Registration of Securities by a Small-Business Issuer — Form SB-2 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: SB-2 Registration of Securities by a Small-Business HTML 1.69M
Issuer
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, HTML 260K Liquidation or Succession
3: EX-3.1 Articles of Incorporation/Organization or By-Laws HTML 7K
4: EX-3.2 Articles of Incorporation/Organization or By-Laws HTML 8K
5: EX-3.3 Articles of Incorporation/Organization or By-Laws HTML 7K
6: EX-3.4 Articles of Incorporation/Organization or By-Laws HTML 121K
7: EX-4.2 Instrument Defining the Rights of Security Holders HTML 101K
8: EX-4.3 Instrument Defining the Rights of Security Holders HTML 137K
9: EX-4.4 Instrument Defining the Rights of Security Holders HTML 73K
10: EX-4.5 Instrument Defining the Rights of Security Holders HTML 152K
11: EX-5.1 Opinion re: Legality HTML 77K
12: EX-10.1 Material Contract HTML 107K
13: EX-10.2 Material Contract HTML 101K
14: EX-10.3 Material Contract HTML 100K
15: EX-10.4 Material Contract HTML 66K
16: EX-10.5 Material Contract HTML 312K
17: EX-10.6 Material Contract HTML 175K
18: EX-10.7 Material Contract HTML 81K
19: EX-10.8 Material Contract HTML 22K
20: EX-10.9 Material Contract HTML 49K
21: EX-23.1 Consent of Experts or Counsel HTML 13K
22: EX-23.2 Consent of Experts or Counsel HTML 10K
EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”)
is
entered into as of March 31, 2006 by and among SWEETSKINZ HOLDINGS CORP., a
Delaware corporation (f/k/a NUPRO INNOVATIONS, INC.) (“SKNZ”),
SWEETSKINZ MERGER SUB, INC., a Delaware corporation, which is a wholly owned
subsidiary of SKNZ (“Merger
Sub”
and,
together with SKNZ, the “SKNZ
Parties”),and
SWEETSKINZ, INC., a Pennsylvania corporation (“SweetskinZ”).
Capitalized terms used herein, but not defined have the meanings ascribed to
them in Annex
1
hereto.
RECITALS
WHEREAS,
the Board of Directors of each of SKNZ, Merger Sub and SweetskinZ have
determined that it is in the best interests of their respective stockholders
for
SKNZ to acquire SweetskinZ upon the terms and subject to the conditions set
forth herein; and
WHEREAS,
the SKNZ Parties and SweetskinZ are desirous of effecting a merger, all upon
the
terms and conditions set forth herein.
NOW,
THEREFORE, the parties hereto, intending to be legally bound, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby represent, warrant, covenant, and agree as
follows:
SECTION
1
THE
MERGER
1.1 Merger.
Subject
to the terms and conditions of this Agreement, Merger Sub shall be merged with
and into SweetskinZ in a transaction intended to qualify as a tax-free
reorganization pursuant to Section 368(a) of the Code.
SECTION
2
TERMS
OF MERGER
2.1 Terms
of Merger; Effective Time.
The
terms of merger (the “Merger”)
are as
follows:
(a) Merger
Sub shall be merged with and into SweetskinZ in accordance with the statutory
provisions of the Pennsylvania Consolidated Statutes (“PCS”).
(b) SweetskinZ
shall be the surviving corporation (the “Surviving
Corporation”),
and
the corporate identity, existence, purposes, powers, franchises, rights, and
immunities of SweetskinZ shall continue unaffected and unimpaired by the Merger.
The corporate identity, existence, purposes, powers, franchises, rights, and
immunities of Merger Sub shall be merged into the Surviving Corporation, and
the
Surviving Corporation shall be fully vested therewith.
(c) Immediately
after the Closing, the Merger shall be effected by filing with each of the
Secretaries of State of Pennsylvania and Delaware the Certificate of Merger
attached hereto as Exhibit
A
(the
“Certificate
of Merger”).
The
time at which the Certificate of Merger is filed with the Secretary of State
of
Pennsylvania shall be the “Effective
Time”
of
the
Merger. Concurrently with the Closing, the parties shall cause the Certificate
of Merger to be so filed and recorded. In the event the Certificate of Merger
is
not filed with the Secretary of State of Pennsylvania by May 15, 2006 or is
withdrawn prior thereto, this Agreement shall be null and void.
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(d) Except
insofar as specifically otherwise provided by law, Merger Sub shall cease to
exist at the Effective Time, whereupon the separate existences of SweetskinZ
and
Merger Sub shall become a single corporation.
(f) At
the Effective Time, without any action by the holder thereof, (i) each issued
and outstanding share of SweetskinZ common stock, no par value per share
(collectively, “SweetskinZ
Common Stock”)
and
(ii) each outstanding option or warrant to purchase a share of SweetskinZ Common
Stock (the “Options”),
shall
be deemed cancelled and converted into the right to receive (A) with respect
to
the SweetskinZ Common Stock, .5311155
shares
of common stock, $.001 par value of SKNZ (the “SKNZ
Common Stock”),
and
(B) with respect to the Options, options (or warrants, as applicable)
exercisable into .5311155
shares
of SKNZ Common Stock upon substantially the same terms and conditions as in
effect prior to the Closing Date, but with appropriate adjustments to the
exercise prices of such Options (collectively, “Replacement Options”). At the
Effective Time, without any action by the holder thereof, each outstanding
share
of the capital stock of Merger Sub shall be deemed cancelled and converted
into
the right to receive one share of common stock of the Surviving Corporation.
The
aggregate number of shares of SKNZ Common Stock and the aggregate number of
Replacement Options issued to the SweetskinZ Stockholders pursuant to this
Section 2.1(f) shall equal, as of the Closing Date, approximately seventy three
and four tenths percent (73.4%) of the outstanding SKNZ Common Stock on a fully
diluted basis, exclusive of options outstanding under SKNZ Omnibus Stock
Plan.
(g) Fractional
shares of SKNZ Common Stock shall not be issued and each holder of SweetskinZ
Common Stock who would otherwise be entitled to receive any such fractional
shares shall forfeit the right thereto.
(h) At
the Effective Time, SKNZ shall issue certificates evidencing the number of
shares of SKNZ Common Stock issuable to the holders of SweetskinZ Common Stock
in the Merger and Replacement Options issuable to the holders of the Options
pursuant to Section 2.1(f) in return for the applicable certificates of
SweetskinZ Common Stock and applicable Option agreements to be cancelled
pursuant to Section 2.1(f).
(i) If
any certificate representing SweetskinZ Common Stock or Options shall have
been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the
person claiming such certificate to be lost, stolen or destroyed and an
agreement by such person to indemnify SKNZ and/or the Surviving Corporation
against any claim that may be made against it with respect to such certificate,
SKNZ will issue, in exchange for such lost, stolen or destroyed certificate,
certificates representing the SKNZ Common Stock or Options to which such Person
is entitled under Section 2.1(f), and any dividends or other distributions
to
which such Person is entitled pursuant to this Agreement.
-4-
2.2 Closing.
Subject
to the Parties’ right to terminate this Agreement found in Section 8 hereof, the
closing (the “Closing”)
of the
transactions contemplated by this Agreement shall take place at 10:00 a.m.
EST
on the second business day following the satisfaction or waiver of all
conditions to the obligations of the parties hereto to consummate the
transactions contemplated by this Agreement (the “Closing
Date”),
at
the offices of Rubin, Bailin, Ortoli, Mayer & Baker LLP, 405 Park Avenue -
15th
Floor,
New York, New York10022, unless another time, date or place is agreed to in
writing by the parties hereto.
SECTION
3
REPRESENTATIONS
AND WARRANTIES OF SWEETSKINZ
SweetskinZ
and Yann Mellet, SweetskinZ founder and majority shareholder, represent and
warrant to the SKNZ Parties, as of the date hereof and as of the Closing Date
(except for representations and warranties that speak as of a specific date
or
time, in which case, such representations and warranties shall be true and
complete as of such date or time), as follows:
3.1 Organization
of SweetskinZ.
SweetskinZ is a corporation duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Pennsylvania. SweetskinZ has
the
requisite corporate power and authority to own, lease, and operate its
properties, and to carry on its business where such properties are now owned,
leased, or operated and in the manner that such business is now conducted.
SweetskinZ is qualified to do business as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a Material Adverse
Effect on SweetskinZ.
3.2 Capitalization;
Ownership of Common Stock.
(a) The
authorized capital stock of SweetskinZ consists of 25,000,000 shares of common
stock, no par value per share (“Common Stock”), of which 5,393,360 shares are
issued and outstanding. There are options and warrants to purchase an aggregate
of 3,670,166 shares of SweetskinZ Common Stock outstanding. There are also
promissory notes outstanding with an aggregate face amount plus accrued interest
of $4,116,280 which notes and accrued interest will convert, immediately prior
to the Effective Time, into 4,116,280 shares of SweetskinZ Common
Stock
(b) Except
for the shares of SweetskinZ Common Stock, the options and warrants to purchase
SweetskinZ Common Stock and the promissory notes and accrued interest
convertible into SweetskinZ Common Stock described in 3.2(a) above and set
forth
on Schedule
3.2,
there
are no other outstanding equity securities of SweetskinZ outstanding or any
outstanding securities of SweetskinZ convertible or exchangeable at any time
into equity securities of SweetskinZ. SweetskinZ does not have any Subsidiaries
and does not own any interests in any corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, organization or any other entity.
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3.3 Authorization,
Validity and Effect of Agreements.
Subject
to the approval of the SweetskinZ Stockholders, SweetskinZ has the requisite
corporate power and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby. The consummation by SweetskinZ
of
the transactions contemplated hereby will have been duly authorized by all
requisite corporate action required to consummate the Merger. This Agreement
will constitute, and all agreements and documents contemplated hereby (when
executed and duly delivered pursuant hereto) will constitute, the valid and
legally binding obligations of SweetskinZ, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium
or
other similar laws relating to creditors’ rights and general principles of
equity.
3.4 Books
and Records.
The
minute books, stock record books, and other records of SweetskinZ, all of which
have been made available in their entirety to the SKNZ Parties, are complete
and
correct in all material respects. The minute book of SweetskinZ contains
accurate and complete records in all material respects of all meetings held
of,
and corporate action taken by, the stockholders, the Board of Directors, and
committees of the Board of Directors of SweetskinZ, and no meeting of any such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
3.5 Absence
of Conflicting Agreements.
The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement (with or without the giving of
notice, the lapse of time, or both): (a) other than the approval of the
SweetskinZ Stockholders, does not require the consent of any third party; (b)
will not conflict with any provision of the Certificate of Incorporation,
Bylaws, or other organizational documents of SweetskinZ; (c) will not conflict
with, result in a breach of, or constitute a default under, any applicable
Order, Legal Requirement, or ruling of any court or Governmental Body to which
SweetskinZ is subject; (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license, or permit to which SweetskinZ is a party or
by
which SweetskinZ or its assets are bound; and (e) will not create any Lien
upon
any of the assets of SweetskinZ or any of the SweetskinZ Common Stock. Except
for the filing of the Certificate of Merger with the Secretary of State of
the
State of Pennsylvania, and the filing of a Form D with the SEC, no filing or
consent with any Governmental Body or any other third party is required of
SweetskinZ to consummate this Agreement or the transactions contemplated
hereby.
3.6 Real
Property.
Other
than the lease for the property located at 2311 Wallace St., Philadelphia,
PA,
pursuant to which SweetskinZ is obligated to pay $9,500 per month through
December 31, 2006, SweetskinZ does not own any real property or have any Real
Property Interests. SweetskinZ is not and, to SweetskinZ’s Knowledge, the
landlord of its leased premises is not, in default, violation, or breach under
said lease, and no event has occurred and is continuing that constitutes (with
notice or passage of time or both) a default, violation or breach thereunder
by
SweetskinZ or, to SweetskinZ’s Knowledge, the landlord. SweetskinZ has not
received any notice of a default under said lease. SweetskinZ has, to date,
enjoyed quiet enjoyment and practical access to the premises subject to the
lease. The leased premises (including the improvements thereon): (a) are in
good
condition and repair consistent with its current use; and (b) are available
for
immediate use in the conduct of SweetskinZ’s business and operations.
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3.7 Tangible
Personal Property.
SweetskinZ owns or leases all Tangible Personal Property necessary to conduct
SweetskinZ’s business and operations as now conducted. Without material
exception, SweetskinZ owns and has good title to each item of Tangible Personal
Property owned by it, and none of such Tangible Personal Property owned by
SweetskinZ is subject to any Liens, except for Permitted Encumbrances. With
allowance for normal repairs, maintenance, wear, and obsolescence, each material
item of Tangible Personal Property owned by SweetskinZ is in good operating
condition and repair and is available for immediate use in SweetskinZ’s business
and operations.
3.8 Contracts.
Schedule
3.8
lists
all written Contracts and true and complete descriptions of all oral Contracts
(including any amendments and other modifications to such Contracts) that
SweetskinZ is a party or otherwise bound. All of such Contracts are in full
force and effect and are valid, binding, and enforceable against SweetskinZ
and,
to SweetskinZ’s Knowledge, the other party(ies) thereto in accordance with their
terms, except as the enforceability of such Contracts may be affected by
bankruptcy, insolvency, or similar laws affecting creditors’ rights generally
and by judicial discretion in the enforcement of equitable remedies. SweetskinZ
is not, and to SweetskinZ’s Knowledge, no other party thereto is, in material
default, violation, or breach in any respect under any such Contract and no
event has occurred and is continuing that constitutes (with notice or passage
of
time or both) a material default, violation, or breach in any respect thereunder
by SweetskinZ or, to SweetskinZ’s Knowledge, the other party(ies) thereto. No
party to any Contract listed on Schedule
3.8
has
delivered notice of any intention to terminate such Contract or amend the terms
thereof.
3.9 Intangibles.
Schedule
3.9
is a
true and complete list of all material Intangibles owned and used by SweetskinZ
in its business and operations as now conducted. SweetskinZ owns or has the
right to use all material Intangibles required for the conduct of SweetskinZ’s
business and operations as now conducted. Except as set forth on Schedule
3.9,
(a)
SweetskinZ has not received any notice or demand alleging that it is infringing
upon or otherwise acting adversely to any trademarks, service marks, trade
names, service names, copyrights, patents, patent applications, know-how,
methods, processes or other intellectual property of any other Person, and
there
is no claim, proceeding or action pending or, to SweetskinZ’s Knowledge,
threatened with respect thereto; (b) to SweetskinZ’s Knowledge, no Person is
infringing upon SweetskinZ’s rights or ownership interest in its Intangibles;
(c) to SweetskinZ’s Knowledge, SweetskinZ is not improperly using any trade
secrets, or improperly using any confidential information of or about any of
its
past or present employees; and (d) to SweetskinZ’s Knowledge, the ownership and
use of such Intangibles does not, and will not, as a result of the continued
operation of the business as presently conducted, violate any Legal Requirement
from or to any jurisdiction, and none of the Intangibles are subject to any
outstanding Order, decree, judgment, stipulation or any Lien. With respect
to
each Intangible license, sublicense or agreement, (a) neither SweetskinZ nor,
to
SweetskinZ’s Knowledge, the other party(ies) to the license, sublicense, or
agreement, is in material breach or default, and no event has occurred which
with notice or lapse of time would constitute a material breach or default
or
permit termination, modification, or acceleration thereunder, and (b) no party
to the license, sublicense or agreement has repudiated any provision thereof.
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3.10 Title
to Properties.
Except
as disclosed on Schedule
3.10,
SweetskinZ has good title to its assets and properties, free of Liens or rights
of others of any kind or nature, except for Permitted Encumbrances.
3.11 Financial
Statements.
SweetskinZ has delivered to SKNZ audited financial statements for the
twelve-month period ended year ended December 31, 2004 and 2005 (collectively,
the “Financial
Statements”).
Each
of the foregoing Financial Statements (including, in all cases, the notes
thereto, if any) (i) was accurate and complete in all material respects as
of
the date thereof, (ii) fairly presented the financial condition and results
of
operations of SweetskinZ set forth therein, and (iii) were prepared in
accordance with GAAP applied on a consistent basis throughout the period covered
thereby. SweetskinZ has no liabilities or obligations of any nature, whether
known or unknown and whether absolute, accrued, contingent, or otherwise, except
for liabilities or obligations reflected or reserved against in the Financial
Statements and liabilities incurred in the Ordinary Course of Business since
the
date thereof. No off-balance sheet transactions exist in which SweetskinZ is
a
party.
3.12 Tax
Matters.
(a) SweetskinZ
has filed all Tax Returns required to be filed. All such Tax Returns were
correct and complete and have been prepared in compliance in all material
respects with all applicable Legal Requirements. All Taxes owed by SweetskinZ
(whether or not shown on any Tax Return) have been paid. SweetskinZ currently
is
not the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by a Governmental Body in a jurisdiction
where SweetskinZ does not file Tax Returns that it may be subject to taxation
by
that jurisdiction. There are no Liens on any of the assets of SweetskinZ that
arose in connection with any familiar (or alleged failure) to pay any
Tax
(b) SweetskinZ
has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other Person for
all
periods for which the statutory period of limitations for the assessment of
such
Tax has not yet expired and all IRS Forms W-2 and 1099 required with respect
thereto have been properly completed and timely filed.
(c) No
foreign, federal, state or local Tax audits or administrative Tax proceedings
are pending or being conducted with respect to SweetskinZ. Neither SweetskinZ
nor any director or officer of SweetskinZ has received from any foreign,
federal, state or local Taxing Authority (including jurisdictions where
SweetskinZ has not filed Tax Returns) any (i) notice indicating an intent to
open an audit or other review; (ii) request for information related to Tax
matters; or (iii) notice of deficiency or proposed adjustment for any amount
of
Tax proposed, asserted or assessed by any Taxing Authority against SweetskinZ.
Correct and complete copies of all material federal, state, local and foreign
income Tax Returns filed or issued since its inception have been provided or
made available to the SKNZ Parties;
(d) SweetskinZ
has not (i) waived any statute of limitations in respect of any Tax which has
continuing effect or (ii) agreed to any extension of time with respect to a
Tax
assessment or deficiency which has not expired;
-8-
(e) SweetskinZ
has not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
(f) There
is no contract, agreement, plan or arrangement covering any persons that,
individually or collectively, could give rise to the payment of any amount
that
would not be deductible by reason of Section 280G of the Code, or would
constitute compensation in excess of the limitations set forth in Section 162(m)
of the Code.
(g) SweetskinZ
has disclosed to the Internal Revenue Service on the appropriate Tax
Returns any Reportable Transaction in which it has participated.
SweetskinZ has retained all documents and other records pertaining
to any Reportable Transaction in which it has participated, including
documents and other records listed in Treasury Regulation Section
1.6011-4(g) and any other documents or other records which are related to
any Reportable Transaction in which it has participated but
not listed in Treasury Regulation Section 1.6011-4(g).
3.13 Insurance.
SweetskinZ maintains insurance coverage with reputable insurers in such amounts
and covering such risks as are in accordance with normal industry practice
for
companies engaged in businesses similar to that of SweetskinZ (taking into
account the cost and availability of such insurance). Schedule
3.13
sets
forth a complete listing of all insurance maintained by SweetskinZ (indicating
form of coverage, name of carrier and broker, coverage limits and premium,
expiration dates and deductibles).
3.14 Personnel
and Employee Benefits.
(a) Employees
and Compensation.
Schedule
3.14
contains
a true and complete list of all employees employed by SweetskinZ as of the
date
hereof. Schedule
3.14
also
contains a true and complete list of all employee benefit plans or arrangements
covering the officers and employees employed by SweetskinZ, including, with
respect to the employees any:
(i) “Employee
welfare benefit plan,” as defined in Section 3(1) of ERISA (a “Welfare
Plan”);
(ii) “Multiemployer
pension plan,” as defined in Section 3(37) of ERISA (a “Multiemployer
Plan”
and,
together with the Welfare Plans, the “Benefit
Plans”);
(iii) “Employee
pension benefit plan,” as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) (a “Pension
Plan”);
(iv) Employee
plan that is maintained in connection with any trust described in Section
501(c)(9) of the Code; and
(v) Employment,
severance, or other similar contract, arrangement, or policy and each plan
or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers’ compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, or retirement benefits
or
arrangement for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights, stock purchases, or other forms of incentive
compensation or post-retirement insurance, compensation, or benefits that is
not
a Welfare Plan, Pension Plan, or Multiemployer Plan, (collectively,
“Benefit
Arrangements”).
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(b) Pension
Plans.
SweetskinZ does not sponsor, maintain, or contribute to any Pension
Plan.
(c) Welfare
Plans.
Each
Welfare Plan complies currently and has been maintained in compliance with
its
terms and, both as to form and in operation, with all requirements prescribed
by
any and all statutes, orders, rules and regulations that are applicable to
such
plans, including ERISA and the Code. SweetskinZ does not sponsor, maintain,
or
contribute to any Welfare Plan that provides health or death benefits to former
employees of SweetskinZ other than as required by Section 4980B of the Code
or
other applicable laws.
(d) Benefit
Arrangements.
Each
Benefit Arrangement has been maintained in compliance with its terms and with
the requirements prescribed by all statutes, orders, rules and regulations
that
are applicable to such Benefit Arrangement. SweetskinZ is not a party to any
written contract prohibiting the termination of any employee.
(e) Multiemployer
Plans.
Except
as disclosed on Schedule
3.14,
SweetskinZ has not at any time been a participant in any Multiemployer
Plan.
(f) Delivery
of Copies of Relevant Documents and Other Information.
SweetskinZ has delivered or made available to the SKNZ Parties true and complete
copies of each of the following documents:
(i) Each
Welfare Plan and Pension Plan (and, if applicable, related trust agreements)
and
all amendments thereto, and written descriptions thereof that have been
distributed to employees, all annuity contracts or other funding instruments;
and
(ii) Each
Benefit Arrangement and written descriptions thereof that have been distributed
to employees and complete descriptions of any Benefit Arrangement that is not
in
writing.
(g) Labor
Relations.
Except
as set forth on Schedule
3.14(g),
SweetskinZ is not a party to or subject to any collective bargaining agreement
or written or oral employment agreement with any employee. Except as set forth
on Schedule
3.14(g),
with
respect to its employees, SweetskinZ has complied in all material respects
with
all laws, rules and regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and has not received any notice alleging that SweetskinZ has failed
to
comply with any such laws, rules, or regulations. No proceedings are pending
or
overtly threatened between SweetskinZ, on the one hand, and any employee (singly
or collectively), on the other hand. No labor union or other collective
bargaining unit represents or claims to represent any of the employees.
3.15 Legal
Actions and Orders.
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(a) There
is no claim, legal action, counterclaim, suit, arbitration, or other legal
or
administrative proceeding, or Tax Proceeding pending or overtly threatened
against SweetskinZ or relating to the assets used by SweetskinZ, or the business
or operations of SweetskinZ, nor does SweetskinZ have Knowledge of any basis
for
the same.
(b) There
is no Order issued against SweetskinZ or the assets owned or used by SweetskinZ,
or to which SweetskinZ’s business or operations are subject.
(c) No
officer or director or, to SweetskinZ’s Knowledge, agent, or employee of
SweetskinZ is subject to any Order that prohibits such officer, director, agent,
or employee from engaging in or continuing any conduct, activity, or practice
relating to the business of SweetskinZ.
(d) No
Related Persons (including officers and directors of SweetskinZ) have: (i)
been
convicted or plead nolo contender to any felony in the past 10 years; (ii)
signed a consent decree with the SEC; or (iii) been convicted of any violation
of a SEC law.
3.16 Environmental
Compliance.
Neither
SweetskinZ’s Tangible Personal Property, nor, to its Knowledge, its Leased Real
Property contains (A) any asbestos, polychlorinated biphenyls or any PCB
contaminated oil, or (B) any Contaminants; and (ii) to SweetskinZ’s knowledge,
all of SweetskinZ’s Leased Real Property is in full compliance with all
applicable Environmental Laws.
(a) SweetskinZ
is, and at all times has been, in full compliance with each material Legal
Requirement that is or was applicable to it or to the conduct or operation
of
its business or the ownership or use of any of its assets;
(b) To
SweetskinZ’s knowledge, no event has occurred or circumstance exists that (with
or without notice or lapse of time) (i) may constitute or result in a violation
by SweetskinZ of, or a failure on the part of SweetskinZ to comply with, any
Legal Requirement, or (ii) may give rise under any Legal Requirement to any
obligation on the part of SweetskinZ to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature; and
(c) SweetskinZ
has not received any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any Legal
Requirement.
3.18 Conduct
of Business in Ordinary Course.
