Exhibit 10.1  


SECURED DEMAND NOTE


	
 

	
 


	
$1,125,000

	
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 International Ltd. (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 ONE MILLION, ONE
HUNDRED TWENTY FIVE THOUSAND ($1,125,000) 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: