EX-4.2 84 a2177321zex-4_2.htm EX-4.2

Exhibit 4.2

FIRST SUPPLEMENTAL INDENTURE

Dated as of May 30, 2007

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.

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.

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.

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