EXHIBIT 10.42
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Execution Copy
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LIMITED WAIVER AND AMENDMENT
LIMITED WAIVER AND
AMENDMENT,
dated as of
December 20, 2005 (this
"Waiver and Amendment"), to that certain Note and Warrant
Purchase Agreement,
dated as of March 31, 2004 (the "Original
Purchase Agreement"), as amended by
the amendments and waivers hereinafter referred to, by and among Advanced
Aesthetics, Inc., a Delaware corporation (the
"Old Parent") and each of Anushka
PBG Acquisition Sub, LLC, a Delaware
limited liability
company ("Anushka PBG"),
Anushka Boca Acquisition Sub, LLC, a Delaware limited liability company
("Anushka Boca"), Wild Hare Acquisition Sub, LLC, a
Delaware limited liability
company ("Wild Hare Acquisition"),
DiSchino Corporation,
a Florida
corporation
("DiSchino"), and Advanced K, LLC, a Delaware limited liability company
("Advanced K, LLC"; each of Advanced K, LLC,
Anushka PBG,
Anushka Boca,
Wild
Hare Acquisition and DiSchino being herein called a "Co-Borrower"; the
Co-Borrowers and the Old Parent being herein collectively called the
"Obligors"), the other affiliates of the Old Parent listed on the signature
pages hereto (the "Other Guarantors"), Technology Investment Capital Corp., a
Maryland corporation, as Collateral Agent
(the "Collateral Agent") and Purchaser
(the "Purchaser"), and TrueYou.com, Inc., a Delaware corporation (the "New
Parent").
R E C I T A L S
A. Pursuant to the Original Purchase Agreement, the Purchaser
agreed to
purchase, subject to the satisfaction of certain conditions, senior secured
promissory notes due 2009 of the Co-Borrowers (the "Note") in a maximum
aggregate principal amount of
$10,000,000.
B. Pursuant to amendments dated May 30, 2004, June 29, 2004,
September
30, 2004, March 15, 2005 and July 11, 2005,
a Limited Waiver and Amendment dated
February 23, 2005, a Waiver and Amendment
dated as of August 30, 2005, a Limited
Waiver and Amendment dated as of October
26, 2005 (the "October Amendment"), and
an Amendment to Note and Warrant Purchase Agreement dated as of November 29,
2005 (the foregoing amendments and waivers being
herein collectively called the
"Amendments"), certain amendments were made to the
Original Purchase Agreement
and certain obligations under the Original
Purchase Agreement were waived by the
Purchaser. The Original Purchase Agreement as amended by the
Amendments
is
hereinafter referred to as the "Existing
Purchase Agreement".
Capitalized terms
used herein without definition shall have the
respective meanings
ascribed to
them in the Existing Purchase Agreement or in the Security
Agreement (as the
case may be).
C. Pursuant to a Share Exchange Agreement dated as of the date hereof
(the "Exchange Agreement") among the New Parent, the Old Parent and the
securityholders of the Old Parent signatory thereto, on the date hereof,
immediately prior to the execution of this Waiver and Amendment, the
securityholders of the Old Parent (including the Purchaser), with certain
exceptions, have transferred all securities of the
Old Parent owned by them to
the New Parent, in exchange for securities of the New Parent, as a result of
which the Old Parent has become a
subsidiary of the New Parent (such exchange of
securities and the other transactions
contemplated by the
Exchange Agreement to
occur on the date hereof being hereinafter collectively called the "Exchange
Transactions"). In connection therewith, on the date hereof the Purchaser
has
exchanged all of its outstanding warrants to purchase common stock of the Old
Parent for new warrants (the "New
Warrants")
to purchase
shares of the
common
stock, par
<PAGE>
value $.001 per share, of the New Parent
("TrueYou Common
Stock") and otherwise
containing substantially the same terms and
provisions as were contained in the
warrants so exchanged, all in accordance with the terms and provisions of the
Exchange Agreement.
D. Under the terms of the October Amendment, the parties thereto
agreed
in Sections 4, 5 and 7 thereof that the time for delivery by the Obligors of
certain monthly, quarterly and annual
financial statements of the Old Parent and
its Subsidiaries (the "Delayed Financial Statements") would be extended to
November 15, 2005. The Obligors failed to deliver the Delayed Financial
Statements on or prior to that date and did
not complete the
delivery thereof
until December 15, 2005.
E. The Obligors and the New Parent have requested, and the Purchaser
has agreed, to make certain amendments to, and to waive certain obligations
under, the Existing Purchase Agreement.
