AMENDMENT AND CONSENT
AMENDMENT AND CONSENT, dated as of February 21, 2006 (this
"Amendment"), 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 Amendment, 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, and a Limited Waiver
and Amendment dated as of December 20, 2005 (the foregoing amendments and
waivers 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, to make
certain amendments to the Existing Purchase Agreement and to consent to certain
transactions.
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. Amendment to Section 7.1. Section 7.1 of the Existing Purchase
Agreement is hereby deleted in its entirety and there is hereby inserted in lieu
thereof the following new Section 7.1:
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7.1 MINIMUM CONSOLIDATED EBITDA. The Co-Borrowers shall not,
at the end of any fiscal quarter, permit Consolidated EBITDA for the
four fiscal quarters ended on such date to be less than the amount set
forth below for such period:
-------------------------------------------- ---------------------------
FOUR FISCAL QUARTERS ENDED MINIMUM CONSOLIDATED EBITDA
-------------------------------------------- ---------------------------
June 30, 2007 $2,000,000
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September 30, 2007 and each fiscal quarter $6,500,000
thereafter
-------------------------------------------- ---------------------------
2. Amendment to Section 7.2. Section 7.2 of the Existing Purchase
Agreement is hereby deleted in its entirety and there is hereby inserted in lieu
thereof the following new Section 7.2:
7.2 CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA. For each
fiscal quarter, commencing June 30, 2006, the Co-Borrowers shall not
permit the ratio of Consolidated Total Debt to Consolidated EBITDA as
of the end of any fiscal quarter set forth below to be greater than the
ratio set forth below:
-------------------------------------------- ---------------------------
FOUR FISCAL QUARTERS ENDED CONSOLIDATED TOTAL DEBT TO
CONSOLIDATED EBITDA RATIO
-------------------------------------------- ---------------------------
June 30, 2007 5.00 to 1.00
-------------------------------------------- ---------------------------
September 30, 2007 and each fiscal quarter 2.00 to 1.00
thereafter
-------------------------------------------- ---------------------------
3. Amendment to Section 7.3. Section 7.3 of the Existing Purchase
Agreement is hereby deleted in its entirety and there is hereby inserted in lieu
thereof the following new Section 7.3:
7.3 CONSOLIDATED SENIOR DEBT RATIO. The Co-Borrowers shall not
permit the Consolidated Senior Debt ratio as of the end of any fiscal
quarter set forth below to be greater than the ratio set forth below:
------------------------------------------------ -----------------------
FISCAL QUARTER ENDED MINIMUM CONSOLIDATED
SENIOR DEBT RATIO
------------------------------------------------ -----------------------
March 31, 2007 15.00 to 1.00
------------------------------------------------ -----------------------
June 30, 2007 8.50 to 1.00
------------------------------------------------ -----------------------
September 30, 2007 and each fiscal quarter 2.00 to 1.00
thereafter
------------------------------------------------ -----------------------
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4. Amendment to Section 7.4. Section 7.4 of the Existing Purchase
Agreement is hereby deleted in its entirety and there is hereby inserted in lieu
thereof the following new Section 7.4:
7.4 MINIMUM UNIT EBITDAR. The Co-Borrowers shall not,
at the end of any fiscal quarter, permit Unit EBITDAR for any fiscal
quarter to be less than the amount set forth below for such fiscal
quarter:
----------------------------------------------- -----------------------
FISCAL QUARTER ENDED MINIMUM UNIT EBITDAR
----------------------------------------------- -----------------------
December 31, 2005 $1,600,000
----------------------------------------------- -----------------------
March 31, 2006 $2,000,000
----------------------------------------------- -----------------------
June 30, 2006 $2,250,000
----------------------------------------------- -----------------------
September 30, 2006 $2,250,000
----------------------------------------------- -----------------------
December 31, 2006 $2,250,000
----------------------------------------------- -----------------------
March 31, 2007 $2,350,000
----------------------------------------------- -----------------------
June 30, 2007 $2,350,000
----------------------------------------------- -----------------------
September 30, 2007 and each fiscal quarter $2,500,000
thereafter
----------------------------------------------- -----------------------
5. Amendment to Section 7.5. Section 7.5 of the Existing Purchase
Agreement is hereby deleted in its entirety and there is hereby inserted in lieu
thereof the following new Section 7.5:
7.5 MINIMUM UNIT FIXED CHARGE RATIO. The Co-Borrowers
shall not permit the Unit Fixed Charge Ratio for any fiscal quarter to
be less than the amount set forth below for such fiscal quarter:
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------------------------------------------- --------------------------
FISCAL QUARTER ENDED MINIMUM UNIT FIXED CHARGE
COVERAGE RATIO
------------------------------------------- --------------------------
December 31, 2005 1.10 to 1.00
------------------------------------------- --------------------------
March 31, 2006 1.20 to 1.00
------------------------------------------- --------------------------
June 30, 2006 1.40 to 1.00
------------------------------------------- --------------------------
September 30, 2006 1.40 to 1.00
------------------------------------------- --------------------------
December 31, 2006 1.40 to 1.00
------------------------------------------- --------------------------
March 31, 2007 1.50 to 1.00
------------------------------------------- --------------------------
June 30, 2007 1.50 to 1.00
------------------------------------------- --------------------------
September 30, 2007 and each fiscal 2.50 to 1.00
quarter thereafter
------------------------------------------- --------------------------
6. Amendment to Section 7.6. Section 7.6 of the Existing Purchase
Agreement is hereby deleted in its entirety and there is hereby inserted in lieu
thereof the following new Section 7.6:
7.6 MINIMUM UNRESTRICTED CASH BALANCE. The Co-Borrowers (a)
shall not permit the Unrestricted Cash Balance on December 31, 2005 to
be less than $9,500,000, and (b) shall not permit the Unrestricted Cash
Balance at any time after December 31, 2005 and on or prior to June 30,
2007 to be less than $2,500,000. For the purposes of this Section 7.6,
the term "UNRESTRICTED CASH BALANCE" means, at any time, the aggregate
amount of Cash and Cash Equivalents of the Parent and its Subsidiaries
at such time, excluding any such Cash or Cash Equivalents that are (i)
held in the Escrow Account, (ii) subject to any Lien (other than a Lien
created pursuant to the Transactions Documents), or (iii) the
disposition or use of which by the Parent or its Subsidiaries is
limited or restricted in any way pursuant to any escrow agreement or
other agreement or instrument (other than any of the Transaction
Documents other than the Escrow Account Control Agreement) to which the
Parent or any of its Subsidiaries is a party.
7. Amendment to Definition of Permitted Indebtedness.
(a) Clause (d) of the definition of the term "Permitted Indebtedness"
appearing in Section 1 of the Existing Purchase Agreement is hereby amended by
deleting the term "$400,000" in the proviso to such clause and inserting in lieu
thereof the term "$2,000,000".
(b) The Obligors hereby further agree that all amounts of Permitted
Indebtedness of the type described in clause (d) thereof as hereby amended
incurred by the Obligors after the date of this Amendment shall be treated as
Capital Expenditures, as defined in Section 1 of the Existing Purchase Agreement
as hereby amended, for all purposes thereof, including, without limitation,
Sections 6.3 and 6.4 thereof.
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8. Loans to Xxxx Xxxxxx and Atlantis Laboratories, Inc.
(a) Subject to the conditions set forth in subparagraph (b) of this
paragraph 8, the Purchaser hereby consents to the following transactions and
agrees that such transactions shall not be deemed to violate Section 6.7 or any
other provision of the Existing Purchase Agreement as amended by this Amendment:
(i) the extension of a construction loan in the maximum
principal amount of $650,000 by the Old Parent to Xxxx Xxxxxx and
Atlantis Laboratories, Inc., each having an address at 000 Xxxx Xxxxxx,
Xxxxxx, Xxxxx 00000 (collectively, the "Borrowers"), in order to
finance the construction by the Borrowers of certain facilities (the
"Facilities") to be used to produce certain cosmetic products to be
manufactured and sold in connection with the business of the Obligors,
such loan to be evidenced by a Construction Loan Agreement (the
"Construction Loan Agreement"), a Construction Loan Promissory Note
(the "Construction Loan Note"), and a Construction Deed of Trust,
Security Agreement, Assignment of Leases and Rents, and Fixture Filing
(the "Construction Deed of Trust"), all substantially in the forms set
forth in Exhibit A to this Amendment, with such additions, deletions
and changes as shall be approved in writing by the Purchaser (such
approval not to be unreasonably withheld or delayed); and
(ii) the extension of a loan in the maximum principal amount
of $450,000 by the Old Parent to the Borrowers in order to finance the
purchase by the Borrowers of certain real property on which the
Facilities are to be located (the "Property"), such loan to be
evidenced by a Loan Agreement (together with the Construction Loan
Agreement, the "Loan Agreements"), Promissory Note (together with the
Construction Loan Note, the "Loan Notes") and a Deed of Trust,
Assignment of Rents and Security Agreement (together with the
Construction Deed of Trust, the "Deeds of Trust"), all substantially in
the forms set forth in Exhibit B to this Amendment, with such
additions, deletions and changes as shall be approved in writing by the
Purchaser (such approval not to be unreasonably withheld or delayed).
(b) The effectiveness of the consent set forth in paragraph 8(a) hereof
shall be subject to the satisfaction (or waiver by the Purchaser in writing) of
the following conditions:
(i) the definitive versions of the loan documents referred to
in paragraph 8(a) shall be executed by all parties thereto, and the
initial disbursements of loan funds by the Old Parent thereunder, shall
occur not later than May 1, 2006;
(ii) at the time of the execution of such loan documents and
disbursements of loan funds referred to in the above clause (i), no
Default or Event of Default shall have occurred and be continuing;
(iii) simultaneously with the execution of such loan
documents, the Old Parent shall execute and deliver to the Purchaser an
Assignment of Contracts and Instruments substantially in the form of
Exhibit C hereto, shall pledge and deliver to the Purchaser the
originals of the Loan Notes, accompanied by appropriate undated bond
powers executed by the Old Parent in blank, and shall deliver originals
or copies of the fully executed
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Loan Agreements and all other agreements and documents executed in
connection therewith; the Old Parent shall promptly thereafter duly
record the Deeds of Trust and take all other actions necessary or
appropriate to create and perfect a first priority security interest
and lien in favor of the Old Parent in all real and personal property
constituting the Property and the Facilities; shall thereupon pledge
and deliver the originals of the Deeds of Trust to the Purchaser; and
all such Loan Notes, Deeds of Trust and other agreements and documents
shall be held by the Purchaser as Collateral Agent under the Security
Agreement, subject to the terms thereof; and
(iv) all advances of funds by the Old Parent under such loan
documents shall be treated as Capital Expenditures, as defined in
Section 1 of the Existing Purchase Agreement as hereby amended, for all
purposes thereof, including, without limitation, Sections 6.3 and 6.4
thereof.
9. Deposit of Additional Escrow Amount. On the date of this Amendment,
the Co-Borrowers shall deposit in the Escrow Account, to be maintained therein
and disposed of in accordance with the terms of the Escrow Account Control
Agreement, an additional amount in cash equal to $1,000,000.
10. Representations and Warranties of the Obligors. Each of the
Obligors represents and warrants to the Purchaser that:
(a) After giving effect to this Amendment, 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 Amendment 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 Amendment 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 each of the Obligors of this
Amendment, 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.
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(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 Amendment or the performance by such Obligor of its obligations
hereunder, or as a condition to the legality, validity or enforceability of this
Amendment or any provision hereof.
11. Effectiveness of Amendment; Payment of Expenses. This Amendment
shall become effective as of the date hereof upon the due execution hereof by
all parties hereto and satisfaction of the requirements of paragraph 9 hereof.
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 Amendment, including without limitation the
fees and cash disbursements of the Purchaser's special counsel, Xxxxx Xxxxxxx
LLP.
12. Effect of Amendment. It is hereby agreed that, except as
specifically provided herein, this Amendment 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 Amendment.
13. Counterparts. This Amendment 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 Amendment by telecopy or
other electronic means shall be effective as delivery of a manually executed
counterpart of this Agreement. Delivery of manually executed counterparts of
this Amendment 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.
14. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
15. Headings. Section headings are included herein for convenience of
reference only and shall not constitute a part of this Amendment 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 Amendment as
of the day and year first written above.
XXXXXXX.XXX, INC.
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
XXXXXXX ADVANCED AESTHETICS, INC.
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
ANUSHKA PBG ACQUISITION SUB, LLC
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
ANUSHKA BOCA ACQUISITION SUB, LLC
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
WILD HARE ACQUISITION SUB, LLC
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
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XXXXXXXX CORPORATION
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Executive Officer
XXXXXXX ADVANCED AESTHETICS, LLC
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Executive Officer
TECHNOLOGY INVESTMENT CAPITAL CORP.,
as Collateral Agent and Purchaser
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
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