Exhibit 10.3
CONSENT AND AMENDMENT
CONSENT AND AMENDMENT, dated as of May 9, 2006 (this "Consent"), by and
among XxxxXxx.xxx Inc., a Delaware corporation (the "Parent"), Xxxxxxx Advanced
Aesthetics, Inc., a Delaware corporation formerly known as Advanced Aesthetics,
Inc. (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"), XxXxxxxx Corporation, a Florida corporation ("XxXxxxxx"), and
Xxxxxxx Advanced Aesthetics, LLC, a Delaware limited liability company formerly
known as Advanced K, LLC ("KAA, LLC"; each of KAA, LLC, Anushka PBG, Anushka
Boca, Wild Hare Acquisition and XxXxxxxx being herein called a "Co-Borrower";
the Co-Borrowers, the Parent and the Old Parent being herein collectively called
the "Obligors"), Technology Investment Capital Corp., a Maryland corporation, as
Collateral Agent and Purchaser (for the purposes of this Consent, the
"Purchaser").
R E C I T A L S
A. Reference is hereby made to that certain Note and Warrant Purchase
Agreement, dated as of March 31, 2004, among the Old Parent, the Co-Borrowers
and the Purchaser (the "Original Purchase Agreement"). 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 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, an Amendment to Note and
Warrant Purchase Agreement dated as of November 29, 2005, a Limited Waiver and
Amendment dated as of December 20, 2005, and an Amendment and Consent dated as
of February 21, 2006 (the foregoing amendments, waivers and consents being
herein collectively called the "Amendments"), certain amendments were made to
the Original Purchase Agreement, certain obligations under the Original Purchase
Agreement were waived by the Purchaser, and the Parent was joined as a party.
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.
C. The Obligors have requested, and the Purchaser has agreed, subject to
the terms and conditions set forth herein, to consent to the making on the date
hereof of a junior subordinated loan to the Parent in the aggregate principal
amount of $4,838,710 (the "Subordinated Loan") by Xxxxxxx Investments LLC,
Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, inc., Premium
Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot
Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC,
and North Sound Legacy International Ltd. (collectively, the "Subordinated
Lenders") pursuant to a Loan Agreement dated as of the date hereof in the form
set forth as Exhibit A hereto (as amended from time to time hereafter, the
"Subordinated Loan Agreement"), and those certain Subordinated Promissory Notes
dated the date hereof in the form set forth as
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Exhibit B hereto (as amended from time to time hereafter, the "Subordinated
Notes"). The obligations of the Parent under the Subordinated Loan Agreement and
the Subordinated Notes would be guaranteed by each of the subsidiaries of the
Parent listed in Exhibit A to the Subordinated Loan Agreement (the "Subordinated
Guarantors") pursuant to Unconditional Guaranties, in the form set forth in
Exhibit C hereto and dated as of the date hereof (collectively, as amended from
time to time hereafter, the "Subordinated Guaranties"; the Subordinated Loan
Agreement, the Subordinated Notes and the Subordinated Guaranties are
hereinafter collectively referred to as the "Subordinated Loan Documents"). On
the date hereof, and as a condition to the effectiveness of this Consent, the
Parent, the Subordinated Guarantors and the Subordinated Lenders are entering
into a Subordination Agreement with the Purchaser dated as of the date hereof in
the form of Exhibit D hereto.
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 Subordinated Loan. Subject to the due execution and delivery
on the date hereof of the Subordination Agreement by all parties thereto other
than the Purchaser, the Purchaser hereby consents to the execution and delivery
on the date hereof of the Subordinated Loan Documents by the respective parties
thereto and the extension of the Subordinated Loan to the Parent as provided for
therein. The term "Permitted Indebtedness" as defined in the Existing Purchase
Agreement shall on and after the date hereof be deemed amended to include the
Indebtedness and obligations incurred by the Parent and the Subordinated
Guarantors pursuant to the Subordinated Loan Documents.
2. Amendment to Definitions of "Consolidated Total Debt" and "Consolidated
Interest Expense". On and after the date hereof, the term "Consolidated Total
Debt" as defined in Section 1 of the Existing Purchase Agreement shall be deemed
amended to exclude all Indebtedness incurred by the Parent and its Subsidiaries
pursuant to the Subordinated Loan Documents, and the term "Consolidated Interest
Expense" as defined therein shall be deemed amended to exclude all interest
accrued in respect of the Subordinated Loan so long as such interest is not paid
in cash.
3. Amendment to Definition of "Change of Control". On and after the date
hereof, the term "Change of Control" as defined in Section 1 of the Existing
Purchase Agreement shall be deemed amended to include, in any event, any "Change
of Control" as such term is defined in the Subordinated Loan Agreement.
4. Waiver of Default Under Cash Balance Covenant. If and only if (i) the
financing contemplated by the Subordinated Loan Documents is consummated on the
date hereof and (ii) the Unrestricted Cash Balance is not less than $2,500,000
on the date hereof, the Purchaser hereby waives any Event of Default which may
have occurred by reason of the failure of the Co-Borrowers to comply with the
provisions of Section 7.6 of the Existing Purchase Agreement at any time prior
to the date hereof.
5. Representations and Warranties of the Obligors. Each of the Obligors
represents and warrants to the Purchaser that:
(a) After giving effect to this Consent, the representations and
warranties contained in Section 3 of the Existing Purchase Agreement are true in
all material respects on and as of the date hereof to the same extent as if made
on and as of the date hereof except to the extent that such representations and
warranties specifically relate to an earlier date, in which case they are true
in all material respects as of such earlier date.
(b) The execution, delivery and performance by each of the Obligors of
this Consent are within their respective corporate powers and have been duly
authorized by all necessary corporate action on the part of the board of
directors and stockholders of each respective Obligor. This Consent has been
duly executed and delivered by each of the Obligors and is the legal, valid and
binding obligation of each Obligor, enforceable against that Obligor, in
accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally and by general principles of equity.
(c) Neither the execution and delivery by any of the Obligors of this
Consent, nor the fulfillment of or compliance with the terms and provisions
hereof, will conflict with, or result in a breach or violation of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation of any Lien on any properties or assets of any Obligor pursuant to, the
Organizational Documents of such Obligor or any contract, agreement, mortgage,
indenture, lease or instrument to which such Obligor is a party or by which it
is bound or to which any of its assets are subject, or any statute, ordinance,
law, rule, regulation, order, writ, judgment, injunction, decree or award to
which such Obligor or any of its assets are subject.
(d) No consent, approval or authorization of or declaration, registration
or filing with any Governmental Authority or any nongovernmental Person,
including, without limitation, any creditor or stockholder of any Obligor, is
required in connection with the execution or delivery by such Obligor of this
Consent or the performance by such Obligor of its obligations hereunder, or as a
condition to the legality, validity or enforceability of this Consent or any
provision hereof.
6. Payment of Expenses. The Obligors shall promptly pay, or reimburse the
Purchaser for, all costs and expenses of the Purchaser incurred in connection
with the negotiation, preparation and execution of this Consent, including
without limitation the fees and cash disbursements of the Purchaser's special
counsel, Xxxxx Xxxxxxx LLP.
7. Effect of Amendment. It is hereby agreed that, except as specifically
provided herein, this Consent does not in any way affect or impair the terms,
conditions and other provisions of the Existing Purchase Agreement or any of the
other Transaction Documents, or the obligations of the Obligors thereunder, and
all terms, conditions and other provisions of the Existing Purchase Agreement
and the Transaction Documents shall remain in full force and effect except to
the extent specifically amended, modified or waived pursuant to the provisions
of this Consent.
8. Counterparts. This Consent may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed counterpart of a signature page of this Consent by telecopy or other
electronic means shall be effective as delivery of a manually
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executed counterpart of this Consent. Delivery of manually executed counterparts
of this Consent shall immediately follow delivery by telecopy or other
electronic means, but the failure to so deliver a manually executed counterpart
shall not affect the validity, enforceability, or binding effect hereof.
9. Governing Law. THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10. Headings. Section headings are included herein for convenience of
reference only and shall not constitute a part of this Consent for any other
purposes.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Consent as of
the day and year first written above.
XXXXXXX.XXX INC.
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer/Chairman
XXXXXXX ADVANCED AESTHETICS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer/Chairman
ANUSHKA PBG ACQUISITION SUB, LLC
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer/Chairman
ANUSHKA BOCA ACQUISITION SUB, LLC
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer/Chairman
WILD HARE ACQUISITION SUB, LLC
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer/Chairman
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XXXXXXXX CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer/Chairman
XXXXXXX ADVANCED AESTHETICS, LLC
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer/Chairman
TECHNOLOGY INVESTMENT CAPITAL CORP., as
Collateral Agent and Purchaser
By: /s/ Xxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
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EXHIBIT A TO CONSENT AND AMENDMENT
Form of Subordinated Loan Agreement
EXHIBIT B TO CONSENT AND AMENDMENT
Form of Subordinated Promissory Note
EXHIBIT C TO CONSENT AND AMENDMENT
Form of Unconditional Guaranty
EXHIBIT D TO CONSENT AND AMENDMENT
Form of Subordination Agreement