Since
December 31, 2005 and through the date hereof, there has not been any Material
Adverse Effect involving SweetskinZ. Without limiting the generality of the
foregoing, since that date, SweetskinZ has not:
(a) made
any material sale, assignment, lease, or other transfer of assets other than
in
the Ordinary Course of Business;
(b) canceled
any debts owed to or claims held by SweetskinZ outside the Ordinary Course
of
Business;
-11-
(c) made
any material changes in its accounting practices;
(d) suffered
any material write-down of the value of any assets or any write-off as
uncollectable of any of its accounts receivable;
(e) made
any capital expenditures outside the Ordinary Course of Business;
(f) made
any capital investment in or any loan to any other Person outside the Ordinary
Course of Business;
(g) experienced
any material damage, destruction, or loss (whether or not covered by insurance)
to its property; or
(h) committed
to do any of the foregoing.
3.19 Accounts
Receivable.
SweetskinZ does not have any material accounts receivable.
3.20 Customers
and Suppliers; Loss of Business.SweetskinZ
does not have any customers as of March 31, 2006.
3.21 Relationships
with Related Persons.
Yann
Mellet owns 2311 Wallace Street, Philadelphia, PA in fee simple. Such property
is leased by SweetskinZ through December 31, 2006 at a monthly rate of $9,500.
Other than ownership of such title, no Related Person of SweetskinZ has, or
has
had, any interest in any property (whether real, personal, or mixed and whether
tangible or intangible) used in or pertaining to SweetskinZ’s business. Except
as set forth in this Section 3.21, no Related Person of SweetskinZ is, or has
owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in a Person that has (i) had business dealings
or a
financial interest in any transaction with SweetskinZ other than business
dealings or transactions conducted in the Ordinary Course of Business with
SweetskinZ at substantially prevailing market prices and on substantially
prevailing market terms, or (ii) engaged in competition with SweetskinZ with
respect to any line of the products or services of SweetskinZ (a “Competing
Business”)
in any
market presently served by SweetskinZ except for ownership of less than one
percent of the outstanding capital stock of any Competing Business that is
publicly traded on any recognized exchange or in the over-the-counter market.
Further, our Vice President of Marketing, Fanny Berry, is a sibling to Yann
Mellet, our Chief Technology Officer.
3.22 Brokers
or Finders.
Neither
SweetskinZ nor, to SweetskinZ’s Knowledge, any director, officer, agent or
employee of SweetskinZ, has employed any broker or finder or has incurred or
will incur any broker’s, finder’s or similar fees, commissions or expenses, in
each case in connection with the transactions contemplated by this Agreement.
-12-
SECTION
4
REPRESENTATIONS
AND WARRANTIES OF THE SKNZ PARTIES
The
SKNZ
Parties, jointly and severally, represent and warrant to SweetskinZ (and the
SweetskinZ Stockholders) as of the date hereof and as of the Closing Date
(except for representations and warranties that speak as of a specific date
or
time, in which case, such representations and warranties shall be true and
complete as of such date or time) as follows:
4.1 Organization
of SKNZ and Merger Sub.
SKNZ
and Merger Sub are duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Each other direct or indirect subsidiary
of
SKNZ is duly organized, validly existing, and in good standing under the laws
of
the state of its formation. SKNZ and each of its Subsidiaries has the requisite
corporate power and authority to own, lease, and operate its properties, to
carry on its business where such properties are now owned, leased, or operated
and in the manner that such business is now conducted. SKNZ and each of its
Subsidiaries is qualified to do business as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a Material Adverse
Effect on SKNZ. Neither SKNZ nor any of its Subsidiaries is a participant in
any
joint venture or partnership with any Person with respect to any part of its
operations or its business.
4.2 Capitalization;
Corporate Status.
(a) The
authorized capital stock of SKNZ consists of (i) 50,000,000 shares of common
stock, par value $0.001 per share, of which 2,535,295 shares are issued and
outstanding and (ii) 1,000,000 shares of preferred stock, par value $0.001
per
share, of which there are no shares outstanding. All of the issued and
outstanding shares of SKNZ Common Stock have been duly authorized, validly
issued and are fully paid and non-assessable. All of the issued and outstanding
shares of SKNZ Common Stock and their ownership are as described on Schedule
4.2.
Except
as described on Schedule
4.2,
(a) no
shares of SKNZ Common Stock are held in treasury, (b) there are no outstanding
equity securities of SKNZ or other securities of SKNZ convertible or
exchangeable at any time into equity securities of SKNZ, and (c) there are
no
outstanding stock appreciation rights, phantom stock rights, profit
participation rights, or other similar rights with respect to any capital stock
of SKNZ. Schedule
4.2
also
sets forth all commitments or obligations that would require the issuance or
sale of additional shares of capital stock of SKNZ at any time under any
options, subscriptions, warrants, rights, or other obligations to purchase
SKNZ
Common Stock. SKNZ owns the Subsidiaries set forth on Schedule
4.2.
(b) SKNZ
and its Subsidiaries are now, and have been for the last 3 years, inactive
companies with no operations. Prior thereto, SKNZ and its Subsidiaries were
active businesses. SKNZ and its Subsidiaries have no material assets, no
material liabilities, known or unknown, contingent or otherwise and no
commitments other than immaterial obligations with respect to tax filings,
corporate maintenance, and other similar ongoing expenses. At the Effective
Time, the business of the Surviving Corporation will be the only operating
business of SKNZ.
4.3 Authorization,
Validity and Effect of Agreements.
SKNZ and
Merger Sub have the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated hereby.
The
consummation by SKNZ and Merger Sub of the transactions contemplated hereby
has
been duly authorized by all requisite corporate action. This Agreement
constitutes, and all agreements and documents contemplated hereby (when executed
and duly delivered pursuant hereto) will constitute, the valid and legally
binding obligations of the SKNZ Parties, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium
or
other similar laws relating to creditors’ rights and general principles of
equity.
-13-
4.4 Books
and Records.
The
minute books, stock record books, and other records of SKNZ and each of its
Subsidiaries, all of which have been made available in their entirety to
SweetskinZ, are complete and correct in all material respects. The minute books
of SKNZ and its Subsidiaries contain accurate and complete records in all
material respects of all meetings held of, and corporate action taken by, the
respective stockholders, the respective Board of Directors, and committees
of
the Board of Directors of SKNZ and its Subsidiaries, and no meeting of any
such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
4.5 Absence
of Conflicting Agreements.
As to
the SKNZ Parties, the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement (with or without
the giving of notice, the lapse of time, or both): (a) do not require the
consent of any third party; (b) will not conflict with any provision of the
Certificate of Incorporation, Bylaws, or other organizational documents of
SKNZ
or any of its Subsidiaries; (c) will not conflict with, result in a breach
of,
or constitute a default under any applicable Order, Legal Requirement, or ruling
of any court or Governmental Body to which SKNZ or any of its Subsidiaries
is
subject; (d) will not conflict with, constitute grounds for termination of,
result in a breach of, constitute a default under, or accelerate or permit
the
acceleration of any performance required by the terms of, any material
agreement, instrument, license, or permit to which SKNZ or any of its
Subsidiaries is a party or by which SKNZ or any of its Subsidiaries or their
respective assets are bound; and (e) will not create any Lien upon any of the
assets of SKNZ or any of its Subsidiaries or any of the SKNZ Common Stock.
Except for the filing of the Certificate of Merger and a Form D Filing pursuant
to Regulation D of the Securities Act, no filing with any Governmental Body
or
any other third party is required to consummate this Agreement or the
transactions contemplated hereby.
4.6 SEC
Filings; Financial Statements.
(a) Prior
to November 10, 2005, SKNZ was required to file reports under the Exchange
Act.
From March 28, 2003 through November 10, 2005, SKNZ failed to make all required
filings under the Exchange Act. Thus, SKNZ and its Subsidiaries have not been
in
continuous compliance with the Securities Act or the Exchange Act and may have
potential liabilities as a result of such failure to file. Belmont Partners
LLC
and Alberdale Capital LLC, shareholders of SKNZ, have agreed to indemnify
SweetskinZ from such potential liabilities by placing 75,000 and 200,000 shares
of SKNZ Common Stock, respectively, with the Escrow Agent pursuant to the terms
of the Escrow Agreement attached hereto as Annex
II
.
(b) SKNZ
has delivered to SweetskinZ audited financial statements, including the balance
sheet and statement of income for the fiscal years ended December 31, 2004
and
December 31, 2005, respectively (collectively the “SKNZ
Financial Statements”).
Each
of the SKNZ Financial Statements (including, in all cases, the notes thereto,
if
any) (i) was accurate and complete in all material respects as of the date
thereof, (ii) fairly presented the financial condition and results of operations
of SKNZ set forth therein, and (iii) were prepared in accordance with GAAP
applied on a consistent basis throughout the period covered thereby. Except
as
set forth on Schedule
4.6,
SKNZ
has no liabilities or obligations of any nature, whether known or unknown and
whether absolute, accrued, contingent, or otherwise, except for liabilities
or
obligations reflected or reserved against in the SKNZ Financial Statements
and
liabilities incurred in the Ordinary Course of Business since the dates thereof.
No off-balance sheet transactions exist in which SKNZ or any of its Subsidiaries
is a party.
-14-
4.7 Liabilities.
As of
the Closing Date, SKNZ shall have no liabilities, taxes or any other
obligations, contractual, or otherwise, whether or not contingent or known
or
unknown, other than those set forth in the SKNZ Financial Statements.
4.8 Tax
Matters.
(a) SKNZ
and each of its Subsidiaries has timely filed all Tax Returns required to be
filed. All such Tax Returns were correct and complete and have been prepared
in
compliance in all material respects with all applicable laws and regulations.
All Taxes owed by SKNZ and each of its Subsidiaries (whether or not shown on
any
Tax Return) have been paid. Neither SKNZ nor any of its Subsidiaries currently
is the beneficiary of any extension of time within which to file any Tax Return.
No claim has ever been made by a Governmental Body in a jurisdiction where
either SKNZ or any of its Subsidiaries do not file Tax Returns that they may
be
subject to taxation by that jurisdiction. There are no Liens on any of the
assets of either SKNZ or any of its Subsidiaries that arose in connection with
any failure (or alleged failure) to pay any Tax.
(b) SKNZ
and each of its Subsidiaries has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other Person for
all
periods for which the statutory period of limitations for the assessment of
such
Tax has not yet expired and all IRS Forms W-2 and 1099 required with respect
thereto have been properly completed and timely filed.
(c) No
foreign, federal, state or local Tax audits or administrative Tax proceedings
are pending or being conducted with respect to SKNZ or any of its Subsidiaries.
Neither SKNZ nor any of its Subsidiaries nor any director or officer of SKNZ
or
any of its Subsidiaries has received from any foreign, federal, state or local
Taxing Authority (including jurisdictions where SKNZ and its Subsidiaries have
not filed Tax Returns) any (i) notice indicating an intent to open an audit
or
other review; (ii) request for information related to Tax matters; or (iii)
notice of deficiency or proposed adjustment for any amount of Tax proposed,
asserted or assessed by any Taxing Authority against SKNZ or any of its
Subsidiaries.
(d) Correct
and complete copies of all material federal, state, local and foreign income
Tax
Returns, examination reports, and statements of deficiencies assessed against,
or agreed to by, SKNZ or any of its Subsidiaries filed or issued since December31, 2002 have been provided to SweetskinZ.
-15-
(e) Neither
SKNZ nor any of its Subsidiaries have (i) waived any statute of limitations
in
respect of any Tax which has continuing effect or (ii) agreed to any extension
of time with respect to a Tax assessment or deficiency which has not
expired.
(f) The
unpaid Taxes of SKNZ and its Subsidiaries (i) did not, as of December 31, 2005,
exceed the reserve for Tax liability (rather than any reserve for deferred
Taxes
established to reflect timing differences between book and Tax income) set
forth
on the face of the SKNZ Financial Statements as of such date and (ii) do not
exceed the reserve as adjusted for the passage of time through the Closing
Date
in accordance with the past customs and practice of SKNZ and its Subsidiaries
in
filing their Tax Returns. Since December 31, 2002, neither SKNZ nor any of
its
Subsidiaries have incurred any liability for Taxes arising from extraordinary
gains or losses, as the term is used in GAAP, outside the ordinary course of
business consistent with past custom and practice.
(g) SKNZ
and each of its Subsidiaries have disclosed on their federal income Tax Returns
all positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662 of the
Code.
(h) Neither
SKNZ nor any of its Subsidiaries (i) is or has been a party to any Tax
allocation or sharing agreement or (ii) has been a member of an Affiliated
Group
(as defined in Section 1504(a) of the Code) filing a consolidated federal income
Tax Return (other than a group the common parent of which is SKNZ) or has a
liability for Taxes of any person under Treasury Regulation Section 1.1502-6
(or
any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
(i) Neither
SKNZ nor any of its Subsidiaries has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(j) There
is no contract, agreement, plan or arrangement covering any persons that,
individually or collectively, could give rise to the payment of any amount
that
would not be deductible by reason of Section 280G of the Code, or would
constitute compensation in excess of the limitations set forth in Section 162(m)
of the Code.
(k) Neither
SKNZ nor any of its Subsidiaries has been the “distributing corporation” (within
the meaning of Section 355(a)(1) of the Code) nor the “controlled corporation”
(within the meaning of Section 355(a)(1) of the Code) within the two-year period
ending as of the date of this Agreement.
(l) SKNZ
and
each
of its Subsidiaries has disclosed to the Internal Revenue Service on the
appropriate Tax Returns any Reportable Transaction in which it has
participated. SKNZ
and
each
of its Subsidiaries have retained all documents and other
records pertaining to any Reportable Transaction in which it has
participated, including documents and other records listed in Treasury
Regulation Section 1.6011-4(g) and any other documents or other records which
are related to any Reportable Transaction in which it has
participated but not listed in Treasury Regulation Section
1.6011-4(g).
-16-
(m) Neither
SKNZ
nor
any
of its Subsidiaries
will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any: (i) change in accounting method for a
taxable period ending on or prior to the Closing Date under Section 481(a)
of
the Code (or any corresponding provision of state, local or foreign income
Tax
law); (ii) “closing agreement” as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign income Tax law); (iii)
installment sale or open transaction disposition made on or prior to the Closing
Date; or (iv) prepaid amount received on or prior to the Closing
Date.
4.9 Insurance.
Neither
SKNZ nor any of its Subsidiaries maintains insurance coverage (including without
limitation, director and officer liability insurance).
4.10 Personnel
and Employee Benefits.
(a) Employees
and Compensation.
Other
than the Omnibus Stock Plan attached hereto as Annex
III,
neither
SKNZ nor its Subsidiaries maintains any employee benefit plans or arrangements
covering the officers and employees employed by SKNZ or any of its Subsidiaries
at any time, including any:
(i) Welfare
Plan;
(ii) Multiemployer
Plans;
(iii) Pension
Plan;
(iv) Employee
plan that is maintained in connection with any trust described in Section
501(c)(9) of the Code; and
(v) Benefit
Arrangements.
(b) Pension
Plans.
Neither
SKNZ nor any of its Subsidiaries sponsors, maintains, or contributes to any
Pension Plan.
(c) Welfare
Plans.
Neither
SKNZ nor any of its Subsidiaries sponsors, maintains, or contributes to any
Welfare Plan that provides health or death benefits to former employees of
SKNZ
or any of its Subsidiaries other than as required by Section 4980B of the Code
or other applicable laws.
(d) Benefit
Arrangements.
Each
Benefit Arrangement has been maintained in compliance with its terms and with
the requirements prescribed by all statutes, orders, rules and regulations
that
are applicable to such Benefit Arrangement. Neither SKNZ nor any of its
Subsidiaries is a party to written contract prohibiting the termination of
any
employee.
(e) Multiemployer
Plans.
Neither
SKNZ nor any of its Subsidiaries has at any time been a participant in any
Multiemployer Plan.
(f) Prior
Employees.
Neither
SKNZ, nor any of its Subsidiaries, has any obligation to any present or former
employee of SKNZ or any of its present or former Subsidiaries, under any Plan
or
Benefit Arrangement described in Subsections 4.10(a), 4.10(b) or 4.10(c) or
for
indemnification for any matter or in any other respect.
-17-
(g) Labor
Relations.
Neither
SKNZ nor any of its Subsidiaries is a party to or subject to any collective
bargaining agreement or written or oral employment agreement with any employee.
SKNZ and each of its Subsidiaries have complied in all material respects with
all laws, rules and regulations relating to the employment or labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and have not received any notice alleging that SKNZ or any of its
Subsidiaries has failed to comply with any such laws, rules, or regulations.
No
proceedings are pending or overtly threatened between SKNZ or any of its
Subsidiaries, on the one hand, and any employee (singly or collectively), on
the
other hand. No labor union or other collective bargaining unit represents or
claims to represent any of the employees of SKNZ or any of its Subsidiaries.
There is no union campaign being conducted to solicit cards from any employees
to authorize a union to represent any of the employees of SKNZ or any of its
Subsidiaries or to request a National Labor Relations Board certification
election with respect to any employees.
4.11 Legal
Actions and Orders.
(a) There
is no claim, legal action, counterclaim, suit, arbitration, or other legal
or
administrative proceeding, or Tax Proceeding pending or overtly threatened,
against SKNZ or any of its Subsidiaries or relating to the assets used by SKNZ
or any of its Subsidiaries, or the business or operations of SKNZ or any of
its
Subsidiaries, nor does SKNZ or any of its Subsidiaries have Knowledge of any
basis for the same.
(b) There
is no Order directed to SKNZ or any of its Subsidiaries or the assets owned
or
used by SKNZ or any of its Subsidiaries, or to which SKNZ’s or any of its
Subsidiaries’ business or operations, is subject.
4.12 Environmental
Compliance.
NeitherSKNZ’s
nor its Subsidiaries’ have any Tangible Personal Property, nor any Leased Real
Property Interests. SKNZ and each of its Subsidiaries have obtained all
Governmental Authorizations that are required under all Environmental
Laws.
(a) SKNZ
and each of its Subsidiaries are, and at all times have been, in full compliance
with each material Legal Requirement that is or was applicable to them or to
the
conduct or operation of their business or the ownership or use of any of their
assets;
(b) No
event has occurred or circumstance exists that (with or without notice or lapse
of time) (i) may constitute or result in a violation by SKNZ or any of its
Subsidiaries of, or a failure on the part of SKNZ or any of its Subsidiaries
to
comply with, any Legal Requirement, or (ii) may give rise under any Legal
Requirement to any obligation on the part of SKNZ or any of its Subsidiaries
to
undertake, or to bear all or any portion of the cost of, any remedial action
of
any nature; and
-18-
(c) Neither
SKNZ nor any of its Subsidiaries has received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (i) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (ii) any actual, alleged,
possible, or potential obligation on the part of SKNZ or any of its Subsidiaries
under any Legal Requirement to undertake, or to bear all or any portion of
the
cost of, any remedial action of any nature.
4.14 Stock
Issuable in Merger.The
Merger Consideration, when issued, will be duly authorized and validly issued,
fully paid and non-assessable, will be delivered hereunder free and clear of
any
Liens, adverse claims, security interests, pledges, mortgages, charges and
encumbrances of any nature whatsoever, except that the Merger Consideration
shall not be registered under the Securities Act or any state securities law
and
will be “restricted securities,” as such term is defined in the rules and
regulations of the SEC promulgated under the Securities Act, and will be subject
to restrictions on transfers pursuant to such rules and regulations. SKNZ has
reserved an adequate number of shares of SKNZ Common Stock to enable it to
issue
the Merger Consideration subject to the Escrowed Shares. At the Effective Time,
(i) the SweetskinZ Stockholders and holders of the Replacement Options will
own
in aggregate 73.4% of the outstanding capital stock of SKNZ on a fully diluted
basis (without giving effect to outstanding options granted under SKNZ Omnibus
Stock Plan and the shares issuable from the five year 5% convertible debentures
issued in the financing by SKNZ of up to $6,000,000 to occur concurrently with
the Closing, as referenced in Section 6.2(i) and (ii) SKNZ will own one hundred
percent (100%) of the outstanding capital stock of the Surviving Corporation
on
a fully diluted basis.
4.15 Contracts.
Schedule
4.15
lists
all written Contracts and true and complete descriptions of all oral Contracts
(including any amendments and other modifications to such Contracts) that SKNZ
or Merger Sub is a party or otherwise bound.
4.16 Brokers
or Finders.
Except
as set forth on Schedule
4.16,
neither
SKNZ nor any of its Subsidiaries, nor any director, officer, agent or employee
thereof, has employed any broker or finder or has incurred or will incur any
broker’s, finder’s or similar fees, commissions or expenses, in each case in
connection with the transactions contemplated by this Agreement.
SECTION
5
COVENANTS
5.1 Procedure
for Exchange.
At the
Effective Time, SKNZ shall make appropriate provision for issuance of
certificates representing the Merger Consideration against surrender of the
SweetskinZ Common Stock certificates and Option agreements.
5.2 Conduct
of SweetskinZ’s Business Prior to Closing.
Except
as otherwise contemplated by this Agreement, from the date hereof through the
earlier of the termination of this Agreement or the Closing, SweetskinZ shall
conduct its business in the Ordinary Course of Business. Without limiting the
generality of the foregoing, except as contemplated by this Agreement or as
consented to by SKNZ, during the period set forth in the preceding sentence,
SweetskinZ shall act as follows:
-19-
(a) SweetskinZ
shall not adopt any change in any method of accounting or accounting practice,
except as contemplated or required by GAAP;
(c) subject
to the fiduciary obligations of its board of directors, SweetskinZ shall not
merge or consolidate with, or agree to merge or consolidate with, or purchase
or
sell, or agree to purchase or sell, all or substantially all of its assets
or
the assets of any other Person;
(d) except
for the dispositions in the Ordinary Course of Business, SweetskinZ shall not
sell, mortgage, pledge, or otherwise dispose of any assets or properties owned,
leased, or used in the operation of its business;
(e) SweetskinZ
shall not authorize for issuance, issue, or sell any additional shares of its
capital stock or issue any securities or obligations convertible or exchangeable
into shares of its capital stock or issue or grant any option, warrant, or
other
right to purchase any shares of its capital stock; provided, however, that
SweetskinZ may issue and sell debt or equity securities in an aggregate amount
not to exceed $300,000 when combined with any indebtedness incurred under
subsection 5.2(f) below;
(f) SweetskinZ
shall not incur, or agree to incur, any indebtedness for borrowed money;
provided, however, that SweetskinZ may incur or agree to incur indebtedness
for
borrowed money in an aggregate amount not to exceed $300,000 when combined
with
any amounts raised in connection with the issuance and sale of debt or equity
securities under subsection 5.2(e) above;
(g) SweetskinZ
shall not terminate the existing insurance policies on the assets of its
business; and
(h) SweetskinZ
shall preserve its business and assets and use reasonable commercial efforts
to
keep available its present employees and to preserve present relationships
with
its customers, employees, and others having business relations with
it.
5.3 Conduct
of SKNZ’s Business Prior to Closing.
Except
as otherwise contemplated by this Agreement, from the date hereof through the
earlier of the termination of this Agreement or the Effective Time, neither
SKNZ
nor any of its Subsidiaries shall conduct any business. In addition, without
limiting the generality of the foregoing, except as contemplated by this
Agreement or as consented to by SweetskinZ, during the period set forth in
the
preceding sentence, SKNZ and its Subsidiaries shall act as follows:
(a) neither
SKNZ nor any of its Subsidiaries shall adopt any change in any method of
accounting or accounting practice, except as contemplated or required by
GAAP;
(c) subject
to the fiduciary obligations of its board of directors, neither SKNZ nor any
of
its Subsidiaries shall merge or consolidate with, or agree to merge or
consolidate with, or purchase or agree to purchase all or substantially all
of
the assets of, or otherwise acquire, any other business entity;
-20-
(d) other
than as contemplated by Section 6.2(i), neither SKNZ nor any of its Subsidiaries
shall authorize for issuance, issue, or sell any additional shares of its
capital stock or issue any securities or obligations convertible or exchangeable
into shares of its capital stock or issue or grant any option, warrant, or
other
right to purchase any shares of its capital stock;
(e) neither
SKNZ nor any of its Subsidiaries shall incur, or agree to incur, any
indebtedness for borrowed money;
(f) neither
SKNZ nor any of its Subsidiaries shall hire any employees, consultants or
independent contractors, or permit any increases in the compensation of any
of
its employees except as required by law or existing contract or agreement or
enter into or amend any Welfare Plan, Pension Plan, Benefit Plan or Benefit
Arrangement;
(g) except
as contemplated by this Agreement and in the Ordinary Course of Business,
neither SKNZ nor any of its Subsidiaries shall enter into, amend, renew, extend
or terminate, or waive any Contract, or incur any obligation that will be
binding on SKNZ or any such Subsidiary;
(h) except
as contemplated by this Agreement, neither SKNZ nor any of its Subsidiaries
shall enter into any transactions, including any with an Affiliate that will
be
binding upon SKNZ or any of its Subsidiaries following the Closing Date;
and
(i) SKNZ
and its Subsidiaries shall maintain their respective assets and records in
good
condition.
5.4 Access
to Information.
