Exhibit 10.1

 
MANAGEMENT SERVICES AGREEMENT

THIS MANAGEMENT SERVICES AGREEMENT (the “Agreement”) is made and entered into
effective as of December 20, 2005, by and between DRTATTOFF, LLC, a California
limited liability company (“Manager”) and William Kirby, D.O., an individual
(“Physician”).

RECITALS

A. Physician is licensed to practice osteopathic medicine in the State of
California, and has special expertise in the removal of tattoos.

B. Manager is a company specializing in providing management services to
healthcare professionals, and is experienced in providing management services to
practices of the type operated by Physician.

C. Physician desires to provide tattoo removal services at the “Practice Site,”
as such term is defined below, and Manager and Physician desire that Manager
provide management services to Physician on the terms and conditions contained
in this Agreement.

NOW, THEREFORE, the parties to this Agreement do hereby agree as follows:

1. Relationship of Physician and Manager.

a. Appointment of Manager. Physician hereby appoints Manager as the exclusive
manager of Physician’s tattoo removal practice (the “Practice”) at the “Practice
Site,” as such term is defined in Section 2.e. below, and at any other Practice
Sites at which Physician provides or supervises tattoo removal services, and
Manager shall provide to Physician the technical, management, administrative and
support services and equipment described in Section 2 below.
 
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b. Retention of Authority and Control. Notwithstanding the authority granted to
Manager in this Agreement, Manager and Physician agree that Physician shall at
all times exercise overall control of the operations of the Practice, and shall
retain legal responsibility for all professional medical and ethical matters in
connection with the Practice. Manager’s duties for Physician under this
Agreement shall be purely non-medical and administrative in nature, and Manager
shall in no way exercise any clinical judgment as to the nature of professional
or ancillary services or type of practitioner that any patient requires or
receives. Rather, Physician shall be solely responsible for and have complete
authority, supervision and control over the provision of professional healthcare
services performed by Physician and the “Licensed Health Professionals,” as such
term is defined below in Section 2.b.iv., as Physician, in his sole discretion,
deems appropriate and in accordance with all applicable laws and regulations.
This Agreement shall in no way be construed to mean or suggest that Manager is
engaged, or permitted to engage, in the practice of osteopathic medicine. Any
delegation of authority by Physician to Manager that would require or permit
Manager to engage in the practice of osteopathic medicine shall be prohibited
and deemed ineffective and Physician shall retain and have sole authority at all
times with respect to all such matters.

2. Manager’s Services. Manager shall provide the following management services
(collectively, “Services”) with respect to the Practice conducted by Physician:

a. Day-to-Day Management. Physician hereby engages Manager as his sole and
exclusive agent to manage and administer the day-to-day business functions
related to the Practice conducted by Physician at the Practice Site. Manager’s
performance of the Services shall involve such expenditure of time as Manager
determines is necessary or advisable in its reasonable discretion.

b. Personnel.

i. Manager shall employ or engage and provide to Physician all administrative
personnel, including a receptionist, secretarial and transcribing personnel,
billing personnel, purchasing personnel, janitorial and maintenance personnel,
and such other administrative and management personnel that Manager determines
to be necessary or appropriate, after consultation with Physician, for the
efficient and proper operation of Physician’s Practice. All such administrative
and non-licensed personnel engaged by Manager shall be referred to collectively
as the “Support Personnel.”
 
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ii. Manager shall be responsible for the hiring, supervising, training,
disciplining, and termination of the Support Personnel, including all
determinations regarding the retention, promotion, demotion, awarding of
bonuses, salary adjustments and other matters affecting the terms and conditions
of the employment or engagement of the Support Personnel in accordance with and
subject to such personnel policies as may be adopted from time to time by
Manager. Staffing levels, work hours and shifts and employee benefit programs
shall be established and implemented by Manager in accordance with the policies
and funding arrangements developed by Manager.

iii.  Manager shall be responsible for compensating the Support Personnel, and
shall provide payroll accounting services and maintain employee records,
workers’ compensation insurance, unemployment insurance, and such employee
benefit programs for the Support Personnel as it determines are necessary or
advisable in its sole discretion.

iv.  Physician shall be responsible for employing or engaging, at Physician’s
sole cost and expense, additional physicians or licensed allied health
professionals, including but not limited to Registered Nurses and/or Physician
Assistants (collectively, the “Licensed Health Professionals”), which Physician
shall supervise in accordance with all applicable laws and regulations. If
Physician engages Licensed Health Professionals, Manager shall administer the
payment of compensation of the Licensed Health Professionals, including
providing payroll and accounting services, preparing checks for the signature of
Physician and maintaining employee records. Manager shall also administer the
payment of all applicable vacation pay, sick leave, and retirement, health and
life insurance benefits provided by Physician, at Physician’s sole cost and
expense, to the Licensed Health Professionals.
 
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c. Billing and Collection.

i. Manager shall provide all billing and collection services that Manager
determines to be necessary or appropriate in connection with the charges
resulting from the performance of services by Physician and the Licensed Health
Professionals. Specifically, Manager shall prepare patient invoices; input
billing information; prepare computerized billing statements and submit bills
and claims to patients and third party payors; respond to telephone inquiries
from patients and payors concerning their bills; diligently pursue collection of
unpaid bills for up to 180 days from the initial billing, and, thereafter; refer
such unpaid bills to collection agencies or attorneys for collection, the cost
and expense of which shall be borne solely by Physician. Manager shall deposit
all payments into the “Operational Account” described in Section 3 below.
Manager shall provide monthly and year-to-date reports showing all billings,
collections, and accounts receivable and the aging of same.

ii. Physician hereby appoints Manager for the term of this Agreement as his true
and lawful attorney-in-fact for the following purposes:

1. To bill in Physician’s name and on his behalf: (a) patients; (b) third party
payors and (c) any other persons or entities who are obligated to pay for
services performed by Physician and the Licensed Health Professionals.

2. To collect in the name of Physician and on his behalf all charges, fees or
other amounts resulting from or related to the professional and ancillary
services performed by Physician and the Licensed Health Professionals.

3. To receive all payments arising from the professional and ancillary services
performed by Physician and the Licensed Health Professionals; take possession of
and endorse in the name of Physician all cash, notes, checks, money orders,
insurance payments and any other instruments received as payments of accounts
receivable of Physician, however arising. Physician shall immediately forward to
Manager any such payments that may come into the possession of Physician or the
Licensed Health Professionals. Physician hereby expressly authorizes and grants
Manager the right to open any mail or messengered envelopes or packages sent by
any Practice patient or third party payor which lists Physician or any Licensed
Health Professional as the addressee. Physician agrees that he shall not attempt
to stop, hinder, interfere with, re-direct or divert any claims, payments or
explanation of benefits, whether submitted or paid in a written form, by
facsimile or electronically, during the term of this Agreement or after its
expiration.
 
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4. To deposit all “Gross Revenues,” as such term is defined in Section 3.a.
below, directly into the Operational Account, in accordance with Section 3
below.

iii. Physician acknowledges and agrees that Manager shall have discretion to
compromise, settle or write off any amount due from a patient or third party
payor, or determine not to appeal a denial by any third party payor of any claim
for payment, for any particular professional service rendered by or on behalf of
Physician.

d. Supplies, Equipment, and Furniture.

i. Manager shall be responsible for furnishing all management information
systems (collectively, the “Management Information System”), office supplies,
equipment, furnishings, furniture and personal property, including all
telephones, postage and duplication services, stationery, forms and other items
(collectively, the “Office Equipment”) which Manager, after consultation with
Physician, determines to be necessary or appropriate for the operation of
Physician’s Practice. Manager also shall be responsible for providing, either by
purchase or by lease, such medical equipment (the “Medical Equipment”) as
Physician and Manager determine is necessary or appropriate for the operation of
the Practice.

ii. Manager shall arrange for the maintenance and repair of the Office Equipment
and the Medical Equipment. If Manager determines, after consultation with
Physician, that any item of existing the Office Equipment or Medical Equipment
utilized in Physician’s practice is worn out or obsolete and that it is
unreasonable, impossible or economically impractical to repair, and if Manager,
after consultation with Physician, further determines that such item is
necessary or appropriate for the efficient operation of Physician’s practice,
then Manager shall purchase Office Equipment or Medical Equipment which is the
same model or functional equivalent as the item of equipment to be replaced for
use in the Practice.

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e. Practice Site.

i. Manager shall provide to Physician, for his non-exclusive use in operating
the Practice, the premises located at 8670 Wilshire Boulevard, Suite 203,
Beverly Hills, California 90211, together with all appurtenances, improvements
and fixtures (collectively, the “Practice Site”). Changes in location of the
Practice Site may be effected by Manager as of the expiration of any lease or
other arrangement by which Manager leases or occupies the Practice Site or at
any other time as may be approved in writing by Manager after consultation with
Physician. Further, Manager shall have the exclusive right to manage Physician’s
Practice at any additional location at which Physician provides tattoo removal
services, and such additional locations shall be considered a “Practice Site”
for purposes of this Agreement, and Physician’s performance of tattoo removal
services at such additional Practice Site(s) shall be subject to the terms and
conditions contained in this Agreement. Physician acknowledges that this
Agreement and Manager’s provision of any Practice Site to Physician gives
Physician only a conditional right to use the Practice Site, which right shall
automatically expire, without notice or further action by Manager, upon the
expiration or early termination of this Agreement for any reason, and Physician
shall immediately vacate the Practice Site upon such expiration or early
termination. Physician further acknowledges that no leasehold interest is
created or conveyed by this Agreement, and that no landlord-tenant relationship
is created by this Agreement or otherwise exists between Manager and Physician.

ii. Manager shall provide or arrange for the provision of all of the lessee
maintenance and repair obligations for the Practice Site that are required to be
performed pursuant to the terms of the Practice Site lease between Manager and
its landlord, as well as any and all other maintenance and repairs to the
Practice Site which Manager, after consultation with Physician, determines to be
necessary.
 
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iii. Manager shall provide or arrange for all utilities and building services
related to the utilization by Physician and the Licensed Health Professionals of
the Practice Site.

iv. Physician acknowledges that Manager is the owner of the name, “Dr. Tattoff,”
and any related names or derivations thereof (collectively, the “Name”) and has
the right to use the Name in connection with Manager’s business. Manager hereby
grants to Physician a revocable license to use the Name in connection with the
practice conducted by Physician at the Practice Site. Physician acknowledges
that this Agreement gives Physician only a conditional right to use the Name,
which right shall automatically expire, without notice or further action by
Manager, upon the expiration or early termination of this Agreement for any
reason, and Physician shall immediately cease using the Name in connection with
its practice at the Practice Site. Further, Physician agrees to not use the Name
in connection with any other business or professional practice he may conduct
without the prior written consent of Manager. Physician shall cooperate fully
with Manager in completing, renewing and filing any documents that must be
submitted to the Osteopathic Medical Board of California, and any fictitious
business name statement related to the Name, to evidence Physician’s agreement
to the provisions contained in this Section 7.

f. Advertising and Marketing.  Upon request by Physician, Manager shall assist
Physician in arranging for third parties to provide advertising and marketing
services (collectively, “Advertising Services”) in connection with the tattoo
removal services provided by Physician at the Practice Site. In assisting
Physician, Manager is acting solely in its capacity as an administrator to
Physician. At no time shall Manager hold itself out as providing, or actually
provide, tattoo removal services on behalf of Physician. In engaging or
employing personnel to provide Advertising Services, Physician shall ensure that
all such Advertising Services conducted on behalf of Physician shall be
performed in accordance with all applicable laws, regulations, rules and
guidelines, including but not limited to those promulgated by the Osteopathic
Medical Board of California. Physician shall directly pay the providers of such
Advertising Services for the actual cost and expense of all Advertising Services
performed on behalf of Physician.
 
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g. Additional Services. If Physician desires that Manager provide services in
addition to those listed in this Section 2, and Manager desires to provide such
additional services, the parties may negotiate for Manager to provide such
additional services on such terms and for such additional compensation as the
parties may agree upon in writing.
 
3. Bank Account.

Manager shall deposit all payments into a checking account established in
Physician’s name at a bank or other financial institution (“Agent”) mutually
agreed upon by the parties (the “Operational Account”). The Operational Account
shall require two (2) signatures for all drafts, checks and withdrawals: (a) the
signature of a representative of Manager; and (b) the signature of Physician.
Manager shall deposit into the Operational Account all cash, checks, money
orders and other instruments received by Physician in connection with the
operation of the Practice. Physician shall pay Manager the amount of
compensation due on a semi-monthly basis, as set forth below in Section 4.b.

4. Compensation for Services.

a. Management Fee. Manager and Physician acknowledge and agree that Manager
shall incur substantial time, costs and expense in performing the Services on
behalf of Physician, and that such costs and expenses will vary over the term of
this Agreement. Additionally, the parties acknowledge and agree that the level
and intensity of the Services will increase as the volume of Physician’s
Practice increases. Manager and Physician acknowledge that the Fee, as such term
is defined below, has resulted from arm’s length negotiations between the
parties and does not take into account the volume or value of referrals or
business otherwise generated between the parties, and is consistent with fair
market value for the Services, including the Office Equipment, Medical Equipment
and Practice Site provided by Manager to Physician. Accordingly, as compensation
in full for the performance of the Services hereunder, Physician shall pay
Manager a fee of forty-five percent (45%) of Physician’s Gross Revenues received
during each calendar month during the term of this Agreement (the “Management
Fee”). As used herein, the term “Gross Revenues” shall be defined to mean all
amounts received by Physician relating to any and all professional services and
ancillary services related to tattoo removal rendered by Physician and the
Licensed Health Professionals to patients at the Practice Site, whether such
revenues are received in cash from patients, private or prepaid insurance, other
third party payors or any other source. If Physician or the Licensed Health
Professionals directly receive any Gross Revenues, Physician shall immediately
deliver any and all such Gross Revenues to Manager for deposit into the
Operational Account.
 
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b. Payment Date.  Due to its substantial investment and the costs and expenses
Manager has incurred and will incur in performing its duties hereunder, the
Management Fee shall be payable as follows: On the first (1st) and fifteenth
(15th) days of each month during the term of this Agreement, Manager shall
calculate the portion of the Gross Revenues in the Operational Account to be
paid to Company for the Services it provides hereunder, and Manager shall
prepare a check, drawn on the Operational Account, in the amount to be paid to
Manager (the “Manager Check”). Company shall also calculate the portion of the
Gross Revenues in the Operational Account that Physician is entitled to retain
and shall prepare a check, drawn on the Operational Account, in the amount to be
paid to Physician (the “Physician Check”). Manager shall deliver to Physician
the Physician Check, together with its written calculation of the amount due to
each party. Manager shall retain the Manager Check in payment of its Management
Fee. If Physician fails or refuses to pay, or prevents payment of the Management
Fee, or any portion thereof, to Manager when due, Manager shall be entitled to
interest on the overdue amount at the greater of ten percent (10%) per annum or
the highest amount allowed by law, such interest to commence accruing as of the
due date of such payment. The foregoing remedies of Manager, together with all
other remedies of Manager set forth herein, shall be cumulative and in addition
to all other rights and remedies afforded to Manager at law or in equity.
 
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c. Semi-Annual Review.  Manager shall review annually, and have the right to
adjust, the Management Fee if necessary to insure that Manager is being paid its
costs plus a reasonable profit. If Manager proposes a change in the amount of
the Management Fee, Manager shall notify Physician at least sixty (60) days in
advance of the date on which the revised Management Fee is to be effective and
shall provide to Physician a written statement of the basis for the change, and
Physician shall pay the revised Management Fee beginning on the effective date.

d. Collection Continuation Period. Notwithstanding the termination or expiration
of this Agreement, for a period of ninety (90) days following such termination
or expiration (the “Collection Continuation Period”), Manager shall have the
right, but not the obligation, to continue to provide, at the same compensation
rate set forth in Section 4.a. above, the collection services described in
Section 2.c. above with respect to all Practice services related to tattoo
removal provided by Physician and the Licensed Health Professionals prior to the
expiration or termination of this Agreement. Physician specifically agrees that
the foregoing provision is fair and reasonable and is intended to compensate
Manager for the Services it provided during the term of the Agreement.

5. Security Interest.

In order to secure Physician’s timely payment of the Management Fee, any other
sums owed to Manager by Physician, and the performance of any other obligation
of Physician under this Agreement, Physician hereby grants Manager a security
interest in and to all of the Gross Revenues, accounts receivable, cash and all
funds in the Operational Account and other deposit accounts, whether now
existing or hereafter acquired, pertaining to and generated by or in connection
with the Practice conducted by Physician. To evidence the security interest
granted to Manager herein, Manager and Physician shall enter into the “Security
Agreement,” attached hereto as Exhibit “A” and incorporated herein by this
reference. Manager shall file a UCC-1 financing statement with the California
Secretary of State documenting the security interest granted to Manager, and
Physician shall cooperate with Manager in filing such UCC-1. Upon the release of
the security interest granted herein, Manager shall complete and file a UCC-2
releasing such security interest.
 
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6. Term and Termination.

a. Term. The initial term of this Agreement shall be for one (1) year commencing
as of the date first written above; thereafter, this Agreement shall renew
automatically for successive terms of one (1) year each, unless either party
notifies the other party in writing, not less than ninety (90) days’ prior to
the end of the then current term, of its intention to not renew this Agreement.
 
b. Termination. 

i. Either party may terminate this Agreement for cause upon the material breach
of this Agreement by the other party, if such breach is not cured within ten
(10) days following written notice of such breach.

ii. Either party may terminate this Agreement immediately upon the filing, with
respect to the other party, of a voluntary or involuntary petition in bankruptcy
if such petition is not dismissed within thirty (30) days of such filing; or
upon the appointment of a receiver or trustee to take possession of all, or
substantially all, of the assets of a party, if such appointment is not
terminated within thirty (30) days, or upon the garnishment or attachment of the
Gross Revenues generated by Physician at the Practice Site.

iii. Manager may terminate this Agreement immediately upon the occurrence of any
of the following events:
 
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(a) Manager’s good faith determination that Physician’s operation of the
Practice does not meet the accepted professional or ethical standards of the
osteopathic medicine profession or that Physician or the Licensed Health
Professionals are jeopardizing the health or welfare of Physician’s patients;

(b) The suspension, revocation, restriction, termination or non-renewal of
Physician’s professional license;

(c) The suspension, revocation, restriction, termination or non-renewal of
Physician’s medical staff membership or practice privileges at any hospital;

(d) The felony conviction, or conviction of any crime involving moral turpitude,
of Physician;

(e) Physician’s inability, due to illness or physical or mental disability, to
perform or supervise tattoo removal services at the Practice Site during
Physician’s normal hours of operation for thirty (30) or more days,
consecutively or cumulatively, during any twelve (12) month period of this
Agreement;

(f) If, for any reason, Manager no longer has the right to use the Practice
Site, due to Manager’s landlord’s termination of the Premises Lease, its
expiration, or otherwise; or
 
(g) Physician’s breach of any of the provisions of Section 7 below.

iv. Either party may terminate this Agreement immediately upon the dissolution
of the other party, if such party is an entity, for any reason.

c. Effect of Termination. Upon termination or expiration of this Agreement, each
party’s respective obligations hereunder shall terminate in full, except for
those obligations which either explicitly, as set forth in this Agreement, or by
their nature survive the termination or expiration of this Agreement. In
addition, Physician shall return all documents, data and other materials or
information that constitute “Confidential Information” as such term is defined
in Section 11.a. below.
 
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7. Physician Covenants. Physician covenants and agrees that, at all times during
the term hereof, Physician shall (a) insure that he is duly licensed to practice
osteopathic medicine in the State of California, without restriction; (b) insure
that the Licensed Health Professionals are duly licensed to perform their
respective professions, without restriction, and that they have the appropriate
level of education and experience to perform the services required of them in
connection with the Practice; (c) conduct the Practice and supervise the
Licensed Health Professionals in compliance with all applicable federal, state
and local laws, rules and regulations; (d) not enter into discussions or
negotiations or an agreement with any other person or entity regarding some or
all of the Services or for the sale or merger of the Practice, unless Physician
obtains Manager’s prior written consent; (e) be open for business during regular
business hours, Monday through Friday, in accordance with the schedule adopted
by Physician, but Physician shall provide no less than twenty (20) hours of
tattoo removal services, including supervision services, per month; and (f)
continuously practice at the Practice Site during Physician’s normal business
hours, provided that Physician may take such reasonable amounts of time off for
vacation, illness or family emergencies.

8. Records.

a. Patient Records. Although Manager shall maintain Physician’s patient charts
and records on behalf of Physician, Physician shall be solely responsible for
making and reviewing all entries made by Physician and the Licensed Health
Professionals on all Physician patient charts and records, and all such patient
records and charts maintained by Manager in connection with professional medical
services provided by Physician shall be Physician’s property. Each of the
parties hereto shall maintain and safeguard the confidentiality of all patient
records, charts and other information generated in connection with the
professional medical services provided hereunder in accordance with federal and
state confidentiality laws and regulations, including without limitation, the
California Confidentiality of Medical Information Act, Civil Code Section 56 et
seq. and the Health Insurance Portability and Accountability Act of 1996
(“HIPAA”) and the regulations thereunder. Notwithstanding the foregoing, Manager
shall have a continuing right to inspect and copy (at Manager’s expense) all
records pertaining to Physician’s patients as may be necessary in connection
with Manager’s performance of services pursuant to this Agreement or for other
reasonable purposes, subject to federal and state confidentiality laws, and
provided Manager gives Physician at least five (5) days’ prior written notice.
 
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b. Business Records. All business and administrative records maintained by
Manager in connection with the Services provided to Physician shall be Manager’s
property. Notwithstanding the foregoing, Physician shall have a continuing right
to inspect and copy (at Physician’s expense) all such business records for any
reasonable purpose, provided Physician gives Manager at least five (5) days’
prior written notice.
 
9. Insurance; Indemnification.

a. General Liability Insurance. Manager shall procure and maintain at all times
during this Agreement, at Manager’s sole cost and expense, comprehensive general
liability and property insurance covering the Practice Site with general
liability limits in commercially reasonable amounts, as determined by Manager.
Within ten (10) days after Physician’s request, Manager shall furnish
certificates, endorsements and copies of all insurance policies to Physician.

b. Indemnification. Physician agrees to defend, indemnify and hold harmless
Manager, its officers, directors, members, representatives, employees and
agents, from and against any and all losses, liabilities, damages, claims,
judgments, costs or expenses, including attorneys’ fees, that Manager may
suffer, incur or become liable for, as a result of any action or omission by
Physician and/or the Licensed Health Professionals. Manager agrees to defend,
indemnify and hold harmless Physician, its officers, directors, members,
representatives, employees and agents, from and against any and all losses,
liabilities, damages, claims, judgments, costs or expenses, including attorneys’
fees, that Physician may suffer, incur or become liable for, as a result of any
action or omission by Manager.
 
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10. Compliance with Laws. The obligations of Manager pursuant to this Agreement
shall be subject to any limitations or restrictions which may be imposed by law
or regulation, and Manager may suspend any or all obligations hereunder, or, at
its option, terminate this Agreement, if it determines, upon advice of counsel,
that the performance of any obligation pursuant to this Agreement may contravene
applicable law or regulation.

11. Non-Disclosure of Manager’s Professional and Business Practices, Trade
Secrets, or Privileged Information; Non-Solicitation and Non-Interference.

a. Confidentiality. Physician agrees to keep confidential and to not use or
disclose the business practices, trade secrets or privileged information of
Manager and to keep such knowledge confidential in Physician’s dealings with any
healthcare practice, clinic or practice, hospital, health care facility or other
person or entity. Further, Physician agrees that Physician will not at any time
disclose to any person or use (except for the benefit of Manager) information
obtained by Physician during the period of Physician’s relationship with Manager
regarding Manager’s business plans, business methods, strategic plans, financial
statements, financial information, any and all data base or data input programs,
computer programs and software (whether or not completed or in use), any and all
operating manuals or similar materials that constitute Manager’s systems,
templates or forms, techniques, or any other trade secrets, confidential or
proprietary information respecting Manager and its business operations
(collectively, “Confidential Information”). Except to the extent necessary for
Physician to carry out his duties and obligations under this Agreement,
Physician acknowledges and agrees that he is expressly prohibited from creating,
making, duplicating, copying, retaining, taking, maintaining or possessing, by
any means or method, such Confidential Information either during or after the
term of this Agreement. Notwithstanding the foregoing, Manager may from time to
time license to Physician the use of any logo, trademark or tradename Manager
develops from time to time, including the “Name,” as discussed above in Section
2.e.iv. above. Physician shall immediately cease using such logo, trademark or
tradename for any purpose whatsoever upon the expiration or earlier termination
of this Agreement, and shall immediately return to Manager all materials
containing any logo, trademark or tradename.
 
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b. Non-Interference. Physician agrees that Physician will not disrupt, damage,
impair or interfere with the business of Manager, whether by way of interfering
with or raiding its employees or independent contractors, disrupting its
relationship with agents, suppliers, business contacts, representatives, vendors
or otherwise.

c. Survival of Obligations. The obligations of this Section 11 shall be in full
force and effect during the term of this Agreement and shall survive the
termination or expiration of this Agreement. Notwithstanding Section 13. of this
Agreement, in the event of a breach of this Section 11, Physician acknowledges
that any violation of this Section 11 could result in irreparable injury to
Manager, and the remedy at law would be inadequate. Accordingly, Manager shall
be entitled to injunctive relief in addition to any other remedies to which
Manager may be entitled at law or in equity.

12. Independent Contractor In performing all Services under this Agreement,
Manager is, and shall at all times be acting and performing as, an independent
contractor to Physician, with Manager practicing and performing its business in
accordance with its own judgment as to the method of rendering such services,
except as limited by this Agreement. The relationship between Manager and
Physician is not one of partners, joint venturers, principal and agent or
employer and employee, or any relationship other than that of independent
parties contracting with each other solely for the purpose of carrying out the
provisions of this Agreement. Except as specifically provided herein, Physician
shall neither have nor exercise any control or direction over the methods by
which Manager and its employees and independent contractors provide the Services
required of it hereunder. Manager shall neither have nor exercise any control or
direction over the professional judgment of Physician or the manner in which
Physician performs his professional services. The parties hereto understand that
Manager, in its capacity as Manager, does not practice osteopathic medicine and
shall not employ, engage or supervise Physician in his provision of medical
services. Each party hereto shall be solely responsible for the compensation,
benefits, insurance coverage, employer taxes and any other obligations of its
own employees or independent contractors.
 
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13. Resolution of Disputes. 

a. For all disputes, claims or controversies arising in connection with,
relating to, or arising out of this Agreement, the parties agree to first
attempt to resolve such dispute, claim or controversy by non-binding mediation.
The mediation shall be conducted by a mediator agreed upon by the parties. If
the parties are unable to resolve their dispute, claim or controversy within
thirty (30) days after a party’s request for mediation, then except as otherwise
provided in Section 11 of this Agreement, such dispute, claim or controversy
shall be settled by arbitration in accordance with Sections 1280 through 1286.4
of the California Code of Civil Procedure and the Commercial Arbitration Rules
of the American Arbitration Association (the “AAA Rules”).

b.  Each of the parties specifically agrees that the provisions of this Section
13 shall govern the resolution of any such controversy or claim. The
controversies and claims so governed by this Section 13 therefore include, but
are not limited to, any claim for a tort, breach of contract, or a violation of
any federal or California statute or regulation, regardless of whether such
controversy or claim is based on California case law, a California statute,
federal common law or a federal statute.

c. Each of the parties specifically waives the right to a jury trial to resolve
a controversy or claim arising out of or relating to this Agreement.

d. In the event of any conflict between the California Code of Civil Procedure
Sections 1280 through 1286.4 and the AAA Rules, the Code of Civil Procedure
shall control. Judgment on the award rendered may be entered in any court having
jurisdiction thereof.

e. Such arbitration shall be held in Los Angeles County, California.
 
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f. The arbitrator shall make written findings of fact and conclusions of law.
The arbitrator shall have no authority to make conclusions of law or an award
that could not have been made by a court of law. If either party initiates legal
proceedings against the other party, other than arbitration in accordance with
the rules of the American Arbitration Association as described above, the
prevailing party shall be allowed such costs and reasonable attorneys’ fees as
the court may allow.

g. All documents, exhibits, transcripts, decisions, awards, and other
information produced or created in connection with the arbitration proceeding
shall be kept strictly confidential by the parties.

14. General Provisions.

a. No Assignment. Unless otherwise permitted in this Agreement, neither party
hereto shall assign any of its rights, nor delegate any of its duties under this
Agreement, without first obtaining the express written consent of the other
party. Subject to the foregoing restriction, this Agreement shall be binding on
the parties hereto and their successors and permitted assigns.

b. Severability. If any provision of this Agreement as applied to any party or
to any circumstance shall be found by a court to be invalid or unenforceable,
the same shall in no way affect any other provision of this Agreement, the
application of any such provision in any other circumstance, or the validity or
enforceability of this Agreement, unless such invalidity or unenforceability
would defeat an essential business purpose hereof, or except as otherwise
provided herein.

c. Notice. All notices or demands shall be in writing and shall be given
personally, by electronic facsimile, or by certified mail. Notice shall be
deemed conclusively made at the time of notice if given personally or if by
certified mail, three (3) days after deposit thereof in the United States mail,
properly addressed and postage pre-paid to the following addresses:
 
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  Physician:   William Kirby, D.O.     13044 West Pacific Promenade #424    
Playa Del Rey, CA 90094     Attention: Dr. Will Kirby       Manager:   DRTATTOFF
Management Company, LLC     8500 Wilshire Blvd #105     Beverly Hills,
California 90211     Attention: James Morel, Manager

 
d. Waiver. A waiver by either party of any of the terms and conditions of this
Agreement in any instance shall not be deemed or construed to be a waiver of
such term or condition for the future, or of any subsequent breach thereof, nor
shall it be deemed a waiver of performance of any other obligation hereunder.

e. Entire Understanding. This Agreement and any exhibits attached hereto contain
the entire understanding of the parties hereto relating to the subject matter
contained herein, and supersede all prior and collateral agreements,
understanding, statements and negotiations of the parties. This Agreement can
only be changed, modified, amended, rescinded or supplemented by a written
agreement executed by both parties.

f. California Law. This Agreement shall be construed and enforced in all
respects according to the laws of the State of California.

g. Attorney’s Fees. Should either party institute any action or proceeding,
including without limitation arbitration, relating to this Agreement, the
prevailing party in any such action or proceeding shall be entitled to receive
from the other party all costs and expenses, including reasonable attorney’s
fees, incurred in connection with such action or proceeding.

h. Interpretation of Agreement. The parties acknowledge and agree that because
all parties and their attorneys participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which construes
any language, whether ambiguous, unclear or otherwise, in favor of, or against
any party by reason of that party’s role in drafting this Agreement.
 
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i. Additional Acts. The parties hereto agree to perform such other acts, and to
execute such additional documents, as may be required from time to time to carry
out the provisions of this Agreement or the intentions of the parties.

IN WITNESS WHEREOF, this Agreement is executed effective as of the date and year
first set forth above.
 

  “MANAGER”   “PHYSICIAN”   DRTATTOFF, LLC,     a California limited liability
company         By: /s/ James Morel   /s/ William Kirby   Manager   William
Kirby, D.O.        

 
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EXHIBIT “A”

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (“Security Agreement”) is made and entered into
effective as of December 20, 2005 by and between DRTATTOFF, LLC, a California
limited liability company (“Secured Party”) and William Kirby, D.O., an
individual (“Debtor”).

RECITALS

A. Debtor and Secured Party have entered into that certain “Management Services
Agreement,” of even date herewith (the “MSA”), by which Secured Party provides
management services to Debtor in connection with the tattoo removal practice
conducted by Debtor at 8670 Wilshire Boulevard, Suite 203, Beverly Hills,
California 90211 (the “Practice Site”) and at other Practice Sites the parties
may agree upon from time to time, as set forth in the MSA.

B. Debtor has agreed to enter into this Security Agreement in order to grant
Secured Party a first priority security interest in the Collateral (as
hereinafter defined) to secure prompt payment and performance of Debtor’s
obligations to Secured Party, including, without limitation, Debtor’s obligation
to pay Secured Party the Management Fee set forth in the MSA.

NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions,
representations, and warranties hereinafter set forth, and for other good and
valuable consideration, the parties hereto agree as follows:

AGREEMENT

1. Definitions. As used in this Security Agreement, the following terms shall
have the following meanings:

“Account Debtor” means any person or entity who is or who may become obligated
with respect to, or on account of, an Account.

“Accounts” means all accounts, as that term is defined in section 9102(a)(2) of
the California Commercial Code, now owned or hereafter acquired by Debtor in
connection with or arising out of the Practice conducted by Debtor at any and
all Practice Sites, including (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper or Instruments), whether arising out of Goods sold or
services rendered by Debtor or any “Licensed Health Professional,” as such term
is defined in the MSA, at any Practice Site (including any such obligations that
may be characterized as an account or contract right under the Code); (b) all of
Debtor’s rights in, to, and under all purchase orders or receipts for Goods or
services; (c) all of Debtor’s rights to any Goods represented by any of the
foregoing (including unpaid sellers’ rights of rescission, replevin,
reclamation, and stoppage in transit, and rights to returned, reclaimed, or
repossessed Goods); (d) all money due or to become due Debtor under all purchase
orders and contracts for the sale of Goods or the performance of services or
both by Debtor or in connection with any other transaction (whether or not yet
earned by performance by Debtor), including the right to receive the proceeds of
those purchase orders and contracts; and (e) all collateral security and
guaranties of any kind given by any other Debtor with respect to any of the
foregoing.
 
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“California Commercial Code” means the Uniform Commercial Code as may, from time
to time, be enacted and in effect in the State of California. Terms defined in
the California Commercial Code not otherwise defined in this Security Agreement
or the MSA are used in this Security Agreement as defined in that Code on the
date of this Security Agreement.

“Collateral” means all of Debtor’s personal property, furniture and fixtures,
whether now owned or hereafter acquired, located at any Practice Site or
elsewhere and resulting from Debtor’s operation of the Practice conducted at any
Practice Site, including, but not limited to, all of Debtor’s interest in
Accounts, Chattel Paper, Contracts, Debtor’s Books, Equipment, Fixtures, General
Intangibles, Goods, Instruments and letters of credit, Inventory, Investment
Property, Deposit Accounts, money, cash or cash equivalents, and to the extent
not otherwise included, all proceeds and products of the foregoing and all
accessions to, substitutions and replacements for, and rents and profits of each
of the foregoing.

“Debtor’s Books” means any and all presently existing and hereafter acquired or
created books and records of Debtor, including all records (including
maintenance and warranty records), ledgers, computer programs, disc or tape
files, printouts, runs, and other computer prepared information summarizing, or
evidencing the Accounts.

“Deposit Account” means any deposit account, as that term is defined in section
9102(a)(29) of the California Commercial Code, now owned or hereafter acquired
by Debtor.

“Equipment” means all equipment, as that term is defined in section 9102(a)(33)
of the California Commercial Code, now owned or hereafter acquired by Debtor,
wherever located, including all of data processing and computer equipment with
software and peripheral equipment, office machinery, furniture, tools,
attachments, accessories, medical and laser equipment, and other equipment of
every kind and nature, trade fixtures and other fixtures, together with all
additions and accessions, replacements, parts, substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties, and rights with
respect to the foregoing, and all products and proceeds of the foregoing and
condemnation awards and insurance proceeds with respect thereto.

“Fixtures” means all fixtures, as that term is defined in section 9102(a)(41) of
the California Commercial Code, now owned or hereafter acquired by Debtor,
wherever located.  

“General Intangibles” means all general intangibles, as that term is defined in
section 9102(a)(42) of the California Commercial Code, now owned or hereafter
acquired by Debtor in connection with the Practice conducted at any and all
Practice Sites, including all right, title, and interest that Debtor may now or
hereafter have in or under any Contracts, Licenses, Copyrights, Trademarks, and
Patents and all applications therefore and reissues, extensions, or renewals;
interests in partnerships, joint ventures, and other business associations;
permits; inventions (whether or not patented or patentable); knowledge,
know-how, skill, expertise, or experience; software; databases; data; processes;
models, drawings, materials, and records; goodwill (including the goodwill
associated with any Trademark or Trademark License); all rights and claims in or
under insurance policies (including insurance for fire, damage, loss, and
casualty, whether covering personal property, real property, tangible rights, or
intangible rights, all liability, life, key man, and business interruption
insurance, and all unearned premiums); uncertificated and certificated
securities; chooses in action; deposit, checking, and other bank accounts;
rights to receive tax refunds and other payments; rights to receive dividends,
distributions, cash, instruments, and other property in respect of or in
exchange for pledged shares or other equity interests; rights of
indemnification; all ledgers, correspondence, credit files, invoices, and other
papers and records; magnetic tapes, CD-ROMs, zip drives, and other data storage
media; and other papers and documents in the possession or under the control of
Debtor or any computer bureau or service company from time to time acting for
Debtor.
 
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“Goods” means any goods, as that term is defined in section 9102(a)(44) of the
California Commercial Code, now owned or hereafter acquired by Debtor.

“Licenses” means Copyright Licenses, Patent Licenses, and Trademark Licenses.

“Obligations” means any and all debts, liabilities, obligations, or undertakings
owing by Debtor to Secured Party, including, without limitation, all debts,
liabilities, obligations or undertakings arising under, advanced pursuant to, or
evidenced by the MSA and this Security Agreement, whether direct or indirect,
absolute or contingent, matured or unmatured, due or to become due, voluntary or
involuntary, whether now existing or hereafter arising.

“Practice” means the tattoo removal services and any other services provided by
Debtor and the “Licensed Health Professionals,” as such term is defined in the
MSA, at any and all Practice Sites.

“Practice Site” or “Practice Sites” means the premises located at 8670 Wilshire
Boulevard, Suite 203, Beverly Hills, California 90211, together with all
appurtenances, improvements and fixtures. The term “Practice Site” or “Practice
Sites” also includes any additional or replacement locations at which Debtor
conducts a Practice and which are managed, or entitled to be managed, by Secured
Party pursuant to the MSA.

2. Grant of Security Interest. Debtor hereby grants to Secured Party a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure the prompt payment and performance of all
of the Obligations. Debtor acknowledges and affirms that such security interest
in the Collateral has attached to all Collateral without further act on the part
of Secured Party or Debtor.

3. Perfection and Further Assurances.

a. Debtor authorizes Secured Party to authenticate and file all records
(including initial financing statements, certificates of title, and control
instructions to third parties, amendments, continuation statements, etc.) that
are reasonably required by Secured Party to perfect and continue its security
interest in the Collateral. Debtor authorizes Secured Party to indicate that the
financing statement covers all assets or all personal property owned by Debtor
and used in connection with the Practice operated by Debtor at any Practice
Site. Debtor will execute (sign, acknowledge when necessary, and deliver) any
other records or documents necessary to perfect and continue the security
interest under applicable federal or state statute, regulation, or treaty,
including any financing statement necessary to perfect a security interest in
fixtures.
 
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b. Debtor agrees to authenticate and to cause all necessary third parties to
authenticate any and all records necessary for Secured Party’s control over
Deposit Accounts, electronic Chattel Paper, and letter-of-credit rights. Debtor
agrees that the third party will have the right to comply with the instructions
originated by Secured Party directing disposition of such Collateral without
further consent by Debtor and will indemnify and defend the third party from all
claims by Debtor arising from or related to the third party’s compliance with
Secured Party’s disposition instructions. Debtor will cause any bank with which
a Deposit Account is maintained to subordinate its rights of recoupment and
setoff to Secured Party’s security interest.

c. Debtor represents and warrants that (1) his exact name is as set forth in the
preamble to this Security Agreement; and (2) Debtor is located (as that term is
used in California Commercial Code section 9307) in California.

d. Debtor authorizes Secured Party to take possession of any and all items of
the Collateral at any time. Debtor promises to deliver possession of the
Collateral promptly upon receipt of an authenticated request from Secured Party
for delivery of possession.

e. Whether or not Debtor is then in default, Secured Party will have the right,
but not the obligation, to (1) notify Account Debtor and other persons obligated
on the Collateral to make payment or otherwise render performance to or for the
benefit of Secured Party, (2) enforce the obligations of Account Debtor and
other persons obligated on the Collateral, (3) apply the balance of any Deposit
Account which it controls to the Obligations, and (4) take any proceeds to which
it is entitled for application to the Obligations.

4. Notice of Postperfection Changes. Debtor will immediately notify Secured
Party of:

a. Any change in the name of Debtor or Debtor’s use of an assumed business or
trade name;

b. Any change in Debtor’s location;

c. Any merger between Debtor and any third party or transfer by or to Debtor of
substantially all of the assets and liabilities of another person;

d. Any substantial damage to or loss or destruction of any essential or material
part of the Collateral, whether or not covered by insurance.

5. Inspection and Verification Rights. Debtor will keep accurate records and
documents relating to the Collateral at its principal business office. Secured
Party will have the unconditional right at all reasonable times and upon
reasonable prior notice to Debtor to:
 
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a. Inspect the Collateral, including the records and documents related thereto;

b. Make copies of the records and documents;

c. After notice to Debtor (unless it is in default), verify orally and in
writing directly with third parties, including Account Debtor, the accuracy of
any information provided by Debtor with respect to the Collateral;

d. Determine through employees, agents, or independent contractors the value of
the Collateral at the expense of Debtor no more than once per calendar year and
at any time reasonably prudent when Debtor is in default;

e. Enter upon any premises owned, leased, or otherwise controlled by Debtor for
the foregoing purposes.

f. Debtor promises and agrees to provide to Secured Party access to the
Collateral and to provide any office space (including computer hardware,
operating systems, and software and access to safes and other areas of
safekeeping) that is reasonably necessary for the exercise of the foregoing
rights. Debtor grants to Secured Party an easement over all premises owned,
leased, or otherwise controlled by Debtor for the purpose of inspecting and
valuing the Collateral and, following any default, repossessing, storing,
preparing for disposition, and disposing of the Collateral. Debtor authorizes
and instructs all third parties who have information relating to the Collateral
(such as customers, Account Debtor, obligors, government agencies, employees,
and outside accountants) to provide any and all information, records, and
documents relating to the Collateral to Secured Party upon its written request
provided that Secured Party has given Debtor prior notice in writing of its
intention to ask for such information.

6. Covenants. Debtor promises and agrees to:

a. Pay and perform the Obligations when and as due;

b. Cooperate completely and promptly with Secured Party in perfecting and
foreclosing Secured Party’s security interest, in locating, inspecting,
evaluating, collecting, assembling, repossessing, and disposing of the
Collateral, and in notifying third parties about Secured Party’s security
interest and collection rights;

c. Operate its business in the ordinary course and not change the size, nature,
or emphasis of that business in any materially adverse way;  
 
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d. To maintain fire and extended coverage insurance on the Collateral in the
amounts and under policies acceptable to Secured Party, naming Secured Party
under a lender’s loss-payable clause, and to provide Secured Party with the
original policies and certificates at Secured Party’s request;

e. Pay all taxes, assessments, and similar charges (“taxes”) levied against the
Collateral as and when the same become due and payable;

f. Pay all amounts when due which, if not so paid, may become the subject of a
lien against the Collateral which might have or gain priority over Secured
Party’s security interest (a “lien claim”);

g. Perform all maintenance, repairs, and replacements that are necessary to keep
the Fixtures and Equipment in good and safe operating condition and promptly pay
all costs of such work;  

h. Take all reasonable steps to protect the tangible items of the Collateral
against theft, loss, or damage;

i. Provide to Secured Party upon authenticated request evidence of insurance
coverage and the payment of taxes and lien claims; and

j. Indemnify and defend Secured Party against all claims, loss, liability, cost,
or expense asserted against or incurred by Secured Party by reason of Debtor’s
failure to provide a perfected, first-priority security interest in any item or
items of the Collateral or the breach or default of Debtor under this Security
Agreement.

k. Debtor hereby authorizes Secured Party to pay the premiums for insurance,
taxes, and the principal, interest, fees, and costs constituting lien claims if
Debtor does not do so in a timely manner (unless Debtor is then contesting such
obligation in good faith and by appropriate means) and Secured Party reasonably
believes such payment is necessary for the protection of the Collateral and/or
Secured Party’s security interest in the Collateral (a “security protection
advance”). Debtor promises and agrees to reimburse Secured Party on demand for
any security protection advance made by Secured Party and to pay interest
thereon at the rate of 10% per annum from the date of the advance until the date
of reimbursement.

l. To pay all expenses, including attorney fees, incurred by Secured Party in
the perfection, preservation, realization, enforcement, and exercise of Secured
Party’s rights under this Security Agreement.
 
m.  To indemnify Secured Party against loss of any kind, including reasonable
attorney fees, caused to Secured Party by reason of its interest in the
Collateral.
 
n. To conduct Debtor’s business efficiently and without voluntary interruption.
 
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o. To preserve all rights, privileges, and franchises held by Debtor’s business.
 
p. To give Secured Party notice of any litigation that may have a material
adverse effect on Debtor’s business.
 
q.  Not to change the name or place of Debtor’s business, or to use a fictitious
business name, without first notifying Secured Party in writing.
 
r.  Not to sell, lease, transfer, or otherwise dispose of the Collateral except,
before the occurrence of a default, for cash proceeds of Accounts collected in
the ordinary course of business.
 
s.  Not to use the Collateral for any unlawful purpose or in any way that would
void any effective insurance.
 
t.  To notify Secured Party promptly in writing of any default, potential
default, or any development that might have a material adverse effect on the
Collateral.

7. Representations and Warranties. Debtor represents and warrants to Secured
Party that:

a. Debtor is duly licensed to practice osteopathic medicine in the State of
California, without restriction;

b. Debtor is authorized to execute and deliver this Security Agreement. The
Security Agreement is a valid and binding obligation of Debtor. The Security
Agreement creates a perfected, first-priority security interest enforceable
against the Collateral in which Debtor now has rights, and will create a
perfected, first-priority security interest enforceable against the Collateral
in which Debtor later acquires rights, when Debtor acquires those rights.

c.  Neither the execution and delivery of this Security Agreement, nor the
taking of any action in compliance with it, will (1) violate or breach any law,
regulation, rule, order, or judicial action binding on Debtor, any agreement to
which Debtor is a party, Debtor’s articles of incorporation or bylaws; or (2)
result in the creation of a lien against the Collateral except that created by
this Security Agreement.

d.  No default or potential default exists.

e. Debtor has not (1) made any assignment for the benefit of creditors, (2)
applied for or consented to the appointment of a receiver or trustee for its
affairs, or (3) been the subject of any voluntary or involuntary bankruptcy,
insolvency, reorganization or liquidation proceeding.
 
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f. Other than financing statements in favor of Secured Party, no effective
financing statement naming Debtor as debtor, assignor, grantor, mortgagor,
pledgor or the like and covering any part of the Collateral is on file in any
filing or recording office in any jurisdiction.

