REAFFIRMATION, RATIFICATION AND AMENDMENT AGREEMENT
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December 22, 2006
Laurus Master Fund, Ltd.
c/o Laurus Capital Management, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the (a) Securities Purchase Agreement, dated as of June 30,
2006 between ▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company") in favor
of Laurus Master Fund, Ltd., a Cayman Islands company ("Laurus") (as amended,
modified or supplemented from time to time, the "Securities Purchase
Agreement"), (b) the Subsidiary Guaranty, dated as of June 30, 2006 made by
▇▇▇▇▇▇▇ Advanced Aesthetics, Inc., a Delaware corporation ("KAA"), Advanced
Aesthetics Sub, Inc. a Delaware corporation ("AAI"), Advanced Aesthetics, LLC, a
Delaware limited liability company ("AAL"), ▇▇▇▇▇▇▇ Advanced Aesthetics, LLC, a
Delaware limited liability company ("▇▇▇▇▇▇▇ Advanced"), Anushka PBG, LLC, a
Delaware limited liability company ("Anushka PBG"), Anushka Boca LLC, a Delaware
limited liability company ("Anushka Boca"), Wild Hare, LLC, a Delaware limited
liability company ("Wild Hare"), ▇▇▇▇▇▇▇▇ Corporation, a Florida corporation
("▇▇▇▇▇▇▇▇"), Anushka PBG Acquisition Sub, LLC, a Delaware limited liability
company ("Anushka Acquisition"), Anushka Boca Sub, LLC, a Delaware limited
liability company ("Boca Acquisition") and Wild Hare Acquisition Sub, LLC, a
Delaware limited liability company ("Wild Hare Acquisition" and together with
KAA, AAI, AAL, ▇▇▇▇▇▇▇ Advanced, Anushka PBG, Anushka Boca, Wild Hare, Dischino,
Anushka Acquisition and Boca Acquisition, the "Subsidiaries") in favor of Laurus
Master Fund, Ltd., a Cayman Islands company ("Laurus") (as amended, modified or
supplemented from time to time, the "Subsidiary Guaranty"), (c) Master Security
Agreement dated as of June 30, 2006, made by the Company and the Subsidiaries in
favor of Laurus (as amended, modified or supplemented from time to time, the
"Master Security Agreement") (d) Stock Pledge Agreement dated as of June 30,
2006, made by the Company, KAA, Anushka PGB, Anushka Boca, Wild Hare and
▇▇▇▇▇▇▇▇ in favor of Laurus (as amended, modified or supplemented from time to
time, the "Stock Pledge Agreement"); (e) the Intellectual Property Security
Agreement dated as of June 30, 2006, made by the Company, KAA, ▇▇▇▇▇▇▇ Advanced
and AAL in favor of Laurus (as amended, modified or supplemented from time to
time, the "IP Security Agreement); and (f) the Secured Term Note dated as of
June 30, 2006, issued by the Company to the Purchaser in the original principal
amount of $25,000,000 (as amended, modified or supplemented from time to time,
the "Existing Note", and together with the Securities Purchase Agreement, the
Subsidiary Guaranty, the Master Security Agreement, the Stock Pledge Agreement
and the IP Security Agreement, collectively, the "Existing Agreements").
To induce Laurus to provide additional financial accommodations to the
Company evidenced by (i) that certain Subordinated Secured Term Note, dated the
date hereof, made by the Company in favor of Laurus (as amended, modified or
supplemented from time to time, the
"New Laurus Term Note"), (ii) the Subordinated Securities Purchase Agreement
referred to in the New Laurus Term Note (as amended, modified or supplemented
from time to time, the "New Laurus Purchase Agreement"), (iii) the Related
Agreements referred to in, and defined in, the New Laurus Purchase Agreement
(the agreements set forth in the preceding clauses (i) through (iii), inclusive,
collectively, the "New Laurus Agreements"), each of the Company and each
Subsidiary hereby:
(a) represents and warrants to Laurus that it has reviewed and
approved the terms and provisions of each of the New Laurus Agreements and the
documents, instruments and agreements entered into in connection therewith;
(b) acknowledges, ratifies and confirms that all indebtedness
incurred by, and all other obligations and liabilities of, each of the Company
and each Subsidiary under each of the New Laurus Agreements are (i)
"Obligations" under, and as defined in the Subsidiary Guaranty, (ii)
"Obligations" under, and as defined in, the Master Security Agreement; (iii)
"Indebtedness" under, and as defined in, the Stock Pledge Agreement; and (iv)
"Obligations" under, and as defined in, the IP Security Agreement;
(c) acknowledges, ratifies and confirms that each of the New
Laurus Agreements are "Documents" under, and as defined in, each of the
Subsidiary Guaranty, the Master Security Agreement and the Stock Pledge
Agreement;
(d) acknowledges, ratifies and confirms that all of the terms,
conditions, representations and covenants contained in the Existing Agreements,
as modified herein, are in full force and effect and shall remain in full force
and effect after giving effect to the execution and effectiveness of each of the
New Laurus Agreements and this Reaffirmation, Ratification and Amendment
Agreement;
(e) represents and warrants that no offsets, counterclaims or
defenses exist as of the date hereof with respect to any of the undersigned's
obligations under any Existing Agreement;
(f) acknowledges, ratifies and confirms the grant by each of the
Company and each Subsidiary to Laurus of a security interest in the assets of
(including the equity interests owned by) each of the Company and each
Subsidiary respectively, as more specifically set forth in the Existing Security
and Guaranty Agreements; and
(g) agree s with Laurus that the Existing Agreements are hereby
amended as follows:
(i) that Section 1 of the Securities Purchase Agreement is hereby
amended and restated to state as follows:
1. AGREEMENT TO SELL AND PURCHASE. Pursuant to
the terms and conditions set forth in this Agreement, on the
Closing Date (as defined in Section 3), the Company shall sell to
the Purchaser, and the Purchaser shall purchase from the Company,
the Note. The sale of the Note on the Closing Date shall be known
as the "Offering". The Note will mature on the Maturity Date (as
defined in the Note). Collectively, the Note and Warrants,
together with the Warrant Shares (as
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hereinafter defined), are referred to as the "Securities". Upon
repayment in full of the unpaid principal due under the Note and
the New Laurus Term Note (as defined in the Reaffirmation),
together with accrued and unpaid interest thereon and all other
accrued and unpaid amounts due thereunder (collectively, the
"Note Amounts"), the Master Security Agreement, Subsidiary
Guaranty, Stock Pledge Agreement and IP Security Agreement and
the security interests in the Collateral pledged thereunder (and
as defined therein) shall automatically terminate and be of no
further force or effect. Capitalized terms used and not otherwise
defined herein shall have the meanings respectively assigned to
them in the applicable Related Agreement, including (without
limitation) the Reaffirmation, Ratification and Amendment
Agreement among the Company, the Subsidiaries and the Purchaser
dated on, about or as of December 21, 2006 (the "Reaffirmation").
(ii) As certain of the Schedules to the New Laurus Purchase Agreement
provide updated information, to the extent each Schedule to the
Securities Purchase Agreement (an "Existing Schedule") has a
counterpart annexed to the New Laurus Purchase Agreement (a "New
Schedule), the Securities Purchase Agreement is hereby amended by
deleting each Existing Schedule and replacing it with its
counterpart New Schedule.
(iii) Section 3.1 of the Existing Note is hereby amended by the
addition of the following new paragraph immediately following the
final subsection thereof
Notwithstanding anything to the contrary in this Section 3.1, it
shall not be an Event of Default or Default hereunder if a
payment default occurs under the New Laurus Term Note (as defined
in the Reaffirmation) as a result of the Company's compliance
with the applicable terms of any subordination agreement to which
the Company and Laurus are both parties.
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This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York.
Very truly yours,
▇▇▇▇▇▇▇.▇▇▇, INC.
BY:
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NAME:
TITLE:
ADDRESS:
▇▇▇▇▇▇▇ ADVANCED AESTHETICS, INC.
BY:
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NAME:
TITLE:
ADDRESS:
ADVANCED AESTHETICS SUB, INC.
BY:
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NAME:
TITLE:
ADDRESS:
ADVANCED AESTHETICS, LLC
BY:
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NAME:
TITLE:
ADDRESS:
▇▇▇▇▇▇▇ ADVANCED AESTHETICS, LLC
BY:
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NAME:
TITLE:
ADDRESS:
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ANUSHKA PBG, LLC
BY:
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NAME:
TITLE:
ADDRESS:
ANUSHKA BOCA LLC
BY:
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NAME:
TITLE:
ADDRESS:
WILD HARE, LLC
BY:
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NAME:
TITLE:
ADDRESS:
▇▇▇▇▇▇▇▇ CORPORATION
BY:
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NAME:
TITLE:
ADDRESS:
ANUSHKA PBG ACQUISITION SUB, LLC
BY:
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NAME:
TITLE:
ADDRESS:
ANUSHKA BOCA SUB, LLC
BY:
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NAME:
TITLE:
ADDRESS:
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WILD HARE ACQUISITION SUB, LLC
BY:
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NAME:
TITLE:
ADDRESS:
ACKNOWLEDGED AND AGREED TO BY:
LAURUS MASTER FUND, LTD.
BY:
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NAME:
TITLE:
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