(a) From
and after the date of this Agreement until the earlier of the Closing Date
or a
termination of this Agreement pursuant to Section 8, SweetskinZ shall, subject
to any limitations imposed by any Governmental Authorization, or Governmental
Body, (i) give the SKNZ Parties and the SKNZ Parties’ employees, accountants and
counsel (subject to agreements by such persons to use and treat Confidential
Information described in Subsection 5.4(c) subject to the restrictions set
forth
in Subsection 5.4(c)), full and complete access upon reasonable notice during
normal business hours, to all officers, employees, offices, properties,
agreements, records and affairs of SweetskinZ to perform its due diligence
review of SweetskinZ; (ii) provide the SKNZ Parties with all financial
information of SweetskinZ that is distributed to the officers and directors
of
SweetskinZ; and (iii) provide copies of such other information concerning
SweetskinZ as the SKNZ Parties may reasonably request from time to time.
(b) From
and after the date of this Agreement until the earlier of the Closing Date
or a
termination of this Agreement pursuant to Section 8, the SKNZ Parties shall
subject to any limitations imposed by any Governmental Authorization, or
Governmental Body, (i) give SweetskinZ and its employees, accountants and
counsel full and complete access upon reasonable notice during normal business
hours, to all officers, employees, offices, properties, agreements, records
and
affairs of SKNZ and its Subsidiaries to perform its due diligence review of
SKNZ
and its Subsidiaries; (ii) provide SweetskinZ with all financial information
of
SKNZ and its Subsidiaries that is distributed to the officers and directors
of
SKNZ; and (iii) provide copies of such other information concerning SKNZ and
its
Subsidiaries as SweetskinZ may reasonably request from time to
time.
-21-
(c) All
confidential information of a party to which the other party obtains pursuant
to
this Section 5.4 shall be deemed “Confidential Information.” As used in this
Section 5.4, the term “Confidential
Information”
shall
mean any and all information (verbal and written) relating to the business
of
SweetskinZ or SKNZ, as the case may be, including, but not limited to,
information relating to: identity and description of goods and services used;
purchasing; costs; pricing; sources; machinery and equipment; technology;
research, test procedures and results; customers and prospects; marketing;
and
selling and servicing. From and after the date hereof, the parties agree not
to,
at any time, directly or indirectly, use, communicate, disclose or disseminate
any Confidential Information of the other parties in any manner whatsoever,
except in connection with the operation of the Surviving Corporation after
the
Closing or as required by applicable law.
5.5 Name
Change.
If this
Agreement is terminated pursuant to Section 8 or the Merger is not consummated
by May 15, 2006, the SKNZ Parties will take all actions necessary to change
SKNZ’s name from “SweetskinZ Holdings, Inc.” to a name not containing
“SweetskinZ.”
5.6 Employment
Agreements.
Prior
to or at the Closing, SKNZ shall enter into an employment agreement with each
of
Yann Mellet and Andrew Boyland acceptable to Alberdale Capital.
5.7 Resignation
of Employees; Appointment of Directors and Officers.
At the
Closing, SKNZ shall cause its officer but not its director, Christopher Bartle,
to resign, and SKNZ shall take such reasonable actions as are necessary to
effectuate the election of Yann Mellet, Andrew Boyland and William Rosenstadt
and together with Christopher Bartle (collectively, the “New
Board”)
to the
board of directors of SKNZ, to
hold
office in accordance with applicable law, the Certificate of Incorporation
and
Bylaws of SKNZ until resignation, removal or replacement. At
the
Effective Time, Yann Mellet shall be duly nominated and appointed as SKNZ’s
Chairman of the Board and Chief Technology Officer, Andrew Boyland shall be
duly
nominated and appointed as SKNZ’s Chief Executive Officer
and
Christopher Bartle shall be duly nominated and appointed as SKNZ’s Secretary, in
each case to serve at the pleasure of the New Board in accordance with
applicable law, the Certificate of Incorporation and Bylaws of SKNZ until
resignation, removal or replacement.
5.8 Consummation
of Transaction.
Each of
the parties hereto hereby agrees to use its commercially reasonable efforts
to
cause all conditions precedent to its obligations (and to the obligations of
the
other parties hereto to consummate the transactions contemplated hereby) to
be
satisfied, including, but not limited to, using all commercially reasonable
efforts to obtain
all required (if so required by this Agreement) consents, waivers, amendments,
modifications, approvals, authorizations, novations and licenses; provided,
however, that nothing herein contained shall be deemed to modify any of the
absolute obligations imposed upon any of the parties hereto under this Agreement
or any agreement executed and delivered pursuant hereto.
-22-
5.9 Cooperation/Further
Assurances.
(a) Each
of the parties hereby agrees to fully cooperate with the other parties hereto
in
preparing and filing any notices, applications, reports and other instruments
and documents which are required by, or which are desirable in the reasonable
opinion of any of the parties hereto, or their respective legal counsel, in
respect of, any Legal Requirement in connection with the transactions
contemplated by this Agreement.
(b) Each
of the parties hereby further agrees to execute, acknowledge, deliver, file
and/or record, or cause such other parties to the extent permitted by law to
execute, acknowledge, deliver, file and/or record such other documents as may
be
required by this Agreement or reasonably requested by the other parties or
their
respective legal counsel in order to document and carry out the transactions
contemplated by this Agreement.
5.10 Notice
of Developments.
Each of
the parties hereto shall give prompt written notice to the other Parties of
any
material adverse development causing a breach of any of its own representations
and warranties in Section 3 or Section 4 above. No disclosure by any Party
pursuant to this Section 5.10, however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentation, breach
of
warranty or breach of covenant.
SECTION
6
CONDITIONS
TO OBLIGATIONS OF THE PARTIES
6.1 Conditions
to Obligations of the SKNZ Parties.
All
obligations of the SKNZ Parties to consummate the Merger and the other
transactions contemplated by this Agreement are subject, at the SKNZ Parties’
option, to the fulfillment or waiver prior to or at the Closing Date of each
of
the following conditions:
(a) Representations
and Warranties.
All
representations and warranties of SweetskinZ contained in this Agreement shall
be true and correct at and as of the Closing Date as though made at and as
of
that time (except for representations and warranties that speak as of a specific
date or time, which need only be true and complete as of such date or
time).
(b) Covenants
and Conditions.
SweetskinZ shall have performed and complied with all covenants, agreements
and
conditions required by this Agreement to be performed or complied with prior
to
or on the Closing Date. SKNZ shall have received consolidated audited financial
statements of SweetskinZ for the fiscal years ended December 31, 2004 and
December 31, 2005, respectively.
(c) No
Litigation.
No
action, suit or proceeding against SweetskinZ relating to the consummation
of
any of the transactions contemplated by this Agreement or any governmental
action seeking to delay or enjoin any such transactions shall be pending or
threatened.
(d) Consents
and Approvals.
Any
required consents and approvals hereunder shall have been received, and this
Agreement and the transactions contemplated by this Agreement shall have been
approved by the SweetskinZ Stockholders in the manner required by applicable
law.
-23-
6.2 Conditions
to Obligations of SweetskinZ.
All
obligations of SweetskinZ to consummate the Merger and the other transactions
contemplated by this Agreement, are subject, at SweetskinZ’s option, to the
fulfillment or waiver prior to or at the Closing Date of each of the following
conditions:
(a) Representations
and Warranties.
All
representations and warranties of the SKNZ Parties contained in this Agreement
shall be true and correct in all material respects at and as of the Closing
Date
as though made at and as of that time (except for representations and warranties
that speak as of a specific date or time, which need only be true and complete
as of such date or time).
(b) Covenants
and Conditions; Financial Statements.
The
SKNZ Parties shall have performed and complied in all material respects with
all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date. SweetskinZ shall
have
received consolidated audited financial statements of SKNZ and its Subsidiaries
for the three years ended December 31, 2005.
(c) No
Litigation.
No
action, suit or proceeding against SweetskinZ or any of the SKNZ Parties
relating to the consummation of any of the transactions contemplated by this
Agreement or any governmental action seeking to delay or enjoin any such
transactions shall be pending or threatened.
(d) Consents
and Approvals.
Any
required consents and approvals hereunder shall have been received, and this
Agreement and the transactions contemplated by this Agreement shall have been
approved by the SKNZ Stockholders in the manner required by applicable
law.
(e) Due
Diligence Review.
SweetskinZ shall be satisfied with its due diligence review of the SKNZ Parties
as conducted in accordance with the provisions of Section 5.4.
(f) Employment
Agreements.
All
employment agreements to which SKNZ or any of its Subsidiaries is a party shall
have been terminated, and SKNZ shall have entered into the employment agreements
referenced in Section 5.6 above.
(g) Resignation
of Employees.
All
current officers, directors and employees of SKNZ and its Subsidiaries, shall
have resigned and released SKNZ from all claims and liabilities as required
by
Section 5.7.
(h) Indemnification
Agreement.
SweetskinZ
shall have received an indemnification agreement from each of Alberdale Capital
LLC (“Alberdale”) and Belmont Partners LLC (“Belmont”), in substantially the
form attached hereto as Annex
III,
which
indemnification agreement will provide for Alberdale and Belmont to place a
total of 275,000 shares of SKNZ Common Stock into escrow as security for any
breaches of the representations, warranties and covenants of the SKNZ Parties
hereunder.
-24-
(i) Financing.
SweetskinZ shall have received a written certification from Oceana Partners
Ltd
confirming that it has obtained commitments (and the related funds) to purchase
convertible debentures in SKNZ immediately upon the effectiveness of the Merger
in an aggregate amount of at least $3,000,000 and on terms and conditions
substantially as set forth on the Private Placement Memorandum attached hereto
as Annex V, which commitments will become binding and effective immediately
upon
the Effective Time.
(j) Deliveries.
SweetskinZ shall have received complete copies of all the documents required
to
be delivered under Section 7.2.
(k) Shares
Placed in Escrow by SKNZ Shareholders.
Immediately prior to Closing, SKNZ shall arrange to have 275,000 (200,000 from
Alberdale Capital LLC and 75,000 from Belmont Partners LLC) shares of SKNZ
common stock placed in escrow with the Escrow Agent (“Escrowed Shares”) for a
period of six months from the Registration Statement’s (as that term is defined
in the Securities Purchase Agreement) effective date. Sweetskinz right to
recourse against SKNZ with respect to any liability identified in Exhibit
A
to
Purchase Agreement dated October 7, 2005 between Alberdale Capital LLC and
Belmont Partners LLC shall be limited to the sale of the Escrowed Shares. In
the
event that Sweetskinz seeks indemnification pursuant to such Exhibit
A,
it
shall provide written notice to Alberdale and Belmont of its intention to do
so.
Sweetskinz shall then have the right to sell that number of Escrowed Shares
necessary to satisfy such liability and reasonable expenses on commercially
reasonable terms between unrelated parties and apply the proceeds of each dollar
as follows: $0.25 against Belmont and $0.75 against Alberdale. Upon the
completion of the indemnification period, the Escrow Agent shall promptly return
all remaining Escrowed Shares to their rightful owner.
SECTION
7
CLOSING
DELIVERIES
7.1 Deliveries
by SweetskinZ.
On the
Closing Date, SweetskinZ shall deliver to the SKNZ Parties the following, in
form and substance reasonably satisfactory to the SKNZ Parties and their
counsel:
(a) Certificate
of Merger.
The
Certificate of Merger in the form attached hereto as Exhibit
A
dated
the Closing Date and duly executed by the appropriate officers of SweetskinZ;
(b) Certificate.
A
certificate, dated as of the Closing Date, executed by an appropriate officer
of
SweetskinZ, certifying to SKNZ: (i) that the representations and warranties
of
SweetskinZ contained in this Agreement are true and correct in all material
respects as of the Closing Date as though made on and as of that date (except
for representations and warranties that speak as of a specific date or time,
which need only be true and complete as of such date or time) and (ii) that
SweetskinZ has in all material respects performed and complied with all of
their
respective obligations, covenants and agreements in this Agreement to be
performed and complied with on or prior to the Closing Date;
(c) Secretary’s
Certificate.
A
certificate, dated as of the Closing Date, executed by SweetskinZ’s Secretary
(i) certifying that the resolutions, as attached to such certificate, were
duly
adopted by each of SweetskinZ’s Board of Directors and stockholders, authorizing
and approving the execution of this Agreement and the consummation of the
transactions contemplated hereby and that such resolutions remain in full force
and effect, and (ii) providing, as attachments thereto, SweetskinZ’s Certificate
of Incorporation and Bylaws, with all amendments;
-25-
(d) Good
Standing Certificates.
Certificate as to the good standing of SweetskinZ issued by the Pennsylvania
Secretary of State to be dated not more than a reasonable number of days prior
to the Closing Date;
(e) Stockholders’
Certificates.
Certificates
representing all of the outstanding shares of SweetskinZ Common Stock held
by
the SweetskinZ Stockholders as of the Closing Date, accompanied by all documents
required to effect the surrender of such certificates;
(f) Other
Documents.
Such
other documents as are listed in this Agreement or as are reasonably requested
by the SKNZ Parties or their counsel for complete implementation of this
Agreement and consummation of the transactions contemplated hereby.
7.2 Deliveries
by the SKNZ Parties.
Prior
to or on the Closing Date, the SKNZ Parties shall deliver the following, in
form
and substance reasonably satisfactory to SweetskinZ and its
counsel:
(a) Delivery
of Merger Consideration.
Stock
certificate(s) representing the shares of SKNZ Common Stock constituting Merger
Consideration in the amounts contemplated by this Agreement or an instruction
letter from SKNZ to its transfer agent directing it to issue such certificate(s)
to the SweetskinZ Stockholders;
(b) Certificate
of Merger.
The
Certificate of Merger duly executed by the appropriate officers of Merger Sub;
(c) Officer’s
Certificate.
A
certificate, dated as of the Closing Date, executed on behalf of an officer
of
each of SKNZ and Merger Sub certifying (i) that the representations and
warranties of each of the SKNZ Parties contained in this Agreement are true
and
correct in all material respects as of the Closing Date as though made on and
as
of that date, and (ii) that each of the SKNZ Parties have in all material
respects performed and complied with all of its obligations, covenants and
agreements in this Agreement to be performed and complied with on or prior
to
the Closing Date;
(d) Secretary’s
Certificate.
A
certificate, dated as of the Closing Date, executed by each of SKNZ’s and Merger
Sub’s Secretary: (i) certifying that the resolutions, as attached to such
certificate, were duly adopted by each of such party’s Board of Directors,
authorizing and approving the execution of this Agreement and the consummation
of the transaction contemplated hereby and that such resolutions remain in
full
force and effect; and (ii) providing, as an attachment thereto, each of such
party’s Certificate of Incorporation and Bylaws;
(e) Good
Standing Certificates.
Certificates as to the good standing of SKNZ issued by the Delaware Secretary
of
State in the case of SKNZ and Pennsylvania in the case of Merger Sub, each
such
certificate to be dated a date not more than a reasonable number of days prior
to the Closing Date;
-26-
(f) Officer,
Director and Other Employee Resignations.
Resignations of all SKNZ employees, directors and officers prior to the Closing
as described in Section 5.7; and
(g) Other
Documents.
Such
other documents listed in this Agreement or as are reasonably requested by
SweetskinZ or its counsel for complete implementation of this Agreement and
consummation of the transactions contemplated hereby.
SECTION
8
TERMINATION
8.1 Termination
by Mutual Consent.
This
Agreement may be terminated at any time prior to Closing by the mutual consent
of the parties.
8.2 Other
Termination.
This
Agreement may be terminated by any party hereto and the Merger abandoned if
any
other party hereto (the SKNZ Parties, on the one hand, and SweetskinZ, on the
other hand) shall have failed to satisfy any of its respective conditions
precedent under Section 6 hereof (unless such failure results primarily from
the
terminating party’s breach of any representation, warranty or covenant contained
in this Agreement or under any other agreement contemplated hereunder) or the
Closing shall not have occurred on or before April 30, 2006.
8.3 Termination
by SKNZ.
The
SKNZ Parties may terminate this Agreement by giving written notice to SweetskinZ
at any time prior to the Closing in the event SweetskinZ has breached any
representation, warranty or covenant contained in this Agreement in any material
respect, the SKNZ Parties have notified SweetskinZ of the breach and the breach
has continued without cure for a period of 10 days after the notice of breach.
8.4 Termination
by SweetskinZ.
SweetskinZ
may terminate this Agreement by giving written notice to SKNZ at any time prior
to the Closing in the event the SKNZ Parties have breached any representation,
warranty or covenant contained in this Agreement in any material respect,
SweetskinZ has notified SKNZ of the breach and the breach has continued without
cure for a period of 10 days after the notice of breach.
8.5 Specific
Performance.
The
parties recognize that, if either party hereto breaches this Agreement and
refuses to perform under the provisions of this Agreement, monetary damages
alone would not be adequate to compensate the other party for its injury. Such
party shall therefore be entitled, in addition to any other remedies that may
be
available, to obtain specific performance of the terms of this Agreement. If
any
action is brought by such party to enforce this Agreement, the breaching party
shall waive the defense that there is an adequate remedy at law.
8.6 Payment
of Fees and Expenses Upon Breach.
In
addition to all other rights and remedies that the SKNZ Parties, on the one
hand, and SweetskinZ, on the other hand, may have, (i) if this Agreement is
terminated by the SKNZ Parties pursuant to Section 8.3, SweetskinZ shall pay
the
SKNZ Parties’ expenses
incurred in connection with the authorization, preparation, execution and
performance of this Agreement, including all fees and expenses of counsel,
accountants, agents and representatives, and (ii) if
this
Agreement is terminated by SweetskinZ pursuant to Section 8.4, SKNZ shall pay
SweetskinZ’s expenses
incurred in connection with the authorization, preparation, execution and
performance of this Agreement, including all fees and expenses of counsel,
accountants, agents and representatives.
-27-
SECTION
9
SURVIVAL
9.1 Survival.
Each of
the parties hereto hereby agrees that: (i) the representations and warranties
made by or on behalf of the SKNZ Parties in this Agreement or in any document
or
instrument delivered pursuant hereto shall survive the Closing until the one
year anniversary of the effectiveness of the Registration Statementand
(ii)
the representations and warranties made by SweetskinZ in this Agreement or
in
any document or instrument delivered pursuant hereto shall survive only until
the Closing. All covenants and agreements of the SKNZ Parties contained in
or
made pursuant to this Agreement or in any certificate furnished pursuant hereto
shall survive the Closing.
SECTION
10
MISCELLANEOUS
10.1 Fees
and Expenses.
In the
event the transactions contemplated by this Agreement are consummated in
accordance with the terms herein, SKNZ shall bear all costs and expenses of
all
of the parties hereto. Subject to Section 8.6, in the event such transaction
is
not consummated, SKNZ, on the one hand, and SweetskinZ, on the other hand,
shall
pay their own expenses incurred in connection with the authorization,
preparation, execution and performance of this Agreement, including all fees
and
expenses of counsel, accountants, agents and representatives, and each party
shall be responsible for all fees or commission payable to any finder, broker,
advisor, or similar Person retained by or on behalf of such party. The
provisions of this Section 10.1 shall survive the termination of this Agreement.
10.2 Notices.
All
notices, requests, consents, payments, demands, and other communications
required or contemplated under this Agreement shall be in writing and (a)
personally delivered or sent via telecopy (receipt confirmed and followed
promptly by delivery of the original), or (b) sent by Federal Express or other
reputable overnight delivery service (for next business day delivery), shipping
prepaid, as follows:
or
to
such other Persons or addresses as any Person may request by notice given as
aforesaid. Notices shall be deemed given and received at the time of personal
delivery or completed telecopying, or, if sent by Federal Express or such other
overnight delivery service one Business Day after such sending.
10.3 Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, executors personal and legal
representatives.
10.4 Further
Assurances.
The
parties shall take any actions and execute any other documents that may be
necessary or desirable to the implementation and consummation of the
transactions contemplated by this Agreement.
10.5 GOVERNING
LAW.
THIS
AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS
OF THE STATE OF PENNSYLVANIA (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS
THEREOF).
10.6 Entire
Agreement.
Any
confidentiality agreement entered into between or among the parties, this
Agreement and the Exhibits and the Schedules hereto, each of which Exhibits
and
Schedules are hereby incorporated herein by reference, and all documents,
certificates and other documents to be delivered by the parties pursuant hereto,
collectively, represent the entire understanding and agreement among the parties
hereto with respect to the subject matter of this Agreement, and supersede
all
prior negotiations between the parties, and cannot be amended, supplemented,
or
changed except by an agreement in writing duly executed by each of the parties
thereto.
10.7 Waiver
of Compliance; Consents.
Except
as otherwise provided in this Agreement, any failure of any of the parties
to
comply with any obligation, representation, warranty, covenant, agreement,
or
condition herein may be waived by the party entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but
such
waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement, or condition shall not operate
as
a waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any
party
hereto, such consent shall be given in writing in a manner consistent with
the
requirements for a waiver of compliance as set forth in this Section
10.7.
-29-
10.8 Headings.
The
headings of the Sections and subsections contained in this Agreement are
inserted for convenience only and do not form a part or affect the meaning,
construction or scope thereof.
10.9 Counterparts.
This
Agreement may be signed in two or more counterparts with the same effect as
if
the signature on each counterpart were upon the same instrument.
10.10 Cooperation.
The
parties hereto shall reasonably cooperate with each other and their respective
counsel and accountants in connection with any actions required to be taken
as
part of their respective obligations under this Agreement, and in connection
with any litigation after the implementation and consummation of this Agreement,
and otherwise use their commercially reasonable efforts to consummate the
transaction contemplated hereby and to fulfill their obligations under this
Agreement.
10.11 Public
Announcements.
The
parties hereto shall consult with each other before issuing any press releases
or otherwise making any public statements with respect to this Agreement or
the
transactions contemplated herein and shall not issue any such press release
or
make any such public statement without the prior written consent of the other
party, which shall not be unreasonably withheld; provided, however, that a
party
may, without the prior written consent of the other party, issue such press
release or make such public statement as may be required by law if it has used
all reasonable efforts to consult with the other party and to obtain such
party’s consent but has been unable to do so in a timely manner. The provisions
of this Section 10.12 shall survive the termination of this
Agreement.
[SIGNATURE
PAGE FOLLOWS]
-30-
IN
WITNESS WHEREOF,
this
Agreement has been executed by the parties as of the date first written
above.
The
SKNZ Parties:
SWEETSKINZ
HOLDINGS, INC. (f/k/a NURPO INNOVATIONS, INC.)
By:
/s/ Christopher H.
Bartle
Christopher
H. Bartle
President
SWEETSKINZ
MERGER SUB, INC.
By:
/s/
Christopher H.
Bartle
Christopher
H. Bartle
President
SweetskinZ:
SWEETSKINZ,
INC.
By:
/s/ Andrew
Boyland
Andrew
Boyland
Chief
Executive Officer
/s/
Yann
Mellet
Yann
Mellet
-31-
INDEX
OF ANNEXES, EXHIBITS AND SCHEDULES
ANNEXES:
I
Capitalized
Terms
II
Belmont
and Alberdale Indemnification and Escrow
Agreements
The
following terms, as used in this Agreement, have the meanings set forth in
this
Annex
1
(terms
defined in the singular to have the correlative meaning in the plural and vice
versa):
“Affiliate”
means,
with respect to any Person, (a) any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with such Person, or (b) an officer or director of such Person
or
of an Affiliate of such Person within the meaning of clause (a) of this
definition. For purposes of clause (a) of this definition, (i) a Person shall
be
deemed to control another Person if such Person (A) has sufficient power to
enable such Person to elect a majority of the board of directors of such Person,
or (B) owns a majority of the beneficial interests in income and capital of
such
Person; and (ii) a Person shall be deemed to control any partnership of which
such Person is a general partner.
“Closing”
means
the closing of the transactions contemplated by this Agreement on the Closing
Date.
“Closing
Date”
means
the date on which the Closing occurs, as determined pursuant to Section
2.2.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Contaminant”shall
mean and include any pollutant, contaminant, hazardous material (as defined
in
any of the Environmental Laws), toxic substances (as defined in any of the
Environmental Laws), asbestos or asbestos-containing material, urea
formaldehyde, polychlorinated biphenyls, regulated substances and wastes,
radioactive materials, and petroleum or petroleum by-products, including crude
oil or any fraction thereof.
“Contracts”
means
all contracts, consulting agreements, leases, non-governmental licenses and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) that relate to or affect a party’s assets, properties, or its business
or operations, the performance of which involves annual consideration in excess
of $10,000.
“Environmental
Laws”
shall
mean and include, but not be limited to, any applicable federal, state or local
law, statute, charter, ordinance, rule or regulation or any Governmental Body
interpretation, policy or guidance, including, without limitation, applicable
safety/environmental/health laws, such as, but not limited to, the Resource
Conservation and Recovery Act of 1976, Comprehensive Environmental Response
Compensation and Liability Act, Federal Emergency Planning and Community
Right-to-Know Law, the Clean Air Act, the Clean Water Act, and the Toxic
Substance Control Act, as any of the foregoing have been amended, and any
Governmental Authorization or Order applicable to or affecting any property
(real or personal) used by or relating to a party or issued pursuant to any
Environmental Laws which pertains to, governs, or controls the generation,
storage, remediation or removal of Contaminants or otherwise regulates the
protection of health and the environment, including, but not limited to, any
of
the following activities, whether on site or off site if such could materially
affect the site: (i) the emission, discharge, release, spilling or dumping
of
any Contaminant into the air, surface water, ground water, soil or substrata;
or
(ii) the use, generation, processing, sale, recycling, treatment, handling,
storage, disposal, transportation, labeling or any other management of any
Contaminant.
2
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“Escrow
Agent”
means
Rubin, Bailin, Ortoli, Mayer & Baker LLP
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“GAAP”
means
generally accepted United States accounting principles, applied on a consistent
basis.
“Governmental
Authorization”
means
any approval, consent, license, permit, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
“Governmental
Body”
means
any:
(a) nation,
state, county, city, town, village, district, or other jurisdiction of any
nature;
(b) federal,
state, local, municipal, foreign, or other government;
(c) governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal);
(d)
multi-national organization or body;
(e) self-regulatory
organization (including, with limitation, NASD); or
(f) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any
nature.
“Intangibles”
means
all copyrights, trademarks, trade names, service marks, service names, domain
names, licenses, patents, and any applications therefore, permits, proprietary
information, technical information and data, databases, machinery and equipment,
hardware, software and information systems, warranties, and other intangible
property rights and interests (and any goodwill associated with any of the
foregoing) applied for, issued to, or owned by SweetskinZ or under which
SweetskinZ is licensed or franchised and that are used in its business and
operations.
“Knowledge”
means,
with respect to the SweetskinZ and SKNZ Parties, the actual knowledge of such
party’s officers and directors.
3
“Leased
Real Property”
means
all real property and all buildings and other improvements thereon and
appurtenant thereto leased by either SKNZ or SweetskinZ, as the case may
be.
“Legal
Requirement”
means
any federal, state, local, municipal, foreign, international, multinational,
self regulatory organization or court or other administrative order,
constitution, law, ordinance, principle of common law, rule, regulation,
statute, treaty, by-law, or the like.
“Lien”
means
any mortgage, pledge, security interests, encumbrance, lien or charge of any
kind.
“Losses”
means
any loss, liability, damage, cost, claim or expense, including, without
limitation, reasonable attorneys’ fees and expenses.
“Material
Adverse Effect”
shall
mean a material adverse effect on the business, operations, properties,
financial condition, assets, liabilities or results of operations of the Person
referred to, taken as a whole, or the ability of such Person to consummate
the
transactions contemplated by this Agreement.
“Merger
Consideration”
means
the shares of SKNZ Common Stock and other securities issued (or to be issued)
to
the SweetskinZ Stockholders in connection with the Merger.
“Order”
means
any award, decision, injunction, judgment, decree, order, ruling, writ,
determination, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any
arbitrator.
“Ordinary
Course of Business”
an
action taken by a Person will be deemed to have been taken in the “Ordinary
Course of Business” only if:
(a) such
action is consistent with the past practices of such Person and is taken in
the
ordinary course of the normal day-to-day operations of such Person;
(b) such
action is not required to be authorized by the board of directors of such Person
(or by any Person or group of Persons exercising similar authority);
and
(c) such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or by any Person or group of
Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business
as
such Person.
“Permitted
Encumbrances”
means
(a) encumbrances of a landlord, or other statutory lien not yet due and payable,
or landlord’s liens arising in the Ordinary Course of Business, (b) encumbrances
arising in connection with equipment or maintenance financing or leasing under
the terms of the Contracts set forth on the Schedules, (c) encumbrances for
Taxes not yet delinquent or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on books of the contesting party in accordance with generally accepted
accounting principles, or (d) encumbrances that do not materially detract from
the value of any of material assets of SweetskinZ or materially interfere with
the use thereof as currently used.
4
“Person”
means
an individual, corporation, association, partnership, joint venture, trust,
estate, limited liability company, limited liability partnership, organization
or other entity or Governmental Body.
“Real
Property Interests”
means
all interests in Leased Real Property, including fee estates, leaseholds and
subleaseholds, purchase options, easements, licenses, rights to access, and
rights of way, and all buildings and other improvements thereon and appurtenant
thereto, owned or held by SweetskinZ that are used in the business or operations
of SweetskinZ.
“Related
Person”
means
with respect to a particular individual:
(a) each
other member of such individual’s Family;
(b) any
Person that is, directly or indirectly, controlled by such individual or one
or
more members of such individual’s Family;
(c) any
Person in which such individual or members of such individual’s Family hold
(individually or in the aggregate) a Material Interest; and
(d) any
Person with respect to which such individual or one or more members of such
individual’s Family serves as a director, officer, partner, executor, or trustee
(or in a similar capacity); and
With
respect to a specified Person other than an individual:
(a) any
Person that directly or indirectly controls, is, directly or indirectly,
controlled by, or is directly or indirectly under common control with such
specified Person;
(b) any
Person that holds a Material Interest in such specified Person;
(c) each
Person that serves as a director, officer, partner, executor, or trustee of
such
specified Person (or in a similar capacity);
(d) any
Person in which such specified Person holds a Material Interest;
and
(e) any
Related Person of any individual described in clause (b) or (c).
For
purposes of this definition, (a) the “Family”
of an
individual includes (i) the individual, (ii) the individual’s spouse, (iii) any
other natural person who is related to the individual or the individual’s spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) “Material
Interest”
means
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of voting securities or other voting interests representing at
least 5% of the outstanding voting power of a Person or equity securities or
other equity interests representing at least 5% of the outstanding equity
securities or equity interests in a Person.
“Reportable
Transaction”
shall
mean any transaction listed in Treasury Regulation Section
1.6011-4(b).
5
“SEC”
means
the United States Securities and Exchange Commission.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Subsidiary”
or “Subsidiaries”means,
with respect to any Person, any corporation, limited liability company,
partnership, trust, limited partnership, joint venture, or other business
association or entity, twenty percent (20%) or more of the voting securities
or
economic interests of which is or was directly or indirectly owned or controlled
by such Person or by any one or more of its Subsidiaries.
“SweetskinZ
Stockholders”
means
the Persons owning beneficially the shares of SweetskinZ Common Stock on the
date hereof and immediately prior to the Closing.
“Tangible
Personal Property”
means
all machinery, equipment, tools, vehicles, furniture, leasehold improvements,
office equipment, plant, inventory, spare parts and other tangible personal
property.
“Tax”
or
“Taxes”
means
any federal, state, local, or foreign income, gross receipts, windfall profits,
severance, property, production, sales, use, license, excise, franchise,
capital, transfer, employment, withholding, or other tax or similar governmental
assessment, together with any interest, additions, or penalties with respect
thereto and any interest in respect of such additions or penalties.
“Tax
Proceeding”
means
any audit, examination, claim, or other administrative or judicial proceeding
involving Taxes.
“Tax
Return”
shall
mean all returns and reports, amended returns, information returns, statements,
declarations, estimates, schedules, notices, notifications, forms, elections,
certificates or other documents required to be filed or submitted to any
Governmental Body with respect to the determination, assessment, collection
or
payment of any Tax or in connection with the administration, implementation
or
enforcement of, or compliance with, any Tax.
“Taxing
Authority”
shall
mean any Governmental Body exercising tax regulatory authority.
6
ANNEX
II
Belmont
and Alberdale Indemnification and Escrow Agreements
INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (this “Agreement”)
is
made as of April __, 2006, by and among SWEETSKINZ HOLDINGS, INC., a
Delaware corporation (f/k/a Nupro Innovations, Inc) (the “Company”),
SWEETSKINZ, INC., a Pennsylvania corporation (“SweetskinZ”),
BELMONT PARTNERS, LLC (“Belmont”),
and
ALBERDALE CAPITAL, LLC (“Alberdale” and, together with Belmont, each,
individually, an “Indemnitor,”
and
collectively, the “Indemnitors”).
BACKGROUND
A. The
Company and SweetskinZ are parties to an Agreement and Plan of Merger (the
“Merger
Agreement”)
dated
as of April __, 2006 pursuant to which SweetskinZ will merge (the “Merger”)
with
SweetskinZ Merger Sub, Inc., a wholly owned subsidiary of the Company, with
SweetskinZ being the surviving corporation (The Company and SweetskinZ Merger
Sub, Inc sometimes collectively hereafter referred to as the “The Company
Parties”). The Indemnitors are significant stockholders of the Company and will
derive a significant benefit from the consummation of the Merger.
B. Immediately
following the consummation of the Merger, the Company will issue and sell equity
securities in an amount not to exceed $6,000,000, pursuant to a Securities
Purchase Agreement among the Company and the purchasers party thereto, and
in
substantially the form attached hereto as Exhibit
A
(the
“Securities
Purchase Agreement”).
C. The
execution and delivery of this Agreement by the Indemnitors are conditions
to
SweetskinZ’s obligation to consummate the Merger.
NOW,
THEREFORE, intending to be legally bound, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions.
All
defined terms used in this Agreement that are not otherwise defined in this
Agreement shall have the respective meanings assigned to them in the Merger
Agreement.
2. Indemnification.
As an
inducement to SweetskinZ’s consummation of the Merger, the Indemnitors hereby
agree to, jointly and severally, indemnify, defend and hold harmless the
Company, SweetskinZ and their respective directors, officers, stockholders
and
affiliates (collectively, the “Indemnitees”)
from
and against any and all demands, proceedings, judgments, obligations,
settlements, charges, claims, losses of any kind, liabilities, damages, actions,
causes of action, deficiencies, costs and expenses including but not limited
to,
costs of investigation, court costs, actual interests costs, penalties and
reasonable attorneys fees, exceeding in aggregate $50,000 (collectively,
"Losses"),
that
the Indemnitees may sustain, suffer or incur and that arise out of, are caused
by, relate to, or result or occur from or in connection with (i) any breach
by
any of the Company Parties of any representation, warranty or covenant made
by
the Company Parties in the Merger Agreement or (ii) any breach by the Company
of
any representation, warranty or covenant contained in the Securities Purchase
Agreement (except to the extent such breach relates solely to representations,
warranties or covenants of SweetskinZ).
7
3. Security;
Limitations.
As
security for the indemnification obligations of the Indemnitors hereunder,
each
Indemnitor does hereby grant to the Indemnitees a security interest in, and
does
hereby assign, pledge, hypothecate, deliver and set over to the Indemnitees,
their successors and assigns, 275,000 shares of Company common stock (75,000
shares in the name of Belmont (the “Belmont Shares”) and 200,000 shares in the
name of Alberdale (the “Alberdale Shares”)), together with any additions,
exchanges, replacements and substitutions therefor, dividends and distributions
with respect thereto, and the proceeds thereof (collectively, the “Shares”).
The
Indemnitees are hereby authorized to file financing statements naming the
Indemnitors as debtors (without Indemnitors’ signatures) in accordance with the
Uniform Commercial Code as adopted in the State of Delaware. The Indemnitors
hereby authorize the Indemnitees to file all financing statements and amendments
to financing statements describing the Shares in any filing office as the
Indemnitees, in their sole discretion, may determine. Upon Indemnitors’ failure
to perform their indemnification obligations hereunder, Indemitees shall have,
in addition to all rights given at law or in equity, the rights granted to
a
secured party under the Uniform Commercial Code as adopted in the State of
Delaware. Concurrently with the execution of this Agreement, the Shares shall
be
delivered to the Escrow Agent, to be held in escrow pursuant to that certain
Escrow Agreement between the parties hereto and Rubin, Bailin, Ortoli, Mayer
& Baker LLP, such Escrow Agreement to be in substantially the form attached
hereto as Exhibit B. For purposes of this Section, each share of Company Common
Stock shall be deemed to have a value equal to the
Closing Price (as defined below) of such Company common stock on the date the
indemnification claim is paid. Notwithstanding
anything contained herein to the contrary, (i) the liability of the Indemnitors
hereunder shall not apply to any claims up to $50,000 and for any claims of
indemnification that are not made by the Indemnitees on or prior to the
six-month anniversary of the Registration Statement’s (as defined in the
Securities Purchase Agreement) effective date (the “Escrow
Termination Date”)
and
(ii) the indemnification obligations of the Indemnitors hereunder shall be
limited to the Shares. Any Shares forfeited, assigned or transferred hereunder
in satisfaction of this Indemnification shall be on a pro rata basis relative
to
the Belmont Shares and the Alberdale Shares to the extent required, up to their
entirety. All Shares not forfeited, assigned and transferred hereunder prior
to
the Escrow Termination Date will be promptly returned to the Indemnitors;
provided, however, that the Escrow Agent may withhold any Shares it deems
necessary to secure any indemnification claims made hereunder prior to the
Escrow Termination Date, but which, as of such date, have not been resolved,
and
no such Shares withheld by the Escrow Agent pursuant to such provision will
be
returned to the Indemnitors until such indemnification claims are resolved
and
then only to the extent such Shares are not required to be forfeited hereunder.
