Exhibit 10.7


SECURED
DEMAND NOTE


	
 

	
 


	
$375,000

	
March 27, 2007


	
 

	
New York, New York





          FOR
VALUE RECEIVED, TRUEYOU.COM INC., a Delaware corporation, (the “Maker”),
promises to pay to Seapine Investments, LLC (the “Payee”), ON DEMAND, c/o Kidd & Company, LLC,
10 Glenville Street, Greenwich, Connecticut 06831 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: