property.
c. Potentially Responsible Party. With respect to the Business,
Seller has received no written notice or Claim from any
Governmental Entity or from any private party, alleging that
Seller is a potentially responsible party or is otherwise
allegedly liable for costs associated with the remediation of any
Leased Real Property as required by Law or pursuant to any Lease.
Seller shall be responsible for all Claims related to compliance
with Environmental Laws accruing prior to June 12, 1998 with
respect to the operations of the Day Spa Locations and the Closed
Day Spa Locations, and Buyer shall be responsible for all Claims
related to compliance with Environmental Laws accruing thereafter
with respect to the operations of the Day Spa Locations, and with
respect to the Closed Day Spa Locations from June 12, 1998
through the date hereof.
14
13. Intellectual Property Rights.
a. To Seller's Knowledge, as of the date hereof, Seller has the
right to use all Intellectual Property necessary or appropriate
for the operation of the Business or ownership or use of the
Purchased Assets, free and clear of all Liens, and such
Intellectual Property will not be adversely affected by the
transactions contemplated by this Agreement or the Collateral
Documents. To the Knowledge of Seller, Seller has not received
notice within the one year period prior to the date hereof that
it is infringing upon any Intellectual Property of any other
Person in connection with the operation of the Business.
b. Seller and its Affiliates have not entered into any agreement to
make any payments by way of royalties, fees or otherwise to any
owner or licensee of, or other claimant to, any Intellectual
Property used in the Business, except pursuant to the Xxxxxxxxx
Agreement.
c. Seller will enter into a license agreement with Buyer granting
Buyer the perpetual right to use the Intellectual Property which
is the subject of the Xxxxxxxxx Agreement in connection with the
Business, and Buyer shall make any and all payments due
thereunder with respect to the use of such Intellectual Property
in the Business.
14. Contracts. Seller is not a party to any contracts, including
agreements not to compete, which could restrict or prohibit Buyer's
operations or Buyer's ability to expand the Business in any manner.
15. Product Liability Claims. Seller is a named insured under all policies
of insurance relating to product liability listed on Schedule F.15,
attached hereto and incorporated herein, for and against any Claim for
product liability based on any event occurring prior to the date
hereof, which insurance coverage will continue in effect after the
date hereof for a period of not less than two (2) years.
16. Bank Accounts. All cash in all Bank Accounts maintained by Seller
shall remain the property of Seller. Buyer shall cooperate with Seller
to remove the name of any person associated with Buyer who is an
authorized signatory on any of Seller's accounts.
17. Finder's or Broker's Fees. Buyer and Seller represent and warrant that
no broker or other person is entitled to any commission or finder's
fee in connection with any of the transactions contemplated by this
Agreement.
18. Governmental Approvals and Filings. No consent, approval or action of,
with the execution, delivery and performance of this Agreement or in
connection with the consummation of the transactions contemplated
hereby or thereby.
G. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to Seller as follows:
15
1. Organization, Power, Standing and Qualification. Buyer is a
corporation duly organized, validly existing, and in good standing
under the Laws of the Commonwealth of Pennsylvania, and has full power
and authority (corporate or otherwise) to carry on its business as it
is now being conducted and to own and operate the properties and
assets now owned and operated by it. Buyer is and will be at all times
required to be, duly qualified to do business and is in good standing
in each and every jurisdiction where the ownership or leasing of its
properties and assets, including the Purchased Assets and the
operation of the Business requires such qualification except where the
failure to qualify or to be in good standing would not have a Material
Adverse Effect.
2. Power and Authority. Buyer has the requisite power and authority to
execute, deliver and perform this Agreement and the Collateral
Documents to which it is a party and to purchase the Purchased Assets
and assume the Assumed Liabilities. The execution, delivery and
performance of this Agreement and each of the Collateral Documents to
which Buyer is a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary action (corporate or otherwise) on the part of Buyer and
requires no further authorization or consent by Buyer. All resolutions
by the Board of Directors of Buyer authorizing the actions taken in
connection with the sale of the Purchased Assets, including the
execution and delivery of this Agreement, are in accordance with the
Articles and By-Laws of Buyer and were duly adopted and continue in
full force and effect. All corporate consents and authorizations
required to be obtained by Buyer with regard to this Agreement and
consummation of the transactions contemplated hereby have been
obtained. The officers of Buyer executing this Agreement and the
documents executed and delivered pursuant to or in connection with
this Agreement are incumbent officers of Buyer and are authorized to
do so. This Agreement and the Collateral Documents, to the extent
Buyer is a party thereto, constitute the legal, valid and binding
obligations of Buyer, enforceable in accordance with their terms,
except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or similar Laws affecting the enforcement of
creditors' rights generally.
3. Validity of Contemplated Transactions. The execution, delivery and
performance of this Agreement, and each of the Collateral Documents,
and the consummation of the transactions contemplated hereby and
thereby do not and will not: (a) violate, breach or contravene any
provision of the organizational documents of Buyer; (b) violate,
breach, be in conflict with, constitute a Default under, cause the
acceleration of any payments pursuant to, or otherwise impair the good
standing, validity or effectiveness of any contract by which Buyer or
Buyer's property is bound or subject any property or asset of Buyer to
any contract to which Buyer is a party or by which Buyer is bound; (c)
violate any provision of Law or any permit applicable to Buyer or its
properties or assets; or (d) require any consent, approval, waiver,
authorization, or permit of, or filing or registration with, or
notification to, any Governmental Entity or other Person to be
obtained by Buyer except as has been made or waived. To Buyer's
Knowledge, there is no proceeding pending or threatened before any
court or Governmental Entity in which it is being sought to restrain
or prohibit the consummation of the transactions contemplated hereby.
16
4. Inspection Opportunity. Buyer acknowledges that its officers,
directors and authorized agents have been operating the Day Spa
Locations on behalf of Seller and therefore have been given an
opportunity to examine such instruments, documents and other
information relating to the Purchased Assets as they have deemed
necessary or advisable in order to make an informed decision relating
to the transactions contemplated by this Agreement and the suitability
of the Business as an investment for Buyer and that they have been
afforded an opportunity to ask questions and to obtain any additional
information necessary in order to verify the accuracy of the
information furnished and that such parties have, in fact, asked all
such questions and reviewed all such instruments, documents and other
information as they have deemed necessary under the circumstances.
Notwithstanding the foregoing, the parties hereto acknowledge and
agree that (i) Buyer is relying upon the accuracy of the
representations, warranties and covenants of Seller contained in this
Agreement and the Collateral Documents, and (ii) Buyer has been
induced to enter into this Agreement and the Collateral Documents and
to consummate the transactions contemplated hereby and thereby as a
result of Seller's willingness to make accurate representations and
warranties and to undertake to perform the covenants contained in this
Agreement and the Collateral Documents.
5. HSR Act. Buyer has reviewed the rules relating to the size-of- parties
test under the HSR Act and Buyer is not a Ten Million Dollar
($10,000,000.00) person for the purposes thereof.
H. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
investigation made by or on behalf of Seller or Buyer prior to or after the
date hereof, except for (a) representations or warranties made by any party
as provided herein or in any Collateral Document which were (i) not true
when made and (ii) were made by such party fraudulently or with intent to
defraud or mislead, which representations and warranties shall survive in
accordance with the applicable statute of limitations, and (b)
representations and warranties relating to Tax matters and relating to
environmental matters, which shall survive in accordance with the
applicable statute of limitations, all representations and warranties made
by Seller and Buyer in this Agreement or pursuant hereto shall survive the
date hereof until the Survival Date, and thereafter as to any Claims or
Losses notice of which is given prior to the Survival Date.
