Document:

<PAGE>

                                                                    Exhibit 10.2

                                 Promissory Note
                                  SECURED NOTE

DATE:                                        June 30, 2007

MAKER:                                     CURTIS SCHMID
MAKER'S MAILING ADDRESS:                   3022 Fannin Ave.
                                           Midland, Midland County, Texas  79705

PAYEE:                                     PENGE CORP.
PLACE FOR PAYMENT (INCLUDING COUNTY):      3327 West Wadley, Suite 3-366
                                           Midland, Midland County, Texas 79705

PRINCIPAL AMOUNT:                          ONE HUNDRED FIFTY-FIVE THOUSAND
                                           THREE HUNDRED NINETY-TWO AND
                                           25/100 DOLLARS ($155,392.25)

ANNUAL INTEREST RATE ON UNPAID             SEVEN PERCENT (7%) per annum
PRINCIPAL FROM DATE:

ANNUAL INTEREST RATE ON MATURED,           SEVEN PERCENT (7%) per annum
UNPAID AMOUNT:
TERMS OF PAYMENT (PRINCIPAL                All unpaid principal, together with
AND INTEREST):                             interest in the amount of ONE HUNDRED
                                           FIFTY-FIVE THOUSAND THREE HUNDRED
                                           NINETY-TWO AND 25/100 DOLLARS
                                           ($155,392.25) shall be due and
                                           payable in three equal payments of
                                           principal together with interest
                                           earned to date on the 30th day of
                                           each of June of 2008, 2009 and 2010
                                           (the "Maturity Date").

SECURITY FOR PAYMENT:
         A Security Interest Created and Granted in the Following Security:
         Collateral:             Maker's interest in the Stock and Ground of S&S
                                 Plant Farm Inc., a Texas Corporation

OTHER SECURITY FOR PAYMENT:         None

<PAGE>

SPECIAL PROVISION: Reference is hereby made for all purposes to that certain
Stock Purchase Agreement by and among Penge Corp., a Delaware Corporation, S&S
Plant Farm Inc., a Texas Corporation, and Curtis Schmid, individual, dated as of
June 30, 2007. Reference is specifically made to sub-paragraphs 1.2 (e) and (f).
The obligations of Maker in this Secured Note are contingent upon the
performance of its obligations under sub-paragraph 1.2 (f). Should Shareholder,
as named in that paragraph, fail to discharge all of the obligations set forth
in said sub-paragraph (f), the amount of Purchaser's obligation under this
Secured Note shall be reduced by the exact same amount. For example and to
exhibit the workings of this provision, if on June 30, 2008, Payee shall have
failed to discharge its obligations to the extent of the principal and interest
payment due by Maker on that date, Maker shall only owe what has actually been
discharged by Payee as though that amount were the original principal balance of
this Secured Note. Therefore, if Payee has discharged $30,000.00 of its
obligations, on or before June 30, 2008, all that Payee will owe is $30,000.00
as though it were the original principal balance with no interest earned. If on
or before June 30, 2009, Payee has once again discharged an additional amount,
but said amount is less than Maker's obligation for that payment, then Maker's
only obligation will be the additional amount discharged by Payee with no
interest earned. The same calculation will be made for June 30, 2010 so that if
additional obligations of Payee have been discharged since the two years before,
then Maker will owe to the extent of those newly discharged obligations and that
will be the full extent of his obligation under this Secured Note.

         Maker promises to pay to the order of Payee at the place for payment
and according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.

         If Maker defaults in the payment of this Note or in the performance of
any obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
Payee may declare the unpaid principal balance and earned interest on this Note
immediately due. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notices
of protest, to the extent permitted by law.

         If this Note or any instrument securing or collateral to it is given to
an attorney for collection or enforcement, or if suit is brought for collection
or enforcement, or if it is collected or enforced through probate, bankruptcy,
or other judicial proceeding, then Maker shall pay Payee all costs of collection
or enforcement, including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.

         Interest on the debt evidenced by this note shall not exceed the
maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that maximum
amount shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.

         Each Maker is responsible for all obligations represented by this Note.

         When the context requires, singular nouns and pronouns include the
plural.