8. Power of Attorney. Debtor hereby irrevocably appoints Secured Party as
Debtor’s attorney in fact with full power of substitution to do any and all acts
which Debtor is obligated by this Security Agreement to do and for the purpose
of, subsequent to any default of Debtor hereunder, taking any action and
executing any instruments which Secured Party may deem necessary or advisable to
accomplish the purposes of this Security Agreement. Without limiting the
generality of the foregoing, Secured Party shall have the following powers:
 
a.  To perform any of Debtor’s obligations under the Security Agreement in
Debtor’s name or otherwise.

b.  To give notice of Debtor’s right to payment, to enforce that right, and to
make extension agreements with respect to it.

c.  To release persons liable on rights to payment, to compromise disputes with
those persons, and to surrender security, all as Secured Party determines in its
sole discretion when acting in good faith based on information known to it when
it acts.

d.  To prepare and file financing statements, continuation statements,
statements of assignment, termination statements, and the like, as necessary to
perfect, protect, preserve, or release Secured Party’s interest in the
Collateral.
 
e.  To endorse Debtor’s name on instruments, documents, or other forms of
payment or security that come into Secured Party’s possession.

f.  To take cash in payment of obligations.

g.  To verify information concerning rights to payment by inquiry in its own
name or in a fictitious name.

h. To prepare, execute, and deliver insurance forms; to adjust insurance claims;
to receive payment under insurance claims; and to apply such payment to reduce
Debtor’ Obligations.

This power of attorney is coupled with an interest and may not be revoked or
cancelled by Debtor without Secured Party’s written consent.

9. Events of Default. Debtor will be in default under this Security Agreement
if:

a. Debtor fails to pay any Obligations, or any portion thereof, to Secured Party
when due, at stated maturity, on accelerated maturity, or otherwise.
 
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b. Debtor fails to make any remittances required by this Security Agreement.

c. Debtor commits any breach of this Security Agreement, or any present or
future rider or supplement to this Security Agreement, or any other agreement
between Debtor and Secured Party evidencing the Obligations or securing them,
including without limitation the MSA and any amendments or supplements thereto.

d. Any warranty, representation, or statement, made by or on behalf of Debtor in
or with respect to the Security Agreement, is false.

e. The Collateral is lost, stolen, or damaged.

f. There is a seizure or attachment of, or a levy on, the Collateral.

g. Debtor ceases operations, is dissolved, terminates its existence, does or
fails to do anything that allows Obligations to become due before their stated
maturity, or becomes insolvent or unable to meet its debts as they mature.
 
h.  Secured Party for any reason deems itself insecure.
 
i.  Debtor (1) applies for or consents to the appointment of a receiver,
trustee, liquidator, or custodian of himself or of a substantial part of his
property; (2) is unable, or admits in writing its inability, to pay its debts
generally as they mature; (3) makes a general assignment for the benefit of his
creditors or any of them; (4) is dissolved or liquidated in full or in part; (5)
commences a voluntary case or other proceeding seeking liquidation,
reorganization, or other relief with respect to itself or its debts under any
bankruptcy, insolvency, or other similar law now or hereafter in effect, or
consents to any relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding commenced
against it; or (6) takes any action for the purpose of effecting any of the
foregoing.
 
j.  Proceedings for the appointment of a receiver, trustee, liquidator, or
custodian of Debtor or of all or a substantial part of its property, or an
involuntary case or other proceedings seeking liquidation, reorganization, or
other relief with respect to such Debtor or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect are commenced and an
order for relief is entered or such a proceeding is not dismissed or discharged
within 60 days of commencement.

 
10. Rights and Remedies. When an event of default occurs:

a. Secured Party may exercise all rights and remedies available to Secured Party
under this Security Agreement and the California Commercial Code, including
acceleration of the Obligations (that is, make such Obligations immediately due
and payable). All such rights and remedies are cumulative.
 
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b. Without thereby limiting the generality of the foregoing or of Secured
Party’s rights under any other section of this Security Agreement, Secured
Party, upon Debtor’s default, will be entitled to immediate possession of all
items of the Collateral and to collect and apply all payments from, and to
enforce performance by, third parties as to the Collateral.  

c. Debtor will assemble the tangible items of the Collateral and make such items
available to Secured Party at the location or locations designated by Secured
Party. Debtor must also allow Secured Party, its representatives, and its agents
to enter the premises where all or any part of the Collateral, the records, or
both may be, and remove any or all of it.

d. Debtor agrees that it will be commercially reasonable if (1) Secured Party
gives Debtor and other persons entitled to notice written notice at least 10
days in advance of any public or private disposition of all or any nonperishable
part of the Collateral.

e. Secured Party and Debtor each waives the right to trial by jury in any action
or proceeding relating to any claim, offset, defense, or counterclaim, whether
in contract or tort, at law or in equity, arising out of or relating to this
Security Agreement.

f. The prevailing party in the trial or appeal of any civil action, arbitration,
or other adversary proceeding relating to this Security Agreement or any related
offset, defense, or counterclaim, whether in contract or tort, at law or in
equity, will be entitled to the award of a reasonable attorney fee in addition
to costs and disbursements.

11. Attorneys’ Fees, Costs and Expenses. Debtor shall pay all costs and expenses
of Secured Party enforcing its rights under this Security Agreement, including
reasonable attorneys fees.

12. No Waiver. No waiver by Secured Party of any default shall be deemed to be a
waiver of any other subsequent default, nor shall any such waiver by Secured
Party be deemed to be a continuing waiver.

13. Survival. Debtor’s representations and warranties made in this Security
Agreement will survive its execution, delivery, and termination.

14. Successors and Assigns. This Security Agreement will bind and benefit the
successors and assigns of the parties, but Debtor may not assign his rights
under the Security Agreement without Secured Party’s prior written consent.

15. Governing Law. This Security Agreement will be governed by, and construed in
accordance with, the laws of the State of California.

16. Entire Agreement. This Security Agreement is the entire agreement and
supersedes any prior agreement or understandings between Secured Party and
Debtor relating to the Collateral.

17. Notices. All notices hereunder by a party to another party shall be in
writing, delivered personally, by means of electronic communications, by
certified or registered mail, return receipt requested, or by overnight courier,
and shall be deemed to have been duly given when delivered personally or by
electronic communication, or when deposited in the United States mail, postage
prepaid, or deposited with the overnight courier addressed as follows:
 
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  Debtor:   William Kirby, D.O.     13044 West Pacific Promenade #424     Playa
Del Rey, CA 90094     Attention: Dr. Will Kirby       Secured Party: DRTATTOFF
Management Company, LLC     232 N. Almont Drive     Beverly Hills, California
90211     Attention: James Morel, Manager

 
or to such other persons or places as any party may from time to time designate
by written notice to the others.

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
executed effective as of the date first written above.
 

SECURED PARTY:   DEBTOR:       DRTATTOFF, LLC   a California limited liability
company         By: /s/ James Morel   /s/ William Kirby   Manager   William
Kirby, D.O.

 
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