I. CONDUCT OF SELLER AND BUYER AFTER CLOSING.
a. After the date hereof, Buyer shall be responsible for the
operation of the Business. Seller will cooperate with Buyer after
the date hereof to effect the orderly transfer of the Purchased
Assets. In addition, after the date hereof, at the request of
either party and at the requesting party's expense, but without
additional consideration, the other party shall execute and
deliver from time to time such further instruments of assignment,
conveyance and transfer, shall cooperate in the conduct of
Litigation and the processing and collection of insurance claims,
and shall take such other actions as may reasonably be required
to convey and deliver more effectively to Buyer the Purchased
Assets including, without limitation, Non-Transferable Assets or
to confirm and perfect Buyer's title to the Purchased Assets, and
otherwise to accomplish the orderly transfer to Buyer of the
Purchased Assets as contemplated by this Agreement and the
Collateral Documents.
17
b. In the event a transfer tax (or tax in substitution thereof) is
levied on all or part of the transactions contemplated hereunder
by any federal, state or local government, the party who is
charged under the applicable law with the obligation to pay (and
not collect) such tax shall timely and fully do so.
J. INDEMNIFICATION.
1. General.
a. Subject to Section J.2 below, Seller shall defend, indemnify and
hold harmless Buyer from, against and with respect to any and all
Claims, Losses, costs, expenses, obligations, Liabilities,
damages, recoveries and deficiencies, including costs of
investigation, interest, penalties and reasonable attorneys'
fees, that Buyer may incur, sustain or suffer as a result of any
breach of, or failure by Seller to perform, any of the
representations, warranties, covenants or agreements of Seller
contained in this Agreement, in any Exhibit or Schedule furnished
by or on behalf of Seller under this Agreement, the Collateral
Documents, or as a result of the conduct of Seller with respect
to the Business prior to the date hereof.
b. Subject to Section J.2 below, Buyer shall defend, indemnify and
hold harmless Seller from, against and with respect to any and
all Claims, Losses, costs, expenses, obligations, Liabilities,
damages, recoveries and deficiencies, including costs of
investigation, interest, penalties and reasonable attorneys'
fees, that Seller may incur, sustain or suffer as a result of any
breach of, or failure by Buyer to perform, any of the
representations, warranties, covenants or agreements of Buyer
contained in this Agreement, in any Exhibit or Schedule furnished
by or on behalf of Buyer under this Agreement, the Collateral
Documents or as a result of the conduct of Buyer in the operation
of the Business on and after the date hereof.
2. Claims for Indemnity. Whenever a Claim shall arise for which any party
shall be entitled to indemnification hereunder, the Indemnified Party
shall notify the Indemnifying Party in writing within ten (10) days of
the Indemnified Party's first receipt of notice of, or the Indemnified
Party's obtaining Knowledge of, such Claim, and in any event within
such shorter period as may be necessary for the Indemnifying Party to
take appropriate action to resist such Claim. Such notice shall
specify all facts Known to the Indemnified Party giving rise to such
indemnity rights and shall estimate (to the extent reasonably
possible) the amount of potential liability arising therefrom. If the
Indemnifying Party shall be duly notified of such dispute, the parties
shall attempt to settle and compromise the same or shall submit the
same to arbitration in accordance with Section L.8 and any rights of
indemnification established by reason of such settlement, compromise,
or arbitration shall promptly thereafter be paid and satisfied by any
Indemnifying Party obligated to make indemnification hereunder.
