EXHIBIT 10.1
 
SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is made as of April 4,
2008 between Tao Minerals, Ltd., a Nevada corporation (the “Company”), and the
investor listed on Exhibit A hereto (the “Investor”).
 
RECITALS:
 
WHEREAS, the Investor desires to purchase and the Company desires to issue and
sell, upon the terms and conditions set forth in this Agreement 10% convertible
notes (the “Notes”) of the Company, in the form attached hereto as Exhibit B in
the aggregate principal amount of One Million ($1,000,000) Dollars (the
“Purchase Price”) convertible into shares of common stock, par value $0.001 per
share of the Company (the “Conversion Shares”), upon the terms and subject to
the limitations set forth in the Notes;
 
WHEREAS, the parties contemplate that $125,000 of the Purchase Price will be
advanced within five (5) days of the execution of this Agreement and the
remainder of the Purchase Price will be advanced within five (5) days of the
effectiveness of the Registration Statement (as defined below);
 
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto agree as follows:
 
1. PURCHASE AND SALE OF NOTES.
 
1.1 Purchase and Sale of Notes.  Upon the terms and subject to the conditions of
this Agreement, the Company agrees to issue and sell to the Investor, and the
Investor agrees to purchase from the Company, the Notes set forth in the amounts
set forth on Exhibit A hereto, at an aggregate purchase price of $1,000,000
(“Purchase Price”).
 
1.2 Closing.  The Initial closing of the purchase and sale of the Notes (the
“Initial Closing”) shall take place at the offices of the Company within five
(5) days of the execution of this Agreement at 12:00 noon, Eastern time or such
other location, time or date as the parties shall mutually agree, but only after
the satisfaction or waiver of each of the conditions set forth in Sections 6 and
7. The final closing (the “Final Closing” and together with the Initial Closing,
the “Closing”) shall take place within five (5) days of the effectiveness of the
Registration Statement (as defined below) at the offices of the Company at 12:00
noon, Eastern time or such other location, time or date as the parties shall
mutually agree, but only after the satisfaction or waiver of each of the
conditions set forth in Sections 6 and 7.  At each Closing, the Company shall
deliver to the Investor at the address set forth on Exhibit A hereto, a Note in
the name of the Investor, representing the Note purchased, and the Investor
shall deliver to the Company the applicable portion of the Purchase Price, by
wire transfer of immediately available funds to the following account:
 
______________________
 
______________________
 
 
 
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2.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
 
For purposes of this Section, all references to “Company” in Sections 2.1, 2.4
(with the exception of subsection (a) thereof), 2.7, 2.9 through 2.12, and 2.14
through 2.17 shall be deemed to be a reference to the Company and all of its
direct and indirect subsidiaries.  The Company hereby represents and warrants to
each Investor that, except as set forth on a Schedule of Exceptions (the
“Company Schedule of Exceptions”) attached hereto as Schedule A, which
exceptions shall be deemed to be representations and warranties as if made
hereunder:
 
2.1 Corporate Organization.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, and has the requisite corporate power and authority to own or
lease its properties and to carry on its business as now being conducted.  The
Company is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the property owned or leased by it or
the nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or in good standing
would not have, individually or in the aggregate, a Material Adverse
Effect.  For purposes of this Agreement, “Material Adverse Effect” shall mean,
as to any entity, any material adverse effect on the business, operations,
conditions (financial or otherwise), assets, results of operations or prospects
of that entity individually or of the Company and its subsidiaries as a whole.
 
2.2 Capitalization; Organizational Documents.
 
(a) The authorized capital stock of the Company consist of 552,000,000 shares of
Common Stock, of which as of the date hereof, 57,106,909 shares are issued and
outstanding, and 1,000,000 shares of preferred stock of the Company, of which,
as of the date hereof, no shares are issued or outstanding.  All of the issued
and outstanding shares have been duly and validly issued and are fully paid and
nonassessable and have been issued in accordance with all applicable federal and
state securities laws.  No shares of Common Stock are subject to preemptive
rights or any other similar rights or any liens suffered or permitted by the
Company.  There are no preemptive rights or rights of first refusal or similar
rights which are binding on the Company permitting any person to subscribe for
or purchase from the Company shares of its capital stock pursuant to any
provision of applicable law, the Certificate of Incorporation (as defined below)
or the Company’s By-laws.  There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Notes and the Conversion Shares.  The Company has made available to each
Investor true and correct copies of the Company’s Certificate of Incorporation,
as amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s By-laws, as in effect on the date hereof (the
“By-laws”).
 
(b) Upon issuance of the Notes and payment of the Purchase Price therefor in
accordance with the terms of this Agreement, the Conversion Shares will be duly
authorized, validly issued, fully paid and nonassessable, and free and clear of
any restrictions on transfer and any taxes, claims, liens, pledges, options,
security interests, purchase rights, preemptive rights, trusts, encumbrances or
other rights or interests of any other person (other than any restrictions under
the Securities Act of 1933, as amended (the “Securities Act”).
 
 
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2.3 Authorization; Enforcement.  (a) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement and to issue, sell and perform its obligations with respect to the
Notes in accordance with the terms hereof, (b) the execution and delivery of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Company’s Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, and (c) this Agreement has been duly
executed and delivered by the Company.  This Agreement, when executed and
delivered by the Company, constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.
 
2.4 No Conflicts.  The execution, delivery and performance of this Agreement by
the Company, and the consummation by the Company of the transactions
contemplated hereby, will not (a) result in a violation of the Certificate of
Incorporation or By-laws of the Company, or (b) violate or conflict with, or
result in a breach of, any provision of, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any lien on or against any of the
properties of the Company, any note, bond, mortgage, agreement, license,
indenture or instrument to which the Company is a party, or result in a
violation of any statute, law, rule, regulation, writ, injunction, order,
judgment or decree applicable to the Company or by which any property or asset
of the Company is bound or affected, except where such violation, conflict,
breach or other consequence would not have a Material Adverse Effect.   Except
as specifically contemplated by this Agreement, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental or regulatory or self-regulatory
agency in order for it to execute, deliver or perform any of its obligations
under or contemplated by this Agreement in accordance with the terms
hereof.  All consents, authorizations, orders, filings and registrations that
the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof.
 
2.5 SEC Documents; Financial Statements.  The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Securities and Exchange Commission (the “SEC”) pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) (all of the foregoing, and all other documents and registration statements
heretofore filed by the Company with the SEC being hereinafter referred to as
the “SEC Documents”).  The Company has delivered or made available to the
Investor true and complete copies of the SEC Documents.  As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Act, and the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC (except those SEC Documents
that were subsequently amended), contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.  As of their respective dates, the
financial statements of the Company and its subsidiaries included (or
incorporated by reference) in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto.  Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except (a) as may be otherwise indicated in such
financial statements or the notes thereto, or (b) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present the financial position of the Company
and its subsidiaries as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
 
 
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2.6 Securities Law Exemption.  Assuming the truth and accuracy of each
Investor’s representations set forth in this Agreement, the offer, sale and
issuance of the Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and applicable state securities
laws, and neither the Company nor any authorized agent acting on its behalf has
taken or will take any action hereafter that would cause the loss of such
exemption.
 
2.7 Litigation.  All actions, suits, arbitrations or other proceedings or, to
the Company’s knowledge, investigations pending or threatened against the
Company that would have a Material Adverse Effect on the Company, are disclosed
in the SEC Documents.  There is no action, suit, proceeding or, to the Company’s
knowledge, investigation that questions this Agreement or the right of the
Company to execute, deliver and perform under same.
 
2.8 Use of Proceeds.  The net proceeds from the sale of the Notes shall be used
solely for general corporate and working capital purposes; provided however, the
Company shall utilize $25,000 for investor relations program reasonably
acceptable to the Investor.
 
2.9 Intellectual Property.  The Company owns, or has the contractual right to
use, sell or license all intellectual property necessary or required for the
conduct of its business as presently conducted and as proposed to be conducted,
including, without limitation, all trade secrets, processes, source code,
licenses, trademarks, service marks, trade names, logos, brands, copyrights,
patents, franchises, domain names and permits.  The Company has not received any
communications alleging that the Company has violated or, by conducting its
business presently conducted or as proposed to be conducted, violates or will
violate any intellectual property rights of any other person or entity.
 
2.10 Title to Property and Assets.  The Company has good and marketable title to
or, in the case of leases and licenses, has valid and subsisting leasehold
interests or licenses in, all of its properties and assets (whether real or
personal, tangible or intangible) free and clear of any liens or other
encumbrances, except for liens or other encumbrances that do not, individually
or in the aggregate, have a Material Adverse Effect.  With respect to property
leased by the Company, the Company has a valid leasehold interest in such
property pursuant to leases which are in full force and effect, and the Company
is in compliance in all material respects with the provisions of such leases.
 
 
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2.11 Compliance with Laws.  The Company is and has been in compliance with all
laws, rules, regulations, orders, judgments or decrees that are applicable to
the Company, the conduct of its business as presently conducted and as proposed
to be conducted, and the ownership of its property and assets (including,
without limitation, all Environmental Laws (as defined below) and laws related
to occupational safety, health, wage and hour, and employment
discrimination).  All required reports and filings with governmental authorities
have been properly made as and when required, except where the failure to report
or file would not, individually or in the aggregate, have a Material Adverse
Effect.  “Environmental Laws” means all federal, state, local and foreign laws,
ordinances, treaties, rules, regulations, guidelines and permit conditions
relating to contamination or pollution of the environment (including ambient
air, surface water, ground water, land surface or subsurface strata) or the
protection of human health and worker safety, including, without limitation,
laws and regulations relating to transportation, storage, use, manufacture,
disposal or release of, or exposure of employees or others to, Hazardous
Materials (as defined below) or emissions, discharges, releases or threatened
releases of Hazardous Materials.  “Hazardous Materials” means any substance that
has been designated by any governmental entity or by applicable Environmental
Laws to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum, urea
formaldehyde and all substances listed as hazardous substances pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or defined as a hazardous waste pursuant to the Resource
Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to Environmental Laws, but excluding office and janitorial
supplies maintained in accordance with Environmental Laws.
 
2.12 Licenses and Permits.  The Company has obtained and maintains all material
federal, state, local and foreign licenses, permits, consents, approvals,
registrations, memberships, authorizations and qualifications required to be
maintained in connection with the operations of the Company as presently
conducted and as proposed to be conducted, the lack of which could have a
Material Adverse Effect.  The Company is not in default in any material respect
under any of such licenses, permits, consents, approvals, registrations,
memberships, authorizations and qualifications.
 
2.13 Related Entities.  Except as disclosed on the Company Schedule of
Exceptions, the Company does not presently own or control, directly or
indirectly, any interest in any other subsidiary, corporation, association or
other business entity.  The Company is not a party to any joint venture,
partnership or similar arrangement.
 
2.14 Taxes.  The Company has timely filed all tax returns and reports (federal,
state and local) required to be filed and these returns and reports are true and
correct in all material respects.  The Company has paid all taxes and other
assessments shown to be due on such returns or reports.  Neither the Internal
Revenue Service nor any state or local taxing authority has, during the past
three (3) years, examined or informed the Company it is in the process of
examining any such tax returns and reports.  The provision for taxes of the
Company as shown on the financial statements included in the most recent SEC
Filing, is adequate for taxes due or accrued as of the date thereof and since
that date the Company has provided adequate accruals in accordance with
generally accepted accounting principals in its financial statements for any
taxes incurred that have not been paid, whether or not shown as being due on any
tax returns.  The Company has not elected, pursuant to the Code, to be treated
as a collapsible corporation pursuant to Section 341(f) of the Code, nor has it
made any other elections pursuant to the Code (other than elections that relate
solely to methods of accounting, depreciation or amortization) that would have a
Material Adverse Effect.
 
 
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2.15 Employees.  The Company does not have any collective bargaining agreements
with any of its employees.  There is no labor union organizing activity pending
or, to the Company’s knowledge, threatened with respect to the Company.
 
2.16 Material Contracts.  All contracts, agreements, instruments, leases,
licenses, arrangements, understandings or other documents filed with or required
to be filed as exhibits to the SEC Documents to which the Company therein is a
party or by which it may be bound have been so filed (the “Material
Contracts”).  The Material Contracts that have been filed as exhibits are
complete and correct copies of the contracts, agreements, instruments, leases,
licenses, arrangement, understanding or other documents of which they purport to
be copies.  The Material Contracts are valid and in full force and effect as to
the Company, and, to the Company’s knowledge, to the other parties
thereto.  Except as otherwise disclosed herein, the Company is not in violation
of, or default under (and there does not exist any event or condition which,
after notice or lapse of time or both, would constitute such a default under),
the Material Contracts, except to the extent that such violations or defaults,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.  The Company has not received any notice of
cancellation or any written communication threatening cancellation of any
Material Contract by any other party thereto.  The Company is not a party to and
is not bound by any contract, agreement or instrument, or subject to any
restriction under the Certificate of Incorporation, its bylaws or other
governing documents that would have a Material Adverse Effect.
 
2.21 Brokers and Finders.  The Company has not employed any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement that would be entitled to a broker’s, finder’s or similar fee or
commission in connection herewith and therewith.
 
2.22 Disclosure.  This Agreement, Schedules and Exhibits hereto and all other
documents delivered to the Investor in connection herewith or therewith at the
Closing, do not contain any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  There are no facts
that, individually or in the aggregate, would have a Material Adverse Effect
that have not been disclosed to each Investor in this Agreement (including the
Schedules and Exhibits hereto), the SEC Documents or any other documents
delivered to the Investor in connection herewith or therewith at the Closing.
 
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR.
 
The Investor, hereby represents and warrants to the Company, that:
 
3.1 Organization.  The Investor is a corporation, limited liability company or
limited partnership, as the case may be, duly organized, validly existing and in
good standing in the jurisdiction of its formation.  The Investor has all
requisite power and authority to execute, deliver and perform all of its
obligations of this Agreement.
 
 
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3.2 Authorization; Enforcement.  (a) The Investor has the requisite power and
authority to enter into and perform its obligations under this Agreement, (b)
the execution and delivery of this Agreement by the Investor and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Investor, and
(c) this Agreement has been duly executed and delivered by the Investor.  To the
knowledge of the Investor, no other proceedings on the part of the Investor are
necessary to approve and authorize the execution and delivery of this
Agreement.  This Agreement, when executed and delivered, constitutes a valid and
binding obligation of the Investor, enforceable against the Investor in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and remedies.
 
3.3 No Conflicts.  The execution, delivery and performance of this Agreement by
the Investor, and the consummation by the Investor of the transactions
contemplated hereby will not (a) result in a violation of the organizational
documents of the Investor, or (b) result in a violation of any statute, law,
rule, regulation, writ, injunction, order, judgment or decree applicable to the
Investor, except where such violation, conflict, breach or other consequence
would not have a Material Adverse Effect.  The Investor is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental or regulatory or self-regulatory
agency in order for it to execute, deliver or perform any of its obligations
under or contemplated by this Agreement in accordance with the terms hereof.
 
3.4 Investment Representations.
 
(a) The Investor is an “accredited investor”, as defined in Regulation D
promulgated under the Securities Act, and has such knowledge, sophistication and
experience in financial and business matters that the Investor is capable of
evaluating the merits and risks of the investment in the Shares.
 
(b) The Investor (i) has adequate means of providing for its current financial
needs and possible contingencies, and has no need for liquidity of investment in
the Company, (ii) can afford to hold unregistered Shares for an indefinite
period of time and sustain a complete loss of the entire amount of the
subscription, and (iii) has not made an overall commitment to investments which
are not readily marketable that is so disproportionate as to cause such overall
commitment to become excessive.
 
(c) The Investor agrees and understands that the Notes are being offered and
sold to the Investor in reliance upon specific exemptions from the registration
requirements of the Securities Act and the rules and regulations promulgated
thereunder and that, in order to determine the availability of such exemptions
and the eligibility of the Investor to acquire the Notes and the Conversion
Shares, the Company is relying upon the truth and accuracy of the Investor’s
representations and warranties, and compliance with the Investor’s covenants and
agreements, set forth in this Agreement.  The Investor further agrees with the
Company that (i) the Notes are not being offered or sold to the Investor by
means of any form of general solicitation or general advertising, and in
connection therewith, the Investor did not (1) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio, whether
closed circuit or generally available; or (2) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.  The Investor hereby acknowledges that the
offering of the Notes have not been reviewed by the SEC or any state regulatory
authority since the offering of the Notes is intended to be exempt from the
registration requirements of Section 5 of the Securities Act pursuant to
Regulation D promulgated thereunder.  The Investor understands that the Notes
and the Conversion Shares have not been registered under the Securities Act and
agrees not to sell or otherwise transfer the Conversion Shares unless they are
registered under the Securities Act or unless an exemption from such
registration is available.
 
 
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(d) The Notes are being purchased by the Investor for its own account, for
investment purposes only, not for the account of any other person, or
corporation and not with a view to distribution, assignment or resale to others
in whole or in part.  The Investor has no present intention of selling, granting
any participation in, or otherwise distributing the Notes and the Conversion
Shares.  The Investor does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, pledge, hypothecate, grant any
option to purchase or otherwise dispose of any of the Conversion
Shares.  Nothing herein shall prevent the distribution of any Conversion Shares
to any subsidiary, member, partner, stockholder, affiliate or former member,
partner, stockholder or affiliate of the Investor in compliance with the
Securities Act and applicable state “blue sky” laws.
 
(e) The Investor has had access to the Company’s SEC Documents and other public
filings.
 
(f) With respect to corporate tax and other economic considerations involved in
an investment in the Notes, the Investor is not relying on the Company.  The
Investor has carefully considered and has, to the extent the Investor believes
such discussion necessary, discussed with its professional legal, tax,
accounting and financial advisors the suitability of an investment in the Notes
for its particular tax and financial situation and has determined that the Notes
are a suitable investment for the Investor.
 
(g) The Company has made available to the Investor all documents and information
that the Investor has requested relating to an investment in the Notes.
 
(h) Subject to the Company’s disclosures in this Agreement and the SEC
Documents, the Investor recognizes that that investment in the Company involves
substantial risks, including loss of the entire amount of such investment and
has taken full cognizance of and understands all of the risk factors relating to
the purchase of the Shares.
 
(i) The Investor has not been formed for the specific purpose of acquiring the
Shares.
 
4. COVENANTS.
 
4.1 Confidentiality.  The Investor hereby acknowledges that unauthorized
disclosure of information regarding the offering of the Shares pursuant to this
Agreement may cause the Company to violate Regulation FD and the Investor agrees
to keep such information confidential. The Company shall not publicly disclose
the name of the Investor, or include the name of the Investor in any filing with
the Commission or any regulatory agency or trading market, without the prior
written consent of such Investor, except (i) as required by the federal
securities laws and in connection with the registration statement contemplated
by this Agreement and (ii) to the extent such disclosure is required by law or
trading market regulations.
 
 
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4.2 Restrictions on Transfer. The Investor acknowledge that (a) the Notes and
the Conversion Shares have not been registered under the provisions of the 1933
Act, and may not be transferred unless (i) subsequently registered thereunder or
(ii) the Investor shall have delivered to the Company an opinion of counsel,
reasonably satisfactory in form, scope and substance to the Company, to the
effect that the Conversion Shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; and (b) any sale of
the Conversion Shares made in reliance on Rule 144 promulgated under the 1933
Act may be made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any resale of such securities under circumstances
in which the seller, or the person through whom the sale is made, may be deemed
to be an underwriter, as that term is used in the 1933 Act, may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder.
 
4.3 Restrictive Legend. The Investor acknowledges and agrees that the Notes and
the Conversion Shares shall bear a restrictive legend and a stop-transfer order
may be placed against transfer of any such Securities except that the
requirement for a restrictive legend shall not apply to Conversion Shares sold
pursuant to a current and effective registration statement or a sale pursuant
Rule 144 or any successor rule.
 
4.4 Securities Compliance.  The Company shall take all action necessary to
comply with any federal or state securities laws applicable to the transactions
contemplated hereunder.
 
5. REGISTRATION RIGHTS.
 
5.1 Registrable Shares.  As used herein the term “Registrable Shares” means the
shares of common stock into which the Notes are convertible.
 
