EXHIBIT 10.44
Advanced Aesthetics, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
September 1, 2005
c/o Pequot Capital Management
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: Exchange of Series F Preferred Stock for Series H Preferred Stock
Gentlemen:
Reference is made to that certain Subscription Agreement dated as of
July 7, 2005, between you and Advanced Aesthetics, Inc. (the "Company"),
pursuant to which you acquired (i) shares of the Company's Series F Preferred
Stock, par value $0.01 per share ("Series F Preferred Stock"), and (ii) a
warrant (the "Original Warrant") to purchase shares of the Company's common
stock, par value $0.01 per share ("Common Stock") (collectively, the "Series F
Investment"). As you know, the Company is offering (the "Series G Offering") to
sell shares of Series G Preferred Stock, par value $0.01 per share ("Series G
Preferred Stock"), together with warrants to purchase shares of Common Stock,
pursuant to that certain Confidential Private Placement Memorandum dated August
30, 2005 (the "Memorandum"). In connection with the Series G Offering and your
participation therein, you and the Company desire to conform the terms of the
Series F Investment to the terms of the Series G Offering. Accordingly, you and
the Company agree as follows:
1. Exchange of Shares. Concurrently with the closing of the Series G
Offering (the "Closing"), you will exchange your shares of Series F Preferred
Stock for a like number of shares (the "Series H Shares") of the Company's
Series H Preferred Stock, par value $0.01 per share ("Series H Preferred
Stock"). The Certificate of Designation of the Series H Preferred Stock is
attached hereto as Exhibit A. You agree to deliver the original stock
certificate evidencing your shares of Series F Preferred Stock to the Company
for cancellation.
2. Exchange of Warrant. Concurrently with the Closing, you will
exchange the Original Warrant for a new warrant in the form attached hereto as
Exhibit B (the "New Warrant"). The New Warrant replaces and supersedes the
Original Warrant. You agree to deliver the Original Warrant to the Company for
cancellation.
3. Registration Rights Agreement. Upon cancellation of your shares of
Series F Preferred Stock and the Original Warrant, the rights and benefits
granted to you under that certain Registration Rights Agreement dated as of July
7, 2005 will be of no further force or effect, given that Agreement's specific
and limited application to the shares of Common Stock to
be issued upon conversion of your shares of Series F Preferred Stock and/or
exercise of the Original Warrant. In substitution thereof, you and the Company
will execute and deliver a new Registration Rights Agreement at the Closing
attached to the Memorandum as Annex E.
4. Representations and Warranties.
(a) The Company hereby represents, warrants, acknowledges and
agrees as follows:
(i) The Company possesses all requisite power and authority to
issue and deliver the Series H Shares and to issue the Common Stock upon
conversion of the Series H Shares. The execution and delivery of this Letter
Agreement has been duly authorized by all necessary corporate action. This
Letter Agreement has been duly executed and delivered and constitutes valid and
binding obligations of the Company, enforceable against the Company in
accordance with its terms (i) except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally, including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(ii) The shares of Series H Preferred Stock to be issued to
you, when issued in exchange for the shares of Series F Preferred Stock pursuant
to Section 1 hereof, will be duly authorized, validly issued, fully paid and
nonassessable. The Common Stock issuable upon conversion of such shares of
Series H Preferred Stock and exercise of the New Warrant has been duly
authorized and validly reserved for issuance and, when and if issued upon
conversion in accordance with the Certificate of Designation of the Series H
Preferred Stock and/or exercise in accordance with the New Warrant, will be
validly issued, fully paid and nonassessable. No holder of any of the Series H
Preferred Stock will be subject to personal liability solely by reason of being
such a holder.
(iii) The representations, warranties, acknowledgements and
agreements of the Company set forth in Section 3(A) of that certain Subscription
Agreement dated as of the date hereof between you and the Company which relate
to the Series G Offering are hereby incorporated herein by reference and shall
apply mutatis mutandis to this Letter Agreement as if set forth in full herein.
(b) You represent and warrant that (i) you have full power and
authority to execute and deliver this Letter Agreement and to carry out the
provisions hereof, and (ii) the execution and delivery of this Letter Agreement
has been duly authorized by all necessary action.
5. Buyback of Shares and Warrant. In the event that you shall deliver
written notice to the Company of your election to seek redemption pursuant to
this Section 5 of the Letter Agreement at any time when the shares of Common
Stock issuable upon conversion or exercise of the Series H Shares and the New
Warrant then held by you shall not then be covered by an effective registration
statement filed with the Securities and Exchange Commission, the Company agrees
that it will, within 20 days of receipt of such written notice, repurchase the
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Series H Shares and New Warrant then held by you for an aggregate repurchase
price of $100 in cash.
6. Escrow. You understand that the shares and warrants issuable to the
purchasers in the Series G Offering and the Series H Preferred Stock and
warrants being exchanged for the Series F Investment will be delivered to you
when the Escrow Funds (as defined in the Escrow Agreement annexed as Exhibit G
to the Memorandum) ("Escrow Agreement") are released in accordance with the
provisions thereof. In the event that such Escrow Funds are not released to the
Company in accordance with the Escrow Agreement but are returned to investors,
this Letter Agreement shall be of no force and effect.
Please indicate your agreement below.
Very truly yours,
ADVANCED AESTHETICS, INC.
By: __________________________
Name:
Title:
AGREED:
By:_____________________________
Name:
Title:
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