NOW, THEREFORE,
in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as
follows:
1. Consent to Amendment to Certificate of Incorporation.
The Purchaser
hereby consents to the adoption by the Old Parent of an amendment to its
Certificate of Incorporation increasing its authorized capital to 70,000,000
shares of common stock, which amendment became effective
on September 12, 2005,
and hereby irrevocably waives any Default or Event of Default
that may have
occurred by reason of such amendment.
2. Consent
to Change of Name of Old Parent. The Purchaser hereby
consents to the change of name of the Old
Parent to "Klinger Advanced Aesthetics
Inc.," and irrevocably waives any requirement of notice with respect to such
change. The Old Parent hereby consents to
the filing of such Uniform Commercial
Code financing statements or amendments thereto, and such other filings and
other actions as in the judgment of the Collateral Agent may be required to
perfect and preserve the Liens of the
Collateral Agent in
all Collateral of the
Old Parent now owned or hereafter acquired
or arising.
3. Waiver With Respect To Delivery of Delayed Financial Statements.
The
Purchaser hereby irrevocably waives any Default or Event of
Default resulting
from the failure of the Obligors to deliver
the Delayed Financial
Statements to
the Purchaser on or before November 15,
2005. In consideration
of such waiver,
the Company agrees that on each day during the period from and including
November 16, 2005 to but not including December 15, 2005 (the date on which
delivery of the Delayed Financial Statements to the Purchaser was
completed),
the outstanding principal amount of the Note shall
bear interest at the rate of
15% per annum, in lieu of the rate that
would otherwise apply pursuant to
Section 2.2(d)(i) or (ii) of the Existing Purchase Agreement as in effect
immediately prior to the date hereof (and the
provisions of Section
2.2(d)(i)
and (ii) of the Existing Purchase Agreement
and the corresponding
provisions of
the Note shall hereby be deemed amended to so provide with respect to such
period).
-2-
<PAGE>
4. Consent to Exchange
Transactions. The
Purchaser hereby consents to
the execution and delivery by the Old Parent of
the Exchange Agreement
and to
the performance by it of its obligations thereunder, and agrees that the
Exchange Transactions, if effected in accordance with the
terms of the Exchange
Agreement, will not constitute or be deemed to have resulted in a Change of
Control or a Default or Event of
Default. The New Warrant to be issued to the
Purchaser on the Closing Date shall be in the form of Exhibit A and, as
consideration for setting the Exercise Price
stated therein at $.001 per share,
the New Parent shall pay to the Purchaser on the date the New
Warrant is first
exercised in whole or in part a fully
earned and non-refundable fee in the
amount of $1,332.00.
5. Amendments to Transaction Documents. Effective on the date hereof,
the Existing Purchase Agreement, the Security Agreement and the Guaranty
Agreement are hereby amended as
follows:
(a) except where used
solely in connection
with a stated event
or
condition
occurring or period
ending prior to the date hereof,
the term
"Parent" as used
in the Existing Purchase Agreement shall be deemed to mean
and refer to the
New Parent;
(b) the term "Closing
Date" appearing at the
end of the definition
of "Change of
Control" appearing in Section 1 of the Existing Purchase
Agreement
is hereby deleted and there is inserted in lieu thereof the
phrase
"December
20, 2005 after giving effect to the transactions
contemplated
by the Share Exchange
Agreement dated as of such date among
the Parent,
Advanced Aesthetics, Inc. and the securityholders parties
thereto";
(c) the term "Guarantor" as used in the Existing Purchase
Agreement
and the
Guaranty Agreement shall be deemed to include
the New Parent in
addition to all
other Persons referred to by that term immediately prior to
the date
hereof;
(d) the term "Obligor"
as used in the Existing Purchase Agreement
and the
Guaranty Agreement shall be deemed to include
the New Parent in
addition to all
other Persons referred to by that term immediately prior to
the date
hereof;
(e)
the term "Grantor" as
used in the Security
Agreement shall be
deemed to
include the New Parent in addition to all other Persons
referred
to by that term
immediately prior to the date hereof;
(f) the Existing
Purchase Agreement
shall be deemed amended to add
the New Parent
as a party thereto,
as the "Parent" and a
"Guarantor" and
"Obligor"
thereunder;
(f) the Security
Agreement shall be
deemed amended to add
the New
Parent as a
party thereto and a "Grantor" thereunder; and
(g) the Guaranty
Agreement shall be deemed amended to add the
New Parent as a party thereto and a "