5.2 Mandatory Registration.
 
(a) On or before forty-five (45) days of the date hereof, the Company shall
prepare and file with the Commission a Registration Statement covering the
resale of all of the Registrable Shares for an offering to be made on a
continuous basis pursuant to Rule 415 (the “Required Filing Date”).  The
Registration Statement required hereunder shall be on Form S-1  (except if the
Company is not then eligible to register for resale the Registrable Shares on
Form S-1, in which case the Registration Statement shall be on another
appropriate form in accordance herewith).  The Company shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event not later than the 120th day after filing
thereof (the “Effectiveness Date”), and shall use its commercially reasonable
efforts to keep the Registration Statement continuously effective under the
Securities Act until the earlier of the date when all Registrable Shares covered
by the Registration Statement (a) have been sold pursuant to the Registration
Statement or an exemption from the registration requirements of the Securities
Act or (b) may be sold without restrictions pursuant to Rule 144 counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Investors or (c) the
second anniversary of the date on which the Registration Statement is declared
effective (the “Effectiveness Period”) or such longer time as the Company may
determine.
 
 
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(b)  If: (i) the Registration Statement is not filed on or prior to its Required
Filing Date, or (ii) the Company fails to file with the Commission a request for
acceleration in accordance with Rule 461 promulgated under the Securities Act,
within five business days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that a Registration Statement
will not be “reviewed”, or not subject to further review, or (iii) a
Registration Statement filed or required to be filed hereunder is not declared
effective by the Commission on or before the required Effectiveness Date, or
(iv) after a Registration Statement is first declared effective by the
Commission, it ceases for any reason to remain continuously effective as to all
Registrable Securities for which it is required to be effective, or the Investor
is not permitted to utilize the Prospectus therein to resell such Registrable
Securities, for in any such cases 30 business days (which need not be
consecutive days) in the aggregate during any 12-month period (any such failure
or breach being referred to as an “Event”) and for purposes of clause (i) or
(iii) the date on which such Event occurs, or for purposes of clause (ii) the
date on which such five business day period is exceeded, or for purposes of
clause (iv) the date on which such 30 business day period is exceeded, being
referred to as “Event Date”, then in addition to any other rights the Investors
may have hereunder or under applicable law, the Company shall pay to the
Investor liquidated damages, in cash or shares of Common Stock at the option of
the Company, at a rate equal to one (1%) percent  per month (pro rata on a
30-day basis) of the total Purchase Price, up to a maximum of ten (10%) percent
of the total principal amount of the Notes.  Such liquidated damages shall be
payable within ten (10) days of the end of each one-month anniversary of the
filing deadline set forth in this section 5(c).
 
5.3 Covenants of the Company With Respect to Registration.
 
The Company covenants and agrees as follows:
 
(a) Not less than one (1) business day prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto,
furnish to the Investors copies of all such documents proposed to be filed
(including documents incorporated or deemed incorporated by reference to the
extent requested by such person), which documents will be subject to the review
of such Investors within such five business days. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Investor shall reasonably object in good faith based on the
advice of counsel and the Company shall make reasonable efforts to address the
objections raised.
 
(b) The Company shall prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
Securities Act with respect to the disposition of all Shares covered by such
Registration Statement during the period of time such Registration Statement
remains effective;
 
(c) The Company shall use its commercially reasonable efforts to register and
qualify the Shares covered by such Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Investors; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
 
(d) During the period of time such Registration Statement remains effective, the
Company shall notify each Investor of Registrable Shares covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
 
5.4 Expenses.  All expenses incurred in effecting a registration pursuant to
this Agreement (including, without limitation, all registration, qualification
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses) shall be borne by the Company.  All
transfer taxes, underwriting discounts and selling commissions applicable to the
sale of the Registrable Shares shall be borne by the Investors thereof.
 
5.5 Indemnification.  In the event any Registrable Shares are included in a
Registration Statement under this Section 5:
 
 
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(a) To the extent permitted by law, the Company will indemnify and hold harmless
each Investor, the partners, officers, directors, stockholders, members and
managers of such Investor, each person, if any, who controls such Investor
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (each, a “Violation”): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
Registration Statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Investor, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 5.5(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld or
delayed), nor shall the Company be liable to any Investor, underwriter or
controlling person for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Investor, underwriter or
controlling person.
 
(b) To the extent permitted by law, each selling Investor will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims, damages,
or liabilities (joint or several) to which any of the foregoing persons may
become subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such violation occurs in reliance
upon and in conformity with written information furnished by such Investor
expressly for use in connection with such registration; and each such Investor
will pay, as incurred, any legal or other expenses reasonably incurred by any
person indemnified pursuant to this Section 5.5(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 5.5(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Investor (which consent shall not be unreasonably withheld or delayed); provided
further that in no event shall any indemnity under this Section 5.5(b) exceed
the net proceeds from the offering received by such Investor.
 
(c) Promptly after receipt by an indemnified party under this Section 5.5 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 5.5, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified parties
which may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the reasonable fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time after receipt
of notice of the commencement of any such action, if prejudicial to its ability
to defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 5.5, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 5.5.
 
 
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(d) If the indemnification provided for in this Section 5.5 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, liability, claim, damage or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations; provided that in
no event shall any contribution by an Investor under this Section 5.5(d) exceed
the net proceeds from the offering received by such Investor.  The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties’ relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
 
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
 
(f) The obligations of the Company and Investors under this Section 5.5 shall
survive the completion of any offering of Registrable Shares in a registration
statement and the termination of this Agreement.
 
5.6 Reports Under Exchange Act.  With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit an Investor to
sell Shares of the Company to the public without registration, the Company
agrees to:
 
(a) Make and keep public information available, as those terms are used in SEC
Rule 144, at all times;
 
(b) File with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act;
 
(c) Furnish to any Investor, so long as the Investor owns any Registrable
Shares, forthwith on request, (i) a written statement by the Company that it has
complied with the reporting requirements of SEC Rule 144, the Securities Act and
the Exchange Act, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested in availing any
Investor of any rule or regulation of the SEC that permits the selling of any
such securities without registration; and
 
 
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(iv) Undertake any additional actions reasonably necessary to maintain the
availability of the use of Rule 144.
 
6. CONDITIONS TO INVESTOR OBLIGATIONS AT CLOSING.
 
The obligations of the Investor to purchase the Notes at the Closing are subject
to the fulfillment on or prior to the Closing of each of the following
conditions:
 
6.1 Representations and Warranties.  The representations and warranties of the
Company contained in Section 2 shall be true in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date, except that any
representations and warranties stated as being true and correct as of a date
other than the date hereof shall be true and correct as of such other date.
 
6.2 Performance.  The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
 
6.3 Qualifications.  All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
of the United States that are required in connection with the lawful issuance
and sale of the Shares to the Investors pursuant to this Agreement shall have
been duly obtained and shall be effective on and as of the Closing.
 
6.4 Proceedings and Documents.  All corporate and other proceedings undertaken
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to each Investor, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
 
6.5 Absence of Litigation.  No proceeding challenging this Agreement or the
transactions contemplated hereby or thereby, or seeking to prohibit, alter,
prevent or delay the Closing, shall have been instituted against the Company
before any court, arbitrator or governmental body, agency or official and shall
be pending.
 
6.6 Registration Statement. With respect to the Final Closing, the Registration
Statement shall have been declared effective by the SEC.
 
6.7 Legal Prohibition.  The purchase of the Notes by the Investors shall not be
prohibited by any law or governmental order or regulation.
 
6.8 Investor Relations. The Company shall have retained an investor relations
firm to perform investor relations services, reasonably acceptable to the
Company.
 
6.9 DWAC. The Company shall take all action to add its shares of common stock to
the list of DWAC eligible issues.
 
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7. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING.
 
The obligations of the Company under Section 1 of this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions:
 
7.1 Representations and Warranties.  The representations and warranties of each
Investor contained in Section 3 shall be true in all respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date, except that any representations and
warranties stated as being true and correct as of a date other than the date
hereof shall be true and correct as of such other date.
 
7.2 Performance.  Each Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
 
7.3 Qualifications.  All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
of the United States that are required in connection with the lawful issuance
and sale of the Shares to the Investors pursuant to this Agreement shall have
been duly obtained and shall be effective on and as of the Closing.
 
