Exhibit 10.2



	
 

	
 


	
SECURED
  DEMAND NOTE


	
 

	
 


	
$375,000

	
March
16, 2007


	
 

	
New
York, New York 





          FOR
VALUE RECEIVED, TRUEYOU.COM INC., a Delaware corporation, (the “Maker”),
promises to pay to North Sound Legacy Institutional Fund LLC (the “Payee”),
ON DEMAND, c/o 20 Horseneck Lane,
Greenwich, Connecticut 06830 or at such other place as may be designated in
writing by the holder of this Note, the principal sum of THREE HUNDRED SEVENTY
FIVE THOUSAND ($375,000) DOLLARS, which sum shall be payable in lawful money of
the United States of America, together with interest on the unpaid principal
balance computed from the date hereof at rate equal to the sum of the prime
rate as set forth in the Wall Street Journal from time to time plus 2.0% per
annum. Interest shall be calculated on the basis of the actual number of days
elapsed over a year of 360 days and shall be paid on the first day of each
month. Interest not paid on such date shall be added to the principal amount of
this note as of the date due. 


          1.
AUTHORITY. The Maker (and the undersigned representatives of the Maker,
if any) represents that the Maker has full power, authority and legal right to
execute and deliver this Note and that this Note constitutes a valid and
binding obligation of the Maker.


          2.
DEFINED TERMS. Whenever used, the singular number shall include the
plural, the plural the singular, and the words “Payee” and “Maker” shall
include, respectively, their respective successors and assigns; provided,
however, that the Maker shall in no event or under any circumstance have the
right to assign or transfer its obligations under this Note or the related
documents, in whole or in part, to any other person, party or entity.  


          3.
HEADINGS, ETC. The headings and captions of the numbered paragraphs of
this Note are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.



          4.
ENFORCEABILITY. The Maker acknowledges that this Note and the Maker’s obligations
under this Note are and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense to this Note and the obligations of
the Maker under this Note or the obligations of any other person or party
relating to this Note. This Note and the instruments and documents referred to
herein (collectively and as the same may be amended or otherwise modified from
time to time, the “Documents”) set forth the entire agreement and
understanding of the Payee and the Maker, and the Maker absolutely,
unconditionally and irrevocably waives any and all right to assert any set-off,
counterclaim or crossclaim of any nature whatsoever with respect to this Note
or the obli-






gations of the Maker hereunder or thereunder, or the
obligations of any other person or party relating hereto or thereto or to the
obligations of the Maker hereunder or thereunder or otherwise in any action or
proceeding brought by the Payee to collect the Note, or any portion thereof, or
to enforce, foreclose and realize upon the liens and security interests of the
Payee in any collateral (provided, however, that the foregoing shall not be
deemed a waiver of the Maker’s right to assert any compulsory counterclaim
maintained in a court of the United States, or of the State of New York if such
counterclaim is compelled under local law or rule of procedure, nor shall the foregoing
be deemed a waiver of the Maker’s right to assert any claim which would
constitute a defense, setoff, counterclaim or crossclaim of any nature whatsoever
against the Payee in any separate action or proceeding). The Maker acknowledges
that no oral or other agreements, conditions, promises, understandings,
representations or warranties exist with respect to this Note or with respect
to the obligations of the Maker under this Note, except those specifically set
forth in this Note and the instruments and documents being signed concurrently
herewith. The Maker agrees to pay all costs or expenses of Payee related to
Payee’s enforcement of the obligations of the Maker hereunder, including but
not limited to reasonable attorneys’ fees and expenses, irrespective of whether
litigation is commenced. 


          5. WAIVER.
The Maker waives presentment, demand for payment, notice of dishonor and any or
all notices or demands in connection with the delivery, acceptance, performance,
default or enforcement of this Note and consents to any or all delays,
extensions of time, renewals, release of any party to any document related to
this Note (collectively the “Documents”), and of any available security
therefor, and any and all waivers or modifications that may be granted or
consented to by the Payee with regard to the time of payment or with respect to
any other provisions of any of the Documents, and agrees that no such action,
delay or failure to act on the part of the Payee shall be construed as a waiver
by the Payee of, or otherwise affect, in whole or in part, its right to avail
itself of any remedy with respect thereto. No notice to or demand on the Maker
shall be deemed to be a waiver of the obligation of the Maker or of the right
of the Payee to take further action without further notice or demand as
provided in any of the Documents.


          6.
AMENDMENTS. This Note may not be modified, amended, changed or terminated
orally, except by an agreement in writing signed by the Maker and the Payee. No
waiver of any term, covenant or provision of this Note shall be effective
unless given in writing by the Payee and, if so given by the Payee, shall only
be effective in the specific instance in which given.


          7.
GRANT OF SECURITY. As security for the payment and performance of the
obligations of the Maker arising under the Documents, the Maker and each of its
direct and indirect subsidiaries (collectively, the “Assignees” and each, an
“Assignee”) hereby grants to the Payee a security interest in all of such Assignee’s
right, title and interest in, to and under all of its personal property,
wherever located and whether now existing or owned or hereafter acquired or
arising, including all cash, cash equivalents, accounts, accounts receivable,
deposit accounts, inventory, equipment, goods, fixtures, documents, instruments
(including, without limitation, promissory notes), contract rights, commercial
tort claims, general intangibles (including, without limitation, payment
intangibles and an absolute right to license on terms no less favorable than
those currently in effect among such Assignor’s affiliates), chattel paper,
supporting obligations, investment property (including, without limitation, all
partnership 


2






interests, limited liability company membership interests
and all other equity interests owned by any Assignor), letter-of-credit rights,
trademarks, trademark applications, tradestyles, patents, patent applications,
copyrights, copyright applications and other intellectual property in which
such Assignor now has or hereafter may acquire any right, title or interest,
all proceeds and products thereof (including, without limitation, proceeds of
insurance) and all additions, accessions and substitutions thereto or therefore
(collectively, the “Collateral”). The Maker agrees to take any and all such
actions as the Payee may deem necessary or proper to permit the Payee to
perfect and defend the Payee’s security interest granted hereby. 


          8.
NO CONSENTS REQUIRED; NO CONFLICTS. The Maker hereby represents and
warrants to the Payee that no authorization, consent, approval, license,
exemption of, or filing or registration with, any Governmental Authority, or
approval or consent of any other Person, is required for the due execution,
delivery or performance by the Maker of any Documents, except for recordings or
filings in connection with the perfection of the liens on the Collateral in
favor of the Payee. “Governmental Authority” means any federal, state,
local or other governmental department, commission, board, bureau, agency,
central bank, court, tribunal or other instrumentality or authority, domestic
or foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government. “Person” means
an individual, corporation, partnership, limited liability company, joint
venture, trust, unincorporated organization or any other entity of whatever
nature or any Governmental Authority. The Maker hereby represents and warrants
to the Payee that the Maker’s execution and delivery of this Note and its
performance of its obligations hereunder does not and will not (a) contravene
or conflict with the organizational documents of the Maker or any subsidiary
thereof or any material agreement to which the Maker is a party or by which it
is bound; (b) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Maker or its subsidiaries; or (c) constitute a
default (or would constitute a default with notice or lapse of time or both)
under or give rise to a right of termination, cancellation or acceleration or
loss of any benefit under any material agreement, contract or other instrument
binding upon the Maker or its subsidiaries or under any material license,
franchise, permit or other similar authorization held by the Maker or its
subsidiaries. 


          9.
GOVERNING LAW. This Note is and shall be deemed entered into in the
State of New York and shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflicts of
laws.


             
IN WITNESS WHEREOF, the Maker has duly executed this Note the day and year
first above written.


	
 

	
 

	
 


	
 

	
TRUEYOU.COM INC.


	
 

	
 


	
 

	
By:


	
 

	
 

	



	
 

	
 

	
Name: 


	
 

	
 

	
Title: 





3







	
 

	
 


	
Exhibit A


	
 

	
 


	
 

	
CONFIDENTIAL 


	
 

	
 


	
 

	
PRELIMINARY INVESTMENT OUTLINE 


	
 

	
 


	
Investor:

	
Laurus Master Fund, Ltd. and any existing investor of
  TrueYou, Inc. (the “Investor(s)”)


	
 

	
 


	
Company(s):

	
TrueYou, Inc. (“TUYU”) and its subsidiaries (collectively
  the “Company”). 


	
 

	
 


	



	
 

	
 


	
Investment Amount:

	
Up to $24,000,000 (TBD)


	
 

	
 


	
Type:

	
Restructuring Term Note
  (the “Note”)


	
 

	
 


	
Interest Rate:

	
WSJ Prime plus 2.0%
  payable monthly 


	
 

	
 


	
Term:

	
Three (3) Years from
  Closing


	
 

	
 


	
Restricted Cash

	
The proceeds of the Note
  will be held in a restricted cash account and released according to approved
  budget and milestones achieved, as agreed upon by Management and Investor.


	
 

	
 


	
Interest Escrow:

	
18 months of interest on
  the Note, as well as, the existing Senior Debt (collectively the “Debt”) will
  be held in a restricted cash account to be released to satisfy interest
  payments on a monthly basis.


	
 

	
 


	
Principal 

  Amortization:

	
No Principal amortization
  and no pre-payment penalty.


	
 

	
 


	
Collateral:

	
Pari-Passu with current
  Laurus Senior Debt on all assets of the Company, which shall include, but not
  be limited to accounts receivable, inventory, equipment, intellectual
  property, general intangibles, contract rights, documents, instruments,
  chattel paper, supporting obligations and investment property. First priority
  stock pledge of all equity interests and subsidiaries held directly and
  indirectly by the Company. The Company will also set up a lock box in the
  Company’s name at a Bank to be mutually agreed upon by Company and Laurus and
  controlled by Laurus acting as Agent for all Investors. 


	
 

	
 


	
Asset Sale and 

  Mandatory 

  Prepayments:

	
Proceeds from asset sale,
  subsidiary sale and/or sale of any collateral other than in the ordinary
  course of business will be used to pay the Debt.


	
 

	
Additional capital raised
  post this round of financing will be used to pay down the Debt and for
  working/growth capital at 75% and 25% respectively. Upon approval by Board of
  Directors, Management Team and Investor group additional equity will
  proportionally dilute all members of the capital structure.










	
 

	
 

	
 


	
Covenants:

	
The Transaction shall
  include customary covenants including but not limited to, 


	
 

	
 

	
 


	
 

	
          • Defined
  Cash Flow and Leverage Covenants (TBD) 


	
 

	
 

	
 


	
 

	
          • Weekly
  financial and operational reporting requirements 


	
 

	
 

	
 


	
 

	
          • Consent
  of the Investors for any material contracts entered into by the Company 


	
 

	
 

	
 


	
 

	
          • Approval
  by the Investors for any disbursements in excess of [an amount to be
  determined] 


	
 

	
 

	
 


	
Fees:

	
3.5% of the Investment
  Amount payable at closing.


	
 

	
 

	
 


	
Investor Equity 

  Consideration:

	
The Investors will receive
  equity equal to 75% of the fully-diluted common stock of the Company. 


	
 

	
 

	
 


	
Equity Claw-Back:

	
Subject to performance
  criteria agreed by Investor, Investor fully diluted equity will be reduced to
  55% of the fully diluted common equity of the Company. 


	
 

	
 


	
 

	
Claw back is subject to
  Company meeting certain defined hurdle rates within 36 month period from
  closing, but not limited to:


	
 

	
 

	
 


	
 

	
          a.
  Debt fully repaid; And


	
 

	
 

	
 


	
 

	
          b.
  Total debt (debt plus any other debt) to TTM EBITDA (4 consecutive months)
  not to exceed 4.0x.


	
 

	
 

	
 


	
 

	
Upon meeting hurdle rates,
  equity will be assigned to defined active individuals primarily Mr. Richard
  Rakowski and/or his designees. Structure will be such that it will, at best
  efforts, preserve capital gains treatments.


	
 

	
 


	
Management Equity Consideration:

	
Management will be
  allocated 10% of the fully diluted equity ownership in the Company to be
  vested over a three year period.


	
 

	
 

	
 


	
Closing Conditions:

	
 


	
 

	
• Management providing
  detailed current status and reconciliation of Company’s cash position and
  obligations (including cash needs and viability of capital necessary to fund
  the Company prior to closing.)


	
 

	
 


	
 

	
• Management will provide
  a detailed weekly business plan which will include defined cash needs by
  business segment for the projected period of no less than 24 months


	
 

	
 


	
 

	
• Agreed upon projections,
  cash reconciliations and financial statements


	
 

	
 


	
 

	
• Company providing
  detailed weekly, flash reports and cash reconciliation


	
 

	
 


	
 

	
• Key management support
  of the transaction


	
 

	
 


	
 

	
• Confirmation of Sephora,
  LVMH, HSN, Johns Hopkins, and Chemist support and commitment to the proposed
  Investment and Business Plan.


	
 

	
 


	
 

	
• Laurus acting as the
  Agent for the Investors


	
 

	
 


	
 

	
• Review of all Material
  Contracts of the business including all royalty agreements the Company has
  entered into.


	
 

	
 


	
 

	
• Board Control by the
  Investors


	
 

	
 


	
 

	
• Management Appointment
  by Investors, if required by Investors


	
 

	
 


	
 

	
• Key Management Equity
  and Compensation Agreements.


	
 

	
 


	
 

	
• Approval of the Laurus
  Investment Committee










This proposal letter does not set forth all the terms
and conditions of the Investment offered herein. Rather, it is only an outline,
in summary format, of the major points of understanding which will form the
basis of the final documentation, which will be prepared by Investor. 


The Company grants to the Investor a security interest
in the Collateral and authorizes the Investor to file, notwithstanding any
termination of this Proposal Letter, UCC-1 financing statements covering the
Collateral naming the Investor as secured party and the Company as the debtor,
in all appropriate jurisdictions, together with any amendments, modifications
and substitutions thereto to secure the obligations of the Company to the
Investor contained herein and the cost, if any, incurred in collecting such
obligations. 


This Proposal Letter is not
and shall not be deemed to be a binding agreement by LMF to provide the
Investment as set forth herein. Such agreement will arise only upon the
execution and delivery by TUYU of definitive agreements satisfactory in form
and substance to LMF and the fulfillment, to the satisfaction of LMF, of
certain conditions precedent required by LMF and set forth therein. In the
event TUYU elects not to consummate the transactions contemplated hereby or
TUYU is unable for any reason to close the transaction in accordance with the
terms and conditions of this letter on or before March 27, 2007, the terms of
this Proposal Letter shall automatically terminate (unless extended in writing
in LMF’s discretion), and LMF shall thereafter be entitled to retain the full
amount of the Deposit irrespective of the amount of expenses incurred; provided,
however, in the event LMF’s costs and expenses exceed the amount of the
Deposit, TUYU shall be liable for the difference. 


If the above is acceptable
to you, please sign and return to us the enclosed copy of this Proposal Letter
no later than the close of business on March 12, 2007. 


AGREED TO: 


	
 


	
By:




	
Title: