1
EXHIBIT 2.1
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and executed as of the ____ day of ________, 199__, by and among Better Image,
Inc., a Georgia corporation ("Better Image"), ___________________, a
_____________________ (the "Company"), and _______________________, residents of
the State of __________________ (individually "Shareholder" and collectively
"Shareholders").
WITNESSETH:
WHEREAS, the Company owns certain assets used to operate a cosmetic and
reconstructive surgery practice in ___________________;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, Better Image is engaged in the business of acquiring the
assets of and managing cosmetic and reconstructive surgery practices to the
extent permitted by applicable law; and
WHEREAS, the Boards of Directors of each of the Company and Better
Image have determined that a business combination between the parties is in the
best interests of their respective companies and shareholders and accordingly
have agreed to effect the Merger (as hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The closing of the transactions contemplated hereby (the "Closing")
will take place as soon as practicable following the satisfaction or waiver of
the conditions to the obligations of the parties to effect the Merger, but in no
event shall the Closing be held later than June 30, 1999 (such date of Closing
being referred to herein as the "Closing Date"). The place of Closing shall be
at such place as the parties may mutually agree.
1.1 MERGER OF THE COMPANY INTO BETTER IMAGE. On the Closing Date,
the Company shall be merged with and into Better Image in accordance with this
Agreement and the separate corporate existence of the Company shall thereupon
cease (the "Merger"). The Merger shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated. The Merger is intended to
2
be a "tax-free reorganization" pursuant to Section 368(a)(1)(A) of the Code and
the parties hereto shall not report the transaction in a manner inconsistent
therewith or otherwise take any action that would prevent the Merger from
qualifying as such; provided, however, that the actual tax effect of the
transactions contemplated by this Agreement is not a condition precedent to the
closing of the transactions contemplated hereby and no party hereto makes or has
made any representation, warranty or covenant to any other party hereto as to
such qualification. Better Image shall be the surviving corporation in the
Merger (in such capacity, hereinafter referred to as the "Surviving
Corporation") and shall be governed by the laws of the State of Georgia, and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have the
effects specified pursuant to the laws of the State of Georgia.
1.2 MERGER CERTIFICATES. If all conditions to the Merger set forth
herein have been fulfilled or waived in accordance herewith and this Agreement
shall not have been terminated pursuant to the terms hereof, the parties hereto
shall cause to be properly executed and filed on the Closing Date Articles of
Merger meeting the requirements of the laws of the State of _____________. The
Merger shall become effective on the Closing Date (such effective date being
referred to herein as the "Effective Date").
1.3 ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. At the
Effective Date, the Articles of Incorporation of Better Image shall be the
Articles of Incorporation of the Surviving Corporation.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of Better
Image on the Closing Date shall be the Bylaws of the Surviving Corporation,
unless and until duly amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of Better Image immediately prior to the Effective Date shall, from
and after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of Better Image immediately prior to the Effective Date shall, from and
after the Effective Date, be the officers of the Surviving Corporation and shall
hold their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Effective Date shall
-2-
3
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
common stock shall thereafter cease to have any rights with respect to such
shares of Company common stock, except the right, subject to Section 1.8(c), to
receive, without interest, the consideration specified in Annex I attached
hereto (in the aggregate, the "Merger Consideration").
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) On the Closing Date, (i) the Shareholders, as the
holders of all outstanding certificates representing shares of Company common
stock, shall, upon surrender of such certificates, be entitled to receive the
Merger Consideration and (ii) until the certificates representing Company common
stock have been surrendered by Shareholders and replaced by certificates
representing Better Image common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of Better Image
common stock in such share amounts as will be issued pursuant to Annex I.
(b) The Shareholders shall deliver to Better Image on the
Closing Date the certificates representing Company common stock owned by them,
duly endorsed in blank by the Shareholders, or accompanied by blank stock
powers, and with all necessary transfer tax and other revenue stamps (if any),
acquired at the Shareholders' expense. The Shareholders agree to cure any
deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Simultaneous
with such delivery on the Closing Date, the Shareholders shall receive in
exchange therefor a certificate representing that number of shares of Better
Image common stock and the amount of any cash such Shareholder is entitled to
receive pursuant to Sections 1.7 and 1.8(c) hereof.
(c) The percentage of Common Stock collectively held by
all of the cosmetic and reconstructive surgical practices affiliated with Better
Image, including the Shareholders, immediately prior to the exchange of Common
Stock for cash (20%) and immediately prior to the initial public offering (the
"IPO") shall be sixty-five percent (65%).
(d) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of Better Image common stock will be
issued.
1.9 SUBSEQUENT ACTIONS. If, at any time after the Effective Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or
-3-
4
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, and to effect the cancellation
of all outstanding shares of Company common stock in return for the
consideration set forth in this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of the Company, and each Shareholder or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of the Company or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly and severally, hereby
represent and warrant to Better Image that the following statements are current
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date and the Effective Date.
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is duly
organized, validly existing and in good standing under the laws of the State of
______________. The Company has all necessary corporate powers to own all of its
assets and to carry on its business as such business is now being conducted. The
Company does not own stock directly or indirectly, in any other corporation,
association or business organization, nor is the Company a party to any joint
venture or partnership, other than as set forth on Exhibit 2.1. The Shareholders
are the sole shareholders of the Company and own all outstanding shares of
capital stock, free of all security interests, claims, encumbrances and liens,
in the amounts set forth on Exhibit 2.1. Each share of Company common stock has
been legally and validly issued and is fully paid and nonassessable. No shares
of capital stock of the Company are owned by the Company in treasury. There are
no outstanding (a) bonds, debentures, notes or other obligations the holders of
which have the right to vote with the shareholders of the Company on any matter
(except as set forth in Exhibit 2.1), (b) securities of the Company convertible
into equity interests in the Company, or (c) commitments, options, rights or
warrants to issue any such equity interests in the Company, to issue securities
of the Company convertible into such equity interests, or to redeem any
securities of the Company. The Company is not required to qualify to do business
as a foreign corporation in any other state or jurisdiction by reason of its
business, properties or activities in or relating to such other state or
jurisdiction. The Company does not have any assets, employees or offices in any
state other than _____________________.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken all
action required by law, its Articles of
-4-
5
Incorporation, its Bylaws or otherwise, to authorize the execution, delivery and
performance of this Agreement and such related documents. Each Shareholder has
the legal capacity to enter into and perform this Agreement and the other
agreements to be executed and delivered in connection herewith. The Company has
obtained (or will obtain as of the Closing Date) the approval of its
shareholders necessary to the consummation of the transactions contemplated
herein. This Agreement and all agreements and documents executed and delivered
in connection herewith have been, or will be as of the Closing Date, duly
executed and delivered by the Company and the Shareholders, as appropriate, and
constitute or will constitute the legal, valid and binding obligations of the
Company and the Shareholders, enforceable against the Company and the
Shareholders in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies. The execution and delivery
of this Agreement, and the agreements executed and delivered pursuant to this
Agreement or to be executed and delivered on the Closing Date, do not, and,
subject to the receipt of consents described on Exhibit 2.5, the consummation of
the actions contemplated hereby will not, violate any provision of the Articles
of Incorporation or Bylaws of the Company or any provisions of, or result in the
acceleration of, any obligation under any mortgage, lien, lease, agreement,
rent, instrument, order, arbitration award, judgment or decree to which the
Company or any Shareholder is a party or by which the Company or any Shareholder
is bound, or violate any material restrictions of any kind to which the Company
is subject, or result in any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental authorizations
and approvals required to be maintained by the Company, the Shareholders and
each licensed employee of the Company have been duly obtained and are in full
force and effect unless such failure to obtain would not have a material adverse
effect on the Company. There are no proceedings pending or, to the knowledge of
the Company and the Shareholders, threatened, which may result in the
revocation, cancellation or suspension, or any adverse modification, of any
thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and all amendments thereto of the Company have been
delivered to Better Image, and the books of account of the Company have been
kept accurately in the ordinary course of business and the revenues, expenses,
assets and liabilities of the Company have been properly recorded in such books.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
-5-
6
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished Better Image with copies of financial information
("Financial Statements") about the Company as set forth on Exhibit 2.6 attached
hereto, including the unaudited Balance Sheet ("Balance Sheet") as of __________
("Balance Sheet Date"). Such financial statements were prepared in accordance
with Generally Accepted Accounting Principles ("GAAP") consistently applied
throughout the periods involved, and fairly present the financial condition and
results of operations of the Company, as applicable, as of the respective dates
thereof and for the respective periods covered thereby, reflect all liabilities
of the Company, including all contingent liabilities of the Company, as of their
respective dates, and present fairly the financial position of the Company as of
such dates and the results of operations and cash flows for the period or
periods reflected therein as required in accordance with GAAP; provided,
however, that such Financial Statements are subject to post year end adjustments
(which will not be material individually or in the aggregate).
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
Such leases listed on Exhibit 2.7 are valid and enforceable in accordance with
their respective terms unless such validity or unenforceability will have no
material negative impact on the Company. There is not, under any such lease, any
existing default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or lapse
of time, or both, would constitute a default.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. An inventory list of
all interests in personal property and real estate leasehold interests owned by
the Company is set forth on Exhibit 2.9 (the "Property"). The Company has good,
valid and marketable title to the Property free and clear of any liens, claims,
charges, exceptions or encumbrances, except for those, if any, which are set
forth in Exhibit 2.9 attached hereto or those which were disposed of in the
ordinary course of business prior to the Closing Date. The real estate leasehold
interest and personal property described on Exhibit 2.7 and Exhibit 2.9
constitute the only real and personal property used in the conduct of the
Company's business, except as otherwise disclosed in Exhibit 2.9.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
GAAP. The items of the Company's inventory have been acquired in the ordinary
course of its business, are adequate for the reasonable requirements of its
business, and may be used for their intended purposes. Except as otherwise noted
in the Balance Sheet, substantially all of the inventory owned or used by the
-6-
7
Company is in good, current, standard and merchantable condition and is not
obsolete or defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as set
forth on Exhibit 2.11, the Company is not a licensee in respect of any patents,
trademarks, service marks, trade names, copyrights or applications therefor, or
manufacturing processes, formulas or trade secrets or similar items and no such
licenses are necessary for the conduct of its business. No claim is or, to the
best of Company's or Shareholders' knowledge, is pending to the effect that the
present or past operations of the Company infringe upon or conflict with the
asserted rights of others to any patents, patent rights, manufacturing
processes, trade names, trademarks, service marks, inventions, licenses,
specialized treatment protocols, copyrights, formulas, know-how and trade
secrets. To the best of Company's and Shareholders' knowledge, the Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to Better
Image, and (e) all employee manuals, materials, policies, procedures and
work-related rules, copies of which have been delivered to Better Image. The
Company is in compliance with all applicable laws, rules, regulations and
ordinances respecting employment and employment practices. The Company has not
engaged in any unfair labor practice. To the best of Company's and Shareholders'
knowledge, there are no unfair labor practices charges or complaints pending or
threatened against the Company, and the Company has never been a party to any
agreement with any union, labor organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Except as set forth on Exhibit 2.13,
neither the Company nor any Shareholder nor outstanding shares of the Company's
stock nor any of the Company's assets is subject to any pending, nor does the
Company or any Shareholder have knowledge of any threatened litigation,
governmental investigation, condemnation or other
-7-
8
proceeding against or relating to or affecting the Company, any Shareholder, the
outstanding shares of the Company's stock, any of the assets of the Company, the
operations, business or prospects of the Company or the transactions
contemplated by this Agreement, and, to the knowledge of the Company and the
Shareholders, no basis for any such action exists, nor is there any legal
impediment of which the Company or any Shareholder has knowledge to the
continued operation of its business in the ordinary course, subject to consents
set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to Better Image true
copies of all written, and disclosed to Better Image, all oral, outstanding
contracts, obligations and commitments of the Company, excluding patient
contracts (the "Contracts"), all of which are listed or incorporated by
reference on Exhibit 2.7 (in the case of leases) and Exhibit 2.14 (in the case
of Contracts other than leases) attached hereto. Except as otherwise indicated
on such Exhibits, to the best of Company's and Shareholders' knowledge, all of
such Contracts are valid, binding and enforceable in accordance with their terms
and are in full force and effect, and no defenses, offsets or counterclaims have
been asserted or may be made by any party thereto, subject to applicable
bankruptcy, insolvency, reorganization or other laws affecting the rights of
creditors generally, or to equitable principles. Except as indicated on such
Exhibits, there is not, under any such Contract, any existing default by the
Company, or any condition or event of which the Company or any Shareholder has
knowledge which with notice or lapse of time, or both, would constitute a
default. The Company and the Shareholders have no knowledge of any default by
any other party to such Contracts. Neither the Company nor the Shareholders have
received notice of the intention of any party to any Contract to cancel or
terminate any Contract and have no reason to believe that any amendment or
change to any Contract is contemplated by any party thereto. Other than those
contracts, obligations and commitments of the Company listed on Exhibit 2.7 and
Exhibit 2.14 and any patient contracts, the Company is not a party to any
material written or oral agreement, contract, lease or arrangement, including
any:
(a) Contract related to the assets of the Company not
made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, xxxx of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon notice
of thirty (30) days or less;
-8-
9
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $1,000 or that cannot be performed in the
ordinary course of business within thirty (30) days after the date hereof or
terminated by the Company without payment of any penalty or other expense.
2.15 SUBSEQUENT EVENTS. Except as disclosed on Exhibit 2.15, the
Company has not, since the Balance Sheet Date:
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except for this Agreement, other than in the
ordinary course of business or incurred any indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown or
reflected on the Balance Sheet or (ii) liabilities incurred since the Balance
Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business consistent with
past practices;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or canceled any debts or claims or waived any rights, except in the
ordinary course of business consistent with past practices;
-9-
10
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand Dollars ($5,000);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than as permitted hereunder;
(l) Redeemed, purchased, sold or issued any stock, bonds
or other securities to persons other than the Shareholders;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse change
in its financial condition, assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date, of the Company's (i) accounts receivable,
net of allowances for uncollectible and doubtful amounts ("Accounts
Receivable"), and (ii) current accounts payable and current accrued liabilities
(other than the current portion of long-term debt) ("Accounts Payable"). Exhibit
2.16 contains a true and accurate (i) list of all Accounts Receivable, and (ii)
list of all Accounts Payable and (iii) statement of the working capital
("Working Capital") of the Company as of the Balance Sheet Date. Since the
Balance Sheet Date, the Company has not changed any principle or practice with
respect to the recordation of accounts receivable or the calculation of reserves
therefor, or any material collection, discount or write-off policy or procedure.
Accounts Receivable are not recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company is
in substantial compliance with the terms and conditions of such third-party
payor arrangements, and
-10-
11
the reserves established by the Company are adequate to cover any liability
resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
To the best of Company's and Shareholders' knowledge, all such tax returns are
complete and accurate in all respects and properly reflect the relevant taxes
for the periods covered thereby. The Company has no tax liability, except for
real and personal property taxes and license fees for the current period not yet
due and payable and sales, use, employment and similar taxes for periods as to
which such taxes have not yet become due and payable. The unpaid taxes of the
Company did not, as of the Balance Sheet Date, exceed the reserve for taxes set
forth on the face of the Balance Sheet, as adjusted for the passage of time
through the Closing Date, in accordance with the past custom and practice of the
Company. The Company and the Shareholders have not received any notice that any
tax deficiency or delinquency has been asserted against the Company and there
are no audits relating to taxes of the Company threatened, pending or in
process. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on, or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes required
by law to have been withheld and paid by it. Neither the Company nor any
predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to Better
Image correct and complete copies of the Company's three most recently filed
annual state and federal income tax returns, together with all examination
reports and statements of deficiencies assessed against or agreed to by the
Company during the three calendar year period preceding the date of this
Agreement.
2.18 COMMISSIONS AND FEES. There are no claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
Better Image, the Company or the Shareholders resulting from any action taken by
the Company or the Shareholders or their respective agents or employees, or any
of them.
2.19 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet or set forth in Exhibit 2.13, the Company did not
have, as of the Balance Sheet Date, and has not incurred since that date and
will not have incurred as of the Closing Date, any liabilities or obligations of
any nature, whether accrued, absolute, contingent or otherwise, and whether due
or to become due, other than those incurred in the ordinary course of business.
The Company and the Shareholders do not know, or have reasonable grounds to
know, of any basis for the assertion against the Company as of the Balance Sheet
Date, of any claim or liability of any nature in any amount not fully reflected
or reserved against on the Balance Sheet, or of any
-11-
12
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.19 attached hereto.
2.20 INSURANCE POLICIES. The Company and each Shareholder of the
Company carries property, liability, malpractice, workers' compensation and such
other types of insurance as is customary in the industry. Valid and enforceable
policies in such amounts are outstanding and duly in force and will remain duly
in force through the Closing Date. All such policies are described in Exhibit
2.20 attached hereto and true and correct copies have been delivered to Better
Image. Neither the Company nor any Shareholder has received notice or other
communication from the issuer of any such insurance policy canceling or amending
such policy or threatening to do so. Neither the Company nor any Shareholder of
the Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.21 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.21
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a) any
bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or program,
including, but not limited to, those described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). To the best of
Company's and Shareholders' knowledge, all such plans listed on Exhibit 2.21
(individually "Company Plan," and collectively "Company Plans") have been
operated and administered in all material respects in accordance with all
applicable laws, rules and regulations, including without limitation, ERISA, the
Internal Revenue Code of 1986, as amended, Title VII of the Civil Rights Act of
1964, as amended, the Equal Pay Act of 1967, as amended, the Age Discrimination
in Employment Act of 1967, as amended, and the related rules and regulations
adopted by those federal agencies responsible for the administration of such
laws. The Company has not previously made, is not currently making, and is not
obligated in any way to make, any contributions to any multi-employer plan
within the meaning of the Multi-Employer Pension Plan Amendments Act of 1980.
With respect to each Company Plan, either (i) the value of plan assets
(including commitments under insurance contracts) is at least equal to the value
of plan liabilities or (ii) the value of plan liabilities in excess of plan
assets is disclosed on the Balance Sheet, all as of the Closing Date.
2.22 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree, rule or regulation that materially and adversely affects the condition
(financial or otherwise), operations, assets, liabilities, business or prospects
of the Company; provided, however, that the Company and the Shareholders will
remain in compliance with all requirements under the Company's existing managed
care
-12-
13
contracts and any physicians employed by the Company will remain in compliance
with all requirements governing the practice of medicine.
2.23 COMPLIANCE WITH LAWS IN GENERAL. The Company, the Shareholders
and Company's licensed employees have complied with all applicable laws, rules,
regulations and licensing requirements, including, without limitation, the
Federal Environmental Protection Act, the Occupational Safety and Health Act,
the Americans with Disabilities Act and any environmental laws and medical waste
laws, and there exist no violations by the Company, any Shareholder or any
licensed employee of the Company of any federal, state or local law or
regulation unless the failure to do so would have no material negative impact
upon the Company. Neither the Company nor any Shareholder has received any
notice of a violation of any federal, state and local laws, regulations and
ordinances relating to the operations of the business and assets of the Company
and no notice of any pending inspection or violation of any such law, regulation
or ordinance has been received by the Company or any Shareholder unless such
notice or violation would have no material negative impact upon the Company.
2.24 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each licensed employee of the Company is qualified for participation in the
Medicare and Medicaid programs and is party to provider agreements for such
programs which are in full force and effect with no defaults having occurred
thereunder. The Company, each Shareholder and each licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. To the best of Company's and Shareholders' knowledge, there are
no pending appeals, overpayment determinations, adjustments, challenges, audit,
litigation or notices of intent to open Medicare or Medicaid claim
determinations or other reports required to be filed by the Company, each
Shareholder and each licensed employee of the Company. Neither the Company, nor
any Shareholder, nor to the best of Company's and Shareholder's knowledge, any
licensed employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.25 FRAUD AND ABUSE. The Company, the Shareholders and all persons
and entities providing professional services for the Company's business have
not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under ss.1320a-7b or ss.1395nn of Title 42 of
the United States Code or the regulations promulgated thereunder, or related
state or local statutes or regulations, or which are prohibited by rules of
professional conduct, including, but not limited to, the following: (a)
knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or payment;
(b) knowingly and willfully making or causing to be made any false statement or
representation of a material fact for use in determining rights to any benefit
or payment; (c) any failure by a claimant to disclose knowledge of the
occurrence of any event
-13-
14
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (ii) in
return for purchasing, leasing or ordering or arranging for, or recommending,
purchasing, leasing or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid, or (e)
referring a patient for designated health services to or providing designated
health services to a patient upon referral from an entity or person with which
the cosmetic and reconstructive surgeon or an immediate family member has a
financial relationship, and to which no exception under ss.1395nn of Title 42 of
the United States Code applies.
2.26 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of the
Company or any Shareholder and furnished or to be furnished to Better Image
pursuant hereto, or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements or facts
contained therein not misleading.
2.27 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since the Balance Sheet Date. No repurchase of any of the
Company's capital stock has been approved, effected or is pending, or is
contemplated by the Board of Directors of the Company.
2.28 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. To the
best of Company's and Shareholders' knowledge, no officer, employee, director or
shareholder of the Company, or their respective spouses, children or affiliates,
owns directly or indirectly, on an individual or joint basis, any interest in,
has a compensation or other financial arrangement with, or serves as an officer
or director of, any customer or supplier or competitor of the Company or any
organization that has a material contract or arrangement with the Company. To
the best of Company's and Shareholders' knowledge, neither the Company, nor any
of its directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three (3) years was, a party to
any contract, lease, agreement or arrangement, including, but not limited to,
any joint venture or consulting agreement with any cosmetic and reconstructive
surgeon, physician, hospital, pharmacy, or other person or entity which is in a
position to make or influence referrals to, or otherwise generate business for,
the Company or to provide services, lease space, lease equipment or engage in
any other venture or activity with the Company.
-14-
15
2.29 PAYORS. Exhibit 2.29 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than ten percent (10%) of revenues of the Company in the
preceding fiscal year. To the best of Company's and Shareholders' knowledge, the
Company has good relations with all such payors and other material payors of the
Company and none of such payors has notified the Company that it intends to
discontinue its relationship with the Company or to deny any claims submitted to
such payor for payment.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BETTER IMAGE.
Better Image hereby represents and warrants to the Company and the
Shareholders that the following statements are current and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement, except as set forth in the disclosure Exhibits
accompanying this Section 3) and the Effective Date.
3.1 CORPORATE EXISTENCE; GOOD STANDING. Better Image is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia. Better Image is, or will be at Closing, duly qualified
to do business and is in good standing in the states where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified would have a material
adverse effect upon Better Image, and has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its assets,
properties and business. Better Image has in effect all federal, state, local
and foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now being conducted,
the absence of which, either individual or in the aggregate, would have a
material adverse effect on the business, operations, or financial condition of
Better Image.
3.2 CONSENTS, POWER AND AUTHORITY. Better Image has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement, and has
taken all actions required by law, its Certificate and Articles of
Incorporation, its Bylaws or otherwise, to authorize the execution, delivery and
performance of this Agreement and such related documents. This Agreement and all
agreements and documents executed and delivered in connection herewith have
been, or will be as of the Closing Date, duly executed and delivered by Better
Image as appropriate, and constitute or will constitute the legal, valid and
binding obligations of Better Image enforceable against Better Image in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and the consummation of the transactions contemplated
hereby will not violate, any provision of the Certificate of Incorporation or
Bylaws of Better Image or any provisions of, or result in the
-15-
16
acceleration of, any obligation under any mortgage, lien, lease, agreement,
instrument, order, arbitration, award, judgment or decree to which Better Image
is a party or by which it is bound.
3.3 CAPITAL STOCK. The issuance and delivery by Better Image of
shares of the common stock of Better Image in connection with the Merger will
be, as of the Closing Date, duly authorized by all necessary corporate action on
the part of Better Image. The shares of Better Image common stock to be issued
in connection with the Merger, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable.
3.4 LEGAL PROCEEDINGS. There is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative or tax proceeding, nor any order, decree or judgment, in
progress, pending, or threatened against or relating to Better Image or the
business or operations of Better Image, nor does Better Image know or have
reason to be aware of any basis for the same.
3.5 ACCURACY OF INFORMATION. No representations, warranties or
covenants of Better Image or the members, officers or directors of Better Image,
nor any statement, list or certificate furnished or to be furnished to the
Company and the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any material untrue
statement of fact or omits or will omit to state a material fact necessary to
make the statements contained therein not misleading in light of the
circumstances under which they were made.
3.6 NO VIOLATION. Th execution, delivery and performance by Better
Image of this Agreement or any agreements required hereby to be executed by
Better Image will not, to the best of Better Image's knowledge, constitute a
violation of any statute, ordinance, judgment, order, decree, regulation or rule
of any court, governmental authority or arbitrator or any license, permit or
franchise applicable or relating to the Center.
3.7 SUBSTANTIALLY SIMILAR TERMS. This Agreement, and all
agreements previously and subsequently entered into by Better Image with all
cosmetic and reconstructive surgical practices affiliated with Better Image
contain substantially similar terms.
SECTION 4. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly and severally, agree that
between the date hereof and the Closing Date:
4.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
-16-
17
4.2 BUSINESS OPERATIONS. Except as specifically contemplated by
this Agreement, the Company and the Shareholders shall operate the Company's
business in the ordinary course. The Company shall not enter into any lease,
contract, indebtedness, commitment, purchase or sale or acquire or dispose of
any capital asset except in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve the business and assets of
the Company intact and shall not take any action that would have an adverse
effect on the business or assets of the Company, including without limitation,
any action the primary purpose or effect of which is to generate or preserve
cash; provided that the Company may continue to operate in the ordinary course
of business. The Company and the Shareholders shall use their best efforts to
preserve intact the relationships with payors, customers, suppliers, patients
and others having significant business relations with the Company. The Company
shall collect its receivables and pay its trade payables in the ordinary course
of business. The Company shall not introduce any new method of management,
operations or accounting. On the Closing Date, the Company shall not be engaged
in the practice of cosmetic and reconstructive surgery and shall not provide
cosmetic and reconstructive services.
4.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit Better Image and its authorized representatives reasonable access to, and
make available for reasonable inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit Better Image and its authorized representatives to inspect and make
copies of all documents, records and information with respect to the business or
assets of the Company as Better Image or its representatives may request. The
Company and the Shareholders shall promptly notify Better Image in writing of
(a) any notice or communication relating to a default or event that, with notice
or lapse of time or both, could become a default, under any contract, commitment
or obligation to which the Company is a party, and (b) any material adverse
change in the Company's business, financial condition or the conditions of its
assets.
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
4.5 ACQUISITION PROPOSAL. The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including, without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing.
-17-
18
4.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take whatever steps are necessary to pay or
fund completely for any accrued benefits, where applicable, or vested accrued
benefits for which the Company or any entity might have liability arising from
any salary, wage, benefit, bonus, vacation pay, sick leave, insurance,
employment tax or similar liability of the Company to any employee or other
person or entity (including, without limitation, any Company Plan and any
liability under employment contracts with the Company) allocable to services
performed prior to the Closing Date.
4.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of Better Image, except as required by law, increase the cash
compensation of any Shareholder or other employee or independent contractor of
the Company, adopt, amend or terminate any compensation plan, employment
agreement, independent contractor agreement, employee policies and procedures or
employee benefit plan, take any action that could deplete the assets of any
employee benefit plan, or fail to pay any premium or contribution due or file
any report with respect to any employee benefit plan, or take any other actions
with respect to its employees or employment matters which might have an adverse
effect upon the Company, its business, assets or prospects.
4.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company, nor will any
repurchase of any of the Company's capital stock be approved or effected.
4.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including, without
limitation, the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
4.10 ACCOUNTING AND TAX MATTERS. The Company will not change in any
material respect the accounting methods or practices followed by the Company
(including any material change in any assumption underlying, or any method of
calculating, any bad debt, contingency or other reserve), except as may be
required by generally accepted accounting principles. The Company will duly,
accurately and timely (with regard to any extensions of time) file all returns,
information statements and other documents relating to taxes of the Company
required to be filed by it, and pay all taxes required to be paid by it, on or
before the Closing Date.
4.11 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of _____________ an
amendment to and/or a restatement of the Company's Articles of Incorporation and
shall take such other action as may be necessary to convert itself into a
general business corporation in accordance with all applicable laws, rules and
regulations. Shareholders shall form a new professional entity (the
-18-
19
"New Corporation") on or before Closing under which it shall conduct its
cosmetic and reconstructive surgery practice and which new entity shall own any
assets of the cosmetic and reconstructive surgery practice required by
applicable law to be owned by the cosmetic and reconstructive surgery practice.
SECTION 5. COVENANTS OF BETTER IMAGE.
Better Image agrees that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. Better Image shall use its best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and provisions. Better Image will use its best
efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including, without limitation, the filing with the
appropriate government officials of all necessary documents in form approved by
counsel for the parties to this Agreement.
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. Better
Image shall use its best efforts to secure all necessary approvals and consents
of third parties to the consummation of the transactions contemplated hereby.
SECTION 6. BETTER IMAGE CONDITIONS PRECEDENT.
The obligations of Better Image hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall have been
true and correct in all respects when initially made and shall be true and
correct in all respects as of the Closing Date.
6.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
6.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
6.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business or
prospects of the Company shall have occurred since the Balance Sheet Date.
-19-
20
6.5 DUE DILIGENCE REVIEW. By June 30, 1999, Better Image shall
have completed a due diligence review of the business, operations and financial
statements of the Company, the results of which shall be satisfactory to Better
Image in its sole discretion.
6.6 APPROVAL BY THE BOARD OF DIRECTORS. This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of Better Image or a committee thereof.
6.7 SERVICE AGREEMENT. On or before the Closing Date, the New
Corporation shall execute and deliver to Better Image a Service Agreement (the
"Service Agreement"), in substantially the form attached hereto as Exhibit 6.7,
pursuant to which Better Image will provide management services to the New
Corporation.
6.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company will terminate, and will cause each licensed employee that has a written
existing employment agreement with the Company to terminate his or her
employment agreement with the Company, and execute a separation and release
agreement ("Separation and Release Agreement"). Each Shareholder of the Company
will execute an employment agreement (the "Employment Agreements") with the New
Corporation, each in form and substance attached hereto as Exhibit 6.8.
6.9 CONSENTS AND APPROVALS. The Company and the Shareholders shall
have obtained all necessary government and other third-party approvals and
consents.
6.10 CLOSING DELIVERIES. Better Image shall have received all
documents, duly executed in form satisfactory to Better Image and its counsel,
referred to in Section 8.1.
6.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its Shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases that are not approved by Better Image.
6.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with _________________ law.
6.13 PUBLIC OFFERING OR FIRM UNDERWRITING. Better Image shall have
completed on or before June 30, 1999, an initial public offering (the "IPO") for
the sale of at least $25,000,000 of the common stock of Better Image.
6.14 NO CHANGE IN WORKING CAPITAL. There shall have been no
material change in the Working Capital of the Company.
-20-
21
6.15 LEGISLATIVE AND LEGAL DEVELOPMENTS. No legislation,
regulations, or other legal developments have occurred or been instituted that
would have a material adverse effect, or present a material risk of an adverse
effect, regarding the contemplated transactions.
SECTION 7. THE COMPANY'S AND THE SHAREHOLDERS' CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Better Image contained herein shall have been true and correct in
all respects when initially made and shall be true and correct in all respects
as of the Closing Date.
7.2 COVENANTS AND CONDITIONS. Better Image shall have performed
and complied with all covenants and conditions required by this Agreement to be
performed and complied with by Better Image prior to the Closing Date.
7.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
7.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 8.2.
7.5 INITIAL PUBLIC OFFERING. Better Image shall have completed the
IPO for the sale of at least $25,000,000 of common stock of Better Image on or
before June 30, 1999.
7.6 LEGISLATIVE AND LEGAL DEVELOPMENTS. No legislation,
regulations, or other legal developments have occurred or been instituted that
would have a material adverse effect, or present a material risk of an adverse
effect, regarding the contemplated transactions.
7.7 MATERIAL ADVERSE CHANGE. No material adverse change to the
business, finances, plans or prospects of Better Image shall have occurred prior
to the contemplated transactions.
7.8 OWNERSHIP OF COMMON STOCK. The percentage of Common Stock
collectively held by all of the cosmetic and reconstructive surgical practices
affiliated with Better Image, including the Shareholders, immediately prior to
the exchange of Common Stock for cash (20%) and immediately prior to the initial
public offering (the "IPO") shall be sixty-five percent (65%).
-21-
22
SECTION 8. CLOSING DELIVERIES.
8.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior to
the Closing, the Company and the Shareholders shall deliver to Better Image the
following, all of which shall be in a form satisfactory to counsel to Better
Image:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement;
(b) executed original Separation and Release Agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the New Corporation
authorizing the execution, delivery and performance of the Service Agreement and
all Employment Agreements, each certified by the authorized representative of
the New Corporation as being true and correct copies of the original thereof;
(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Company;
(g) if applicable, a certificate of the Secretary of the
New Corporation certifying as to the incumbency of the directors and officers of
the New Corporation and as to the signatures of such directors and officers who
have executed documents delivered at the Closing on behalf of the New
Corporation;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of __________________ establishing that the
Company is in existence and is in good standing to transact business in its
state of incorporation;
(i) non-foreign affidavits executed by the Company and
each Shareholder;
-22-
23
(j) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5;
(k) the resignations of the directors and officers of the
Company as requested by Better Image;
(l) a Shareholder Release in form attached hereto as
Exhibit 8.1(l) executed by each Shareholder;
(m) such other instruments and documents as reasonably
requested by Better Image to carry out and effect the purpose and intent of this
Agreement; and
(n) a Receipt of Better Image Stock in form attached
hereto as Exhibit 8.1(n).
8.2 DELIVERIES OF BETTER IMAGE. At or prior to the Closing, Better
Image shall deliver to the Company the following, all of which shall be in a
form satisfactory to counsel to the Company and the Shareholders, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of Better Image (or a committee thereof) authorizing the execution, delivery and
performance of this Agreement and all related documents and agreements each
certified by the Secretary as being true and correct copies of the original
thereof;
(d) certificates of the President of Better Image, dated
as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of Better Image contained herein; (ii) as to the
performance of and compliance by Better Image with all covenants contained
herein; and (iii) certifying that all conditions precedent of Better Image to
the Closing have been satisfied;
(e) a certificate of the Secretary of Better Image
certifying as to the incumbency of the directors and officers of Better Image
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of Better Image;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Georgia establishing that Better Image is
in existence and is in good standing; and
(g) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose and
intent of this Agreement.
-23-
24
SECTION 9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
9.1 NATURE AND SURVIVAL. Unless a party had knowledge of any
misrepresentation or breach of warranty as of the Closing Date of the other
party, all statements contained in this Agreement or in any Exhibit attached
hereto, any agreement executed pursuant hereto, and any certificate executed and
delivered by any party pursuant to the terms of this Agreement, shall constitute
representations and warranties of the Company and the Shareholders, jointly and
severally, or of Better Image, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and for a period of one
(1) year following the Closing Date. Each party covenants with the other parties
not to make any claim with respect to such representations and warranties,
against any party after the date on which such survival period shall terminate.
After the Closing Date, with respect to all breaches of warranties and
representations herein, each party's sole remedy with respect to a breach of a
warranty and representation shall be indemnification pursuant to this Section 9.
9.2 INDEMNIFICATION BY BETTER IMAGE. BETTER IMAGE (FOR PURPOSES OF
THIS SECTION 9.2 AND, TO THE EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"),
SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND THEIR RESPECTIVE AGENTS AND
EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE COMPANY AND THE SHAREHOLDERS,
FOR PURPOSES OF THIS SECTION 9.2 AND, TO THE EXTENT APPLICABLE, SECTION 9.4,
BEING REFERRED TO AS "INDEMNIFIED PERSON"), HARMLESS FROM AND AGAINST ANY AND
ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF OR RESULTING FROM ANY
BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT
CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT,
CERTIFICATE OR OTHER INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR
HEREUNDER. IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY
ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON
HEREBY AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
9.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE
EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"), JOINTLY AND
-24-
25
SEVERALLY, SHALL INDEMNIFY AND HOLD BETTER IMAGE AND ITS RESPECTIVE OFFICERS,
DIRECTORS, SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING
BETTER IMAGE, FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE EXTENT APPLICABLE,
SECTION 9.4, BEING REFERRED TO AS "INDEMNIFIED PERSON") HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER, AND, WITH RESPECT TO ALL TIMES PRIOR TO THE
CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM THE INDEMNITOR'S
MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE COMPANY AND FROM ANY
ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS AND INDEPENDENT
CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS, AND WITH RESPECT TO (i) ANY
VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR CONSULTANTS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR FEDERAL LAWS GOVERNING
HEALTHCARE FRAUD AND ABUSE, OR ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR
RESULTING FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR, WHETHER ON OR AFTER
THE CLOSING DATE, (ii) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, (iii) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS
AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) INCURRED IN
CONNECTION WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE EXECUTED IN
CONNECTION HEREWITH, (iv) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN
LIABILITIES, (v) ANY CLAIM AGAINST OR LIABILITY OF THE COMPANY THAT IS OF A
NATURE THAT, IF KNOWN AT THE CLOSING WOULD HAVE BEEN REQUIRED TO HAVE BEEN
DISCLOSED PURSUANT TO THIS AGREEMENT, AND (vi) ANY LIABILITIES THAT ARE PAST DUE
AS OF THE CLOSING DATE, THAT ARE NOT REFLECTED ON THE BALANCE SHEET, THAT ARE
NOT INCURRED IN THE ORDINARY COURSE OF BUSINESS AND THAT ARE OTHERWISE EXCLUDED
PURSUANT TO THE TERMS OF THIS AGREEMENT. IN CONNECTION WITH INDEMNITOR'S
OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR SHALL REIMBURSE EACH
INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE INCURRED BY SUCH
INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON HEREBY AGREES IN
WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS
FINALLY JUDICIALLY
-25-
26
DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT ENTITLED TO INDEMNIFICATION
HEREUNDER.