7.4 Proceedings and Documents.  All corporate and other proceedings undertaken
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and its counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
 
8. MISCELLANEOUS.
 
8.1 Survival of Warranties.  The warranties, representations, agreements,
covenants and undertakings of the Company or the Investor contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing and shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of the Investors or the
Company.
 
8.2 Incorporation by Reference.  All Exhibits and Schedules appended to this
Agreement are herein incorporated by reference and made a part hereof.
 
8.3 Successor and Assignees.  All terms, covenants, agreements, representations,
warranties and undertakings in this Agreement made by and on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto (including transferees of any
Shares) whether so expressed or not, subject to Section 5.7.
 
8.4 Amendments and Waivers.  Neither this Agreement nor any provision hereof
shall be waived, modified, changed, discharged, terminated, revoked or canceled
except by an instrument in writing signed by the party against whom any change,
discharge or termination is sought.  Failure of either party to exercise any
right or remedy under this Agreement or any other agreement between the Company
and the Investors, or otherwise, or delay by the Company or the Investors in
exercising such right or remedy, will not operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
 
 
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8.5 Governing Law.  This Agreement shall be deemed a contract made under the
laws of the State of New York, without giving effect to the conflicts of law
principles thereof.
 
8.6 Notices.  All notices, requests, consents, demands, notice or other
communication required or permitted under this Agreement shall be in writing and
shall be deemed duly given and received when delivered personally or transmitted
by facsimile, or one business day after being deposited for next-day delivery
with a nationally recognized overnight delivery service, or three days after
being deposited as first class mail with the United States Postal Services, all
charges or postage prepaid, and properly addressed:
 
to the Company at:
 
Tao Minerals, Ltd.
Officina 624, Empresarial Mall Ventura, Cra.32#1B
Sur 51, Medellin, Columbia
Tel:  (___) _____________
Fax:  (___) ______________
Attention:  Chief Executive Officer
 
with a copy (which shall not constitute notice) to:
 
Sichenzia Ross Friedman Ference LLP
61 Broadway, 32nd Floor
New York, New York 10006
Fax: (212) 930-9725
Attention: Michael Ference
 
or to the Investors at the address set forth opposite the Investor’s name on
Exhibit A hereto
 
or such other address as may be furnished in writing by a party hereto.
 
8.7 Counterparts. This Agreement may be executed in counterparts, all of which
together shall constitute one and the same instrument.
 
8.8 Effect of Headings.  The section and paragraph headings herein are included
for convenience only and shall not affect the construction hereof.
 
8.9 Entire Agreement.  This Agreement and the Exhibits and Schedules hereto and
thereto constitute the entire agreement among the Company and the Investors with
respect to the subject matter hereof.  There are no representations, warranties,
covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth herein.  This Agreement supersedes all prior
agreements between the parties with respect to the Shares purchased hereunder
and the subject matter hereof.
 
8.10 Severability.  If any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable under applicable law, such provision
shall be replaced with a provision that accomplishes, to the extent possible,
the original business purpose of such provision in a valid and enforceable
manner, and the balance of the Agreement shall be interpreted as if such
provision were so modified and shall be enforceable in accordance with its
terms.
 
8.11 Interpretation.  This Agreement shall be construed according to its fair
language.  The rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement.
 
8.12 No Strict Construction.  The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
 
[Signature page follows]

 
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first above
written, by the duly authorized representatives of the parties hereto.
 
 

  TAO MINERALS, LTD.          
 
By:
/s/ James Sikora       Name: James Sikora       Title: President          

  OUTBOARD INVESTMENTS LTD.          
 
By:
/s/ Hugh G. O’Neil        Name: Hugh G. O’Neill       Title: Director          
       

 
 
                                        

 
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Schedule A

COMPANY SCHEDULE OF EXCEPTIONS

None
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Exhibit A

 
Investor Name and
 Notice Address
Cash Investment Amount
Outboard Investments, Ltd.
BCM Cape Building
Leeward Highway Providenciales
Turks and Caicos, BWI
 
 
 
$1,000,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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