EXHIBIT 99.1
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is entered into as of December
31, 2001, among THE PLASTIC SURGERY COMPANY, a Georgia corporation (the
"Borrower"), Paul and Beverly Refkin, Steve Refkin and Sherman Clay
(collectively, the "Lenders").
RECITALS
A. Pursuant to that certain Stock Purchase Agreement dated as of
November 15, 2000, by and among Borrower, the Lenders and Florida Center for
Cosmetic Surgery, Inc., a Florida corporation ("FCCS"), Borrower acquired all of
the issued and outstanding capital stock of FCCS (the "FCCS Shares") and, in
connection therewith, (i) issued to the Lenders secured promissory notes (the
"Secured Notes") in the aggregate principal amount of $4,100,000, as amended on
December 1, 2001, by the First Amendment to the Secured Promissory Notes, and
(ii) issued to the Lenders unsecured promissory notes (the "Unsecured Notes") in
the aggregate principal amount of $1,000,000.
B. The payment of the obligations under (i) the Secured Notes, (ii) any
amendment, modification, renewal or extension of the Secured Notes and (iii) any
future indebtedness of Borrower to Lenders are secured by first priority
security interest in all of the assets of FCCS (the "FCCS Assets") and the FCCS
Shares pursuant to the terms of a Stock Pledge Agreement and a Security
Agreement entered into between each of the Lenders and the Borrower
(collectively, the "Existing Security Agreements"). The Secured Notes and the
Unsecured Notes are sometimes referred to collectively as the "Existing Notes."
C. Subject to the terms and conditions of this Agreement, the Lenders
have agreed to enter into a new financing described herein.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties to this Agreement
agree as follows:
SECTION 1
PAYMENT OF THE INDEBTEDNESS
---------------------------
1.1 ACKNOWLEDGEMENT OF AMOUNTS OWED WITH RESPECT TO THE INDEBTEDNESS.
Borrower hereby acknowledges and agrees that the entire amount of the
indebtedness with respect to the Existing Notes (collectively, the
"Indebtedness") is due and payable to the Lenders as described in the Existing
Notes and is not subject to any offset, defense, counterclaim, or claim of
recoupment by Borrower.
1.2 CONTINUED VALIDITY OF THE EXISTING AGREEMENTS UNTIL THE EFFECTIVE
DATE; RESTRUCTURING OF THE INDEBTEDNESS. Borrower hereby expressly acknowledges
and agrees that the Existing Notes and the Existing Security Agreements
(collectively, the "Existing Loan Documents") are valid, binding agreements and
are enforceable against Borrower. The Lenders are prepared to modify and amend
the Existing Notes, and to restructure the Indebtedness as more particularly
described in paragraph 1.4 of this Agreement, provided that the conditions
precedent specified in paragraph 1.3 below are satisfied on or before March 1,
2002. However, until the occurrence of the Effective Date (as defined in
paragraph 1.3 of this Agreement), the obligations of Borrower shall continue to
be governed by the Existing Loan Documents. In that regard for example, until
the Effective Date, Borrower shall continue to be obligated to make all payments
of interest pursuant to the Existing Notes.
1.3 CONDITIONS PRECEDENT TO MODIFICATION OF THE EXISTING NOTES AND
RESTRUCTURING OF THE INDEBTEDNESS. The Lenders hereby agree that if all of the
following conditions precedent have been satisfied by March 1, 2002, the Lenders
will restructure the Indebtedness as specified in paragraph 1.4 of this
Agreement:
(a) All parties hereto have signed this Agreement and the
fully executed document has been delivered to the Lenders;
(b) Borrower has paid all interest owed pursuant to the terms
of the Existing Notes through and including the Effective Date;
(c) Borrower has executed and delivered to the Lenders the
Restructured Secured Notes and the Convertible Notes (as defined in paragraph
1.4 of this Agreement);
(d) Borrower has paid Lenders pro rata the aggregate amount of
$200,000 by check or wire transfer of funds from the bank account of FCCS to
reduce the aggregate principal amount of the Secured Notes from $4,100,000 to
$3,900,000;
(e) Borrower has executed and delivered to Lenders the
Warrants (as defined in paragraph 1.4 of this Agreement); and
(f) Borrower shall have publicly announced the Borrower's
decision to move the Borrower's corporate headquarters and principal place of
business to Fort Lauderdale, Florida, and Borrower shall have commenced the
process to relocate (the "Florida Relocation").
The date by which all of the above-described conditions precedent have been
satisfied (provided that such date is prior to March 1, 2002) is referred to in
this Agreement as the "Effective Date." The documents and instruments referred
to in this paragraph 1.3 (and the restructuring of the Indebtedness described in
paragraph 1.4 of this Agreement) shall not be effective or binding unless all of
the above-referenced conditions precedent have been satisfied by March 1, 2002.
1.4 RESTRUCTURING OF THE INDEBTEDNESS.
(a) On the Effective Date, the Secured Notes shall be amended
and restated, in their entirety, to read as set forth in the form of secured
promissory note (the "Restructured Secured Notes") attached hereto as EXHIBIT A,
and the Unsecured Notes shall be amended and restated, in their entirety, to
read as set forth in the form of convertible promissory note (the "Convertible
Notes") attached hereto as EXHIBIT B, which shall give effect to the
restructuring of Borrower's obligations under the Existing Notes contemplated by
this Agreement. The initial aggregate principal amount of the Restructured
Secured Notes shall be Three Million Nine Hundred Thousand Dollars ($3,900,000),
and the initial aggregate principal amount of the Convertible Notes shall be One
Million Ninety-Three Thousand Eight Hundred Thirty Three Dollars and Nineteen
Cents ($1,093,833.19). On the Effective Date, upon receipt of the Restructured
Secured Notes and the Convertible Notes, the Lenders hereby agree to deliver to
the Borrower for cancellation the Existing Notes.
2
(b) The payments of the obligations under the Restructured
Secured Notes shall continue to be secured by a first priority security interest
in the FCCS Assets and the FCCS Shares and the Existing Security Agreements
shall continue in full force and effect. Additionally, Borrower agrees that all
monies collected by Borrower from its affiliates, excluding FCCS, shall be
deposited into an account with a bank in Fort Lauderdale, Florida and Borrower
and any one Lender shall be signatories on said account. Borrower first shall
make the payments to Lenders required by the Restructured Secured Notes and the
balance of any funds shall be used by Borrower in the ordinary course of
business. Notwithstanding the foregoing, provided that Borrower is not in
default under the Restructured Secured Notes, there shall be no further
restrictions on the funds or cash flow of FCCS.
(c) On the Effective Date, the Borrower shall issue to the
Lenders warrants (the "Warrants") to purchase the aggregate of 500,000 shares of
the Borrower's Common Stock (the "Warrant Shares") at an exercise price equal to
the average closing price per share of Common Stock of Borrower as reported by
the American Stock Exchange for the five (5) trading days ending on the day
immediately prior to the date of this Agreement. The Warrants shall be in the
form attached hereto as EXHIBIT C and shall be issued in the name of each of the
Lenders based upon their pro rata interest in the Restructured Secured Notes.
The Lenders shall have the registration rights with respect to the Warrant
Shares provided in EXHIBIT D attached hereto and incorporated herein.
(d) Borrower represents that it has obtained the prior
approval of its Board of Directors to add two (2) new members, selected by
Lenders, to serve on Borrower's Board of Directors commencing upon the execution
of this Agreement by all parties.
(e) Prior to March 31, 2001, Borrower shall have completed the
Florida Relocation and failure to complete the Florida Relocation shall
constitute an Event of Default under Section 5(b) of the Restructured Secured
Notes and the Convertible Notes.
SECTION 2
GENERAL TERMS
-------------
2.1 NOTICES. For purposes of this Agreement, any notice required or
permitted shall be in writing and is effective when actually delivered (which
shall include facsimile transmission) as specified below:
To Borrower: The Plastic Surgery Company
509 East Montecito Street
Santa Barbara, California 93103
(805) 963-0400
Facsimile: (805) 965-8230
Attn: Dennis Condon
and
3
Stradling Yocca Carlson & Rauth
302 Olive Street
Santa Barbara, California 93101
(805) 564-0065
Facsimile: (805) 564-1044
Attn: David E. Lafitte, Esq.
and
To Lenders: Paul and Beverly Refkin
Steve Refkin
Sherman Clay
c/o Florida Center for Cosmetic Surgery, Inc.
Galleria Professional Building
915 Middle River Drive
Ft. Lauderdale, FL 33304
(800) 274-5476
Facsimile: (954) 565-1285
Attn: Paul Refkin
and
Kipnis & Kahn
30 North LaSalle Street, Suite 2024
Chicago, Illinois 60602-2504
(312) 726-3700
Facsimile: (312) 726-4644
Attn: Les Kipnis, Esq.
2.2 CAPTIONS. Any captions for the sections of this Agreement are for
convenience only and do not control or affect the meaning of construction of any
of the provisions of this Agreement.
2.3 SEVERABILITY. If any term, condition, or provision of this
Agreement, or any other documents or instrument referred to in this Agreement,
is held invalid for any reason, such offending term, condition, or provision
shall be stricken therefrom, and the remainder thereof shall not be affected
thereby.
2.4 AMENDMENTS. This Agreement may be amended or modified only by a
written agreement signed by an authorized representative of Borrower and the
Lenders that by its terms expressly supersedes, modified, amends, or alters this
Agreement.
2.5 NEGOTIATED AGREEMENT. This Agreement is a negotiated agreement. In
the event of any ambiguity in this Agreement, such ambiguity shall not be
subject to a rule of contract interpretation that would cause the ambiguity to
be construed against any of the parties to this Agreement.
4
2.6 VOLUNTARY AND ENTIRE AGREEMENT. The only consideration for the
execution of this Agreement is the consideration expressly recited herein. This
Agreement and the other agreements and instruments referred to in this Agreement
set forth and constitute the entire agreement among the parties hereto with
respect to the subject matter of this Agreement. No oral promise or agreement of
any kind of nature, other than those that have been reduced to writing and set
forth herein, has been made between or among any of the other parties to this
Agreement.
2.7 CONSTRUCTION AND CONFLICT WITH OTHER AGREEMENTS. In the event of
any conflict between the terms of this Agreement and terms of any other
agreements or instruments referred to in this Agreement (including, but not
limited to the Existing Loan Documents), the terms of this Agreement shall
control.
2.8 WAIVERS. No waiver of any provision of this Agreement, or any other
agreement between or among the parties hereto, nor consent to any failure by
Borrower to comply with such provisions, shall be effective unless the same
shall be in writing and signed by Lender, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
2.9 APPLICABLE LAW. This Agreement and any other instrument or
agreement required or contemplated hereunder shall be governed by, and construed
under, the laws of the state of Florida with regard to principles of conflicts
of law.
5
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the
date first set forth above.
BORROWER: THE PLASTIC SURGERY COMPANY
By:
------------------------------------
------------------------------------
------------------------------------
LENDERS: /S/ Paul Refkin
---------------------------------------
Paul Refkin
/S/ Beverly Refkin
---------------------------------------
Beverly Refkin
/S/ Steve Refkin
---------------------------------------
Steve Refkin
/S/ Sherman Clay
---------------------------------------
Sherman Clay
FCCS: FLORIDA CENTER FOR COSMETIC SURGERY
By: /S/ Paul Refkin
------------------------------------
Paul Refkin, Chief Executive Officer
6
EXHIBIT D
REGISTRATION RIGHTS
1. REGISTRATION.
- -- -------------
Borrower will within ninety (90) days the Effective Date file a
registration statement for resale of the Warrant Shares, and Borrower shall keep
such registration effective at all times until each Lender has either sold all
the Warrant Shares or each Lender is able to use Rule 144 of the Securities Act
to sell all the Shares.
2. OBLIGATIONS OF BORROWER.
- -- ------------------------
When applicable within the terms hereof and as required to effect any
registration hereunder within the limitations hereof, Borrower shall, as
expeditiously and as reasonably possible, use its reasonable best efforts, to:
(a) Prepare, file and cause to become effective with the Securities and
Exchange Commission (the "SEC") a registration statement (the "Registration
Statement"), and reasonable and necessary amendments to such Registration
Statement, to include the Shares. Such Registration Statement may include other
shares of Borrower's common stock for sale.
(b) Enter into a written underwriting agreement in customary form and
substance reasonably satisfactory to Borrower, the Lenders and the managing
underwriter or underwriters of the public offering of such securities, if the
offering is to be underwritten in whole or in part.
(c) Furnish to the Lenders and to the underwriters of the securities
being registered such reasonable number of copies of the Registration Statement,
preliminary prospectus, final prospectus, and all amendments and supplements
thereto, in conformity with the requirements of the Securities Act or as such
underwriters may reasonably request in order to facilitate the public offering
of such securities.
(d) Register and qualify the securities covered by such Registration
Statement under such state securities or blue sky laws of such jurisdictions
deemed necessary by Borrower, and prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements and to take
such other actions as may be necessary to maintain such registration and
qualification as necessary.
(e) Notify the Lenders, at any time when a prospectus relating to the
Warrant Shares covered by the Registration Statement is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. Borrower will promptly
amend or supplement the Registration Statement to correct any such untrue
statement or omission.
(f) Notify the Lenders of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for the purpose.
(g) Do such other actions or make available to the Lenders such
documents as reasonably required under the Securities Act and as reasonably
requested in relation to the registration of securities covered by the
Registration Statement.
3. EXPENSES.
- -- ---------
With respect to each inclusion of the Warrant Shares held by the
Lenders in a registration statement pursuant to Section 1 and 2 of this Exhibit
B, all fees, costs and expenses of and incidental to such registration statement
and any underwritten public offering in connection therewith shall be borne
entirely by Borrower; provided, however, that the Lenders shall bear their pro
rata share of any underwriting discounts and commissions, state transfer taxes
and brokerage commissions, this pro rata share to be paid solely from the
proceeds from the sale of Warrant Shares, and with the Lenders not otherwise
liable to pay these amounts. The fees, costs and expenses to be borne by
Borrower as provided in the preceding sentence shall include, without
limitation, all registration, filing, qualification and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for Borrower, fees
and disbursements of counsel for the underwriter or underwriters (if Borrower
and/or the Lenders are required to bear such fees and disbursements), and all
legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the Shares to be
offered are to be registered or qualified. All costs, fees and expenses incurred
in connection with all additional registrations and qualifications shall be
borne pro rata by Borrower, the Lenders and any other shareholders of Borrower
participating in such registration, this pro rata share to be paid solely from
the proceeds from the sale of Warrant Shares, and with the Lenders not otherwise
liable to pay these amounts.
4. INDEMNIFICATION.
- -- ----------------
(a) INDEMNIFICATION BY BORROWER. Borrower shall indemnify and hold
harmless the Lenders and each of their attorneys, accountants and any
underwriter (as defined in the Securities Act or the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act")), for the Lenders, from
and against, and shall reimburse the Seller and each such attorney, accountant,
and underwriter with respect to, any and all claims, actions, demands, losses,
damages, liabilities, costs and expenses to which the Lenders or any such
attorney, accountant, or underwriter may become subject under the Securities
Act, the Exchange Act or otherwise insofar as such claims, actions, demands,
losses, damages, liabilities, costs or expenses arise out of or are caused by
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement, any prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
Borrower shall not be liable in any such case to the extent that any such claim,
action, demand, loss, damage, liability, cost or expense arises out of or is
based upon an untrue statement or omission so made in reliance upon and in
strict conformity with written information furnished by the Lenders or any of
their attorneys or accountants specifically for use in the preparation thereof.
(b) INDEMNIFICATION BY THE LENDERS. The Lenders, both jointly and
severally, shall indemnify and hold harmless Borrower and each of its officers,
directors, employees, attorneys and accountants, any underwriter (as defined in
the Securities Act or the Exchange Act) for Borrower and each person, if any,
who controls Borrower within the meaning of the Securities Act or the Exchange
Act from and against, and shall reimburse Borrower and each such officer,
director, employee, attorney, accountant, underwriter and controlling person
with respect to, any and all claims, actions, demands, losses, damages,
liabilities, costs and expenses to which Borrower or such officer, director,
employee, attorney, accountant, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act or otherwise insofar as such
claims, actions, demands, losses, damages, liabilities, costs or expenses arise
out of or are caused by any untrue statement or alleged untrue statement of any
material fact contained in any registration statement, any prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in each case to the extent, but only to the extent, that any such untrue
statement or omission was so made in reliance upon and in strict conformity with
written information furnished by any Seller or any of their, attorneys or
accountants specifically for use in the preparation thereof.
(c) INDEMNIFICATION PROCEDURES. Promptly after receipt by an
indemnified party pursuant to the provisions of Section 4(a) or 4(b) hereof of
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party shall, if a claim thereof
is to be made against the indemnifying party pursuant to the provisions of such
Sections 4(a) or 4(b), notify the indemnifying party of the commencement
thereof; provided, however, that the failure to so notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may have to
the indemnified party otherwise than hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to participate
in, and to the extent that it may wish, jointly assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election to so assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party pursuant to the provisions of Section 4(a) or 4(b) for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of investigation
(except if representation of such indemnified party by counsel to the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between the indemnified party and any other party represented by such
counsel). No indemnifying party shall be liable to an indemnified party for any
settlement of any action or claim without the consent of the indemnifying party.