9.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may, at its
own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to employ
separate counsel at Indemnitor's expense and to control its own defense of such
action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
9.5 CERTAIN TAX MATTERS.
(a) Shareholders shall prepare and file or cause to be
prepared and filed any tax returns, statements and reports ("Tax Returns") of
the Company covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, reimburse, indemnify and hold harmless Better Image for all
taxes, and all related interest, penalties and additions to tax with respect to
taxable periods of the Company ending on or before the Closing Date.
(b) Better Image shall prepare and file or cause to be
prepared and filed any Tax Returns of Surviving Corporation covering taxable
periods which begin before the Closing Date and end after the Closing Date
("Straddle Periods") taking into account any reasonable reportable positions
advocated and requested by Shareholders for such Straddle Periods. Shareholders
shall, jointly and severally, within fifteen (15) days after payment thereof and
-26-
27
notice of such payment, reimburse, indemnify and hold harmless Better Image and
the Surviving Corporation for all Taxes for any Straddle Period, to the extent
related to the portion of the Straddle Period ending on the Closing Date. For
such purposes, the portion of any tax attributable to the portions of a Straddle
Period ending on the Closing Date and beginning after the Closing Date shall be
determined by apportioning the tax for the entire Straddle Period among such
periods based on the number of days in each such period, provided that, in the
case of taxes based upon or related to income or receipts, such portion shall be
the amount of tax which would have been due if the relevant Straddle Period
ended on the Closing Date.
(c) The Company, Shareholders and Better Image shall
reasonably cooperate with each other in connection with the reporting and filing
of Tax Returns pursuant to this Section 9.5 and any audit, litigation or other
proceeding with respect to taxes. Such cooperation shall include the provision
of copies, at the requesting party's expense, of records and information
relevant to any such Tax Return or proceeding and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder.
9.6 RIGHT OF SET-OFF. In the event of any breach of warranty,
representation, covenant or agreement by the Company or the Shareholders giving
rise to indemnification under Section 9.3 or Section 9.5 hereof, Better Image
shall be entitled to offset the amount of damages incurred by it as a result of
such breach of warranty, representation, covenant or agreement against any
amounts payable by Better Image to the Shareholders or their affiliates.
SECTION 10. TERMINATION.
This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by Better Image if at any time prior to
the Closing Date any representation or warranty of the Company or any
Shareholder contained in this Agreement or in any certificate or other document
executed and delivered by the Company or any Shareholder pursuant to this
Agreement is or becomes untrue or breached in any material respect or if the
Company or any Shareholder fails to comply in any material respect with any
covenant or agreement contained herein, and any such misrepresentation,
noncompliance or breach is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if at
any time prior to the Closing Date any representation or warranty of Better
Image contained in this Agreement or in any certificate or other document
executed and delivered by Better Image pursuant to this Agreement is or becomes
untrue in any material respect or Better Image fails to comply in any material
respect with any covenant or agreement contained herein and such
misrepresentation,
-27-
28
noncompliance or breach is not cured, waived or eliminated within twenty (20)
days of written notice thereof;
(d) by Better Image, the Company or the Shareholders if
the merger contemplated hereby or the IPO has not been consummated by June 30,
1999; or
(e) by Better Image at any time prior to June 30, 1999 if
Better Image determines in its sole discretion as the result of its legal,
financial and operational due diligence with respect to the Company, that such
termination is desirable and in the best interests of Better Image.
SECTION 11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
The Shareholders recognize and acknowledge that they had in the past,
currently have, and in the future may possibly have, access to certain
confidential information of Better Image and Surviving Corporation that is a
valuable, special and unique asset of Better Image's and Surviving Corporation's
businesses. The Shareholders hereby agree that they will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, unless (i) such information becomes
available to or known by the public generally through no fault of the
Shareholders, (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), the Shareholders shall, if
possible, give prior written notice thereof to the other parties hereto, and
provide such other parties hereto with the opportunity to contest such
disclosure, (iii) the Shareholders reasonably believe that such disclosure is
required in connection with the defense of a lawsuit against the disclosing
party, or (iv) the Shareholders are the sole and exclusive owner of such
confidential information as a result of the transactions contemplated hereunder
or otherwise. In the event of a breach or threatened breach by the Shareholders
of the provisions of this Section 11, Better Image or Surviving Corporation
shall be entitled to an injunction restraining the Shareholders from disclosing,
in whole or in part, such confidential information. Nothing herein shall be
construed as prohibiting Better Image or Surviving Corporation from pursuing any
other available remedy for such breach or threatened breach, including the
recovery of damages. The obligations of the parties under this Section 11 shall
survive the termination of this Agreement.
SECTION 12. INVESTMENT AND SECURITIES REPRESENTATIONS.
12.1 ECONOMIC RISK; SOPHISTICATION. The Shareholders represent that
they are able to bear the economic risk of an investment in Better Image common
stock acquired pursuant to this Agreement and can afford to sustain a total loss
of such investment and have such knowledge and experience in financial and
business matters that they are capable of evaluating the merits and risks of the
proposed investment and therefore have the capacity to protect their own
interests in connection with the acquisition of the Better Image common stock.
The Shareholders or their respective representatives have had an adequate
opportunity to ask
-28-
29
questions and receive answers from the officers of Better Image concerning any
and all matters relating to the background and experience of the officers and
directors of Better Image, the plans for the operations of the business of
Better Image, and any plans for additional acquisitions and the like. The
Shareholders or their respective representatives have asked any and all
questions in the nature described in the preceding sentence and all questions
have been answered to their satisfaction.
12.2 COMPLIANCE WITH LAW. Shareholders represent and warrant that
none of the shares of Better Image stock issued to Shareholders will be offered,
sold, assigned, pledged, hypothecated, transferred or otherwise disposed of,
except after full compliance with all of the applicable provisions of the 1933
Act and the rules and regulations of the SEC and applicable state securities
laws and regulations. All certificates evidencing shares of Better Image stock
issued hereunder shall bear the following restrictive legend, as well as any
legend required by the securities or blue sky laws of the state where Better
Image resides:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS
OF ANY JURISDICTION AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AFTER RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER APPLICABLE
SECURITIES LAWS.
12.3 ACCREDITED INVESTOR STATUS. Each of the Shareholders
represents and warrants that he or she is an "accredited investor" as defined in
Rule 501(a) under the 1933 Act.
SECTION 13. MISCELLANEOUS.
13.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to Better Image:
Better Image, Inc.
Two Midtown Plaza, Suite 1220
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
-29-
30
with a copy of each notice directed to Better Image to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxx, Esquire
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to the Company or the Shareholders:
------------------------------
------------------------------
------------------------------
Attn:
Facsimile:
Telephone:
with a copy to:
------------------------------
------------------------------
------------------------------
Attn:
Facsimile:
Telephone:
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
13.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist Better Image and Surviving Corporation in collecting
the accounts receivable of the Company acquired by Better Image in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such amounts
to Surviving Corporation.
13.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without
-30-
31
limiting the generality of the foregoing and whether or not such liabilities may
be deemed to have been incurred in the ordinary course of business, Better Image
and Surviving Corporation shall not be liable to or required to pay, either
directly or indirectly, any (a) fees and expenses of legal counsel, accountants,
auditors or other persons or entities retained by the Company, the New
Corporation or the Shareholders for services rendered in connection with
negotiating and closing the transactions contemplated by this Agreement or the
documents to be executed in connection herewith, whether or not such costs or
expenses are incurred before or after the Closing Date and the Shareholders
shall be liable for all such costs and expenses of the Company, and (b) local,
state and federal income taxes or other similar charges on income or gain
incurred by the Company, the New Corporation or the Shareholders as a result of
the transactions contemplated hereby.
13.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect to
the form and content of any such disclosures.
13.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
13.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
13.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein, and
all statements appearing therein shall be deemed disclosed for all purposes and
not only in connection with the specific representation in which they are
explicitly referenced.
13.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
13.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument.
-31-
32
13.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be assignable
by Better Image to any person, firm or corporation that controls or is under
common control with Better Image. Except as set forth above, no party shall have
the right to assign their respective rights and obligations hereunder without
the written consent of the other party, which consent shall not be unreasonably
withheld. In considering whether or not to grant or withhold consent, it shall
be deemed reasonable for the cosmetic and reconstructive surgery practice to
take into account the management style, philosophy and performance of such
assignee, in addition to any other commercially reasonable facts and
circumstances at the time. Subject to this provision, this Agreement shall be
binding upon the parties hereto, and their successors and assigns.
13.11 AMENDMENTS; WAIVER. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
13.12 ARBITRATION. Any controversy, dispute or disagreement arising
out of or relating to this Agreement, the breach thereof, or the subject matter
thereof, shall be settled exclusively by binding arbitration, which shall be
conducted in Georgia in accordance with the Commercial Arbitration Rules
administered by the American Arbitration Association before a single arbitrator
selected by the parties jointly. Judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
13.13 SERVICE OF PROCESS. Service of any and all process that may be
served on any party hereto in any suit, action or proceeding arising out of this
Agreement may be made in the manner and to the address set forth in Section 13.1
and service thus made shall be taken and held to be valid personal service upon
such party by any party hereto on whose behalf such service is made.
13.14 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable and this Agreement shall be construed and
enforced as if such provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect. In lieu of such
provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
13.15 KNOWLEDGE. For purposes of this Agreement, "knowledge" means
actual knowledge of any party, or its Shareholders, partners, officers and
directors, after reasonable investigation.
-32-
33
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
BETTER IMAGE, INC.
By:
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title :
-------------------------------
COMPANY:
--------------------------------------
By:
----------------------------------
Name:
---------------------------------
Title:
-------------------------------
SHAREHOLDERS:
By:
----------------------------------
Name:
By:
----------------------------------
Name:
By:
----------------------------------
Name:
-33-
34
ANNEX I
MERGER CONSIDERATION
The consideration to be received by the Shareholders pursuant to the
Agreement (the "Merger Consideration") is payable as follows:
Better Image hereby agrees to pay to the Shareholders Better Image
common stock and cash totaling an amount equal to one hundred (100%) of the
Company's Adjusted Gross Revenues (as hereinafter defined) for the previous
calendar year, less the amount, if any, of liabilities of the Company assumed by
the Surviving Corporation in connection with the transactions contemplated by
this Agreement, with the actual amount to be determined upon completion of an
initial public offering of Better Image's common stock (the "IPO") (as finally
determined, the "Purchase Price"). The Purchase Price shall be paid as follows:
(a) 20% of the Purchase Price shall be paid in cash or
immediately available funds at Closing; and
(b) The remainder of the Purchase Price to be paid to the
Shareholders in stock of Better Image to be valued at the time of the IPO, which
IPO shall occur simultaneously with the Closing.
As used herein, the term "Adjusted Gross Revenue" shall be determined
in accordance with generally accepted accounting principles and shall mean all
fees and charges recorded or booked by or on behalf of the Company as a result
of professional cosmetic and reconstructive services personally furnished to
patients by the Surgeon's and those under the Surgeon's supervision and other
fees or income generated in their capacity as professionals after any
adjustments for uncollectible accounts, professional courtesies and other
activities that do not generate a collectible fee.
-34-
35
INDEX TO EXHIBITS
Exhibit Description
------- -----------
2.1 Capitalization of the Company; Partnership/Joint Venture
Agreements
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.13 Legal Proceedings
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Accounts Payable
2.19 Debt
2.20 Insurance Policies
2.21 Employee Benefit Plans
2.28 Banking Relations
2.31 Payors
3.5 Legal Proceedings
6.7 Form of Service Agreement
6.8 Form of Employment Agreement
10.1(m) Shareholder Release
10.1(o) Receipt of Better Image Stock
-35-