18
3. Right to Defend. If the facts giving rise to any Claim for
indemnification shall involve any actual or threatened action or
demand by any third party against the Indemnified Party or any of its
Affiliates, the Indemnifying Party shall be entitled (without
prejudice to the Indemnified Party's right to participate at its own
expense through counsel of its own choosing), at its expense and
through a single counsel of their own choosing, to control the defense
or prosecution of such Claim in the name of the Indemnifying Party, or
if necessary, in the name of the Indemnified Party. In any event, the
Indemnified Party shall give the Indemnifying Party advance written
notice of any proposed compromise or settlement of any such Claim. If
the remedy sought in any such action or demand is solely money
damages, the Indemnifying Party shall have fifteen (15) days after
receipt of such notice of settlement to object to the proposed
compromise or settlement, and if it does so object, the Indemnifying
Party shall be required to undertake, conduct and control, through
counsel of its own choosing and at its sole expense, the settlement or
defense thereof, and the Indemnified Party shall cooperate with the
Indemnifying Party in connection therewith.
4. Limitations. With respect to breaches of representations and
warranties only given under Xxxxxxxx X.0, X.0, X.0, X.0, X.0, X.0, and
G.5, no party shall be entitled to indemnification hereunder with
respect to such a breach until the total of all damages incurred by
such party with regard to such breaches exceeds Fifty Thousand Dollars
($50,000.00). With respect to breaches of all other representations
and warranties, no party shall be entitled to indemnification
hereunder with respect to such a breach until the total of all damages
incurred by such party with regard to such breaches exceeds Two
Hundred Thousand Dollars ($200,000.00). Notwithstanding anything
stated above to the contrary, the limitations set forth in this
Section shall not apply to a breach of any of the representations and
warranties of which the Indemnifying Party had Knowledge at any time
prior to the date on which such representation and warranty was made
or any breach by the Indemnifying Party of any covenant or obligation
set forth in this Agreement, the Collateral Documents or any other
agreement contemplated hereunder. The total liability of any party
(for indemnification or otherwise) with respect only to a breach of
such representations and warranties shall not exceed an amount equal
to the Purchase Price plus Assumed Liabilities.
19
K. FORM OF AGREEMENT.
1. Effect of Headings. The Section headings used in this Agreement and
the titles of the Exhibits or Schedules hereto are included for
purposes of convenience only, and shall not affect the construction or
interpretation of any of the provisions hereof or of the information
set forth in such Exhibits or Schedules.
2. Entire Agreement; Waivers. This Agreement and the other agreements and
instruments referred to herein constitute the entire agreement between
the parties pertaining to the subject matter hereof, and supersede all
prior agreements or understandings as to such subject matter. No party
hereto has made any representation or warranty or given any covenant
to the other except as set forth in this Agreement, the Exhibits and
Schedules hereto, and the other agreements and instruments referred to
herein. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provisions, whether
or not similar, nor shall any waiver constitute a continuing waiver.
No waiver shall be binding unless executed in writing by the party
making the waiver.
3. Counterparts and Facsimile Signatures. This Agreement, any document or
instrument entered into, given or made pursuant to this Agreement or
authorized hereby, and any amendment or supplement thereto may be
executed in two or more counterparts and signature pages may be
transmitted by facsimile and, when so executed and transmitted, will
have the same force and effect as though all signatures were originals
and appeared on a single document. Any signature page of this
Agreement or of such an amendment, supplement, document or instrument
may be detached from any counterpart without impairing the legal
effect of any signatures thereon, and may be attached to another
counterpart identical in form thereto but having attached to it one or
more additional signature pages.
4. Construction of Certain Terms and Phrases. Unless the context of this
Agreement otherwise requires, (i) words of any gender include each
other gender; (ii) words using the singular or plural number also
include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; and (iv) the term "Section" refers to the
specified Section of this Agreement. Whenever this Agreement refers to
a number of days, such number shall refer to calendar days unless
Business Days are specified. Any representation or warranty contained
herein as to the enforceability of a contract shall be subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium or
other similar law affecting the enforcement of creditors' rights
generally and to general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
20
L. ADDITIONAL AGREEMENTS OF THE PARTIES; MISCELLANEOUS PROVISIONS.
1. Cooperation. From time to time from and after the date hereof, the
parties will execute and deliver to each other any and all further
agreements, instruments, certificates and other documents as may
reasonably be requested by the other party in order more fully to
consummate the transactions contemplated hereby, and to effect an
orderly transition of the business being acquired by Buyer hereunder.