                                    /s/ CURTIS SCHMID
                                    -----------------------------------
                                    CURTIS SCHMID                          Maker

<PAGE>

         Joined by Payee this 30 day of June, 2007 to indicate its agreement to
and understanding of the Special Provision as set forth above.

                                       PENGE CORP.

                                       By: /S/ KIRK FISCHER
                                           ---------------------------------

PREPARED IN THE LAW OFFICE OF:

Law Offices of Alan H. Meyers, P.C.
505 N. Big Spring, Suite 104
Midland, Texas 79701
(432) 682-5800
(432) 682-5808 (Fax)Exhibit 4.2  

FIRST SUPPLEMENTAL INDENTURE  

Dated as of May 30, 2007 

to 

INDENTURE  

Dated as of November 16, 2006 

by
and among 

SALLY HOLDINGS LLC
  and
 SALLY CAPITAL INC.,

as Co-Issuers, 

the
SUBSIDIARY GUARANTORS named therein,

as Subsidiary Guarantors, 

and 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee 

9.25% SENIOR NOTES DUE 2014  

 
FIRST SUPPLEMENTAL INDENTURE  

        This FIRST SUPPLEMENTAL INDENTURE, dated as of May 30, 2007 (this "Supplemental Indenture"), by and among
Sally Holdings LLC, a Delaware limited liability company (the "Company"), Sally Capital Inc., a Delaware corporation (the
"Co-Issuer" and, together with the Company, the "Issuers"), Design Lengths, Inc., a
Delaware corporation ("Design Lengths"), Power IQ, Inc., a Delaware corporation ("Power IQ"),
Salon Success International, LLC, a Florida limited liability company ("Salon Success"), Soren Enterprises, Inc., a Delaware corporation
("Soren Enterprises" and together with Design Lengths, Power IQ and Salon Success, the "New Subsidiary
Guarantors"), and each of the subsidiary guarantors under the Indenture referred to below and identified on Schedule A  attached hereto (collectively, the "Existing Guarantors"), and Wells Fargo Bank, National Association, as Trustee under the
Indenture referred to below (the "Trustee"). 

W
I T N E S S E T H: 

        WHEREAS,
the Issuers, the Existing Guarantors, Pacific Salon Systems, Inc., a Washington corporation ("Pacific Salon"), XRG
Enterprises, Inc., a California corporation ("XRG") and the Trustee have heretofore become parties to an Indenture, dated as of
November 16, 2006 (as amended, supplemented, waived or otherwise modified, the "Indenture"), providing for the issuance of 9.25% Senior Notes due
2014 of the Issuers (the "Notes"); 

        WHEREAS,
all of the Existing Guarantors identified on Schedule A to this Supplemental Indenture are currently Subsidiary Guarantors under the Indenture; 

        WHEREAS,
Pacific Salon merged and consolidated with and into Innovations—Successful Salon Services, a California corporation
("Innovations"), whereby Innovations became the surviving entity, and XRG merged and consolidated with and into Innovations, whereby Innovations became
the surviving entity; 

        WHEREAS,
pursuant to Section 1303 of the Indenture, upon the merger or consolidation of any Subsidiary Guarantor with and into the Company or another Subsidiary Guarantor that is
the surviving Person in such merger or consolidation, then such Subsidiary Guarantor will automatically and unconditionally be released from all obligations under its Subsidiary Guarantee, and such
Subsidiary Guarantee shall thereupon terminate and be discharged and of no further force or effect; 

        WHEREAS,
the New Subsidiary Guarantors are indirect, wholly-owned subsidiaries of the Company; 

        WHEREAS,
the New Subsidiary Guarantors are Restricted Subsidiaries under the Indenture; 

        WHEREAS,
Sections 414 and 1308 of the Indenture provide that the Company is required to cause the New Subsidiary Guarantors to execute and deliver to the Trustee a supplemental indenture
pursuant to which the New Subsidiary Guarantors shall guarantee the Issuers' Subsidiary Guaranteed Obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and conditions set forth
herein and in Article XIII of the Indenture; 

        WHEREAS,
each New Subsidiary Guarantor desires to enter into this Supplemental Indenture for good and valuable consideration, including substantial economic benefit in that the financial
performance and condition of the New Subsidiary Guarantors is dependent on the financial performance and condition of the Issuers, the obligations hereunder of which the New Subsidiary Guarantors have
guaranteed, and on the New Subsidiary Guarantors' access to working capital through the Company's access to revolving credit borrowings under the Senior Credit Agreements; and 

        WHEREAS,
pursuant to Section 901 of the Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent
of any Holder. 

1

 

        NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Subsidiary Guarantors, the Issuers,
the Existing Guarantors and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows: 

        1.    Defined Terms.    As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or
recital hereto are used herein as therein defined. The words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture
as a whole and not to any particular Section hereof. 

        2.    Release of Certain Subsidiary Guarantees.    Pursuant to Section 1303 of the Indenture, each of Pacific
Salon and XRG is released from all obligations under its Subsidiary Guarantee, and Pacific Salon's and XRG's Subsidiary Guarantee shall thereupon terminate and be discharged and of no further force or
effect. 

        3.    Agreement to Guarantee.    Upon the execution of this Supplemental Indenture, each of the New Subsidiary
Guarantors shall become and each of the Existing Guarantors shall continue to be, a "Subsidiary Guarantor" under and as defined in the Indenture. Each New Subsidiary Guarantor hereby agrees, jointly
and severally with any other New Subsidiary Guarantors and Existing Guarantors and fully and unconditionally, to guarantee the Subsidiary Guaranteed Obligations under the Indenture and the Notes on
the terms and subject to the conditions set forth in Article XIII of the Indenture and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture
as a "Subsidiary Guarantor" under the Indenture. The Subsidiary Guarantee of each New Subsidiary Guarantor is subject to the subordination provisions of the Indenture. 

        4.    Termination, Release and Discharge.    Each New Subsidiary Guarantor's Subsidiary Guarantee shall terminate and
be of no further force or effect, and each New Subsidiary Guarantor shall be released and discharged from all obligations in respect of such Subsidiary Guarantee, as and when provided in
Section 1303 of the Indenture. 

        5.    Parties.    Nothing in this Supplemental Indenture is intended or shall be construed to give any Person, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of each New Subsidiary Guarantor's Subsidiary Guarantee or any provision contained herein or in
Article XIII of the Indenture. 

        6.    Governing Law.    THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. THE TRUSTEE, THE COMPANY, THE CO-ISSUER, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS AGREE TO SUBMIT TO THE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL
INDENTURE. 

        7.    Ratification of Indenture; Supplemental Indentures Part of Indenture.    Except as expressly amended hereby, the
Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of
the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity
or sufficiency of this Supplemental Indenture or as to the accuracy of the recitals to this Supplemental Indenture. 

        8.    Counterparts.    The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts,
all of which together shall constitute one and the same agreement. 

2

 

        9.    Headings.    The Section headings herein are for convenience of reference only and shall not be deemed to alter
or affect the meaning or interpretation of any provisions hereof. 

3

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. 

	 	 	COMPANY:
	

 	
 	

SALLY HOLDINGS LLC
	

 	
 	

By:	

/s/  GARY G. WINTERHALTER      

	 	 	Name:	Gary G. Winterhalter
	 	 	Title:	President and Chief Executive Officer
	

 	
 	
CO-ISSUER:
	

 	
 	

SALLY CAPITAL INC.
	

 	
 	

By:	

/s/  GARY G. WINTERHALTER      

	 	 	Name:	Gary G. Winterhalter
	 	 	Title:	President and Chief Executive Officer
	

 	
 	
NEW SUBSIDIARY GUARANTORS:
	

 	
 	

DESIGN LENGTHS, INC.
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary
	

 	
 	

POWER IQ, INC.
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary
	

 	
 	

SALON SUCCESS INTERNATIONAL, LLC
	

 	
 	

By:	

/s/  GARY G. WINTERHALTER      

	 	 	Name:	Gary G. Winterhalter
	 	 	Title:	President and Chief Executive Officer

S-1

 

	

 	
 	

SOREN ENTERPRISES, INC.
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary

S-2

 

	

 	
 	
EXISTING GUARANTORS:
	

 	
 	

ARMSTRONG-MCCALL HOLDINGS, INC.

ARMSTRONG-MCCALL HOLDINGS, L.L.C.

ARMSTRONG MCCALL MANAGEMENT, L.C.

ARNOLD'S, INC.

BEAUTY HOLDING LLC

BEAUTY SYSTEMS GROUP LLC

BEYOND THE ZONE, INC.

BRENTWOOD BEAUTY LABORATORIES INTERNATIONAL, INC.

COLORESSE, INC.

DIORAMA SERVICES COMPANY, LLC

ENERGY OF BEAUTY, INC.

ESTHETICIAN SERVICES, INC.

FOR PERMS ONLY, INC.

HIGH INTENSITY PRODUCTS, INC.

INNOVATIONS-SUCCESSFUL SALON SERVICES

ION PROFESSIONAL PRODUCTS, INC.

LADY LYNN ENTERPRISES, INC.

LAND OF DREAMS, INC.

LOME BEAUTY INTERNATIONAL, INC.

MIRACLE LANE, INC.

MODERN PANACHE, INC.

NAIL LIFE, INC.

NEKA SALON SUPPLY, INC.

NEW IMAGE PROFESSIONAL PRODUCTS, INC.

PROCARE LABORATORIES, INC.

SALLY BEAUTY DISTRIBUTION LLC

SALLY BEAUTY DISTRIBUTION OF OHIO, INC.

SALLY BEAUTY INTERNATIONAL FINANCE LLC

SALLY BEAUTY SUPPLY LLC

SATIN STRANDS, INC.

SEXY U PRODUCTS, INC.

SILK ELEMENTS, INC.

TANWISE, INC.

VENETIAN BLENDS, INC.
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary

S-3

 

	

 	
 	

ARMSTRONG MCCALL L.P.
	

 	
 	

By:	

Armstrong McCall Management, L.C., its General Partner
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary

S-4

 

	

 	
 	
TRUSTEE:
	

 	
 	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
	

 	
 	

By:	

/s/  JOSEPH P. O'DONNELL      

	 	 	Name:	Joseph P. O'Donnell
	 	 	Title:	Vice President

S-5

 
Schedule A  

Existing Guarantors  

	Name of Existing Guarantor as Specified in its Charter/Constituent Documents
 
	 	State or Jurisdiction of Incorporation or

Organization

	Armstrong McCall Holdings, Inc	 	Texas
	Armstrong McCall Holdings, L.L.C	 	Delaware
	Armstrong McCall, L.P	 	Texas
	Armstrong McCall Management L.C	 	Texas
	Arnold's, Inc	 	Arkansas
	Beauty Holding LLC	 	Delaware
	Beauty Systems Group LLC	 	Delaware
	Beyond the Zone, Inc	 	Delaware
	Brentwood Beauty Laboratories International, Inc	 	Texas
	Coloresse, Inc	 	Delaware
	Diorama Services Company, LLC	 	Delaware
	Energy of Beauty, Inc	 	Delaware
	Esthetician Services, Inc	 	Delaware
	For Perms Only, Inc	 	Delaware
	High Intensity Products, Inc	 	Delaware
	Innovations—Successful Salon Services	 	California
	Ion Professional Products, Inc	 	Delaware
	Lady Lynn Enterprises, Inc	 	Delaware
	Land of Dreams, Inc	 	Delaware
	Lome Beauty International, Inc	 	Delaware
	Miracle Lane, Inc	 	Delaware
	Modern Panache, Inc	 	Delaware
	Nail Life, Inc	 	Delaware
	Neka Salon Supply, Inc	 	New Hampshire
	New Image Professional Products, Inc	 	Delaware
	Procare Laboratories, Inc	 	Delaware
	Sally Beauty Distribution LLC	 	Delaware
	Sally Beauty Distribution of Ohio, Inc	 	Delaware
	Sally Beauty International Finance LLC	 	Delaware
	Sally Beauty Supply LLC	 	Delaware
	Satin Strands, Inc	 	Delaware
	Sexy U Products, Inc	 	Delaware
	Silk Elements, Inc	 	Delaware
	Tanwise, Inc	 	Delaware
	Venetian Blends, Inc	 	Delaware

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