CORPORATE FINANCE
Oceana
Partners LLC
CORPORATE
FINANCE
June
13,
2006
Xx.
Xxxxxx Xxxxxxx
Chief
Executive Officer
SweetskinZ
Holdings, Inc.
0000
Xxxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Dear
Xx.
Xxxxxxx,
This
agreement replaces in its entirety the earlier letter agreement dated November
30, 2005. This engagement letter shall serve as our agreement (the “Agreement”)
under which Oceana Partners LLC (“Oceana” or the “Advisor”) is retained as the
exclusive financial advisor and placement agent to SweetskinZ Holdings, Inc.
(the “Company”) and such other activities and services as the Company shall
require. In connection therewith, the parties hereto agree as
follows:
1.
Information
and Coordination.
The
Company will supply Oceana with all current publicly disclosed information
respecting the Company’s business prospects and operations (the “Information”).
The Company recognizes and confirms that Oceana (a) will use and rely primarily
on the Information in performing the services contemplated by this Agreement
without having independently verified the same, (b) does not assume
responsibility for the accuracy or completeness of the Information and (c)
will
not make an appraisal of any assets of the Company or any prospective investors
or purchaser of the Offering. To the best of the Company’s knowledge, the
Information to be furnished by the Company, when delivered, will be true and
correct in all material respects and will not contain any material misstatement
of fact or omit to state any material fact necessary to make the statements
contained therein not misleading. The Company shall make available to Oceana
and/or shall agree to have professionally prepared at the Company’s expense, all
financial statements, marketing materials, subscription documents and other
information which in Oceana’s reasonable judgment shall be necessary or
appropriate. The Company will promptly notify Oceana if it learns of any
material inaccuracy or misstatement in or material omission from, any
Information theretofore delivered to Oceana. Advisor will coordinate its
activities with the Company regarding the marketing of the securities to
investors during the term of this Agreement, as herein defined. The Company
will
make senior management reasonably available for meetings with prospective
investors.
2.
Exclusive
Engagement.
During
the Term, as below defined, Advisor shall serve as the exclusive advisor to
the
Company for purposes of the Company’s financial and capital formation,
investment banking and merger and acquisition activities. Nothing herein shall
preclude Advisor from engaging sub-advisors to assist Advisor in the performance
of these activities. In such case, sub-advisors shall be compensated for their
services from such portion of the compensation described under Section 4 hereof
as Advisor shall determine in its sole discretion. Mr. Xxxxx Xxxxxx shall not
be
deemed a sub-advisor in connection herewith. Advisor shall identify on
Attachment A hereto each potential investor in a financing under the Term,
which
the Advisor or any sub-advisors contact during the Term and the Company is
not
in discussions with or otherwise has a previous relationship with (the “Oceana
Investor(s)”). It is specifically agreed that Advisor and any sub-advisors shall
not be paid a fee on proceeds received by entities or individuals which or
who
are not introduced to the Company by Advisor or any sub-advisor.
Oceana
Partners LLC
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Phone
(000) 000-0000 Fax (000) 000-0000
Oceana
Partners LLC
CORPORATE
FINANCE
3.
Term.
This
Agreement shall become effective on the execution date hereof and, unless
previously terminated pursuant to Paragraph 10 below, shall continue in effect
until December 31, 2007 (the "Termination Date"). The period from the date
hereof until the Expiration Date is hereafter referred to as the “Term.”
4.
Compensation.
|
a.)
|
On
each date on which any equity
or equity linked debt securities
are issued to an Oceana Investor and cash is received by the Company
(each
such date a "Closing Date"), the Company shall pay to Oceana or its
designee, in cash, a commission equal to seven percent (7%) of the
gross
purchase price for the equity securities. In addition, the Company
shall
issue to Oceana, or its designee, common stock purchase warrants
(the
"Warrants") to purchase seven percent (7%) of the aggregate common
stock
issued on the Closing Date or Closing Dates at an exercise price
per
Warrant equal to the price of the common stock on such Closing Date.
If
different classes of securities are issued in the form of a Unit,
then
Oceana shall be issued a Unit Purchase option equal to seven percent
(7%)
of the aggregate Units issued at an exercise price per Unit equal
to the
price of the Unit on such Closing Date. The Warrants or Units shall
be
exercisable upon issuance, shall expire five years from the Closing
Date,
unless otherwise extended by the Company, and shall have cashless
exercise
provisions. The Warrants or Units shall also have piggyback and demand
registration rights, anti-dilution and such other similar provisions
identical to the securities sold on the Closing Date.
The Company shall have the right to reject in whole or in part any
proposed purchaser of the securities in its sole and absolute discretion.
In the event that the Company does not accept funds from any Oceana
Investor, Oceana shall not be entitled to any commission hereunder
relating to such proposed purchaser.
|
Oceana
Partners LLC
CORPORATE
FINANCE
|
b.)
|
On
each date on which any non
equity-linked debt securities
are issued to an Oceana Investor and cash is received by the Company
(each
such date a "Closing Date"), the Company shall pay to Oceana or its
designee, in cash, a commission equal to four percent (4%) of the
gross
purchase price for the debt securities. In the event derivative equity
securities (such as warrants) are linked to such debt securities,
the
Company shall also issue to Oceana, or its designee, common stock
purchase
warrants (the "Warrants") to purchase seven percent (7%) of the aggregate
derivative securities issued at an exercise price per Warrant equal
to the
conversion price per derivate security on such Closing Date. If different
classes of derivative securities are issuable, then separate Warrants
shall be issued in respect of each class of derivative securities
equal to
seven percent (7%) of the aggregate derivative securities issued.
The
Warrants shall be exercisable upon issuance, shall expire five years
from
the Closing Date, unless otherwise extended by the Company, and shall
have
cashless exercise provisions. The Warrants shall also have piggyback
and
demand registration rights, anti-dilution and such other similar
provisions identical to the securities issuable upon conversion of
the
convertible debt sold on the Closing Date.
The Company shall have the right to reject in whole or in part any
proposed purchaser of the debt securities in its sole and absolute
discretion. In the event that the Company does not accept funds from
any
Oceana Investor, Oceana shall not be entitled to any commission hereunder
relating to such proposed purchaser.
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c.)
|
Notwithstanding
the foregoing, in connection with Oceana’s placement on behalf of the
Company of $4,133,793 of 5% senior convertible debentures and 4,133,793
three year common stock purchase warrants (the “Warrants”) in May 2006,
the Company shall pay Oceana a fee equal to $200,000 (of which $50,000
has
been paid) and a unit purchase option to purchase 200,000 units,
each unit
(“Unit”) consisting of one share of common stock and a warrant to purchase
one share of common stock at an exercise price of $1.15 per share.
The
unit purchase option is exercisable for $1 per Unit. In addition,
the
Company shall pay Oceana an amount equal to 4% of the gross amount
realized by the Company, if any, upon the exercise of the
Warrants.
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d.)
|
With
respect to any merger and acquisition services to be rendered by
Oceana during the Term, the parties shall negotiate an appropriate
fee at that time.
|
|
e.)
|
This
agreement shall act as irrevocable payment authorization instructions
authorizing the Oceana Investor to wire payment of the fee directly
to
Oceana on the Closing Date.
|
Oceana
Partners LLC
CORPORATE
FINANCE
5.
Retainer.
No
retainers shall be payable hereunder.
6.
Expenses.
Oceana
will be promptly reimbursed by the Company for all reasonable and authorized
out-of-pocket expenses incurred in connection with its activities hereunder.
These expenses may include, but are not limited to, travel
and lodging expenses, due diligence and investor meetings and events, expenses
to print documents for the Company, and postal expenses incurred for mailing
documents, such as materials to investors, for the Company. Oceana shall not
incur any expenses or series of related expenses, subject to reimbursement
by
the Company hereunder, which are in excess of $250, without obtaining the
Company’s prior written approval.
7.
Indemnification.
To the
extent the Advisor becomes involved in any capacity in any action, claim,
proceeding or investigation brought or threatened by any person, including
the
Company’s stockholders, related to or arising out of or in connection with this
Agreement, the Company will promptly reimburse the Advisor for reasonable legal
and other expenses as and when they are incurred in connection therewith. The
Company will indemnify and hold the Advisor harmless from and against any
losses, claims, damages, liabilities or expense to which the Advisor may become
subject under any applicable Federal or state law, or otherwise, related to,
arising out of or in connection with this Agreement, whether or not any pending
or threatened action, claim, proceeding, or investigation giving rise to or
on
the Advisor’s behalf and whether or not in connection with any action,
proceeding or investigation in which the Advisor is a party, except as to that
portion of any such loss, claim, damage, liability or expense which is found
by
a court of competent jurisdiction in a judgment which has become final, in
that
it is no longer subject to appeal or review, to have resulted from the Advisor’s
bad faith or gross negligence. The Advisor agrees to promptly notify the Company
of any action, claim, proceeding or investigation with regard to which the
Company may be liable for indemnification pursuant to the terms of this
Agreement. Neither the termination of this Agreement nor the completion of
the
services provided hereunder shall affect these indemnification provisions which
shall remain operative and in full force and effect.
8.
Arbitration.
Any
dispute between the Company and Oceana shall be subject to binding arbitration
before a New York City based panel of one arbitrator in accordance with the
rules of the American Arbitration Association. Prior to the selection of the
arbitrator of the binding arbitration, the parties shall first attempt
non-binding mediation before a mediator selected by said Association. In the
event the mediator makes a determination and only one of the parties refuses
to
accept said determination, then the refusing party shall be responsible for
all
arbitration and attorney’s fees of the other party should the refusing party
receive a less favorable result from the binding arbitration, subject however
to
the discretion of the arbitrators to reallocate these costs if cause is so
found
by the arbitrators.
Oceana
Partners LLC
CORPORATE
FINANCE
9.
Amendments This
Agreement may only be varied by written agreement between the Advisor and the
Company. All such variations shall only be effective when in writing, signed
by
the duly authorized representatives of both parties.
10.
Termination Subject
to Paragraphs 4, 6, 7 and 11, the provision of services hereunder may be
terminated prior to the Termination Date by the Company and/or the Advisor
by
giving written notice to the other party in the following events:
-
force majeure, defined
as a situation which, in the opinion of either party, creates any change or
development in existing laws and regulations or in local or international
financial, political, military, economic or market conditions or currency
exchange rate which is likely to render impossible the Offering;
-
breach
of any commitments hereunder by Advisor (which is not remedied within 14 days
after written notification to such effect);
In
the
event that the Agreement is terminated prior to the Termination Date, the
Company will forthwith pay the Advisor those of its expenses and fees incurred
or owing up to the Termination Date.
11.
Tail.
Within
20 business days of the Termination Date, the Advisor shall deliver to the
Company a list identifying all investors that Oceana and any of its sub-advisors
had solicited in connection herewith. In the event the Company thereafter
receives funding from any Oceana Investor or an affiliate thereof, within 18
months of the Termination Date (the “Tail Period”), then the Company shall pay
the Advisor the fee as described in paragraph 4 (the “Tail Fee”). The Tail Fee
shall apply to any Oceana Investors, including their affiliates, and to any
third party investor introduced to the Company by Oceana Investors or affiliates
thereof assuming such third party investor was not previously in discussions
with the Company before such introduction.
12.
Notices.
Notices
shall be served to the address/fax number of each party set out in this letter
(or such other address as any of the parties may notify to the other in writing
from time to time). Such notice shall be deemed to be duly given or made when
it
shall have been delivered by registered mail, courier or fax, which shall be
confirmed by registered mail or courier, to the party to which it is required
to
be given or made.
| Contact Addresses: | |
| Oceana Partners LLC: |
Xx. Xxxxxxxxxx X. Xxxxxx
Oceana
Partners LLC
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Tel:
000 000-0000
Fax:
000 000-0000
|
Oceana
Partners LLC
CORPORATE
FINANCE
| SweetskinZ Holdings, Inc. |
Xx. Xxxxxx Xxxxxxx
0000
Xxxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Tel.
000 000-0000
Fax
000 000-0000
|
13.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
New
York.
14.
Miscellaneous.
This
Agreement sets forth the understanding of the parties relating to the subject
matter hereof, and supersedes and cancels any prior communications,
understandings and agreements between the parties with respect to the subject
matter hereof. This Agreement cannot be modified or changed, nor can any of
its
provisions be waived, except in writing when signed by both parties.
If
the
foregoing meets with your understanding, kindly acknowledge your acceptance
at
the place indicated on this letter and on the enclosed copy of this letter.
Please return one of the executed letters to me and keep one for your
files.
Sincerely,
Oceana
Partners LLC
/s/
Xxxxxxxxxx X. Xxxxxx
____________________________
Xxxxxxxxxx
X. Xxxxxx
Senior
Managing Director
ACCEPTED
AND AGREED TO BY:
SweetskinZ
Holdings, Inc.
/s/
Xxxxxx Xxxxxxx
______________________
Xxxxxx
Xxxxxxx
Chief
Executive Officer
Oceana
Partners LLC
CORPORATE
FINANCE
ATTACHMENT
A
1.
Siam Capital Management (Orlando)
2.
XX Xxxxx (NYC)
3.
Sandhurst Capital/Crestview Capital (Darien/Northbrook)
4.
Laurus Funds (NYC)
5.
Redwood (San Francisco)
6.
Bushido/Gamma (NYC)
7.
Iroquois (NYC)
8.
MAG Capital (LA)
9.
Omicron (NYC)
10.
Rock Hill (Bala Cynwyd)
11.
LV Equity (Hoboken)
12.
Vision Capital (NYC)
13.
Sangamon (Chicago)
14.
DC Asset Management (NYC)
15.
New York Consulting Group (NYC)
16.
Midsummer (NYC)
17.
Bristol Capital (San Francisco)
18.
Canaccord (Toronto)
19.
Enable Capital (San Francisco)
20.
LH Financial (NYC)
21.
Gryphon (Dallas)
22.
GM Capital
23.
Ram (Truk)
24.
XX Xxxxx
25.
Xxxxxx Bay Capital
26.
Whalehaven
27.
Crestview
28.
CentreCourt Asset Managment
29.
LibertyView
30.
Dolphin Asset Management
31.
Scorpion Capital Partners