2. Access to Information. Following the date hereof, Seller will
cooperate fully with Buyer and shall provide Buyer and its
accountants, counsel, and other representatives (including without
limitation, its bankers and other lending sources, auditors and
engineers), during normal business hours, and provide full access to
the Books and Records, Relevant Contracts, and other documents,
records, and information of Seller with respect to the Business and
the Purchased Assets, as Buyer or its representatives may reasonably
request.
3. Benefit Plan Participant Schedule. At the request of Buyer, Seller
will deliver a true and complete list of all Employees and their
beneficiaries who, as of the date hereof, participate in a Benefit
Plan of Seller and the Benefit Plans in which they participate.
4. Day Spa Employees.
a. Buyer will offer to employ all Employees who are employed at the
Day Spa Locations as of the date hereof. Such offers of
employment shall be on substantially similar terms and conditions
as their current employment, including credit for the time in
service as an employee of Seller.
b. With respect to all Employees who are offered and accept
employment with Buyer, participation in and coverage under all
Benefit Plans will terminate as of the date hereof, unless
continued participation and coverage is required by operation of
law.
5. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if served personally on the party to
whom notice is to be given, on the day after the delivery thereof to a
recognized overnight courier service for next-day delivery with all
charges prepaid or billed to the account of the sender, or on the
third day after mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid,
and properly addressed as follows:
If to Seller: ThermoLase Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: President
21
with a copy to: ThermoLase Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
If to Buyer: GH DAY SPAS, INC.
0 Xxxx Xxxxxxxx Xxxx
Xxxxxx, XX.
Attn: Xxxxxx Xxxxxxx, President
with a copy to: Xxxxxx Xxxxxxx Xxxxxx Xxxxxx & Xxxxx, P.C.
350 Sentry Parkway, Building 640
X.X. Xxx 0000
Xxxx Xxxx, Xxxxxxxxxxxx 00000-0000
Attn: L. Xxxxxxx Xxxxx, Esq.
or to such other address as either party shall have specified by
notice in writing given to the other party.
6. Press Releases and Announcements. No party shall issue any press
release or public disclosure relating to the subject matter of this
Agreement without the prior approval of the other party, which shall
not be unreasonably delayed or withheld; provided that Seller may make
any public disclosure it believes in good faith is required by law,
regulation or stock exchange rule (in which case Seller shall advise
Buyer and provide it with a copy of the proposed disclosure prior to
making the disclosure).
7. Additional Agreements and Instruments. On or before the date hereof,
Seller and Buyer shall execute, deliver and file all exhibits,
schedules, agreements, certificates, instruments and other documents,
not inconsistent with the provisions of this Agreement and the
Collateral Documents, which, in the opinion of counsel to the parties
hereto, shall reasonably be required to be executed, delivered and
filed in order to consummate the transactions contemplated by this
Agreement and the Collateral Documents.
8. Governing Law; Jurisdiction; Arbitration. This Agreement shall be
construed and interpreted and the rights granted herein governed in
accordance with the Laws of the State of Texas, except if otherwise
provided in an Exhibit. Except with regard to any Claims for Specific
Performance as provided in Section L.12 any Claim, dispute or
controversy arising under or in connection with this Agreement or any
actual or alleged breach hereof shall be settled exclusively by
arbitration to be held before a single arbitrator in any locale or
venue as legal jurisdiction may otherwise be had over the party
against whom the proceeding is commenced, in accordance with the
commercial arbitration rules of the American Arbitration Association
then in effect. As part of his or her award, the arbitrator shall make
a fair allocation of the fee of the American Arbitration Association,
the cost of any transcript, and the parties' reasonable attorneys'
fees, taking into account the merits and good faith of the parties'
22
Claims and defenses. Judgment may be entered on the award so rendered
in any court having jurisdiction. Any process or other papers
hereunder may be served by registered or certified mail, return
receipt requested, or by personal service, provided that a reasonable
time for appearance or response is allowed.
9. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their successors
and permitted assigns. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the
prior written approval of the other party.
10. Amendments. The parties may mutually amend any provision of this
Agreement at any time. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by both
of the parties hereto.
11. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction. If the
final judgment of a court of competent jurisdiction declares that any
term or provision hereof is invalid or unenforceable, the parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration,
or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest
to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be
appealed.
12. Specific Performance. Each of the parties acknowledges and agrees that
the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of
the parties agrees that the other party shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of
this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it
may be entitled at law or in equity.
13. Construction. The language used in this Agreement shall be deemed to
be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against
any party. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires
otherwise.
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14. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and
made a part hereof.
15. Lease Obligations. Seller shall deposit by wire no later than the
second (2nd) day following the date hereof into a separate bank
account of Buyer and Seller, entitled Greenhouse Day Spas Rent Account
maintained at Norwest Bank, Fort Worth, TX, One Million Five Hundred
Thousand Dollars ($1,500,000.00) which shall be disbursed upon the
signatures of Buyer and Seller timely, to pay timely the monetary
obligations due under the Leases for the Day Spa Locations beginning
with the month of July 1999 until the balance of the funds held in
such account are depleted.
16. Cash Payment. Seller shall pay to Buyer by wire no later than the
second (2nd) day following the date hereof a cash payment in the
amount of Five Hundred Thousand Dollars ($500,000.00).
IN WITNESS WHEREOF, the parties have executed this Agreement on and as of
the date first set forth above.
BUYER:
WITNESS/ATTEST: GH DAY SPAS, INC., a Pennsylvania
corporation
_______________________ By:_____________________________
Xxxxxx Xxxxxxx, President
SELLER:
WITNESS/ATTEST: THERMOLASE CORPORATION, a Delaware
corporation
_______________________ By:_____________________________
Xxxxxx Xxxxxxx, President
24
EXHIBIT "A"
PROMISSORY NOTE
(See Attached)
EXHIBIT "B"
SECURITY AGREEMENT
(See Attached)
EXHIBIT "C"
FORM OF SUBLEASE AGREEMENT
(See Attached)
EXHIBIT "D"
MANAGEMENT AGREEMENT
(See Attached)
EXHIBIT "E"
LICENSE AGREEMENT WITH XXXXXXXX XXXXXXXXX
(See Attached)
SCHEDULE A.15
LEASED REAL ESTATE
1. Subleased Day Spa Locations.
1. Inwood Village Shopping Center, 0000 Xxxx Xxxxxx Xxxx, Xxxxxx 000 xxx
000, Xxxxxx, Xxxxx 00000.
2. 0000 Xxxxxxxx, Xxxxx, Xxxxxxxxx.
3. 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx.
4. 000 Xxxxxxxxx Xxxxxx, Xxxx xxx Xxxxxx xx Xxxxxx, Xxxxx of Colorado.
2. Managed Day Spa Locations.
1. 000 Xxxxx Xxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
2. Xxxxx Xxxx Shopping Center, Houston, Xxxxxx County, Texas.
3. 00-00 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx.
4. Somerset Collection North, City of Xxxx, Oakland County, Michigan.
5. Xxxxxxx Xxxxxx Xxxxxxxx Xxxxxx, Xxxx xx Xxxxxxx Xxxxx, Xxxxxx of
Orange, State of California.
3. Closed Day Spa Locations.
1. 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
2. Ballet Valet, 000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxx 00000.
3. 000 Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000.
4. Xxxxxx Park, 000 Xxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000.
5. 0000 Xxxxxxx, Xx Xxxxx, Xxxxxxxxxx 00000.