For purposes of this Agreement, “Closing
Price”
means,
on any particular date (a) the last reported closing bid price per share of
the
Company’s Common Stock on such date on the applicable Trading Market (as defined
in the Securities Purchase Agreement), (b) if there is no such price on such
date, then the closing bid price on the applicable Trading Market on the date
nearest preceding such date, (c) if the Company’s Common Stock is not then
listed or quoted on a Trading Market and if prices for the Company’s Common
Stock are then reported in the “pink sheets” published by the Pink Sheets LLC
(or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Company’s Common Stock so
reported, or (d) if the shares of Company’s Common Stock are not then publicly
traded the fair market value of a share of Company’s Common Stock as determined
by a qualified independent appraiser selected in good faith by the Company’s
board of directors.
8
4. Notices.
If the
Indemnitees intend to seek indemnification under this Agreement, they shall
promptly notify the Indemnitors in writing of such claim; provided, however,
that the failure to give such notice shall not affect the rights of the
Indemnitees hereunder unless given after the Escrow Termination Date.
5. Miscellaneous.
5.1 This
Agreement (together with the Merger Agreement and the other Transaction
Documents (as defined in the Securities Purchase Agreement)) contains the entire
agreement between the parties with respect to the subject matter hereof, is
not
intended to confer upon any third party any rights or remedies, and shall not
be
assignable by any party hereto without the prior written consent of the other
party.
5.2 This
Agreement shall inure to the benefit of and be binding upon the parties hereto,
and their respective successors and permitted assigns.
5.3 This
Agreement shall be governed by the laws of the State of Delaware applicable
to
contracts executed and to be performed therein.
5.4 No
failure of any party hereto to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy hereunder shall preclude any
other or further exercise of the same or any other right, power or remedy by
any
such party.
5.5 Paragraphs
and headings as used in this Agreement have been inserted for convenience of
reference only and shall neither constitute a part of this Agreement nor affect
its meaning, construction or effect.
5.6 If
any
portion of this Agreement is construed to be invalid, illegal or unenforceable
as against public policy or otherwise, the remainder of this Agreement shall
not
be affected thereby, and shall remain in full force and effect.
5.7 This
Agreement may be executed in any number of counterparts, and by any party on
separate counterparts, each of which as so executed and delivered shall be
an
original, and all of which together shall constitute one and the same document.
It shall not be necessary in making proof of this Agreement as to any party
hereto to produce or account for more than one such counterpart executed by
such
party.
[SIGNATURE
PAGE FOLLOWS]
9
IN
WITNESS WHEREOF, the parties have executed this Indemnification Agreement as
of
the date first above written.
SWEETSKINZ
HOLDINGS, INC.
By:
________________________________________
Name: Christopher
Bartle
Title: President
SWEETSKINZ,
INC.
By:
________________________________________
Name: Andrew
Boyland
Title: Chief
Executive Officer
BELMONT
PARTNERS, LLC
By:
________________________________________
Name: Joe
Meuse
Title: Senior
Partner
ALBERDALE
CAPITAL, LLC
By:
________________________________________
Name: Mark
Leininger
Title: Managing
Director
10
ESCROW
AGREEMENT
ESCROW
AGREEMENT (the “Agreement”),
dated
as of April __, 2006 (“Effective
Date”),
by
and among SWEETSKINZ HOLDINGS, INC., a Delaware corporation (f/k/a Nupro
Innovations, Inc.) (the “Company”),
SWEETSKINZ, INC., a Pennsylvania corporation (“SweetkinZ”),
BELMONT PARTNERS, LLC (“Belmont”),
ALBERDALE CAPITAL LLC (“Alberdale”) and Rubin, Bailin, Ortoli, Mayer & Baker
LLP, a limited liability partnership, in its capacity as escrow agent (the
“Escrow
Agent”).
BACKGROUND
A. The
Company, SweetskinZ, Belmont and Alberdale are parties to, and are legally
bound
by, a certain Indemnification Agreement dated as of the date hereof (the
“Indemnification
Agreement”).
Capitalized terms used herein and not defined shall have the meanings given
to
them in the Indemnification Agreement. A copy of the Indemnification Agreement
is attached hereto as Exhibit “A”.
B. Pursuant
to the Indemnification Agreement, Belmont and Alberdale have agreed to deliver
275,000 shares of Company Common Stock to the Escrow Agent under this Agreement
to be held in escrow (the “Escrow
Fund”)
for
purposes of securing Belmont’s and Alberdale’s indemnification obligations under
the Indemnification Agreement.
C. The
Escrow Agent has agreed to serve as escrow agent on the terms and conditions
hereunder.
NOW,
THEREFORE,
in
consideration of the foregoing and the mutual agreements and covenants set
forth
in this Agreement, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Appointment
of Escrow Agent.
The
parties hereby appoint the Escrow Agent to act as the escrow agent under this
Agreement, and the Escrow Agent hereby accepts such appointment and agrees
to
hold the Escrow Fund in escrow, and pay and disburse the Escrow Fund, in
accordance with the terms of this Agreement. Concurrently with the execution
of
this Agreement, Belmont and Alberdale shall deliver the Escrow Fund to the
Escrow Agent. As between the Escrow Agent, on the one hand, and the other
parties hereto, on the other hand, this Agreement constitutes the entire
agreement with respect to the subject matter herein.
2. Disbursements
of the Escrow Fund.
(a) Disbursement.
Upon
receipt of written authorization executed by the Company, SweetskinZ, Belmont
and Alberdale, the Escrow Agent will deliver the Escrow Fund (or a portion
thereof, as applicable) as directed in such authorization. Notwithstanding
anything contained herein to the contrary, if no indemnification claim is made
under the Indemnification Agreement during the period commencing on the date
hereof and ending on the date that is 120 days after the Closing Date (as
defined in the Securities Purchase Agreement), then the Company, SweetskinZ,
Belmont and Alberdale shall, in writing, direct the Escrow Agent to deliver
all
of the then-existing Escrow Fund to Belmont and Alberdale (in the proportions
directed by Belmont and Alberdale in writing). The Escrow Agent will not
disburse any portion of the Escrow Funds without receiving an authorization
under Section 2(a) with respect to such portion, except as provided in Section
3(d).
11
(b) Termination
of Escrow.
This
Agreement shall terminate upon the earlier of (i) disbursement of all of the
Escrow Fund or (ii) the Escrow Termination Date.
3. Matters
Relating to Escrow Agent.
(a) Indemnification
of Escrow Agent.
The
Company, SweetskinZ, Belmont and Alberdale agree, jointly and severally, to
hold
Escrow Agent harmless and to indemnify Escrow Agent against any Losses arising
out of or in connection with the performance of its obligations in accordance
with the provisions of this Agreement, except for gross negligence or willful
misconduct of Escrow Agent. The foregoing indemnities in this paragraph shall
survive the resignation of Escrow Agent or the termination of this Agreement.
The costs and expenses of enforcing this right of indemnification shall also
be
paid by the Company, SweetskinZ, Belmont and Alberdale, on a joint and several
basis.
(b) Specific
Duties; No Liability.
Escrow
Agent’s duties are only such as are specifically provided herein and Escrow
Agent is not charged with any duties or responsibilities in connection with
any
other agreement. Escrow Agent shall incur no liability whatsoever to the
parties, except for liability resulting solely from the gross negligence or
willful misconduct of the Escrow Agent. The Escrow Agent shall have no
responsibility hereunder other than to follow faithfully the instructions herein
contained. The Escrow Agent may consult with counsel (which may be members
of
its own firm) and shall be fully protected in any action taken in good faith
in
accordance with such advice. The Escrow Agent shall be fully protected in acting
in accordance with any written instructions given to it hereunder and believed
by it to have been executed by the proper parties.
(c) Fees.
If
Escrow Agent believes it to be reasonably necessary to consult with counsel
concerning any of its duties hereunder, or if Escrow Agent becomes involved
in
litigation as a result of acting as Escrow Agent hereunder, then in either
case,
the costs, expenses, and reasonable attorneys' fees of Escrow Agent shall be
borne by the Company, SweetskinZ, Belmont and Alberdale, on a joint and several
basis.
(d) Disputes.
It is
understood and agreed that should any dispute arise with respect to the payment,
ownership, or right of possession of the Escrow Fund, Escrow Agent is authorized
and directed to retain in its possession, without liability to anyone, all
or
any part of the Escrow Fund until such dispute shall have been settled either
by
mutual agreement by the parties concerned, by the making of a final written
arbitration award or by the entering of a final non-appealable order of court,
but Escrow Agent shall be under no duty whatsoever to institute or defend any
such proceedings.
(e) Succession.
If the
Escrow Agent resigns (which it may do at any time for any reason whatsoever)
or
is otherwise unable to serve as Escrow Agent hereunder, its successor shall
be
designated in writing by the Company, SweetskinZ, Belmont and Alberdale.
12
4. Notices.
All
notices, consents or other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) when delivered personally, (b) three business days after being mailed
by first class certified mail, return receipt requested, postage prepaid, (c)
one business day after being sent by a nationally recognized express courier
service, postage or delivery charges prepaid, or (d) on the date transmitted
by
telegram or facsimile if confirmed within 24 hours thereafter by a signed
original sent in a manner set forth in (a), (b) or (c) above, to the parties
as
set forth on the signature page hereto or, if to the Escrow Agent, to: Rubin,
Bailin, Ortoli, Mayer & Baker LLP 405 Park Avenue, New York, N.Y.10022,
Attention: William Rosenstadt, Esquire. Any party may change its address for
notice and the address to which copies must be sent by giving notice of the
new
address to the other parties in accordance with this Section provided that
any
such change of address notice shall not be effective unless and until
received.
5. Governing
Law.
This
Agreement shall be construed in accordance with the laws of the State of
Delaware applicable to contracts made and to be performed entirely within the
State of Delaware.
6. Binding
Effect.
All of
the terms and provisions of this Agreement shall be binding upon, and inure
to
the benefit of, the respective heirs, legal and personal representatives,
successors and assigns of the parties hereto.
7. Modifications.
Neither
this Agreement nor any term hereof can be changed, amended, waived or modified
orally, and no agreement shall be effective to waive, change, amend, modify
or
discharge it in whole or in part unless such agreement is in writing and is
signed by the parties against whom enforcement of any change, amendment, waiver,
modification or discharge is sought.
8. Further
Assurances.
Each
party agrees that it will without further consideration execute and deliver
such
other documents and take such other action as may be reasonably requested by
another party to consummate more effectively the purposes or subject matter
of
this Agreement.
9. Counterparts.
This
Agreement may be executed in one or more counterparts, and all such executed
counterparts shall constitute the same agreement.
10. Severability.
If any
provision of this Agreement is determined by a court of competent jurisdiction
to be invalid or unenforceable, the remainder of this Agreement shall
nonetheless remain in full force and effect.
11. Entire
Agreement.
This
Agreement (including the exhibits) and the Indemnification Agreement contain
the
entire agreement between the parties hereto pertaining to the subject matter
hereof and fully supersede all prior written or oral agreements and
understandings between the parties pertaining to such subject
matter.
[SIGNATURE
PAGE FOLLOWS]
13
IN
WITNESS WHEREOF, the undersigned parties have caused this Agreement to be
executed as of the day and year first above written.
SWEETSKINZ
HOLDINGS, INC. (f/k/a
Nupro Innovations, Inc.)
By:
/s/
Christopher Barle
Name: Christopher
Bartle
Title: President
SWEETSKINZ,
INC.
By:
/s/
Andrew Boyland
Name:
Andrew Boyland
Title:
Chief Executive Officer
BELMONT
PARTNERS, LLC
By:
/s/
Joe Meuse
Name:
Joe
Meuse
Title:
President
ALBERDALE
CAPITAL, LLC
By:
/s/
Mark Leininger
Name:
Mark Leininger
Title:
Managing Director
Accepted
and Agreed to this 6th
day of
April, 2006.
RUBIN,
BAILIN, ORTOLI, MAYER & BAKER LLP, as
Escrow
Agent
By:
/s/
William S. Rosenstadt Name:
William S. Rosenstadt
14
Dates Referenced Herein and Documents Incorporated by Reference