SCHEDULE B.2
EXCLUDED ASSETS
1. Bank accounts in the name of ThermoLase Corporation, together with all
cash held in such accounts as of the date hereof.
2. Tax losses relating to the Business for periods prior to the date
hereof.
3. Refunds and claims with respect to payments made by Seller prior to
the date hereof, and causes of actions, and potential causes of action
relating to the Business and accruing prior to the date hereof.
4. Supplies located at Creative Beauty Innovations, Inc. whether
manufactured for or stored for use by the Day Spa Locations.
5. Insurance policies in the name of Seller or one of its Affiliates and
all rights to any payments to Seller and its Affiliates thereunder.
6. Benefits Plans and all rights and obligations thereunder.
7. Lease deposits. 1.
SCHEDULE C.3
ALLOCATION SCHEDULE
Furniture, Fixtures and Equipment $2,500,000.00
SCHEDULE E
ASSUMED LIABILITIES
1. All liability for performing services (and/or providing goods) in
satisfaction of all outstanding gift certificates and customer
deposits, and for customer prepayments for multiple treatment packages
with respect to services not yet performed.
2. Commencing on the date hereof, all liabilities for payroll, benefits
(except as required otherwise by operation of law), and withholding
taxes with respect to all Employees who accept Buyer's offer of
employment.
3. Unless agreed otherwise in writing by Seller, all continuing
obligations of Seller under contracts relating primarily to the
Business, including all agreements relating to relationships with a
physician and/or physician owned professional corporations licensed to
perform SoftLight laser hair removal and skin resurfacing, including
the supervision by Medical Directors of laser hair removal and skin
resurfacing services, all at or with respect to Day Spa Locations
only, and payment for such contractual liabilities shall be governed
by the terms of this Agreement.
4. All liabilities and obligations of Buyer under Sublease Agreements and
Management Agreements in accordance with the terms set forth therein.
SCHEDULE F.10
PENDING OR THREATENED LITIGATION
1. LaserSpas, Inc. et al. V. ThermoLase Corporation, filed in Cuyahoga
County, Ohio, Court of Common Pleas. (plaintiffs claim that they have
sustained business losses as a result of the poor performance of the
SoftLight Laser, and that ThermoLase violated tie Ohio Business
Opportunity Act by failing to provide a disclosure document required
by that act)
2. Xxxxxx Xxxxxx V. ThermoLase, et al., filed in Los Angeles County,
California, Superior Court. (plaintiff claims that her face and neck
were permanently injured by the SoftLight treatment and that she
consulted dermatologists and plastic surgeons to repair the damage)
3. Xxxxxx Xxxxxxxx et al. V. ThermoLase Corporation, filed in Riverside
County, California, Superior Court. (plaintiffs claim that ThennoLase
violated the California Unfair Trade Practices on the grounds that
marketing claims relating to SoftLight laser hair removal were
misleading)
4 Xxxxxxx Xxxxxxxx v. ThermoLase et a!., filed in San Diego County,
California, Superior Court. (plaintiff claims wrongful termination
following disagreement with ThermoLase management regarding licensure
to perform SoftLight hair removal and skin resurfacing procedures)
5. Xxxxx Xxxxxxx. (letter addressed to Boca Raton Greenhouse Spa dated
May20, 1999 makes non specific claims of "severe bodily injuries"
resulting from negligence of The Greenhouse Spa, and requests
insurance coverage information)
6. Xxxxxxx Xxxxxx v. The Greenhouse Spa. (claim before EEOC for
employment discrimination based on complainant's religion)
SCHEDULE F.15
PRODUCT LIABILITY INSURANCE
Carrier: Medmarc Casualty Insurance Company
Policy No.: 99MA380019
Policy Period: July 1, 1999 to July 1, 2000
Insurance Coverage: damages and expenses for covered claims resulting from
the manufacture distribution and sale of medical products
The general aggregate limit and the limit per occurrence is not less than
$3 million
